A magazine for marketers

issue 16

f e a t u r e
Green Means Green
Companies tout their eco-friendly efforts achieve greater ROI, right? Right?

By Elaine Appleton Grant

These days, nobody can blame marketers for rushing to“green” their brands. Rarely has there been a bandwagon like the eco-friendly one upon which most of America’s big-name businesses have jumped with such vigor.

Over the last six months or so, green has become ubiquitous, starring in special issues of various high profile magazines, a year-long special report on National Public Radio, billboards and city buses, PR-driven content on Web pages, social networking sites, and the morning news. The carbon-neutral footprint has become the new motherhood and apple pie. And for good reason.

Given the fervor, marketers might presume a substantial payback to touting one’s eco-friendliness. After all, all these big-name companies wouldn’t invest so heavily in getting the message across if there weren’t a measurable – and significant – return on investment.

Well, not so fast. While there are numerous excellent reasons for companies to run green marketing campaigns, an immediate financial return on investment may not be at the top of that list. In some cases, a measurable financial ROI may not even be on the list. Why not? In most cases, it’s either too hard to tease out the role a company’s values play in a consumer’s purchasing decision, or, because of the newness of many of these campaigns, it’s simply too soon to tell.

Historically, as professors Michael E. Porter and Mark R. Kramer wrote in the Harvard Business Review in December 2006, “Studies of the effect of a company’s social reputation on consumer purchasing preferences or on stock market performance have been inconclusive at best.”

Today, few enlightened professionals would argue about the critical need to conserve energy and water, reduce packaging, toxins, and emissions, and otherwise make American business more sustainable. But the question of whether “marketing green” provides a competitive advantage and of how best to invest resources in communicating that green message is far less clear – especially for large companies that can’t “green” all of their activities at once, or maybe even ever.

So why has green marketing taken such hold of corporate America’s creative teams? Two words: motivation and risk. As news about climate change has gone mainstream, surveys have found that consumers are far more interested in the environment – and in a company’s social values – than they were even several short months ago. In May 2007, a survey by Landor Associates found that concern for the environment among American consumers was “universal,” and that eight in ten consumers say they would spend more to buy environmentally friendly products. Indeed, the company reported that “nearly all Americans display green attitudes and behaviors.” In contrast, last year, 58% of respondents declared themselves “uninterested” in whether a brand or a company was green. The firm calls this shift “one of the most complete and speedy revolutions in consumer attitudes ever seen.”

This transformation may well mean that being green – and communicating it to stakeholders – may soon for brands be the price of entry. It also may mean that companies that can authentically, and quickly, brand themselves as green will have a competitive advantage over companies that cannot. It’s risky not to: a full 93% of consumers “believe companies have a responsibility to preserve the environment,” according to a recent survey by Cone Communications, which also found that 85% of consumers “indicated they would consider switching to another company’s products or services because of a company’s negative corporate responsibility practices.”

Moreover, institutional investors and investor coalitions are demanding information on what public companies are doing to mitigate climate-change risk and are downgrading stocks of companies they consider ill-prepared to adapt to – and help fight – global warming, report Jonathan Lash and Fred Wellington of the World Resources Institute, a Washington, D.C. environmental think tank. (For more, See “Wall Street Grows a Conscience,” page XX.)

Clearly, one good reason for public companies to invest in marketing their green efforts is to communicate with concerned shareholders. Another? As more and more towns, cities and states, and the federal government are adopting green procurement standards, “Businesses that can prove that they are green will increasingly win contracts and have advantages,” says Rona Fried, CEO of SustainableBusiness.com.

The Accidental Eco Brand

To put it simply, while studies of actual ROI are so far inconclusive, all indications point to a marketplace that will increasingly reward companies that adopt genuinely green practices and that communicate them effectively.

Greg Owsley learned that lesson in a single day. The amiable Owsley is chief branding officer for New Belgium Brewing in Fort Collins, Colo., a privately held firm and the country’s third-largest craft brewer. New Belgium was founded in 1992 with environmental stewardship at its core. It reuses 98% of its waste stream, gives employees bicycles after they’ve worked there for a year, and is conducting an experiment, with Colorado State University, to transform algae into oil. In 1998, the company switched completely to wind power. And yet it wasn’t until this past spring that Owsley began marketing the brewer’s sustainability; previously, says Owsley, the company’s marketing had focused on the quality of its Fat Tire, Sunshine Wheat and Frambrozen beers.

Owsley was just beginning to consider incorporating the sustainability message into New Belgium’s branding when he attended a focus group in Seattle last year. There, Owsley had an epiphany about what such a campaign could do for the environment and for the brand. During a rousing discussion about beer and brands, he noticed that one woman was particularly silent. Then she finally spoke up. “This gal said, ‘Does anyone know about New Belgium’s environmental stewardship?’ Everybody was quiet. Then she rattled out so much about New Belgium, I should probably hire her! She talked about our wind power, our recycled waste, our open book management, etc., etc.,” Owlsey recalls. “At the end, this guy said, ‘Now that I know all of this stuff, this is the only beer I’m going to drink.’”

In March, New Belgium debuted what it calls its “whimsical sustainability campaign,” which profiles various environmental advocates – but with a sense of humor rather than with the stridency that has often characterized environmental marketing. One of the ads profiles the “Wormbulance” – a renovated ambulance and composting showcase. Another features “Skinny Dippers for a Cause” – a group of naked environmentalists persuading people to save the Poudre River, which is under threat of being dammed to supply drinking water for the rapidly developing area. The ads run on the company’s microsite,

www.followyourfolly.com.

“We really wanted an affirmative branding agenda that moves from the sole focus of communicating brand distinction, which is what most marketing does, to one that begins to build real brand relevance to the consumer by giving them social and environmental advocacy that they can participate in,” says Owsley, in a rare moment of earnestness.

Follow Your Folly is a big investment. In addition to running Web-based video, the company is running print ads in more than 40 magazines, from Outside to Utne Reader. Owsley doesn’t expect immediate results: “I finally have convinced people here that branding is not something that you turn around and see immediate results from,” Owsley says. “It’s a storytelling

process, a long-term investment.”

That’s especially true for green campaigns, which face a challenge unlike other branding efforts: what author John Elkington calls “The 30:3 Syndrome,” a term he coined in his 2001 book, The Chrysalis Economy, which describes a persistent dramatic gap between purchasing intent and actual behavior. The gist: while surveys have for several years indicated that about 30% of consumers say they’ll spend more on environmentally friendly products, only about 3% actually do.

Still, New Belgium’s campaign, like others of its ilk, is likely to provide a variety of legitimate returns for the company. David Zucker, an expert in cause-related marketing for Porter Novelli, suggests that companies quantify green marketing ROI by different and perhaps more relevant standards. Sure, marketers should measure changes in brand perception. But he also advises that companies that are trying to influence the environmental actions of their competitors should measure the change in those companies’ behaviors. He also advises that marketers measure the increase in consumer dialogue and activity around environmental issues.

In fact, that’s just what New Belgium’s Owsley is planning on doing. Follow Your Folly includes an advocacy campaign – “Team Wonderbike” – which is designed to “replace car miles with bike miles for people’s own health and for the planet’s health,” Owsley says. Team Wonderbike currently has 5,000 members. “If everything goes right,” he says, “we’re hoping to have 20,000 members by the end of the year.” A different kind of ROI indeed. D

SIDEBAR: All or Nothing

In a recent post on his “Green Wombat” blog, author Todd Woody asks, “Will you feel better about driving a planet-warming SUV if you’re sitting on seat covers made from 100 percent post-industrial waste?” The incisive post goes on to describe a new vehicle by a big carmaker, to be left unnamed here.

Need a spot-on definition of “greenwashing”? Here it is: an automaker building a gas-guzzling vehicle and attempting – somewhat desperately – to sell it as environmentally friendly.

As a marketer, it seems easy to avoid greenwashing – don’t advertise your environmental friendliness unless it’s genuine. The trouble is that skepticism among consumers is so high that. even companies that are sincere about their efforts are readily tarred with the hypocrisy brush.

For instance, environmental marketers cite Wal-Mart, despite its controversial reputation among left-leaning greenies, as being both genuine and beneficial in its efforts to fight global warming by working with suppliers to green their products and by selling products like organic food and fluorescent light bulbs. “They are aggressively trying to improve their environmental performance internally and that of their suppliers,” says Nicholas Eisenberger, managing principal at GreenOrder, a sustainability strategy and marketing firm.

“[Wal-Mart’s environmental activities] literally could change the world because of their huge impact,” Eisenberger says. “People criticize them for [being bad] neighbors and no doubt that’s part of the equation. But what we’re seeing is real results on the ground…176 million people a week go through Wal-Mart, so in terms of bringing green mainstream Wal-Mart is doing as much as anybody is.”

What can you do to avoid these kinds of problems? Be cautious about claiming green credentials, says Carin Warner, president of Warner Communications, a public relations firm in Manchester-by-the-Sea, Mass. Before agreeing to “green” any of her clients, she insists that they hire an outside firm to perform an environmental audit of their processes, products, and suppliers.

“There are cases where you try to be as socially responsible as you can be but there are flies in the ointment,” says Warner, “and if a green organization were to look at your client, there would be a lot of problems in their interpretation of green.” She cites one of her clients, a large wild-blueberry grower that, despite employing some sustainable farming and harvesting practices, still uses pesticides, inciting environmental groups to confront the company.

“[The grower] cares about sustainability very deeply and cares about being green and it’s crucial to their business,” Warner says. But, she adds, “We have not gone out and said we’re a green company. We have said we’re a company that takes sustainability very seriously, so the wild blueberry barrens will be here for centuries to come. This is an example where you want to be environmentally responsible but you can’t say you’re a green company because the environmentalists have a very high standard by which to measure green.” The bottom line: if you’re at all in doubt, don’t wear green.

SIDEBAR: What It Means to Be Green

There’s so much noise in the market that it’s difficult for consumers to choose between companies that are genuinely committed to the environment and those that are “greenwashing,” says David Zucker, a partner at public relations firm Porter Novelli in New York, and director of its CauseWorks practice.

“We’re at a critical point now,” he says. “The debate is going to have to be more about the right way to be environmentally responsible versus some approaches that are not really driven by a true, deep commitment to prospective reduction of energy consumption, but are a little bit more about PR.” Helping consumers become educated about those distinctions is really important, he says, and here are some things marketers can do to assist that process:

• Perform an audit. Before embarking on a marketing campaign, engage an outside firm to do an audit of your company’s environmental practices. Carin Warner of Warner Communications advises employing an environmental hazards consultant or a local nonprofit, like Massachusetts’ MassPIRG. An inexpensive alternative? Look for a university that offers a degree in environmental studies and ask a professor to examine your company. “It’s lower cost and very creative, and you’d get the latest thinking and young minds,” Warner says.

• Benchmark. Measure your environmental efficiency against standards where they exist. In the absence of specific federal standards, consider adopting the strictest of state standards. For example, California has taken the lead in requiring lower vehicle-emission standards, an example all companies can follow when purchasing fleets or individual company cars.

• Be transparent. Greg Owsley, director of branding at New Belgium Beer in Fort Collins, Colo., says the company considered using the tag line, “We’re New Belgium and we pollute.” Although they ultimately decided against it, Owsley says, “We’re a manufacturer. We’ll never be the green nirvana that some companies tout themselves as being.” He adds, “The company that says ‘We’re all green’ is crazy! You should talk about your green practices instead.” For true understanding of your environmental impact, and transparency about it, engage in Ceres’ Global Reporting Initiative, a series of standards for reporting an organization’s “triple-bottom-line” results. (See www.ceres.org.)

• Spread the word. If you’ve come up with an environmentally friendly innovation, share it with consumers, stakeholders, even competitors. For instance, last year Timberland created what it calls “The Green Index,” which spells out the amount of energy consumed to manufacture a particular shoe, whether manufacturing it produced any chemical or waste products, and other green measures. Timberland is sharing the concept with its competitors in an effort to set a transparency standard for the footwear industry, says Porter Novelli’s Zucker.