Greenwashing: Cleaning up by ‘saving the world’

Consumer skepticism is on the rise, but marketers continue to play dirty

Here’s an excerpt from our April 22 issue

Skepticism is on the rise, but marketers continue to play dirty

While every product has some impact on the environment, people have become more interested in purchases that cause as little harm as possible. Consumer packaged goods companies, seeing green themselves (cha-ching!), have responded to the trend with a fast-to-market fervor not seen since the discovery that Aqua Net was burning a hole in the ozone and everyone turned to hairspray pumps.

But ever since we’ve had green products, we’ve had greenwashing, and little is being done to combat it. To start, there are no laws specifically governing green claims. Federally, the Competition Bureau and the Canadian Standards Association developed green guidelines titled “Environmental Claims: A Guide for Industry and Advertisers” in 2008. While the guidelines are ultimately helpful, if not a little unwieldy, compliance is voluntary.

The Consumer Packaging and Labelling Act, Textile Labelling Act and Competition Act—which cover false or misleading representations and deceptive marketing practices—can be applied to green marketing, but enforcement on this front is lax. Marketing lawyers say budgetary constraints are to blame and the Competition Bureau hasn’t made this an enforcement priority. The result is a Wild West of green marketing, where companies are getting away with unsubstantiated, vague, misleading or outright false green claims.

But if and when the Competition Bureau decides to put green marketing on the enforcement agenda, companies could be in for some hefty fines: in 2009, the Competition Act was amended, increasing penalties for deceptive marketing to up to $10 million.

“The Competition Bureau has actively pursued that fine against a number of high-profile corporations, primarily in the area of price advertising, but it’s ultimately the same legal basis,” says Chris Oates, a Toronto-based associate at Gowlings, a law firm. “So it’s not inconceivable that the Bureau could choose to target very egregious environmental claims with similarly harsh penalties.”

Michael Kilby, an associate at Toronto law firm Stikeman Elliott, says while the business community has absorbed the voluntary green guidelines to some degree, “there hasn’t been that big precedent-setting case that really sets the tone in the industry.” But, knowing the way the Competition Bureau works, it “might focus on ads or practices that seem particularly problematic and try to send a message with one or two cases, which in their world will have the effect of disciplining all sorts of other companies.”

If multimillion dollar penalties weren’t enough incentive to play a clean game, rising consumer skepticism may be. In 2010, the number of “greener” products on the market in Canada and the U.S. went up by 73%, to more than 4,700 compared to 2009, according to TerraChoice’s most recent “Sins of Greenwashing” report. But a survey by BrandSpark International found that 60% of Canadian consumers believe environmentally friendly claims are often exaggerated or misleading.

“The advantage that a company was hoping to gain by identifying environmental attributes is no longer there if the consumer doesn’t believe them,” says Nancy Wright, vice-president of marketing at Vancouver-based Globe Group, which produces the Epic Sustainable Living Expo. “And that’s a real shame for companies that are producing products that are actually better for the environment. I think that’s really the ultimate risk… that in the end, it does nothing for them if consumers don’t believe the claims.”

People have good reason to be skeptical. The TerraChoice study found that 95% of products claiming to be green commit one or more of the seven “sins of greenwashing,” which include vagueness (such as using the term “all natural”) or irrelevance (for example, “CFC-free,” a frequent claim despite the fact that CFCs are banned by law).

“The majority of green-labelled products are stretching the truth in some way or another when it comes to their claims,” says Adria Vasil, a green living expert and author of three best-selling books—Ecoholic, Ecoholic Home and Ecoholic Body— which guide readers on environmentally friendly products. “That doesn’t mean all those products are environmental menaces, but it does create a weariness in consumers who aren’t sure what to believe or whether to invest the extra dollar or $10 the greener product may cost them. Because of that, we’ve also seen greenwashed claims level off a little… but it’s still far too pervasive.”

More awareness of the voluntary green guidelines would reduce the risk of communicating misleading claims. Under the green guidelines, any vague, incomplete or non-specific claims such as “green” or “environmentally friendly” should not be used. Instead, environmental claims should be clear, specific, substantiated and verified. A series of 12 claims deemed most commonly found in the marketplace, including “compostable,” “degradable” and “recyclable,” are covered in the document. Under each term, the guidelines include definitions, appropriate uses, test standards and examples of the preferred wording on packaging and advertising.

The guidelines also cover claims about the use of ingredients that are already prohibited under the law. For example, “claiming laundry detergent is phosphate-free may be inappropriate because all detergent needs to be [so] under the law,” says Oates.

Unquestionably, there are legitimately green products that adhere to high standards through third-party certification programs, or even company-created programs. Rona, for example, was singled out in the TerraChoice report as being a leader in green retailing, with nearly 500 products under its third-party-certified Eco line. The products have been evaluated and selected by the International Chair in Life Cycle Approach at Polytéchnique de Montréal, and take into account a product’s entire life cycle.

However, there are so many eco-labels (more than 200 in North America, according to Ecolabel Index), some are more credible than others and consumer knowledge of them is low. According to the Responsible Consumption Observatory’s Ontario Responsible Consumption Index 2012 (ORCI), only 28% of the 1,050 people surveyed recognized Environment Canada’s official eco-label, EcoLogo. And just three of the 32 eco-labels surveyed were recognized by more than 50% of consumers.

“There are so many symbols and nobody knows what they mean, what attributes they relate to, whether they represent actual certifications issued by authoritative third parties or are just informal symbols that industry associations or companies have come up with and there aren’t very rigorous standards that back them up,” says Wendy Reed, a partner at Toronto law firm Heenan Blaikie. “And it may suggest to consumers that there’s an independent party backing up the claim when there isn’t.”

There’s more! To read the full article plus tips on effective green marketing practices and a look at how one big-box retailer beat the greenwashing burden, check out the April 22 issue of Marketing. It’s available on newsstands and iPad now. Subscribe today.

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