The Press, June 2008

“It’s not easy bein’ green,” Kermit once lamented.

But at least he is actually green. Companies are scrambling to increase sales by painting themselves green. But how effective a marketing strategy is this?

Barely a day goes by with another “carbon neutral” business. Energy companies, computer providers, airports and many more. I haven’t yet been able to buy a carbon-zero loaf of bread from a carbon-zero diary, but it can only be a matter of time.

Crown-owned Meridian Energy has aggressively positioned its brand around a green promise. “We are the only energy provider with certified carbon neutral electricity. We generate only using renewable resources,” the company says on their website. Much of their promotional activity reinforces this positioning.

It is coming under real fire. National MP Nick Smith has lodged a complaint with the Commerce Commission over Meridian’s claim in advertising material that it is carbon neutral.

Smith says this is a dubious claim because the company has to purchase power from thermal generators (i.e. coal, gas fired generators belching out heaps of carbon) to meet peak demand. They mitigate this by buying carbon credits off other, cleaner generators.

“The idea that Meridian can magically convert thermal electricity into ‘certified carbon-neutral electricity’ by buying these sorts of carbon units is modern day hocus-pocus. It has as much credibility as the old church practice of penance where money could buy forgiveness for sins,” he said.

The validity of purchasing carbon credits, almost a license to get away with polluting activity if you have the money, does seems morally questionable. Worse still, the basis of Meridian’s carbon zero status has been questioned by experts.

New Zealand Carbon Exchange director Karen Price told the 2007 Climate Change and the Law Conference that Meridian’s certification by Landcare Research was not sufficiently robust, as some of their credits were being ‘double-counted’. She said New Zealand lacked internationally accredited carbon-credit trading standards.

The controversy shows how risky building a brand around your greenness can be. The more pure you claim to be the more market or political opponents will try and undermine it. It is the marketing equivalent of the pastor who professes his holiness only to be caught in a questionable situation.

Such is the growing suspicion of ‘greenwash marketing’ an environmental agency called TerraChoice categorised the “six sins of greenwashing” in a 2007 study of products using green brand positioning in the North American market.

“The products we surveyed made a total of 1,753 claims, and 99% per cent committed at least one of the Six Sins of Greenwashing,” says TerraChoice President Scott McDougall. The six sins:

• Sin of the Hidden Trade-Off: e.g. “Energy-efficient” electronics that contain hazardous materials. 57% of all environmental claims in the study were guilty of this.

• Sin of No Proof (26%): e.g. Shampoos claiming to be “certified organic,” but with no verifiable certification.

• Sin of Vagueness (11%): e.g. Products claiming to be 100% natural when many naturally-occurring substances are hazardous, like arsenic and formaldehyde.

• Sin of Irrelevance (4%): e.g. Products claiming to be CFC-free, even though CFCs were banned 20 years ago.

• Sin of Fibbing (1%): e.g. Products falsely claiming to be certified by an internationally recognized environmental standard like EcoLogo, Energy Star or Green Seal.

• Sin of Lesser of Two Evils (1%): e.g. Organic cigarettes or “environmentally friendly” pesticides.

“Consumers are inundated with products that make green claims,” says McDougall. “Some are accurate, certified and verifiable, while others are just plain fibbing to sell products.”

So is there value in giving your marketing a green tinge?

It depends of course on who your market is. If you are selling into government departments or you target people in the growing slice of consumers motivated by sustainability for example, it is a sensible strategy. Don’t expect General Motors to declare the production of the Hummer carbon neutral any time soon.

If you decide to go down the green marketing route, the critical thing to remember is that promoting yourself as green is nothing more than promise. Unless you can deliver on that promise the value of your promotion will be undermined. Maybe not immediately, but eventually your brand, that picture the customer has of your company, will weaken.

It is very difficult to get away with simply saying you are green these days. So much information is available so easily the consumer can quickly smell whether your green is rotten or fresh.

The other consideration for marketers is that claiming greenness will quickly become a ‘table stake’ in many markets i.e. something consumers simply expect. You will have to be environmentally responsible but it will give you no real advantage in the marketplace.

Meridian have made an admirable attempt to differentiate their brand in the energy market. But spending millions trumpeting their greenness is a risky strategy without being able to back it up with a squeaky clean environmental record. They should seek to prove that strongly or choose a different approach.

“I am green and it'll do fine, it's beautiful! And I think it's what I want to be,” Kermit sang. Think carefully if it’s what you want to be.

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