Green Marketing, CSR, and the Problem of Greenwashing

Introduction to Green Marketing

Green marketing involves the promotion of products that are marketed as being environmentally safe or beneficial. The practice had its beginnings in Europe in the early 1980s when certain products were found to be harmful to the earth's atmosphere. As a result, new types of products — called green products — were created that were less damaging to the environment. The green product movement grew quickly in the United States and has continued growing steadily ever since (Green Marketing, 2011).

Also known as sustainable marketing, environmental marketing, and ecological marketing, green marketing consists of activities intended to take advantage of changes in consumer attitudes. More and more often, such changes are influenced by a company's policies or practices that impact the environment or demonstrate concern for the community. As a result of the breadth of opportunities, green marketing is applied to multiple product life-cycle stages. The development of ecologically safer products, biodegradable and recyclable packaging, energy-efficient operations, and better pollution controls are all aspects of product development subject to green marketing. For companies that look at all phases of their product life cycle, the practice of green marketing introduces improvements to the entire process — including processing, packaging, and distribution methods (Green Marketing, 2011).

Green marketing may be an expression of a business's commitment to corporate social responsibility, or it may be little more than a marketing ploy. Eco-innovation and green marketing can lead to top-line sales growth, differentiation, and improved brand equity. Green marketing is based on the assumption that potential consumers will view a product or service's "greenness" as a benefit and base their buying decisions accordingly. Along with the rise of green consumers, there has been a corresponding increase in ecolabeling, green advertising, and environmental reporting. This trend creates an opportunity for almost anything to be marketed as green, from simple packaging changes to products and services that radically reduce materials and waste (Montague, 2009).

Environmental Stewardship and Consumer Demand

Environmentally responsible marketing takes into consideration consumer concerns about promoting, preserving, and conserving the natural environment. Green marketing campaigns highlight the characteristics of a company's products and services that provide superior environmental protection. Such benefits can include reduced waste in packaging, increased energy efficiency in the use of the product, or decreased emissions of toxins or pollutants during production. The Encyclopedia of the Environment notes that marketers are responding to growing consumer demand for eco-friendly products in several ways: by promoting the environmental attributes of their existing products, by introducing new products, and by redesigning existing ones. Marketing campaigns that highlight the ethical and environmental superiority of products have grown substantially in recent years (Green Marketing, 2011).

While some businesses engage in green marketing solely to enable profit, others operate in an environmentally sensitive manner because they feel responsible for preserving the integrity of the natural environment while simultaneously satisfying consumer needs and desires. True green marketing therefore practices genuine environmental stewardship (Green Marketing, 2011).

Several factors account for businesses incorporating an environmental ethic into their operations. The single biggest factor is growing public understanding of the environmental degradation resulting from population growth and global natural resource consumption over the last fifty years. The issue is especially significant in America, which consumes approximately one quarter of the world's resources while representing only a small fraction of the world's population. Growing public sensitivity to environmental issues has been accompanied by a corresponding shift in many American consumers' buying decisions (Green Marketing, 2011).

Businesses took note of the growth in green consumerism and developed new marketing campaigns to appeal to environmentally sensitive consumers. Companies with product lines created in an environmentally friendly manner — such as those using recycled materials or emitting comparatively low levels of pollutants — changed their marketing messages to highlight these efforts and appeal to customers most likely to appreciate them. Many consumers are aware that companies sometimes make self-serving or inaccurate green claims, and studies show that these consumers are more likely to view such claims with skepticism. Because of this distrust, a company's reputation is becoming increasingly important for green consumers. Companies that engage in green marketing while simultaneously engaging in practices that harm the environment are unlikely to gain a significant share of the green consumer market (Green Marketing, 2011).

FTC Regulation of Green Advertising Claims

The Gale Encyclopedia discusses the Federal Trade Commission (FTC) role in regulating green advertising claims. The FTC issued guidelines to help reduce consumer confusion and prevent the false or misleading use of terms such as "recyclable," "degradable," and "environmentally friendly" in environmental advertising. The FTC provides the following guidelines for companies wishing to make environmental claims as part of their marketing promotions:

Qualifications and disclosures should be sufficiently clear and prominent so as to avoid deception. Environmental claims should make clear whether they apply to the product, the package, or a component of either, and should be clarified with regard to minor or incidental components. Environmental claims should not overstate the environmental benefit or attribute — marketers are cautioned to avoid implying a significant environmental benefit where the benefit is actually negligible. When a claim compares the environmental attributes of one product with those of another, the basis for comparison should be sufficiently clear and substantiated.

FTC regulations give green consumers a basis for trusting green marketing claims. The regulations apply to all aspects and forms of marketing, including labeling, advertising, and promotional materials. The intent is to ensure that when a business makes an environmental claim, that claim can be supported with reliable scientific evidence. A company that makes an environmental claim it cannot substantiate leaves itself open to substantial legal penalties (Green Marketing, 2011).

In addition to providing a basis for judging claims as false or misleading, the FTC offers guidance to businesses on how to make specific claims about environmentally friendly aspects of their operations. One way the FTC does this is by clarifying the definitions of commonly used terms such as "recyclable," "biodegradable," and "compostable." These guidelines serve to curb misleading advertising practices while also clarifying the standards companies must meet (Green Marketing, 2011).

Conclusion

After surveying the literature on green marketing practices and product differentiation, one can conclude that companies use green strategies for both the right and wrong reasons to promote their products and services. There are firms that are genuinely socially and environmentally responsible, while others are motivated primarily by profit. The regulatory framework established by the FTC provides some protection against the most egregious forms of deception, but consumer vigilance remains essential. When evaluating any company's use of green marketing, it is best to apply a healthy degree of skepticism.

References

Economist's View, 2005. Why go Green? Product differentiation or Fox in the Henhouse? [Online] Available at: http://economistsview.typepad.com/economistsview/2005/06/why_go_green_pr.html [Accessed 16 July 2011].

Environmental Leader, 2011. Americans Give Green Marketing Claims Too Much Credit, Study Finds. [Online] Available at: [Accessed 16 July 2011].

Green Marketing, 2011. [Online] Available at: [Accessed 16 July 2011].

GreenerDesign Staff, 2009. Companies Develop Green Products to Differentiate and Lead: Survey. [Online] Available at: http://www.greenbiz.com/news/2009/04/13/companies-develop-green-products-differentiate-and-lead-survey [Accessed 16 July 2011].

Greenwashing, 2011. [Online] Available at: http://www.sourcewatch.org/index.php?title=Greenwashing [Accessed 16 July 2011].

Howell, P., 2009. What Does Wal-Mart's New Green Product Labeling Mean for Marketing and Consumers? [Online] Available at: http://parkhowell.com/green-advertising-and-marketing/will-wal-marts-new-green-product-labeling-help-educate-or-confuse-the-consumer [Accessed 16 July 2011].

Montague, B., 2009. Green Marketing for a Sustainable Future. [Online] Available at: [Accessed 16 July 2011].

TerraChoice, 2007. The Six Sins of Greenwashing. [Online] Available at: http://www.terrachoice.com/files/6_sins.pdf [Accessed 16 July 2011].