Green marketing

DEFINITION: The touting of the environmental benefits of a product, service, or company to bolster its image and encourage sales

As the environmental awareness of the general population has grown, companies have increasingly used production methods, product ingredients, and corporate policies to appeal to environmentally concerned consumers. Although some green marketing efforts have effected positive change, the lack of “green standards” has left this marketing approach subject to consumer confusion as well as corporate abuse in the form of greenwashing.

The term “green marketing” first arose in the 1970s during a period of increasing environmental awareness among consumers. New companies formed that emphasized environmentally friendly products, and existing corporations began to give more consideration to environmental issues, partly because of new governmental regulations but also because suddenly “being green” appeared to promise economic benefits. Corporations discovered that they could create loyal customer bases by exceeding regulatory compliance and becoming environmentally proactive. Whether businesses made ecologically friendly choices out of a sense of social responsibility or because they were forced to do so by environmental regulations, they found they could then use those choices as a means to appeal to consumers who were seeking to make healthy choices and reduce their impact on the planet.

Broadly defined, green marketing encompasses a wide variety of corporate practices, activities, and choices. In its simplest, most easily recognized form, it involves promoting or advertising a product that features an easily recognized environment-related attribute—for example, a toothbrush manufactured from recycled plastic yogurt cups, an energy-saving lightbulb, a plastic bag, or pesticide-free produce. Green marketing is also used to promote product modifications that benefit the environment, such as the reformulation of a hairspray to eliminate chemicals that damage the or contribute to greenhouse gas emissions. Reducing or otherwise changing packaging; altering a production process to minimize waste, consume fewer resources, or reduce dependence on hazardous and toxic raw materials; purchasing components from a local manufacturer rather than having them shipped from a source overseas—these and other corporate decisions that determine a company’s overall environmental impact can serve as fodder for a green marketing campaign.

Environmental Responsibility and Profitability

Green marketing represents a challenge to the traditional view that an inherent conflict exists between economic profits and environmental quality. By “going green,” companies can make profits while producing environmentally friendly products, or increase profits by changing production processes to use less energy or material, produce less pollution, or find new uses for onetime waste products. Corporate consideration of environmental consequences can increase efficiency and profitability by forcing executives to rethink normal operating procedures. For example, at the Atlantic Richfield Company’s Los Angeles oil refinery, a series of relatively low-cost changes during the 1980s reduced waste volume by 8,600 tons per year. Because disposal costs were about $300 per ton, the company saved more than $2 million each year in disposal costs alone. Atlantic Richfield also found markets for much of its former waste—it began selling spent alumina catalyst to chemical companies, spent silica catalyst to cement makers, and alkaline carbonate sludge to a nearby sulfuric acid plant.

There are countless other examples of corporate changes benefiting both profitability and environmental quality. The Pollution Prevention Pays (3P) program created by the giant 3M Company is the project perhaps most often cited. Initiated in 1975 by two environmental engineers and a communications specialist, the groundbreaking, company-wide program cut 3M’s generated by 50 percent. By 2009, 3P had saved the company more than $1.2 billion and prevented more than 2.9 billion pounds of pollutants at the source. In addition to the savings, programs such as 3P benefit the public images of the corporations that implement them.

For some companies, green marketing is inextricably linked with corporate image; examples are Ben & Jerry’s, the Body Shop, and Tom’s of Maine, all of which were founded during the 1970s. These companies pioneered the concept of socially responsible, profitable business, and among their corporate values is the importance of minimizing environmental impact. Smaller firms are generally perceived as being “greener” and more socially responsible than huge multinational corporations, so some consumer confusion and alienation arose when during the early twenty-first century these companies were purchased by multinational giants—Ben & Jerry’s by Unilever, the Body Shop by L’Oréal/Nestlé, and Tom’s of Maine by Colgate-Palmolive.

While businesses may choose to be environmentally responsible without promoting that fact, many major corporations have come to consider their environmental efforts to be an important public relations tool. Market research has indicated that roughly one-half of the consumers in the United States and other industrialized nations are willing to pay a premium for environmentally friendly products. Even among those unwilling to pay higher prices, environmental attributes serve as a tiebreaker between competing brands, thus serving as a potential impetus for brand loyalty and product differentiation.

Not all publicized “greening” efforts result in corporate profits. For example, during the late 1980s, McDonald’s restaurants received widespread criticism for using polystyrene foam packaging for its sandwiches. As public pressure increased, McDonald’s signed an agreement with the Environmental Defense Fund, which provided technical assistance in improving the company’s environmental performance. Through these efforts, McDonald’s switched to paper and cardboard packaging and made other adjustments to reduce its environmental impacts. These changes, which were highly publicized, ultimately did not alter McDonald’s market position relative to its major competitors, and none of the competitors experienced enough economic pressure to respond with programs to match that of McDonald’s.

Other businesses have benefited from genuine efforts to serve as good corporate neighbors. Green marketing can indeed sway consumers to purchase a company's products and to market a positive brand. These efforts can entice investment and strengthen customer and employee loyalty. The multinational Starbucks Corporation is routinely cited for these types of positive initiatives. These range from ethical sourcing of products, tuition assistance, and employment programs for military veterans.

Product Labeling

During the 1980s, many companies began using product labels that touted the environmental friendliness of the contents and packaging. Many of these claims were dubious at best, however. For example, soon after dolphin-safe tuna became available, Greenpeace reported that some of the tuna being sold under this claim had been taken in the traditional manner, with no attempts made to prevent dolphins from dying in the nets.

The actual environmental impacts of products can be evaluated, and such evaluation can serve as a basis for product certification. In the European Union and Canada, government performs this function. In the United States, two organizations—Scientific Certification Systems and Green Seal—systematically evaluate the environmental impact of products from production to disposal. In 1992, the Environmental Protection Agency and the Department of Energy created the Energy Star labeling program, which allows producers of electric appliances from light bulbs to computers to dishwashers to place the Energy Star service mark on their products if they meet certain standards of energy efficiency. This program has since been adopted by a number of other countries, including Japan and the European Union.

In 1992, the Federal Trade Commission (FTC) introduced guidelines governing the circumstances under which terms such as “biodegradable,” “recyclable,” and “ozone-safe” can be used in advertising in the United States. Firms that cannot substantiate their environmental claims are not allowed to use these terms in their advertising. Firms are also cautioned against making sweeping claims like "environmentally friendly" that are difficult to substantiate. A 2012 revision of the FTC's "Green Guides" for marketers added sections on certifications and seals of approval, carbon offsets, nontoxic claims, and "made with renewable materials" claims, among other items.

Problems

The unethical practice of making exaggerated or false environmental claims to promote a product or business is known as greenwashing. That term is also sometimes applied to legitimate, environmentally beneficial actions taken by corporations that have flawed environmental records or reputations. The cynical consumer response of suspecting corporations of greenwashing has led some companies to practice what Joel Makower, author of The Green Consumer (1990), has dubbed “covert environmentalism,” in which they shun green marketing to avoid having their environmentally responsible actions attacked and their motives questioned.

An example of dubious corporate practices emerged in April 2022, when the Federal Trade Commission levied record civil penalties on Kohl's and Walmart. Both corporations were alleged to have made false claims about products advertised as being made from bamboo. These items were instead composed of rayon. Kohl's was fined $2.5 million, while Walmart was assessed with a $3 million penalty.

Although green marketing has grown in acceptance and prevalence in the decades since its inception, it remains problematic. Consumer concern reflected in market research surveys does not always translate to significant changes in purchasing and consumption habits. Not all consumers are willing or able to pay a premium for green products. Many are mistrustful of or confused by manufacturers’ claims, and the challenge of actually determining the environmental impact of one good in comparison with another is considerable. In addition, the environmentally educated consumer is more likely to be overwhelmed by conflicting goals. Is it better for the environment, for example, for a meat eater to select grass-fed beef over feedlot-produced meats when grass-fed cattle are known to produce more of the greenhouse gas methane? Ultimately, if an eco-friendly product or service requires consumers to sacrifice too much in terms of price, quality, convenience, or availability, the majority will decide against purchasing it.

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