Energy & Environment and Environment and Environmental Policy and Environmentally friendly

Consumers wary of 'greenwashing' by companies

August 6, 2007

Hoosier Outdoor Advertising sells its scrap billboard vinyl to Oklahoma-based Sustainable Solutions Inc. to be turned into wall coverings and countless other industrial products. It joined the Oklahoma firm in touting the initiative as a "new and exciting sustainable business opportunity."

But Jeff Brawley, general manager of Bloomington-based Hoosier Outdoor, shrugs off the money motivation.

"It's not a moneymaker for us," he said of the penny or two he gets for each pound of scrap. The pocket change might be just enough to cover the cost of gathering the scrap rather than sending it to a landfill. "It's just the right thing to do."

If only it were that simple.

With the gospel of global warming raising the call for "green-ness" to a near-hysterical pitch, there's a growing sense that creating an earth-friendly image will bring companies a strategic advantage.

Yet the contradictions between what companies do day in and day out and what they do to improve the environment can create a marketing minefield.

"Companies are grappling with this right now," said John W. Maxwell, professor of business economics and public policy at Indiana University-Bloomington.

Maxwell, in a study co-authored with University of Michigan researcher Thomas P. Lyon, said companies "are often surprisingly hesitant" to mention their environmentally friendly actions, for fear of being dismissed as "greenwashers" by some environmental groups.

He pointed, for example, to the "Greenwash Academy Awards" at the Earth Summit in Johannesburg, South Africa, in recent years. Among the winners was petroleum giant BP, for its "beyond petroleum rebranding campaign." Besides appearing to be wringing its hands worrying about motorists, BP pointed out how it is a major maker of solar cells and how it uses them atop the canopies of its service stations to power lights and refrigerators.

That's the same BP that lately has been under fire from environmentalists for seeking a permit from the Indiana Department of Environmental Management to dump more treated wastewater into Lake Michigan from its Whiting refinery.

"All that PR spin and investment--was it actually a win for them or did it hold them up for further scrutiny?" asked Marc Zucker, CEO of Synergy Marketing Group in Indianapolis.

Truth in advertising

Maxwell and Lyon defined greenwashing as the "selective disclosure of positive information about a company's environmental or social performance, without full disclosure of negative information on these dimensions."

It's not the same, they added, as having bad environmental habits.

"A firm can have a poor record without presenting any positive information about itself, in which case it would not be accused of greenwashing," the study said.

If the most extreme environmentalists caught wind of Hoosier Outdoor's earth-friendly gestures of late, they might note that outdoor advertising firms cut down trees to make room for their billboards. Those vile sentries of visual pollution are made from steel produced in filthy mills and illuminated with electricity made from power plants that belch billions of tons of mercury, nitrogen oxide and carbon dioxide.

"There could be a backlash for companies," warned Melissa Hickman, principal of Indianapolis advertising and PR firm Hickman + Associates.

Hickman said she's most concerned about companies that try to position themselves as "green" without doing anything internally to change behaviors.

Her firm uses china instead of paper products at the office. It turns off the computers at night. Its business cards look as if they had an appointment with the guillotine. And Hickman wants to take on more "green" clients. One, design firm I.D.O. Inc., uses reused and salvaged building materials at its 601. N. Capitol Ave. building. Those efforts earned I.D.O. the Leadership in Energy and Environmental Design certification. LEED status is the environmental equivalent of the Underwriter's Laboratory seal of approval.

Official designations might help, because to earn environmental credibility in the eyes of the public, "it has to be real. It has to be of substance. You have to have a real [environmental] program in place," said Zucker of Synergy Marketing.

A firm says it turns off the lights at night? Fine--show us the electric bill for how much you saved, he said. "Now we have something to talk about."

Big firms more vulnerable

There appears, however, to be little for small and medium-size companies around these parts to fear in terms of being labeled a greenwasher.

Most environmental groups that level the charge choose companies of national prominence, if only because that can maximize outrage and, in turn, generate more financial support from a group's members, IU's Maxwell said.

Companies that don't care about environmental issues and don't care about maintaining a positive image aren't ripe targets for greenwash claims. But a company like Ford Motor Co, which has touted environmentally friendly initiatives, has more at stake and is more prone to receive and respond to criticism, Maxwell said.

While the Hoosier Environmental Council didn't label Indianapolis Power & Light Co. a greenwasher, per se, the group did pounce on the utility four years ago, when IPL announced it would auction 4,050 acres it owned in Morgan County.

The HEC handed out fliers at IPL's Monument Circle headquarters after failing to convince the utility to set aside some of that land for park use. HEC had leverage: IPL officials liked to play up environmental efforts such as the company's annual Golden Eagle Environmental Grants, which have provided more than $1 million to local environmental initiatives since 1993.

Public pressure eventually helped persuade IPL to sell 1,511 acres of the Morgan County land to the state, as part of Morgan-Monroe State Forest. Business owners and farmers bought the rest.

Clarke Kahlo, director of regional advancement and education for HEC, said the group doesn't want to discourage companies from taking up environmental projects, yet has to be vigilant in making sure such companies are genuine in how they address environmental problems such as air pollution or coal ash.

Kahlo said the big reason companies cannot get away unchallenged when hyping their environmental records is the Internet.

"With the Internet, they don't control the airwaves anymore ... . It's easy to be vigilant and to get information about the other side [of the company]. The transparency factor is higher than it used to be."

Morale builder

Companies that prefer to not thump their chests publicly over their environmental efforts can still benefit internally, Maxwell said.

"One of the reasons to do this stuff is employee morale. Employees want to feel good about the company when they go to a party" and chat, he said.

Happier employees may be more productive, Zucker said. Even if a firm just runs an aggressive recycling program, in-house, younger employees exposed to years of pro-environment messages may respond favorably.

That might be the biggest benefit for some companies, because at least one study suggests the general public isn't bent out of shape yet over green issues.

New York-based Landor Associates, in a 2006 study, found that 58 percent of those surveyed were "Not Green Interested."

They don't care about environmentally friendly practices such as recycling, corporate social responsibility or natural/organic ingredients. On the other extreme, 17 percent considered themselves "Green Motivated," basing purchase decisions on whether a brand "reflects Green behavior in its packaging, ingredients and corporate actions."

The majority's lack of engagement where environmental issues are concerned didn't stop University Place Conference Center & Hotel from issuing a press release late last month touting how it spent $8,000 to install compact fluorescent bulbs at all 278 guest rooms at its IUPUI location.

The hotel said the bulbs use 70 percent less energy and last up to 10 times longer. And, oh yeah, it plans to recycle those bulbs after they blow because, unlike conventional bulbs, they contain mercury.

Hoosier Outdoor Advertising had mostly kept its environmental efforts quiet. Before it started selling scrap to the Oklahoma firm, it donated its scrap vinyl for use in patching roofs of houses damaged by hurricanes.

Brawley said dealing with scrap responsibly is also about pleasing customers. "Our clients are happy it's going to have a second use."

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