Consumers seeking opportunities to "shop green" are being stymied by the very organizations that stand to benefit from this interest. A recent study by the Grocery Manufacturers’ Association (GMA) and Deloitte found that although 47 per cent of shoppers surveyed looked for and found green products, only 22 per cent actually purchased one. That means retailers and manufacturers are losing potential green sales from a quarter of shoppers at the store shelf. (2009 GMA/Deloitte Green Shopper Study. "Finding the green in today’s shoppers: Sustainability trends and new shopper insights.")

For some shoppers, credibility of environmental claims or about a product’s environmental performance enters into the equation. Greenwashing — making unsupported or inflated claims about the sustainability characteristics of a product or service — is the newest concern for environmentally aware consumers. Greenwashing may not always be intentional, but may be the result of loosely interpreted labelling standards and inconsistent enforcement. On its website, environmental marketing company TerraChoice (terrachoice.com) defines the "sins" of greenwashing, which include vagueness, irrelevance and hidden trade-offs.  

The GMA/ Deloitte study, states that green shoppers "need more information related to green products" and that 78 per cent of shoppers who bought green products were swayed because of product characteristics. The opportunity for manufacturers is significant — and not just in terms of helping the environment. Done right, green marketing can help manufacturers uphold their brand promise and increase their market share.

What is eco-labelling?
Eco-labelling is the act of applying a marketing claim to a company’s product or service that explicitly or implicitly implies some sort of environmental attribute. In 1992, the concept of environmental labelling was endorsed by governments at the UN Conference on Environment and Development as a way to improve information and assist consumers in making informed choices.

Most commonly used on consumer products and services, eco-labelling is also referred to as environmental labelling, environmental claims, or environmental marketing. It can include both text and/or symbols, and is used most commonly to demonstrate:

• Recyclability or recycled content
• Lack of harmful ingredients or substances
• Percentage of natural ingredients
• Certification under one or more internal or external systems
• Improvement or comparison to a previous or competitor product or service

In 1993, the International Organization for Standardization (ISO) established a technical committee to develop international environmental labelling standards that would foster consistency, accuracy and fair competition in the marketplace. The ISO 14020 series describes the principles on environmental labels and declarations, and contains different standards for different types of labelling. Of particular relevance to this article is ISO 14021: Self-declared Environmental Claims for Type II environmental labelling (e.g., recyclability, recycled content), of which the Canadian version is CAN/CSA-ISO 14021.

Governments step up to the plate
If standards exist, why is there so much confusion and skepticism? As in many evolving situations, activity in the marketplace is outpacing the rules and regulations. Making inflated or unsupported claims has in part been the result of the self-declared nature of the standard. To help combat the confusion around green marketing, governments have recently begun to assume a more active role.

In Canada, the federal government announced new guidelines in June 2008 for green marketing. These guidelines, which interpret the CAN/CSA-ISO 14021 standard, were developed by the Canadian Standards Association and Competition Bureau of Canada. They are contained in the publication Environmental Claims: a guide for industry and advertisers.

The self-declared environmental claims guidelines apply to any form of green marketing —  statements, images, and symbols — regardless of the medium used (e.g., print, television, radio, Internet).  Perhaps surprising to some, the guidelines reveal that organizations are permitted to make claims without hiring third party certification, provided a number of principles are addressed.

All environmental claims should be substantiated and verified with supporting information that is accurate, adequately and properly tested, and available upon request. Other principles relate to:

• Legality: The standard does not override legally-required environmental information, claims or labelling, or any other applicable legal requirements.
• Life Cycle Analysis: Environmental claims are expected to take into consideration the product’s net environmental benefit based on a life cycle analysis.
• Environmental Improvement: The goal is to encourage demand and supply of products and services causing less environmental stress and stimulate potential for market-driven continual environmental improvement.

In general, the guidelines discourage vagueness (a non-specific claim which broadly implies that a product is environmentally beneficial or environmentally benign); the use of the word "free" unless the level of the specified substance is no more than a trace contaminant; and claims of achieving sustainability. It also calls for the use of explanatory statements if the claim alone is likely to result in misunderstanding.

Further, the guidelines explain when the recycling symbol should be used, and clarify the meaning of these common environmental claims:
 

• Compostable
• Degradable
• Designed for disassembly
• Extended life product
• Recovered energy
• Recyclable
• Recycled content
• Reduced energy consumption
• Reduced resource use
• Reduced water consumption
• Reusable and refillable
• Waste reduction
• Where facilities exist

Advantages to compliance
For manufacturers and merchandisers, compliance with the new guidelines provides an opportunity to enhance brand reputation and build consumer trust. In many cases, shoppers who choose green products and services have increased expectations in these areas.  But companies also want to know how the guidelines will be enforced before they take effect on or about June 2009. 

Although not legally binding, the guidelines are more than simple suggestions; they will be used as a reference for evaluating environmental claims. These claims must comply with the Competition Act; the Consumer Packaging and Labelling Act; and the Textile Labelling Act — all which prohibit the use of false or misleading representations and are administered and enforced by the Competition Bureau and other enforcement agencies. Non-compliance with these acts is subject to criminal or civil recourse. After the transition period (June 2008 — June 2009), the Competition Bureau will increase efforts at enforcement and compliance.

To date, there have already been a number of instances of non-conformity acted upon by the Competition Bureau, notably:

• A clothing chain’s unsubstantiated performance claims surrounding the environmental benefits of a clothing line resulted in the removal of all related labelling and advertising.
• Exaggerated environmental performance on UV protection by a clothing line resulted in the removal of all related claims from clothing tags and the company’s website.
• False claims regarding the benefits (e.g., improved fuel efficiency, reduced emissions) of so-called fuel saving devices resulted in several companies being forced to cease making such claims.

Accordingly, organizations can avoid negative press, a diminished brand image, loss of consumer confidence in legitimate environmental advertising — as well as fines and/or penalties, as scrutiny increases — by paying close attention to the guidelines.

Next steps for effective green labelling
If your organization is already involved — or interested — in promoting the green attributes of a product or service, you should:

• Ensure you have a comprehensive understanding of the impact of the guidelines and requirements on your products and services.
• Educate your people in all departments (e.g., product development, manufacturing, marketing, CR) potentially impacted by green labelling and marketing initiatives.
• Define the size of the prize for green products or services at your company, and understand your high-value consumers. Sustainability has varying degrees of importance to different target segments and product categories.
• Review your branding strategy to identify product attributes and efficiencies in the process that could be highlighted, as well as opportunities related to market segmentation.
• Review claims and conduct a gap assessment to determine whether you are at risk of committing one of the seven sins of greenwashing.
• Ensure that you can substantiate all claims, and that you have the underlying processes and controls to demonstrate current and future performance.
• Put in place a process to prevent issues in the future. Option included engaging an internal audit group and establishing annual reviews.

If you aren’t familiar with the guidelines contained in Environmental Claims: a guide for industry and advertisers there’s no time like the present to get started. Even in an economic downturn, consumer interest in green products and services is likely to continue. It may even increase with more public funding for green projects and the acceleration of clean and green regulation. By communicating honestly and consistently about sustainability, manufacturers and merchandisers can help eliminate the term greenwashing from the vernacular. And in the process, they very well enhance their brand reputation and increase their market share.

Valerie Chort is the National Leader of Deloitte’s Corporate Responsibility & Sustainability group. Daniel Wang is a senior consultant in Deloitte’s Corporate Responsibility & Sustainability group. Contact Valerie at vchort@deloitte.ca and Daniel at danielwang@deloitte.ca.
 

< Prev		Next >