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Corporate Research E-Letter No. 69, January-February 2008

IS CORPORATE GREENWASHING HEADED FOR A FALL?

By Philip Mattera

Imagine you are a communication technician on a planet in another solar system that is facing an ecological disaster and is looking for new solutions. One day you suddenly pick up broadcast signals from Earth that happen to include a man talking to a group of children sitting beside a hulking vehicle he is describing as a “vegetarian” because it uses a fuel called ethanol. The segment ends with the statement: “Chevy: from gas-friendly to gas-free. That’s an American revolution.”

Then you get a transmission from something called BP that is talking about going beyond—beyond darkness, beyond fear, beyond petroleum. Another from Toyota shows a vehicle being put together like a grass hut and then disintegrating back into nature without a trace. The messages keep coming—from General Electric (“eco-imagination”), Chevron (celebrating the miraculous power of “human energy”) and so on.

As you receive more of these signals, you rush to your superiors and announce the good news: Planet Earth has wonderful entities called corporations that can solve all our environmental problems.

Residents of our planet may be tempted to jump to the same conclusion. These days we are bombarded with advertisements that want us to believe that major oil companies, automakers and other large corporations are solving the environmental and energy problems facing the earth. Fear not global warming, peak oil, polluted air and water—big business will take care of everything.

In the late 1990s we saw a hyped-up dot com boom that came crashing down. In the past year or so, we have seen a hyped real estate boom turn into a credit crunch and an unprecedented number of home foreclosures. Are we now seeing a green business boom that will also turn out to be nothing more than hot air?

THE "GREEN CON" 

Today’s surge of corporate environmentalism is not the first time business has sought to align itself with public concerns about the fate of the Earth. Two decades ago, marketers began to recognize the benefits of appealing to green consumers. This revelation first took hold in countries such as Britain and Canada. For example, in early 1989 the giant British supermarket chain Tesco launched a campaign to promote the products on its shelves that were deemed “environmentally friendly.” That same year, Canadian mining giant Inco Ltd. began running ads promoting its effort to reduce sulfur emissions from its smelters, conveniently failing to mention it was doing so under government orders.

In 1990 the green business wave spread to the United States in time to coincide with the 20^th annual Earth Day celebration. Large U.S. companies such as DuPont began touting their environmental initiatives and staged their own Earth Tech environmental technology fair on the National Mall. General Motors ran ads emphasizing its supposed concern about the environment, despite its continuing resistance to significant increases in fuel efficiency requirements.

Such exercises in corporate image-burnishing did not have a great deal of impact. For one thing, environmental groups wasted no time debunking the ads. In 1989 Friends of the Earth in Britain gave “Green Con” awards to those companies that made the most exaggerated and unsubstantiated environmental claims about their products. First prize went to British National Fuels for promoting nuclear power as friendly to the environment.

Greenpeace USA staged a protest at the 1990 corporate Earth Tech fair, denouncing companies such as DuPont for trying to whitewash their poor environmental record with green claims. Greenpeace’s invented term for this practice—greenwashing—immediately caught on, and to this day is a succinct way of undermining dubious corporate claims about the environment.

The general public was also not taken in by the corporate environmental push of 1989-1990. It was just a bit too obvious that these initiatives were meant to deflect attention away from recent environmental disasters such as the Exxon Valdez oil spill in Alaska and Union Carbide’s deadly Bhopal chemical leak. It also didn’t help that many of the claims about green products turned out to be misleading or meaningless.

'LITTLE GREEN LIES"

The question today is whether people have become more receptive to corporate environmental hype. One thing business has going for it in the United States is that the Bush Administration has pursued environmental policies so retrograde that even the most superficial green measures by the private sector shine in comparison. Another is that some environmental groups have switched from an outside adversarial strategy to a more collaborative approach that often involves forming partnerships with companies. Such relationships serve to legitimize business initiatives while turning those groups into cheerleaders for their corporate partners. Former Sierra Club president Adam Werbach took it a step further and joined the payroll of Wal-Mart.

On the other hand, the use of the term “greenwashing” is enjoying a resurgence and has entered the mainstream. A search of the Nexis news archive turns up more than 700 mentions of the term in the past six months alone. Even that bible of the marketing world—Advertising Age—recently published a list titled “The Green and the Greenwashed: Ten Who Get It and 10 Who Talk a Good Game.” Among the latter were General Motors, Toyota, ExxonMobil, Chevron, Wal-Mart, General Electric and Ikea, though Toyota, Wal-Mart and Ikea were also put on the green list for other reasons.

Other business publications have also been taking a more critical approach to green claims. Last September, the Wall Street Journal looked behind GE’s eco-imagination campaign and found all was not well.  For one thing, there was significant resistance even within GE’s managerial ranks and among many of the conglomerate’s major industrial customers. Then there was the fact that GE was still pushing big-ticket products such as coal-fired steam turbines that were significant contributors to global warming. Finally, the paper pointed out that the campaign was motivated in substantial part by a desire to increase sales of existing GE products such as wind turbines that could be promoted as eco-friendly.

In October, Business Week published a cover story titled “Little Green Lies.” It began with the declaration: “The sweet notion that making a company environmentally friendly can be not just cost-effective but profitable is going up in smoke.” The piece featured Auden Schendler of Aspen Skiing Company, a pioneer in adopting environmentally friendly practices. After showing off his company’s energy-efficient facilities, he turned to the Business Week reporter and said: “Who are we kidding?” He then acknowledged that the growth of the company necessarily means burning more power, including the ever-increasing energy needed to create artificial snow during warmer winters. “How do you really green your company? It’s almost f------ impossible.”

THE SIX SINS 

Another factor working against corporate hype is that critics are becoming more systematic in their critique of greenwashing. In November, a marketing firm called TerraChoice did an analysis of more than 1,000 products bearing environmental claims. After finding that all but one of those claims were false or misleading in some respect, TerraChoice issued a paper called The Six Sins of Greenwashing that analyzed the various forms of deception.

The most common shortcoming found by TerraChoice is the “sin of the hidden trade-off,” in which a single positive attribute of a product is promoted while ignoring the detrimental environmental impact of the whole manufacturing process. For example, paper that has some recycled content but is produced in a way that causes serious air and water pollution as well as entailing a large amount of greenhouse gas emissions. The other sins listed by TerraChoice are no proof, vagueness, irrelevance, lesser of two evils and fibbing.

Do-it-yourself greenwashing criticism is now possible through a website recently launched by EnviroMedia Social Marketing. Its Greenwashing Index site allows users to post ads—usually video footage taken from YouTube—and rate them on a scale of 1 (good ad) to 5 ( total greenwashing).  

More troubling, from the corporate perspective, are signs that government regulators and industry-established watchdog groups are giving more scrutiny to green claims. Last month, the UK’s Advertising Standards Authority found that a series of television ads being run around the world by the Malaysian Palm Oil Council contained misleading statements about the environmental benefits of its product. Several months ago, government regulators in Norway banned automobile ads from stating that any cars are environmentally friendly, given their contribution to global warming.

Even in the United States there are signs that regulators may be getting concerned about greenwashing. The Federal Trade Commission, which in 1992 issued national guidelines for environmental marketing claims but has done little on the subject since then, announced in November that it was beginning a review of its rules.

UNCLEAN HANDS AND EXCESSIVE SIZE

Corporations, no doubt, will not give up their environmental claims without a fight. Perhaps the hardest nut to crack will be Wal-Mart. For the past couple of years, the giant retailer has depicted itself as being on a crusade to address global warming and other environmental issues—a crusade it wants its suppliers, its workers and its customers to join. In October 2005 CEO Lee Scott gave a speech in which he embraced sweeping goals to reduce greenhouse gas emissions and raise energy efficiency. Last month he gave another speech that reaffirmed those goals and upped the ante by envisioning a future in which Wal-Mart customers would drive to the store in electric cars that could be recharged in the parking lot using power generated by wind turbines and solar panels.

Wal-Mart’s greenwashing involves sins beyond those listed by TerraChoice. First there is the sin of unclean hands. It is difficult to avoid thinking that the company is using its environmental initiatives to draw attention away from its widely criticized labor practices—both in its own stores and in the factories of its low-wage suppliers abroad. Until the company provides decent working conditions, respects the right of its employees to unionize and ceases to sell goods made by sweatshop labor, Wal-Mart cannot expect to be a paradigm of social responsibility.

Then there’s the sin of size. A company as large as Wal-Mart will inevitably have a negative effect on the countries from which it obtains its goods, the agricultural areas from which it gets it food products, and the communities where it locates its big-box stores. There’s a growing sense that true sustainability entails a substantial degree of localism and moderate-size enterprise. That rules out Wal-Mart, no matter what its CEO professes.

Wal-Mart’s problem may be the problem of big business as a whole. As hard as they try to convince us, huge profit-maximizing transnational corporations may never be true friends of the environment. Let’s hope this message also gets through to those listening in distant worlds.

For more on greenwashing, see Sourcewatch.