You can hardly turn on the television or open a newspaper without witnessing a company's advertisements featuring its "green" or "sustainable" products or business practices.
In response to rapidly growing demand from consumers, the market for these products tripled between 2007 and 2008 with Nielsen predicting a marketplace of more than $400 billion in 2010.
But what do companies mean when they claim a green product or sustainable business practice? A range of interpretations exist, but the majority feature these ideas:
• Green products are both environmentally and socially responsible and can often be described as follows: organically grown, locally sourced, carbon-neutral, recycled/recyclable, and/or energy-efficient. A variety of sources show that consumers perceive consumer goods manufacturers such as Seventh Generation, which makes cleaning products from natural ingredients, and Toyota, with the Prius and its commitment to environmental management, as some of the world's greenest companies.
• Sustainable business practice can include organizations that produce green products and services but more broadly, it requires a corporate focus on long-term benefits for the environment, community, and society. Sustainable companies also pursue the "triple bottom line" of people, planet, and profits. Wal-Mart and Whirlpool, with their efforts to "green" their entire supply chains and introduce eco-friendly products to the masses, represent two companies dedicated to sustainable development. Some researchers also cite products linked to a cause, such as the Product Red suite, whereby companies donate proceeds to fighting AIDS in Africa.
Due in large part to rapidly shifting consumer attitudes and increasing enthusiasm for green products, companies ranging from Honda to Clorox brought nearly 6,000 "green" products to market in 2007 alone. However, this proliferation of products during a global recession has led consumers to become very discerning regarding the legitimacy of companies' green claims. The cynicism is justified, as often terms like green and sustainable are used to describe a variety of practices ranging from "greenwashing" to reputation-management to customer-focused, holistic sustainable business practice.
As more companies make green claims, government and consumer scrutiny of these claims also increases. Many groups now watch out for greenwashing, a practice whereby companies lead consumers to think that their products are more environmentally friendly than they actually are. Clairol received considerable scrutiny in the early 2000s for claims that its Herbal Essences line offered "a truly organic experience," when in fact, the formula included many chemicals. More recently, Kmart and other chains have provoked criticisms for false claims of biodegradable paper goods.
Companies working to improve their reputation in the area of sustainability attempt to offset or neutralize the effects of their businesses without concerning themselves with influencing consumer behavior or the behavior of partners in their supply chain. Enterprise Rent-a-Car, for example, has independently committed to building 50 million trees over the next 50 years to more than offset the emissions from its vehicles.
However, the most interesting examples of greening and sustainability tend to be where companies actively involve their customers in sustainable business practice. These companies are most likely to improve their own profitability and succeed in tangibly benefiting their communities through improved consumer behavior. A few examples of companies leading the pack follow.
Whole Foods won the 2009 Green Choice award from Natural Health magazine due to its commitment to substantive, earth-friendly initiatives that inspire its suppliers, competitors, and customers to follow suit.
• After banning plastic bags from its stores in early 2008, the company recently announced that three times as many customers now shop with reusable bags. Furthermore, it estimates that this shift has kept 150 million bags out of landfills since 2008. COO A.C. Gallo states, "At first we wondered if shoppers would just switch to paper but to our great surprise, people have been truly excited about using reusable bags."
Fairmont Hotels and Resorts was the first global hotel to launch an environmental management program back in 1990. Since then, its commitment to sustainability has touched its partners, guests, and the broader business community.
• By 2010, the company's largest suppliers will comply with its Green Procurement Policy.
• The company has sold tens of thousands of copies of its Green Partnership Guide, a "going green" handbook for companies across industries.
• Guests worldwide pay a premium to contribute to the company's environmental initiatives, which include Lexus Hybrid Living Suites and Travel Green packages:
Finally, retail giant Wal-Mart has committed itself to improving sustainability across every facet of its business, extending this goal from suppliers to stores to consumers. The trump card with consumers, not surprisingly, continues to be everyday low prices even within its green product lines. Evidence that collaboration with consumers is working:
• 66% higher adoption rate of green products (including compact fluorescent bulbs, organic foods, and paper products made with recycled material) among its shoppers between April 2007 to April 2008
• Increased mainstream acceptance and purchase of Clorox Green Works natural cleaning products and Fair Trade coffee
Corporate practices in green and sustainable initiatives are still in an embryonic stage, making it difficult to offer a prescription for those companies who have yet to start walking. Perhaps you have come across some initiatives that have impressed you or made you change your own behavior.
Care to share them with the readers of this blog? Please do, we can learn together.
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