Be careful when you paint it green: As they become more aware of the practice of greenwashing, customers are demanding more transparency from companies when it comes to environmental claims.dimdimich/Getty Images/iStockphoto
It's not easy being green. Companies lambasted in the past for hyping their earth-friendliness are keeping it on the down-low these days. Loud, self-laudatory announcements have been replaced with third-party endorsements, introspection – and a refreshing element of humility.
"Consumers are demanding greater transparency," says Scott McDougall, president of TerraChoice, an environmental marketing firm based in Ottawa. They publish an annual report called The Sins of Greenwashing, looking at how products that claim to offer environmental benefits are promoted and sold.
The report, issued earlier this year, found that the number of "greener" products on store shelves has risen by 73 per cent since 2009. However, only 4.5 per cent of green products are what TerraChoice calls "sin-free", while the rest commit "sins" that range from vague labelling and citing irrelevant facts to fibbing and outright fakery.
"Most of these sins begin with a central truth or environmental virtue and make an error of overstatement or exaggeration," says Mr. McDougall, whose organization also administers EcoLogo, an environmental certification program for green products.
He says that such certification can present problems because knowing which programs to trust can also be tricky. Some manufacturers pull authentic-looking certification labels off websites or have their art departments "draw up something that looks like an endorsement," he says.
Every company claiming environmental credentials can be suspect, says Remi Trudel, a professor of marketing at Boston University. "You can always find some fault," he explains, adding that companies these days are more fearful than ever of claims of greenwashing. "As soon as you put yourself out there, you're setting yourself up for contradiction."
Despite its risks, being seen to be green is not optional for companies. Prof. Trudel says that while green outlooks once differentiated companies and ensured customer loyalty, "today it's one of the things you have to do to stay competitive."
But there are smarter ways to do it.
Customers are more likely to be skeptical about general claims like "We're a socially responsible company" than product-specific claims like "50 per cent more energy efficient," he says.
Dedicated "ethical consumers" who will read the fine-print or scour the company's website are few, he says, but green lobby groups and even iPhone apps that can be consulted at the store shelf are removing the "information asymmetry" for the general public.
Tom Ewart, managing director of the Network for Business Sustainability, a non-profit organization composed of researchers and business leaders based in the Richard Ivey School of Business, says green marketers should proceed "carefully and conservatively, otherwise you're making yourself a target."
They should also recognize that "there's no one sustainable consumer" but a number of issues that concern people, from organics to climate change. And, of course, consumers are first and foremost concerned about a product's functionality.
Simon MacMahon, the global director of advisory services at Jantzi-Sustainalytics, an investment research firm that tracks company performance in social, environmental and governance areas, says companies should be careful about how they communicate their environmentalism to consumers.
It's important to balance "good news with the bad," he says. Companies should ensure openness when providing information and offer comparisons – with last year's numbers, for instance, or industry averages.
Mr. McDougall of TerraChoice says the best strategy for companies looking to green market has been to describe the "journey" their product is on to becoming greener, talking about their accomplishments while acknowledging issues that still have to be addressed. A paper company, for instance, can proudly talk about its high recycled content, which is an "unassailable virtue," he says, while saying it is planning the next steps, such as reducing greenhouse gas emissions and cleaning up waste-water effluent.
Such a story "engages the consumer on a journey with you," he says, ensuring a relationship that every company wants.