BUS 250 wk 3 Disc. 2 replies (DO NOT CHANGE THE PRICE) IF YOU DO I WILL NOT SEND A HANDSHAKE.

8 Green Marketing and Greenwashing Jupiterimages/Creatas/Thinkstock Learning Objectives After reading this chapter, you should be able to:1. Explain the concept and differ ent types of greenwashing.

2. Discuss how gr eenwashing creates barriers to CSR and sustainability.

3. Summarize the wa ys that companies, industries, and stakeholders can prevent greenwashing.

2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.1 Greenwashing: An Overview Pretest Questions 1. Gr eenwashing refers to sustainability and CSR efforts in the household consumer products category. T/F 2.

The Gr een Guide helps consumers identify the best places to buy environmentally friendly products. T/F 3.

E co-labeling is a voluntary environmental performance certification. T/F Answers can be found at the end of the chapter. Introduction Chapter 7 discussed how governments enact laws to help eliminate bias and discrimination— CSR, sustainability, and organizations thrive when employees can safely exercise their talent and creativity. One way to improve CSR and sustainability is to comply with all laws; another way is to enact policies that go beyond compliance. As more firms see the value of CSR (espe- cially beyond mere compliance), and as more stakeholders reward firms with strong CSR pro- files, many firm leaders work to get consumers to pay attention to their organization’s CSR efforts. Stakeholders typically rely on advertisements and company claims to decide whether a firm or product embodies CSR and sustainability principles. This chapter addresses green- washing, or cases in which firms overreach, overstate, or even outright mislead stakeholders about their sustainability and CSR efforts. Greenwashing represents a major threat to the suc- cess of CSR and sustainability, as fraudulent and misleading CSR claims often receive negative publicity. Currently, there is no legislation or single enforcement body to protect stakeholders from greenwashing; the only protection is awareness and stakeholder activism. This chapter introduces multiple types of greenwashing, in part so that future leaders can identify these inside and outside of firms. The chapter also discusses how associations, eco-labeling, and stakeholder activism help protect everyone from greenwashing’s negative effects. 8.1 Greenwashing: An Overview The term greenwashing is a play on whitewashing , which refers to using bright white paint to gloss over or cover something up—usually something bad such as a vice, crime, or scandal.

Whitewashing can also refer to when a person or entity is exonerated after a superficial inves - tigation or by using biased data. The relationship between whitewashing and greenwash- ing significantly overlaps and is largely a play on words; the only difference is the fact that green refers to claims regarding the environment. Thus, greenwashing refers to covering up environmentally problematic practices or making unsubstantiated claims about positive impacts—or some mixture of the two. Note that the term is also used when critics feel that a superficial investigation led to an environmental (or other kind of ) claim. The Swiffer contro- versy, discussed in detail below, more closely relates to this second definition.

Many people are familiar with the household cleaning product Swiffer, which is manufactured and sold by P&G. Created as an alternative to the standard mop, the Swiffer is shaped like a \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.1 Greenwashing: An Overview mop but uses disposable pads that attach to the head of the device. In 2007 Gianfranco Zaccai, president and CEO of the design firm that created Swiffer, wrote a column in BusinessWeek in which he claimed the device was environmentally friendly because it could prevent millions of homes from wasting hot water and dumping detergent down drains, as they would other- wise do with a traditional mop (Fehrenbacher, 2007). Almost immediately after the article was published, however, there was an intense outcry against Zaccai’s claims. Opponents said that the Swiffer was not an example of sustainable design and that such a claim was based on faulty information and erroneous thinking.

Those who called greenwashing on Swiffer attacked the “disposable, plastic-wrapped, chem - ical-soaked pieces of paper that go straight from your floor to landfill, where the chemicals leach into the ground” and argued that “the Swiffer requires continual purchase of toxic chemical sheets that wind up in a landfill” (Fehrenbacher, 2007, para 3). Critics also sug- gested that not all people heat mop water, and thus the Swiffer did not necessarily replace or prevent heated water from being used. Furthermore, critics claimed that extracting petro- leum products to create plastic Swiffers, the plastic sprayers that accompany some models, and the boxes for the disposable pads has a more negative impact on the environment than heating or using water for standard mopping (Van der Meer, 2007).

The ongoing debate about Swiffer illustrates the concept of greenwashing. The next section covers green marketing and the main types of greenwashing.

Green Marketing As discussed, greenwashing refers to false environmental advertising, and the practice has garnered significant attention from the media and legal and regulatory entities. Greenwash- ing remains difficult and somewhat subjective to prove. In part this is because it is difficult to ascertain a company’s motives or pinpoint exactly when a company changed behaviors; it is also difficult to evaluate proprietary data. In many cases time and the consistency with which the accused firm maintains or increases environmentally friendly practices can indi- cate whether a decision or behavior was greenwashing. That said, leaders and consumers should avoid greenwashing and would benefit from asking some basic questions to detect its presence.

However, greenwashing should not discourage manufacturers and marketers from pursuing the commercial opportunities inherent in green marketing. Green marketing is the act of describing and publicizing an organization’s environmental and social activities, efforts, and results. When green marketing is steeped in truth, it strengthens the case for CSR and sustain- ability and can encourage new types of consumers to adopt a product. Greenwashing should not discourage accurate green marketing; rather, it should enable marketers and consumers to be more discerning and honest about their environmental activities. In fact, knowing how the public is primed and ready to protect consumers should encourage marketers to improve their claims so that (a) truly greener products succeed, (b) competitive pressure from ille - gitimate green claims is diminished, (c) consumers do not become jaded and cynical about all claims, and (d) marketers engender an honest and open dialogue with consumers (Terra- Choice, 2010). Later in this chapter, we discuss strategies that companies and industries can use to pursue green marketing but avoid greenwashing. \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.1 Greenwashing: An Overview Types of Greenwashing TerraChoice Environmental Marketing Incorporated, now known as Underwriters Labora- tories, was the first independent organization to investigate how green marketing gave rise to greenwashing. In 2007 TerraChoice surveyed six major retailers and identified 1,108 con- sumer products bearing 1,753 environmental claims. The company found that all but one retailer made claims that were demonstrably false or risked misleading audiences. Instead of simply listing the problems it found, however, the organization identified patterns in the marketing claims. TerraChoice called these the Six Sins of Greenwashing (TerraChoice, 2010).

Since the organization’s first report on the issue, the list has been republished (in 2010 and 2012) and now includes seven types of greenwashing. Other researchers have added three more. All types are described in the following sections.

Hidden Tradeoffs TerraChoice calls the first type of greenwashing the hidden tradeoff. This occurs when an organization uses narrow attributes to suggest a product is green without considering or mentioning other environmental concerns related to the product’s other attributes (Terra- Choice, 2010). Such claims are not usually false, but they can make an item seem greener than a complete analysis would actually support. An example would be a paper product that features recycled content, when in reality the recycled material is present only in small quan- tities or is advertised without equal attention paid to manufacturing or harvesting impacts such as air emissions, water emissions, or transport and global warming impacts. Another example of a hidden tradeoff would be office technology such as a printer. A marketer might promote a printer’s energy efficiency without considering or mentioning related hazardous material content, degradation of indoor air quality, or compatibility with recycled or reman- ufactured cartridges. In TerraChoice’s original study, this hidden tradeoff problem was the most common sin and was present in 57% of all environmental claims (TerraChoice, 2010). If consumers trust the claims of marketers who commit this sin, they might purchase a product believing it benefits the environment more than it actually does.

No Proof Having no proof occurs when an environmental claim is not supported by available infor- mation or when it comes from biased sources. Shampoos and conditioners are examples of products that often fall victim to this sin. Marketers of these common personal products may claim the manufacturer does not participate in animal testing, but marketers either do not or cannot provide evidence to support such claims. Additionally, when this type of greenwashing occurs, marketers do not provide information about where interested parties might obtain such information.

Vagueness Vagueness occurs when a claim is described so obscurely it becomes difficult or impossible for consumers to understand. The original TerraChoice report found recurring incidences of products and services that were marketed with vague claims, such as “chemical free,” “non- toxic,” “all natural,” “recyclable,” “eco-friendly,” “earth friendly,” “green,” “low energy,” and “recycled content.” \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.1 Greenwashing: An Overview The problem with these phrases is that they are not specific; thus, they can mislead or inappropriately entice consumers. Consider that nothing is totally free of chemicals— even water is a chemical! Moreover, every - thing is toxic in sufficient doses. In addition, harmful substances such as arsenic, ura- nium, mercury, and formaldehyde are all naturally occurring—these could therefore be called “natural,” though none would fit the definition of natural that most consum- ers expect. Thus, products must clarify their green claims with detail. For example, con- sider how the phrase sulfate free is more detailed and specific than nontoxic. Such detail allows consumers to make informed choices and avoid being misled. Consider when a product such as wax paper for a household kitchen claims to have “recycled content”—but no quantity of such content is mentioned.

Consumers should ask: “How much of the content is recycled?” “Does something as small as 0.1% deserve to count?” “Does such a number justify making this claim?” Finally, this problem occurs when companies make claims about being green but provide no supporting data or act in ways that contradict each other.

False Labels False labeling occurs when a claim, communicated through words or images, gives the impression that a third party has endorsed or verified the product, when in actuality no such endorsement exists. The most common case of this occurs when marketers put graph- ics on packaging that look like a special label, endorsement, or approval but are actually meaningless. False labels can often be found on shelf-stable foods and cosmetics; they may make it appear as though an outside agency has rated the product as “all natural” or “chemi- cal free,” but no follow-up information or data on the rating agency or award is included on the package.

Irrelevance Irrelevance occurs when a company makes an environmental claim that may be truthful but is not important or relevant to consumers. The claim may be interesting and compelling, but its irrelevance can distract consumers from selecting a product that might be a greener choice.

A common example is found in products such as insecticides, shaving gels, window cleaners, and oven cleaners that are labeled as free of CFCs, which contribute to ozone depletion. This claim is duplicitous because CFCs have been banned for more than 35 years, so products are no longer allowed to be manufactured with this compound. Thus, when companies tout the fact that their products are free of CFCs, they are essentially emphasizing that they are follow - ing the law; such claims are an attempt by these companies to make themselves seem virtu- ous for doing what they are legally required to do. Claims like these are true but irrelevant and are designed to impress a relatively uninformed consumer. Rich Pedroncelli/AP A vague label that does not provide the amount of recycled content in the product can confuse and mislead consumers.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.1 Greenwashing: An Overview The Lesser of Two Evils This marketing tactic is when firms make claims that may be true within the product category, but such claims distract consumers from the greater environmental impact of the category as a whole. Examples of this behavior include touting the virtue of having an “organic” ciga- rette, or selling a “green” insecticide or herbicide for purposes other than growing food. These products might be “greener” alternatives, but they are still harmful to humans and animals.

Fibbing Fibbing or outright lying represents the least prevalent type of greenwashing. It occurs when firms make overtly false environmental claims. Most cases of this behavior relate to misuse or misrepresentation of certification by an independent authority, such as when a shampoo claims to be “certified organic” but researchers can find no evidence of such certification. This problem represents a combination of greenwashing types, as it represents both vagueness and false labels.

Additional Types of Greenwashing As a follow-up to the original greenwashing classifications, author Ed Gillespie identified 10 signs of greenwashing that are similar to the types T erraChoice identified but include three additional indicators. These involve marketers using images in a misleading way (which is different from using labels in a misleading way); making outrageous claims (related to the lesser of two evils problem described earlier); and using jargon to confuse stakeholders. Gil- lespie (2008) describes the three additional problems like so:

Suggesti ve pictures: when marketers use images that suggest a baseless green impact, such as flowers coming from a car’s exhaust pipe or flowers coming from the spray of a toxic household cleaner 2.

Lo w credibility: when marketers make unsupported claims that dangerous products such as cigarettes or some cleaning products have green qualities 3.

Gobbled ygook: when marketers use words or phrases that are difficult for people to understand Examples of Greenwashing In an article titled “Little Green Lies—How Companies Erect an Eco-Facade,” author Eric Hagerman describes companies that have committed one or more acts of greenwashing. He discusses how the cable operator Comcast launched its push for paperless billing with the slogan “PaperLESSisMORE.” However, the company failed to follow its own policy by continu- ing to send prospective customers paper brochures and fliers—which undermined its claim that the company cared about not wasting paper (Hagerman, 2008). This problem relates to vagueness and offering no proof.

Hagerman (2008) also noted that Poland Spring’s slogan suggests that drinking bottled water is natural and beneficial. However, it distracts from the fact that 8 out of 10 empty water bottles end up in landfill, and producing and shipping the 32 billion liters of water sold every \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.1 Greenwashing: An Overview year in the United States requires 17 million barrels of oil. The Poland Spring case is an exam- ple of failing to emphasize the hidden tradeoff and the lesser of two (or more) evils.

Another group frequently accused of green- washing is diaper manufacturers. For exam- ple, Kimberly–Clark sells what it claims are “pure and natural” diapers in green packag- ing. The product uses organic cotton on the outside but retains the same petrochemical gel on the inside as regular diapers (Hager- man, 2008). The most environmentally problematic part of any diaper comes from that gel, as it is a petroleum product that does not biodegrade (or naturally break down) in landfills. Similarly, Pampers, owned by P&G, claimed that its Dry Max diapers reduce landfill waste because of the reduced amount of paper fluff in the diaper. However, the dia- per still used a plastic shell, which does not biodegrade. Furthermore, the company tried to market the diaper as beneficial to consumers because it reduces landfill space, but in reality the product benefited the company, which saved money on materials, shipping, and manufac- turing the revamped diaper (Hagerman, 2008). Here the greenwashing technique the com- pany employed relates to fibbing and irrelevance.

Food products also tend to feature greenwashing. Many food companies market their prod - ucts as “natural,” “wholesome,” or “all natural.” Tyson Foods was accused of greenwashing when it labeled its chicken “all natural” and “raised without antibiotics,” despite the fact that its chickens were treated with antibiotics and fed genetically modified corn. Reports indicate that Tyson injected the chickens with antibiotics before they hatched, in order to claim that they were “raised without antibiotics” (Gutierrez, 2008). This example reflects fibbing, irrel- evance, hidden tradeoffs, and vagueness.

CSR and sustainability advocates often discuss various issues related to food manufactur- ers, in that food security, food availability, and nutrition relate to resource use (water, seeds, clear-cutting forests for farms and cattle, and so on). Furthermore, some people feel that food corporations that use fillers, artificial sweeteners, and other controversial ingredients have the opportunity to improve CSR by increasing or decreasing the health of their products.

Relatedly, the soft drink industry has a long history of clashing with environmental activists. In 2014 PepsiCo introduced a new mid-calorie soda called Pepsi True. Coca-Cola launched a similar product called Coca-Cola Life. Both products come in a green can to help promote the image that the product is a healthy alternative to full-calorie sodas. Both have about 60 calo- ries and are sweetened with a mixture of sugar and stevia. Critics suggest that reducing to 10 teaspoons of sugar in a 600-milliliter bottle makes little difference in terms of health impacts (Han, 2015). Furthermore, the main environmental issue with producing soda drinks is the amount of water used in the manufacturing process, as the water used along with flavoring is not the only water involved in the process. Factory floors are washed down, all products AP Photo/David Goldman The claim that certain diapers are “pure and natural” can be deceiving if they use a manu- factured petrochemical gel.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.2 Remedies to Greenwashing are washed and rinsed, and water is used to cool factory machines and grow ingredients such as sugar and corn (for syrup). As much as 132 gallons of water can go into making a 2-liter bottle of soda (Alter, 2009). Thus, the related greenwashing concerns include irrelevance, false claims, and hidden tradeoffs.

In sum, the fact that beverage companies attempt to market soda drinks and other beverages as good for health or the environment has caused a large number of organizations to call out these firms for greenwashing. 8.2 Remedies to Greenwashing The argument against greenwashing suggests it is bad for the environment because false and unsubstantiated claims (when acted upon) can encourage consumers to do the opposite of what is good for the environment. When people purchase a product or develop a habit based on unsupported or false claims, they could end up hurting the environment. At the very least, this practice leads to corporate sales that stem from duping and fooling consumers. At its worst, it degrades the planet, as harmful products disguised as “good” get used and discarded.

According to a report published by TerraChoice (2010), there are at least three problems with greenwashing. First, well-intentioned consumers, misled into making purchases that do not deliver on claims, squander the potential to protect or benefit the environment. Second, com- petition from loud, convincing, but illegitimate environmental claims steal market share from legitimate products that offer viable benefits, thus slowing the growth of real environmental innovation in the marketplace. Third, greenwashing may create confusion and cynicism about claims from all vendors (even ones not engaged in greenwashing). This can lower consumer- driven progress to improve the environment and rob vendors of the financial incentive to create truly green products. According to TerraChoice, such an outcome causes committed environmental advocates to think that government regulation is the most likely way to create change (TerraChoice, 2010). The next sections expand on this and other remedies to green- washing, including how consumers can avoid products that have been greenwashed.

Consumer Activism Consumers ultimately drive the behavior of firms and marketers, because firms react to how consumers spend money. Consumer choice—demonstrated through spending—essentially rewards certain companies while denying competitors the profits from a purchase. Consumer purchasing behavior sends a strong message; when consumers show an interest in increased health, safety, and community engagement from the companies and brands they patronize, sustainability goals become corporate goals. Through their purchases (or lack thereof ), con- sumers can incentivize businesses to stop greenwashing. When consumers punish offenders by choosing a different product and leaving the offending one on the shelf, manufacturers may improve their products or change untrustworthy behaviors.

Until companies automatically and consistently make sustainable and socially responsible choices, consumers have a responsibility to protect themselves; they also have an oppor - tunity to impact corporate behavior. To proactively protect themselves from greenwashed \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.2 Remedies to Greenwashing claims, consumers can become aware of the most frequently used greenwashing tactics and ask certain questions about the products and claims that surround them. These include:

• Is the green claim focused on one or a small set of environmental concerns?

• Does the claim help consumers find more information or evidence?

• Is the environmental and scientific meaning of the claim specific and self-evident?

• Could the same claim be made by all of the other products in this category?

• Is the claim or outside support or award verifiable, or is it implied in the imagery?

• Does the product category have questionable environmental benefits? (Bloch, 2012).

Not all consumers will take the time to ask each of these questions about every purchase, but consumers who make themselves aware of the issues and protect their interests will be in a position of greater power. Informed consumers are less likely to be duped by attempts to greenwash products and services.

Underwriters Laboratories continues to investigate the state of greenwashing. Its most recent report suggests that consumers are helping improve the green product industry. There is an increase in the number of green products, less greenwashing than in the past, and evidence that companies and retailers are changing (TerraChoice, 2010). These findings suggest that consumer-driven efforts and demands are beginning to make a difference in corporations’ environmental sustainability and responsibility practices. But aside from the powerful force of market behaviors—such as buying or not buying products—what other options do con- sumers and corporate activists have?

Antigreenwashing Activism One way stakeholders can stimulate corporations to change their behavior is to collaborate with other stakeholders. Some watchdog groups and activists want to see legal action taken against companies that engage in misleading advertising. Indeed, the Federal Trade Commis - sion (FTC) has the ability to prosecute false and misleading advertising claims, and with this in mind it created the Green Guide.

Green Guide In 1992 the FTC issued its first Green Guide aimed at fighting greenwashing in public adver - tising and other areas (O’Connor, 2014). This guide was overhauled and relaunched in 2012 (Neff, 2012) and continues to serve as a viable tool for marketers, activists, and consumers.

The updated guide regards use of the words green and eco-friendly in advertising as overly broad and general unless they are qualified with specific and verifiable claims. Thus, advertis - ers must be aware of the rules and be specific with their advertising as they seek to comply with such standards.

The Green Guide also states the following:

Mar keters must verify claims before claiming an item to be “recyclable” if recycling facilities are not available to at least 60% of the U.S. population.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.2 Remedies to Greenwashing 2. Pr oducts should not claim “made with renewable energy” unless all or the majority of the manufacturing processes were powered with renewable energy. The claim can also be made if the company purchased renewable energy certificates.

Companies should not mak e environmental claims that do not make a significant impact.

Substantiat ed claims (such as “uses less plastic than before”) should be verified by at least completing a partial life cycle assessment to prove the claim (Neff, 2012).

Despite these standards, corporate compliance with FTC guidelines remains voluntary and cannot be enforced in courts. However, due to the rise of Internet communication and consum- ers’ use of social media, upset stakeholders can call out advertisers for greenwashing without taking them to court. One example of how consumer communities have come together for this purpose is the creation of the Greenwashing Index. The Greenwashing Index The Greenwashing Index is a list compiled by a watchdog group that works to publicly iden - tify and encourage organizations to alter misleading claims and practices. The creators and managers of the Greenwashing Index belong to the University of Oregon School of Journal- ism and Communication and/or work for the EnviroMedia Social Marketing group. The index attempts to educate and aggregate readers in rating and commenting on ads that may mislead consumers (Greenwashing Index, 2016). It encourages consumers to investigate and report ads with misleading words and visuals, claims that are vague or unprovable, or exaggerations about the extent of a product or company’s green attribute. These criteria are based on the list of greenwashing types discussed earlier; respondents rate advertisers on whether they use one or more of the techniques. Users give each advertisement an overall score and can add comments. A high score represents a very misleading company and is highly undesirable from an advertiser’s point of view (Greenwashing Index, 2016).

Tools like the Greenwashing Index have allowed stakeholders to become increasingly active and effective. Many attempts to impact advertisers and corporate leaders are direct and pub - lic. For example, consumers complain or applaud company behavior by leaving comments on company Facebook pages. They also tweet and retweet company actions. In this way, consum- ers engage in a direct relationship with companies and others via their online social network.

The Greenwash Academy Awards and Climate Greenwash In addition to using social media, consumers also occasionally employ marketing techniques to raise awareness of CSR and sustainability. For example, in 2002, during the World Sum- mit on Sustainable Development in Johannesburg, South Africa, the Greenwashing Academy hosted the tongue-in-cheek Greenwash Academy Awards. The ceremony awarded extractive companies such as BP and ExxonMobil, as well as the U.S. government, for elaborate green- washed advertisements. Also in 2009, prior to the World Business Summit on Climate Change, the organization known as Climate Greenwash attempted to have consumers rate which com- pany in the extractive (oil and gas) industry made the most inaccurate green claim. (Climate Greenwash Awards 2009, n.d.). These events are examples of stakeholders collaborating and using marketing tactics to pressure firms to change their behavior. As social media continues to evolve, companies may find additional ways to greenwash their products and messaging, \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.3 Company and Industry Responses to Greenwashed Claims but stakeholders will also find new ways to use media and activism to challenge firms that do so, or encourage and reward those that don’t. 8.3 Company and Industry Responses to Greenwashed Claims Greenwashing can be detrimental to firms if and when consumers learn they have been duped—the ensuing outrage, loss of trust, and tarnished reputation can result in bad press, lowered stock prices, declines in sales, and the lost opportunity to innovate toward true sus- tainability. One way firm leaders can respond to consumer activism (or avoid it in the first place) is to join industry associations. Self-regulation at the firm or industry-association level also has the potential to mitigate greenwashing.

Industry Associations Industry associations are usually voluntary groupings of companies that have one or more products in the same consumer or manufacturing sector. Association members meet to uphold standards or advance an agenda for that specific industry. Good reasons to join industry asso - ciations include the desire to help shape policy, build awareness of what consumers and activ - ists want, efficiently exchange information between organizations, share expenses and risk related to innovation, and construct a more unified and significant force for change. However, some organizations may join for less noble reasons, such as to gain competitive information, create the appearance of caring, or benefit from the work of others without doing an equal share of work in return.

When voluntary associations require transparency, financial dues, and other investments from constituent firms, they actually build in practices that prevent greenwashing. In particu- lar, when industry organizations organize audits and verify member claims, member organi- zations gain credibility from belonging to such associations.

Industry associations also promote self-regulation. This occurs when companies decide to monitor themselves and engage in corrective actions before issues become public or stake- holders make specific demands that they change. In particular, several industry associations attempt to improve the image and practices of their member firms by actively promoting membership and meaningful change—essentially, the industry associations try to convince firms to change before consumers do. The Sustainability Consortium and the Sustainable Apparel Coalition (SAC) are examples of industry-wide voluntary membership organizations that specifically promote sustainability and CSR.

The Sustainability Consortium Some voluntary associations focus on topics that affect multiple industries. For example, the Sustainability Consortium is a global nonprofit organization with an ever-changing mem- bership base. It offers members access to industry-wide contacts and updates on scientific and technological advances that are industry relevant (Sustainability Consortium, 2015). It \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.3 Company and Industry Responses to Greenwashed Claims collects and disseminates CSR and sustainability-related information to a wide range of con- stituents—its goals relate to sustainability in general rather than one industry in particular.

Association members and partners include retailers, manufacturers, suppliers, service pro- viders, nongovernment organizations, civil society organizations, governmental agencies, and academics. When firms band together in an association, they are often more effective because their diversity of members can circulate different ideas, information, and incentives.

In addition, managers from member companies may find it easier to take advice from asso - ciation members than from other stakeholders—because association members are united in their knowledge of some aspect of the industry. Also, when associations seem to promote a CSR and sustainability agenda, outside stakeholders may leave individual companies alone and focus instead on the association. For example, people against the inhumane treatment of animals and workers in animal processing plants can focus on changing pork or chicken industry associations rather than isolating individual firms for corrective action.

The Sustainable Apparel Coalition The SAC is another voluntary organization, but it is more focused on a particular industry (apparel) than on a cause (general sustainability). Apparel firms have a long history of prob- lems related to labor issues, sourcing, and materials. Clothing manufacturing is typically outsourced to contract manufacturers in developing countries, which gives the retailer less control over the manufacturing process, treatment of employees, and management of raw materials and waste. To address these and other issues, the SAC appeals to apparel, footwear, and home textile producers.

The story of the SAC’s formation reveals how individuals, albeit very powerful ones, can move from suggesting change at a company level to instituting it at an industry level. The SAC was founded in 2010 after John Fleming, then chief merchandising officer at Walmart Corpora- tion, sent a letter to Yvon Chouinard, the founder of Patagonia. The letter suggested that they invite the chief executives of some of the world’s biggest clothing companies—people who were typically competitors—to join forces to create an index to measure products’ environmental impact. Chouinard agreed to the idea, and the organization was created; its membership now accounts for more than one third of the global apparel and footwear industry (Gunther, n.d.). In addition to Pata- gonia and Walmart, founding members include Nike, Target, Gap, H&M, Hanes, Tim- berland, Marks & Spencer, Levi Strauss, JCPenney, Esquel, Li & Fung, Otto Group, Kohl’s, the EPA, the EDF, and the nonprofit labor-rights group Verité (Gunther, n.d.).

The SAC’s success suggests that when par- ticipating organizations agree to measure sustainability performance and widely Ton Koene/picture-alliance/dpa/AP Images The Sustainable Apparel Coalition is an orga- nization that aims to make clothing producers adopt sustainable practices and improve cor- porate social responsibility.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.3 Company and Industry Responses to Greenwashed Claims share such data, the entire industry can address inefficiencies, resolve damaging practices, and achieve environmental and social transparency. One specific way the SAC accomplished these goals was by promoting the Higg Index, which it created to provide consumers with comparable, reliable, and detailed data on material usage and labor practices (Gunther, n.d.).

The Higg Index is still being altered and perfected so that firms and consumers will find it useful. Comparable and accurate data on labor practices, material costs, and environmental impacts is hard to gather and compare, both across and between products and companies.

Thus, member firms are using versions of the Higg Index in private and only sharing the find - ings within the SAC. Companies use the Higg Index internally to do self-assessments and to refine the index before it is unveiled to consumers. The SAC leadership hopes that working this way will encourage firms to attempt new behaviors without waiting for all efforts to be perfect and to participate without fear that consumers will use early data to punish them for mistakes (Gunther, n.d.).

Eco-labeling Eco-labeling represents another way firm managers can signal sustainability and CSR efforts to stakeholders. It also offers a way to respond to claims that firms are greenwashing. Recall that one type of greenwashing relates to mislabeling or misleading claims. Thus, the easiest response (or defense) is for firms to use certified labels to earn and keep consumer trust.

According to the Global Ecolabelling Network (Global Ecolabelling Network, 2016b), an ec o-label is a mark or insignia that identifies a product or service as having a proven positive environmental impact.

Eco-labeling relates more closely to a firm’s environmental performance. It helps consumers take into account environmental concerns when comparing products or services. Some labels quantify pollution or consumption factors, while others convey compliance with third-party standards such as ISO 14024.

ISO 14024 Different classes of labels correspond to specific labeling standards described and endorsed by the ISO. In contrast to vague green symbols or claim statements touted by advertisers, credible labels are based on life cycle considerations. They are awarded by an impartial third party and meet transparent environmental leadership criteria (Global Ecolabelling Network, 2016a).

In terms of eco-labels, ISO 14024 standards apply worldwide. They describe three types of labels (I, II, and III), each of which has increasing levels of specificity and difficulty to obtain.

The three types differ in strength and authority, yet the ISO identifies each as sharing a com- mon goal: To communicate verifiable and accurate information that is not misleading on environmental aspects of products and services, to encourage the demand for and supply of those products and services that cause less stress on the \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.3 Company and Industry Responses to Greenwashed Claims environment, thereby stimulating the potential for market-driven continuous environmental improvement. (Global Ecolabelling Network, 2016b) The value of certain labels tends to vary by industry or stakeholder group. A food manufac- turer may value one type, whereas a fabric manufacturer may value another—this is because one sells a product people ingest, while the other sells a product people only put against their skin. Yet another firm may not value any label unless consumers signal that they want such certifications. Thus, firm leaders may want to explore the options, which vary by cost, diffi- culty, and viability. Labels that exist in addition to the ISO labels are outlined in the following sections. Certified Natural In the cosmetics and beauty product category, one of the more common certifications is the certified natural seal. This label signifies that products use natural raw materials—which include plant oils, fats and waxes, herbal extracts, essential oils, and aromatic materials— from controlled sources. Appropriately verified by a third party, such a label assures consum- ers that they are not ingesting or applying artificial (nonbiologic) ingredients.

Energy Star In the U.S. consumer goods and electronics category, the Energy Star label reflects a go vernment-backed voluntary program to help individuals protect the environment by using energy efficiently. The EPA and the DOE created the label to indicate whether devices such as computers, kitchen appliances, buildings, and other products generally use 20% to 30% less energy than legally required by federal standards. The label indicates that a third party has veri - fied the item in question (which can range from a single electronic product to an entire building) actually con- sumes significantly less electricity than its non–Energy Star competitors. The label can also indicate whether the item was designed so its lifetime operating costs will be lower than its non–Energy Star competitors. The Energy Star label is the symbol for energy efficiency; it allows people to easily identify high-quality, energy-efficient products, homes, and commercial and industrial buildings. Fair Trade For some consumer goods (typically fabrics and handi- crafts) and some food items (typically chocolate, coffee, tea, and sugar), stakeholders value a different label. A fair trade certification signifies that a product is verifi - ably associated with fair trade practices, which involve a specific, market-based approach to addressing poverty Paul Sakuma/AP Images Energy Star labels can help con- sumers make informed decisions when they purchase energy- efficient pr oducts.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Section 8.3 Company and Industry Responses to Greenwashed Claims by improving lives and reducing environmental impact. It also involves paying higher and fair wages and to utilizing farming and harvesting practices that are safe for farmers and nurtur- ing to the environment. The fair trade label lets consumers know that a product was grown with the environment, farmers, and workers in mind. Trade standards and fair trade certifica - tion insist on safe working conditions, protecting the environment, and providing opportuni- ties to empower and improve worker communities.

Consumers often pay a premium for fair trade products, but the fair trade certification label lets consumers trust that the extra money they pay benefits farmer communities directly through higher and more fair wages. As with the other such labels, third parties perform audits and offer consulting services to any organization interested in obtaining the fair trade certification.

Chain of Custody Certification The Forest Stewardship Council (FSC) promotes the sustainable management of forests in ways that are environmentally appropriate, benefit society, and are economically feasible.

Regarding paper products or products with significant paper material content, the most applicable label certifies that the FSC verifies that the paper came from sustainably managed forests. More specifically, the FSC chain of custody certification signifies that the wood or paper used in the product or service has been tracked throughout its production and distri - bution process. Tracking verifies that raw materials are either recycled or come from forests where trees are actively managed for sustainable outcomes. The label verifies that the trees came from sustainably managed forests where companies monitor resource use, maintain native species, and avoid clear-cutting and other environmentally damaging harvesting prac- tices. Only FSC-certified operations are allowed to label products with the FSC trademarks (Ecolabel Index, 2016b).

Verifying Claims Previous sections explored how labels and certifications are one way to convey firms’ values and sustainable behaviors. Such labels vary in terms of related expense, relative ease of acqui- sition, and whether they actually apply to a particular product or service. It is important to mention that we have described just a few of the many possible eco-labels that exist to help firms and consumers signal CSR and sustainability goals. According to the Ecolabel Index organization, there are more than 400 eco-labels in more than 100 countries and 25 industry sectors (Ecolabel Index, 2016a). Interestingly, despite the variety in the number and type of label, one feature of eco-labeling unites all of them: the need for third-party verification.

To thwart or mitigate greenwashing—or accusations of it—firms can hire third-party organi- zations to verify claims or validate the use of certifications and labels that indicate credibility.

Alternately, some labels cannot be earned or utilized without third-party verification.

A robust and sizable industry exists to perform such validations, for a fee. For example, Underwriters Laboratories charges firms to use their particular methods to validate environ- mental claims such as “recycled content,” “regional materials,” “rapidly renewable content,” “recyclability,” “volatile organic compound content,” and “energy-efficiency” (Underwriters Laboratories, 2016). In addition, most of the major consulting firms, which have historically \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary focused on verifying corporate accounting reports, now offer third-party verification of envi- ronmental and sustainability-related reports. Chapter 9 focuses more specifically on sustain- ability reporting, what such reports entail, and what they look like once complete. Chapter 9 also addresses the practice of obtaining third-party verification in more detail. Apply Your Knowledge: Analyze a Company’s Green Marketing Program Select a company that participates in green marketing. Then complete the following: 1. Describe an y areas in which the company might be vulnerable to greenwashing claims based on its current behaviors. Provide suggestions to address these claims.

Discuss an y green opportunities the company is currently missing; describe how and why the company might engage in more green marketing .

T ake one or more of your ideas and describe how a watchdog group might fairly or unfairly accuse the company of greenwashing if it enacted your marketing suggestions. How can the accusations be avoided or defended against?

What ar e the current and long-term benefits the company could receive from green marketing? Chapter Summary Proponents of CSR and corporate sustainability are in a position to advertise positive firm behaviors or publicly criticize problematic ones. Some criticisms specifically relate to firms that make false or misleading claims about environmental benefits.

This chapter illustrated the concept of greenwashing and described different types. The point of discussing greenwashing in such detail is to help firm leaders realize its dangers and identify cases of greenwashing so they can guide firms toward actual sustainable behaviors.

Discussing greenwashing to this extent also helps consumers guard against being misled.

Finally, the social and political climate created by active watchdog groups and some govern - ment agencies incentivizes firm leaders to avoid greenwashing and take steps toward true sustainability.

Given how difficult it can be to determine when publicized efforts are genuine or greenwash- ing, leaders with honest intentions may be unfairly accused of greenwashing. This chapter dis - cussed some ways to protect against such accusations—namely, to use product-appropriate labels, obtain third-party verification, and/or work with industry associations to stay abreast of issues and options. Such methods also help companies and consumers take a more proac- tive and positive approach to monitoring both green marketing claims and greenwashing.

The positive press generated by viable and legitimate advances in sustainability may continue to create an environment in which firms are tempted to join the playing field. Thus, stakehold- ers may need to simultaneously scan for greenwashing while carefully elevating and high- lighting the positive and credible developments in sustainability that have been achieved.

\251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary Posttest 1. The FT C’s Green Guide says marketers can use the term recyclable about a particular product only if .

it cannot be put in a landfill b. it is made of certain mat erials c.

less than a certain amount of ener gy is required to manufacture it d.

f acilities for recycling it are available to at least 60% of the population 2.

Methods used t o falsely claim environmental benefit include all of the following EXCEPT .

hidden tr adeoffs b.

no pr oof c.

vagueness d.

transparency 3.

Suppose a compan y advertises its new product as “energy efficient” but hides the fact that it emits toxic chemicals into the air. What form of greenwashing is this?

v agueness b.

hidden tr adeoff c.

f alse labeling d.

irrelevance 4.

A ccording to Underwriters Laboratories, the modest reduction in greenwashed claims is a result of .

consumers demanding bett er information b.

go vernment mandates c.

court or ders and legal action d.

a mor e professional group of advertisers 5.

Which of the f ollowing is a trustworthy certification for environmental impact with high standards?

the Ener gy Star label b.

being r ecommended by Better Homes and Gardens c.

being labeled as a “gr een product” d.

being described as “or ganic” 6.

Which of the f ollowing is the LEAST effective way for industry associations to prevent greenwashing by their members?

conducting r egular audits to verify member companies’ claims b.

pr omoting self-regulation c.

sharing inf ormation and industry updates d.

r equiring transparency Answers: 1(d); 2(d); 3(b); 4(a); 5(a); 6(c) \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary Critical-Thinking Questions 1. Identify a compan y that is moving toward CSR and sustainability. How is the company marketing its efforts? What suggestions would you make to help the company avoid being accused of greenwashing?

Do y ou think certain industries are unfairly targeted for greenwashing? Why or why not?

What ar e other remedies to greenwashing? How would you inform others about green w ashing and its impact on stakeholders?

In vestigate what it takes to receive fair trade certification (ht tp://fairtradeusa.org ).

What do you think are some challenges to obtaining such certification? What chal- lenges might be faced by, say, a company that seeks certification for new noncoffee products?

Do y ou think consumers are ready to support fair trade products? Why or why not?

F air trade products mostly include coffee, chocolate, sugar, and some textiles/fabric goods. Do you think there is something different about these products that makes fair trade successful for them? What are some ways other products could benefit from fair trade methods?

Do y ou consider one greenwashing resource to be more or less impartial than another? Do you feel that the topic of greenwashing offers value to the CSR and sus- tainability debate? Why or why not?

Suppose a friend w ould like learn how to buy products (such as shampoo, food, and appliances) that have a positive impact on the environment. What suggestions would you offer to help her make informed decisions as she shops? Additional Resources For greenwashing updates, visit:

ht tp://greenwashingindex.com http://sinsofgreenwashing.com ht tp://w w w.stopgreenwash.org Learn more about companies that support fair trade policies and use fair trade certifica- tion here: ht tp://fairtradeusa.org Answers and Rejoinders to Chapter Pretest 1. F alse. Greenwashing refers to efforts (or claims about efforts) in essentially every product and service category.

F alse. The Green Guide is not for consumers; it tells manufacturers what to do (or not do) to create more environmentally sustainable and responsible products and services.

T rue. Labels, when they are endorsements from actual firms that use public criteria and are conferred by third parties, can be powerful evidence that CSR and sustainabil- ity behaviors are in place for a particular product or service. \251 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. Chapter Summary Rejoinders to Posttest 1. A t least 60% of the U.S. population has to have access to the relevant recycling facility for a product to be labeled and marketed as “recyclable.” 2.

T ransparency is not a method of greenwashing; it is a strategy companies can and should use to be more open and honest with their consumers.

This is an e xample of a hidden tradeoff, because the company is advertising its prod- uct as good for the environment because it uses less energy but hides the negative environmental effects of chemicals being released into the air.

Consumers ar e becoming increasingly aware of environmental issues and scrutinizing claims of benefit instead of accepting advertising at face value. 5.

Ener gy Star is a program that provides information on the energy consumption of a product over its lifetime. An Energy Star label means that the product uses 20% to 30% less energy than required by federal standards. 6.

Althoug h industry association members share information and industry updates, this is not a method for preventing greenwashing. Key Terms certified natural A label that signifies a product uses natural raw materials.

eco-label An international certification identifying products or services as compli- ant with environmental standards.

Energy Star A standard for energy-efficient consumer products.

fair trade certification Certification that verifies a product is manufactured using transparent processes, fair wages, and envi- ronmental preservation. green marketing Publicizing environmen- tal and social activities, efforts, and results.

greenwashing Deceptive marketing that presents confusing, misleading, or incorrect information to present it or its products as environmentally responsible.

industry associations Organizations that offer opportunities for companies to join together to enjoy more influence than any single company.