Greenwashing and Corporate Environmental Responsibility

Greenwashing is a form of marketing aimed at increasing a company's profits by deceptively portraying a company’s products and policies as environment friendly. Company expenditures focused on marketing rather than environmental action often indicates Greenwashing. Greenwashing takes many forms and ranges from changing the company’s logo or name to depicting environmentally hazardous material as eco-friendly.

A contrast between greenwashing and responsible environmental choices makes for a compelling study of professionalism.

Background Information

The contemporary environmental movement built momentum during the late 1960's as indicated by this by this Google n-gram of the word "environmental". These concerns did not fade. Surveys from the early 1990's reveal consumer concerns. 77 percent of people in one survey stated that a company’s environmental reputation affected their purchase decision and 84% of another considered corporate environmental crimes more serious than insider trading or price fixing. Public environmental concern holds fast today. Every April 22, People worldwide celebrate Earth Day.

Greenwashing capitalizes on public concern about the environment. Jerry Mander first referred to greenwashing as "ecopornography" in the 1970's. During this era, the anti-nuclear movement began and catalyzed greenwashing propaganda. The nuclear power division of Westinghouse ran advertisements which said “everywhere, extolling the anti-polluting virtues of atomic power” and “reliable, low-cost… neat, clean, safe” In the late 1960s to early 1970s, public utilities invested eight times more on marketing than on research to reduce environmental impact. In the year 1969 alone, the investment topped $300 billion, and this momentum continued into the 1970's. Disasters like Bhopal, Chernobyl, and Exxon Valdez in the 1980's catalyzed the environmental movement. In response, increasingly deceptive and sophisticated greenwashing became more prevalent.

Greenwashing Cases

Greenwashing takes many forms. For example, ARCO, an oil company, planted palm trees and created artificial waterfalls to conceal its Los Angeles facility. Dow Chemical, the largest producer of chlorine in the world, used a picture of the Earth to promote its ongoing “commitment” to the environment. Mitsubishi Corporation cleared 100 year old Canadian Aspen forests to produce six to eight million pair of disposable chopsticks a day and marketed them as “chopsticks that protect nature.”

BP

BP, formerly known as British Petroleum, is currently a leader of the world's oil and gas industry, operating in about 80 countries. BP has been known for marketing itself as pro-environmentalism since the early 2000s. However, its marketing and investments, both before and after Deepwater Horizon Oil Spill], have shown that the company largely does not live up to its claims.

Marketing

In 2000, BP launched a high-profile $200 million public relations campaign designed to portray the company as environmentally-friendly. The company introduced a new slogan, "Beyond Petroleum," and changed its 70-year-old shield logo to a cheerful yellow and green sunburst logo . The shape represents the sun and the colors represent heat, light, and nature. This company re-branding campaign was designed to highlight new initiatives to move "beyond petroleum," such as reducing the company's emissions to pre-1990 levels by 2010.

Investments

In reality, BP's investments in oil operations dwarfed its investments in renewable energy. BP spent $26.5 billion to buy Atlantic Richfield Company (ARCO), an oil and gas extraction company, compared to a mere $45 million to buy Solarex, a solar energy company . During the campaign, BP also continued to invest in Canadian tar sands . If exploited the tar sands could cause significant environmental damage.

In 2008, BP invested over $1.5 billion on renewable energy. In the same year, they invested over $20 billion in fossil fuel. Antonia Juhasz, an energy analyst, noted that 4% of investments in non-fossil fuels should not qualify as “Beyond Petroleum."

Deepwater Horizon oil spill

In April 2010, The Deepwater Horizon Oil Spill killed 11 workers, released millions of barrels of oil into the Gulf of Mexico, and cost BP as much as $8 billion. After the spill, BP spent over $500 million to rebuild its brand image, a third of the amount BP invested into renewable energies in 2008. Examples of BP's marketing investments include TV ads and search term bids. BP released TV ads with BP CEO Tony Hayward, showing clean-up efforts and clean beaches. BP successfully bid for several search terms related to oil spill, “to make it easier for people to find out more about our efforts in the Gulf and make it easier for people to find key links to information on filing claims, reporting oil on the beach and signing up to volunteer,” according to BP spokesman Toby Odone.

At the end of 2010, BP did not improve its alternative energy offerings. In fact, BP started scaling down its renewable energy investments to pay for the costs of the spill. BP sold wind farms worth as much as $3.1 billion and increased production of oil by 24%. In 2011, BP closed BP Solar and its solar operations after 40 years of business. In 2012, BP shut down BP Biofuels. In 2013, BP announced it was selling some of its wind power assets, as part of what a BP spokesperson referred to as their "continuing effort to become a more focused oil and gas company and re-position the company for sustainable growth into the future."

Ecolabels

Overview

The "Energy Star" Ecolabel

An ecolabel is a third party certification that identifies a product as environmentally friendly. There are over 458 ecolables worldwide; some are even granted by the U.S. government. Popular ecolabels include the Leed certification for energy efficient buildings and the Energy Star certification for appliances. Ecolabels are one of the main ways in which consumers are informed of a product's "green" status. Consequently, many companies seek to obtain ecolabels for marketing purposes.

One type of greenwashing occurs when non-environmentally friendly companies successfully obtain ecolabels. Legitimately environmentally friendly companies thus face increased pressure from these competitors, especially given the higher cost of making one’s product environmentally friendly. Additionally, other businesses may feel the need to obtain ecolabels to catch up, even if they do not qualify for them. This makes it difficult for a rushed customer to separate green companies from greenwashing companies. Such a case occurs with the recyclable label. Recycled or recyclable labels imply that a product can either be recycled or was made from recycled products. However, these products may use a large amount of energy, or may contain harmful byproducts during use or manufacturing. This adds further potential for customer manipulation.

Furthermore, some ecolables have unreliable or illegitimate third party validation processes. This dilutes the meaning of ecolabels, making it harder for legitimate ecolabels to be taken seriously. The industry risks losing its credibility.

Tested Green

Tested Green is an example of an ecolabel with improper validation processes. According to the Federal Trade Commission, between February 2009 and April 2010, Tested Green advertised, marketed, and sold environmental certifications using both the website www.testedgreen.com and mass e-mails to prospective consumers.The company’s marketing claimed that Tested Green was the "nation’s leading certification program with over 45,000 certifications in the United States." They offered a "rapid certification" for $190 and a "pro certification" for $550. After receiving payment, Tested Green simply gave businesses the Tested Green logo and a link to a verification page where they could advertise the certification.

The FTC found that Tested Green had sold fraudulent environmental certifications for hundreds of dollars, and told more than 100 customers that its certifications were endorsed by two independent firms – which Tested Green actually owned. The FTC settlement bars Tested Green and its owner Jeremy Ryan Claeys from making misrepresentations when selling any product. Claeys ran the scam while campaigning to be the secretary of state of Kansas, and later went on to become a Kansas state representative.

Corporate Environmental Responsibility

Ray Anderson and Interface Flor

In a 1999 Fortune article, the founder of the carpet tile company Interface, Ray Anderson admits, “For the first 21 years of the company's existence, I never gave one thought to what we were taking from the earth or doing to it.” That all changed when, in 1994, he read Paul Hawken's The Ecology of Commerce. In it, Hawken writes of the imperative for corporations to mitigate environmental problems. Hawken states, “Businesspeople must either dedicate themselves to transforming commerce to a restorative undertaking, or march society to the undertaker.”

Anderson said to himself, "If Hawken is right and business and industry must lead, who will lead business and industry? Unless somebody leads, nobody will. ... Why not us?" He then challenged Interface's employees to lead the industrial world to sustainability. Thereafter, Interface has been on a mission "to protect, restore, innovate and educate." Through "Mission Zero" they aim to eliminate all of their negative environmental impacts by the year 2020.

Interface uses many diverse strategies in each of 5 areas to reach their goal. These areas are: energy, climate (emissions), waste, facilities, and transportation. In 2013, 100% of the energy used at 5 of the 7 Interface factories came from renewable sources. From 1996 to 2013, emission per unit product were cut by 71%. They attempt to eliminate waste in the broadest sense, defining waste as "any cost that does not produce value to customers." including "everything from scrap materials and defective product to misdirected shipments or incorrect invoices." Many Interface corporate and retail facilities are LEED certified and the company offsets transportation emissions by partnering with EPA SmartWay and Subaru and programs such as Trees for Travel.

Ultimately, these efforts represent a broadening of Interface's realm of responsibility. Anderson reports that, together, these efforts have resulted in a 90% reduction in emissions relative to sales.

Conclusion

Ray Anderson believes “We are, each and every one, a part of the web of life. The continuum of humanity, sure, but in a larger sense, the web of life itself. And we have a choice to make during our brief, brief visit to this beautiful blue and green living planet: to hurt it or to help it.” Anderson was particularly concerned about "our children's future." In response to Anderson's vision, the Interface employee, Glenn Thomas, wrote:

“Without a name, an unseen face, and knowing not your time or place,
Tomorrow's child, though yet unborn, I met you first last Tuesday morn.
A wise friend introduced us two. And through his sobering point of view
I saw a day that you would see, a day for you but not for me….”

In contrast to companies and individuals who greenwash, Anderson and Interface employees are worried about people outside of the conventional realm of responsibility. It seems that professionals consider the impact of their decision in a broader context.

Numerous examples of greenwashing and corporate environmental responsibility exist. The impact of greenwashing could also be further explored by investigating how greenwashing affects company profits, which companies use eco-labels, and how greenwashing influences consumer behavior.