GREEN MARKETING: OPPORTUNITY FOR INNOVATION

Chapter 8: Team Up for Success

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Table of Contents Featured Cases Table of Exhibits

It used to be that investors, employees, customers, and suppliers were the only ones with a keen interest in a company's activities. However, now that the condition of the ecology is a key issue, eyes from practically every corner of society scrutinize firms' environmental activities with an eye on environmental impact. These new corporate environmental stakeholders include the general public, community activists, lawmakers, educators, church leaders, even children and future generations who will feel the affects of today's corporate activities in decades to come. Like conventional industry stakeholders, they have a direct stake in the environmental and societal-related activities of specific industries and firms.

Affecting activities as diverse as raw-material procurement, product development, production, and promotion, some monitor specific companies' environmental impact with an eye toward shutting down polluting operations; boycotting, conducting negative media campaigns and lobbying for stiff new laws are tools in their arsenal. A growing number of others, however, are actually looking to contribute positively by engaging individual industries or companies in collaborative efforts. There is much to gain from enlisting their support.

New Environmental Stakeholders

A growing number of enlightened marketers find that forming constructive partnerships - or coalitions - with willing stakeholder groups provides many positive benefits. These advantages include?

An increasing number of people now see the logic in pooling the collective skills, capabilities, and resources of various societal stakeholder groups in solving complex environmental problems. Smart marketers are now staking out their ground among the realm of available partnership opportunities. The much-heralded McDonald’s alliance with the Environmental Defense Fund has given other marketers the confidence to forge successful alliances of their own.

Such key corporate environmental stakeholders as the general public, employees, retailers, suppliers, environmental groups, and government each have their own needs and agendas (see Exhibit 8.1). This chapter details the challenges and opportunities posed by forming alliances with these particular corporate environmental stakeholders, and offers strategies for working positively with them.

General Public Stakeholders

Educating the public on how best to solve environmental problems and establishing favorable perceptions is highly challenging. Individuals lack basic awareness of ecological principles and processes, and the emotionalism inherent in environmental issues coupled with rampant misperceptions, can make consumers turn their backs on individual companies or industries overnight. The apple industry still reels over extreme public reaction to a public service campaign against the Alar pesticide in 1989.

These same challenges, if not addressed, can stand in the way of industry's ability to secure favorable sites for manufacturing plants, recruit the best employees, and ensure continued markets for their products. Negative attitudes toward aerosols, chemicals, disposable diapers, and what is perceived as excess packaging are just a few examples.

The need to communicate with and educate the general public is made all that more urgent when children are brought into the picture. While children represent a force for positive social as well as environmental change—consider their influence in getting parents to buckle up or stop smoking—their influence can also hinder progress. For example, the general public relishes simple solutions to environment-related dilemmas. Idealistic children, armed with a small bit of information can turn into enviro-cops with easy - albeit often incorrect - mandates. Parents be damned! This already seems to be happening with children's influence on recycling activities within the home.

While recycling is a necessary and desirable consumer behavior, it is not the complete answer to reducing landfill disposal problems that many adults and children perceive. Rather than "reduce, reuse and recycle", the desirable hierarchy is more often "recycle, recycle, landfill." As detailed in Exhibit 2.3, at 49 percent, more consumers engage in recycling than any other eco-related activity. Moreover, consumers are much more likely to engage in recycling-related behaviors, such as buying products that can be recycled or are made from recycled content, than in trying to avoid waste in the first place by using refillable containers or buying fewer disposables.?

The implications of consumers' blind love for recycling can be significant. Because they were not recyclable, aseptic packages were banned from the state of Maine in 1990. (They were reinstated four years later, when pilot recycling programs were set up and knowledge of their energy and source reduction benefits was established.) Even today, 63 percent of Americans favor stricter recycling laws and 93 percent of Americans think manufacturers should be required to design products with a certain percentage of recycled content, even though such design strategies as durability and reduced packaging may represent environmentally superior solutions.¹

With declining stocks of natural resources, household solid waste that is expected to climb to 250.6 millions of tons by 2010 (see Exhibit 8.2), and a practical limit on the amount of recoverable materials from households estimated at 25-35 percent,² consumer attention will need to be refocused on alternative product designs and materials-use policies as well as complements to recycling such as source reduction and composting.

Opportunities to Educate. Clearly, we need a well-informed public equipped to make rational purchasing and policy decisions about such things as products, packaging, and manufacturing processes. Industry has the relevant facts and technical information, not to mention the necessary regulatory and consumer incentives, to help clarify the issues and get the public on a legitimately greener track. Indeed, several corporations and their competitors regularly undertake cooperative communications initiatives to encourage the attitudinal and behavioral changes necessary to support balanced solutions to environmental issues. One example includes an educational campaign conducted by the Aseptic Package Council underscoring the energy and source education benefits of "juice boxes." Beyond mass media campaigns, businesses can enlist the support of such various other stakeholders as educators, employees, and retailers.

Educators

Educators are willing stakeholder partners. Teachers welcome educational materials to help answer students’ environmental questions, and ecology's topical nature helps to lighten up an otherwise dry science, math, or civics lesson. The Consumer Aerosol Products Council (CAPCO), formed in 1991 to correct misperceptions regarding the use of CFCs in aerosols, is just one industry organization that takes advantage of opportunities to ally with teachers in educating children about their products.

In 1995, with only 26 percent of the public aware of the fact that aerosol products do not contain chlorofluorocarbons - and declining sales - CAPCO released an educational program to inform the public about how aerosol products work and their impact on the environment.

Created by a team from the popular children's science program "Beakman's World" with input from a Teacher Review Board comprised of middle and high school teachers, it uses humor to create a lively instructional program. Available free of charge, "Another Awesome Aerosol Adventure" succeeds the award-winning "The Aerosol Adventure," which has reached nearly 750,000 students across the country since 1991. Geared for students in grades four through eight, the package includes an 11-minute video featuring Can Do Man, "defender of aerosol cans everywhere." Teacher and student workbooks revised and updated by an organization which has developed educational programs for the American Chemical Society, the 4-H National Council, and the British Department of Education.³

Industry-sponsored classroom eco-efforts need to be careful to avoid suggestions of bias. For example, a Procter & Gamble-produced teacher's guide entitled "Decision: Earth" focused on life cycle issues associated with such products as soda cans, pizza packaging, and diapers. It was taken to task by Californians Against Waste and other groups. They objected to the materials—and protested their use in California and several other states—because they contained assertions, for example, that disposable diapers are more favorable than cloth; that clear-cutting creates new habitats for wildlife; and that American forests contain more wood than they did four decades ago, despite the destruction of roughly 97 percent of the nation's old-growth forests.⁴

Besides creating school curricula, take advantage of other opportunities that exist to educate students. Sponsor such children's publications and environmentally-oriented television programming as Discovery Channel, Network Earth, and Captain Planet. Cooperate with national or local youth groups and by sponsor community recycling or cleanup projects. Or create a corporate environmental club, like Wal-Mart and Target Stores have done.

Employees

Employees are also able partners in the cause of environment-related education. Employees wear many stakeholder hats. They rely on corporations for their livelihood and have a personal stake in preserving their industry's reputation and markets. As employees, they want to feel good about where they work. Employees are also likely to be members of a corporation's local community as well as purchasers of its products. Enlist their support as the Chemical Specialties Manufacturers Association has - as liaisons to the community, and of course, to their own families and friends.

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CASE STUDY: Employees Enlist Chemical Manufacturers To Fight Chemophobia

The Chem+Life communications program sponsored by the Chemical Specialties Manufacturers Association (CSMA), the industry which makes many of the chemicals that go into everyday household cleaners, solvents, waxes, and other products. The program counters chemophobia by assisting chemical companies in educating employees about the value of chemical products. Launched in 1993 with an introductory kit containing program messages, suggested experiments, and other informational material to be distributed to employees and others, the goal of the program is to reverse the chemical industry's negative image and to inform the public, through employees, of the importance of chemical products in ensuring health, sanitation, and quality of life.

At one participating company, unskilled laborers learn how to decipher chemical data sheets and are counseled on the safe handling of chemicals. At another firm, an aerosol filler uses a scientific experiment to demonstrate that all is not as it seems, especially in the case of aerosol packaging, while employees at a third company learn how to fight chemophobia with the help of an employee newsletter and a coloring book that influences kids and parents alike.

Program participants agree that the message must be clear and simple to be most effective, that demonstrations and meetings are useful, and that, above all, the industry must be honest with employees to build a solid, trusting relationship beneficial to both sides.⁵

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Retailers

Retailers are another potential source of stakeholder support in educating the general public. Besides being on the front line of consumer demand, retailers have their own environmental issues to manage. Their concerns include source reduction and recycling, energy involved in lighting, heating, air conditioning, and indoor air quality. (Retailers consume about one-sixth of U.S. commercial energy.) At the same time, retailers have direct access to influential green consumers. Teaming up with retailers to educate consumers often results in in-store merchandising support that can boost sales as well as strengthened vendor relationships.

Retailers know that for a variety of reasons including credibility and cost, they need to be green, too. Acknowledging the spending power of discriminating green consumers, and desirous of pre-empting legislation while meeting their own employees' demands, many retailers assume a pro-active environmental stance. Grocery stores recycle plastic bags. Many retailers work with vendors to reduce excess packaging, and several, including Target, Home Depot, and the Gap, voluntarily install energy-efficient lighting.

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CASE STUDY: Wal-Mart's Green Store

Since 1989 when Sam Walton launched retailing's first major environmental marketing program, Wal-Mart has been engaged in myriad environment-related activities. One of the most notable is the building of an entire green store in Lawrence, Kansas, designed to be environmentally sound from the ground up. The store incorporates features such as sustainably harvested wood, a rooftop rainwater-collection system, solar powered outdoor signage, and a specially designed system of natural "daylighting" that has been linked to increased sales, presumably because of the pleasant environment and the enhanced attractiveness of the merchandise itself.

The store also includes an extensive recycling area and facilities for on-site community education. A second green demonstration store in Industry, California, demonstrates high-tech skylights, a massive solar-electric awning that produces 14,000 watts of electricity to light, heat, and cool the building as well as a granite-like interior finishing material made primarily of recycled newsprint and a bio-based resin derived from soy flour.

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With major retail chains now developing more comprehensive responses to environmental concerns, the potential to educate is great. Leverage this opportunity by educating retailers on environmental issues, by helping them to set up in-store recycling and waste reduction programs, and by developing green consumer education and promotional programs. One retailer that understands these challenges and opportunities is Home Depot.

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CASE STUDY: Home Depot's Environmental Greenprint and Other Initiatives

In the retail home center industry, Home Depot's financial success is not its only distinguishing factor. The company's strong commitment to environmentalism has won it many kudos from consumers, the government, other businesses, and environmentalists. Home Depot set out to address the challenges of green while meeting the needs of its customers through a variety of programs. The 479-store chain began to seriously incorporate environmentalism into the company in 1990, shortly after the 20th anniversary of Earth Day. As part of its commitment, it published a much-imitated set of Corporate Environmental Principles, and has been empowering its consumers with access to alternative products and reliable environmental claims information. (Simultaneously, the company is protecting itself from liability stemming from consumer confusion associated with any false environmental claims by vendors.)

In 1991, Home Depot became the first major retailer in the U.S. to successfully establish a third party evaluation process for environmental claims. In a program with Scientific Certification Systems (SCS), Home Depot requires the verification of all claims made on labels, in-store displays, and advertising published for Home Depot use. The program addresses claims about specific product as well as claims regarding a company's environmental records.

Home Depot's consumer education efforts do not stop there. In 1992, it began publishing its "Environmental Greenprint" which was distributed in all of its stores. The "Environmental Greenprint" mapped out areas of the home where environmentally sound products and practices can be used and implemented. For example, it recommended the use of light colored roof shingles, light dimmers, and ceiling fans as energy savers, and faucet aerators and water timers for lawns as water savers. It also included many green home-improvement tips, an environmental checklist for homeowners, and a handy list of contact numbers for more information on related subjects such as lead, pesticides, and energy efficiency.

As an extension of the "Environmental Greenprint" program, Home Depot works in conjunction with Habitat for Humanity, a nonprofit organization to incorporate cost-saving, environmentally preferable building material and techniques into homes for underprivileged families. Other pioneering environmental initiatives include using simulated wood for hollow-core interior doors instead of tropical hardwoods, discontinuing sales of lead plumbing solder, requiring suppliers to replace wood pallets with reusable slip sheets, and joining the EPA's Green Lights Program.?

In 1993, Home Depot also created the industry's first Recycling Depots which allow customers to sell back recyclables such as old wire, ladders, sinks, and grills. After separating out the various recyclable parts, Home Depot sells the material to partner scrap yards in the community. For customers, the recycling center is a definite plus in that they get cash for old household parts together with the convenience of being able to buy new. According to company estimates, approximately 6.5 million pounds of material have been saved from the landfills as a result of this program.

These many efforts have helped to keep Home Depot among the nation's most admired corporations and among other accolades, in 1996, earned the company an award from the President's Council on Sustainable Development.

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Ideas for Action

Ask the following questions to assess opportunities for enlisting consumers', educators', and retailers' support for your company's environment-related initiatives:

Government

It used to be a question of "jobs versus the environment," and "loggers versus spotted owls." That was in the days when government's primary toolkit consisted of passing laws that entailed costly "end-of-pipe" clean-up methods, and the concomitant risk of hefty fines. In attempting to comply, some companies were forced out of business or had to scale back operations - and jobs along with them. But things are starting to change.

Government is learning that the historical "command and control" approach to environmental protection cannot solve problems by itself. These days, a light is going off in lawmakers' heads: why not develop voluntary programs that can help industry and the as well as the environment? Slowly but surely this enlightened approach is starting to take over, creating opportunities for win-win solutions for businesses willing to shed lingering fears associated with letting government legislators and regulators into the tent. Partnering businesses enjoy increased flexibility in meeting existing laws and regulators as well as access to technical resources that can lead to competitive advantage, new marketing opportunities, and enhanced credibility and public recognition for their environmental efforts.

The time for industry and legislators to join together comes none too soon. The voting public, while not giving up on the need for continued regulation of industry, desires market-based solutions to environmental problems. For example, a poll conducted in 1995 by the Roper organization for Times Mirror magazines found that 69 percent of adults surveyed believe that "environmental protection and economic development can work together." Backed by a clear mandate, government is adding some new strategies to its environmental protection arsenal. Many of these pay off in big ways for industry.

Voluntary Partnerships. Enlightened politicians and bureaucrats now create exciting voluntary pollution prevention programs for willing industry partners. A plethora of resulting local, state and federal programs extend an unbeatable package of incentives for businesses looking to control their own destinies.

Green Star® is a community-based environmental leadership program which demonstrates that businesses using environmentally responsible practices can save money and attract customers (see Exhibit 8.3).

The program was established in Anchorage, Alaska, in 1990 as a partnership between the Alaska Department of Environmental Conservation, the Anchorage Chamber of Commerce, and the Alaska Center for the Environment. Green Star is now its own non-profit organization and remains the point of contact for other communities, inside and outside Alaska, interested in starting other Green Star programs.

Since 1990, Anchorage's program has inspired new chapters in Fairbanks, Nome, Kenai, and Deadhorse. More than 300 Alaska businesses representing 46,000 employees, including AT&T Alascom, Anchorage Hilton, and Safeway, are now enrolled in the program. There are 10 Green Star chapters in the United States, including Midland, Texas; Kauai, Hawaii; and Spokane, Washington.

Businesses enrolling in the program agree to meet 12 of 18 pollution prevention and energy conservation standards (there are six mandatory standards). Once these standards are achieved, the company submits an application for recognition and the Green Star award. The program then conducts a site visit and reviews the company's efforts to meet the program standards.

Businesses successfully completing the standards are recognized in a variety of ways and receive rights to use the trademarked Green Star name and logo. The program also gives technical assistance to those needing help to complete the standards.

Beyond helping businesses streamline the auditing process and save money, some programs actually create opportunities for industry to profit from pollution-prevention efforts, and even spur sales of environmentally sound products and technologies. The granddaddy of these is the U.S Environmental Protection Agency’s ENERGY STAR Program.

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CASE STUDY: EPA Partners with Industry to Prevent Pollution and Boost Profits

Created by the EPA’s Atmospheric Pollution Prevention Division in 1991 to promote energy efficiency, the ENERGY STAR program aims to reduce air pollution and greenhouse gas emissions while helping businesses and consumers save money without sacrifice. Participating companies and such other organizations as hospitals, schools and universities discover that enlightened energy-efficiency strategies yield new sources of competitive advantage: a cleaned-up environment with increased sales and profits, improved workplaces, and better employee morale and productivity, as well as a shine on their corporate image.

Two different programs make up this unique public-private sector effort: the ENERGY STAR and Green Lights® Buildings program is aimed at enhancing energy efficiency within commercial and industrial buildings, and the ENERGY STAR labeling programs are designed to stimulate the market for energy-efficient office equipment, residential heating and cooling equipment, major appliances, and even new homes.

Partners in the ENERGY STAR and Green Lights Buildings programs sign a voluntary Memorandum of Understanding (MOU) and agree to upgrade their facilities with energy-efficient technologies within a specific time period, where profitable. In exchange, EPA provides technical and promotional support, including the use of an attractive logo to help organizations implement internal upgrades and obtain recognition for their efforts (see Exhibit 8.4).

To date, more than 2,400 corporations, hospitals, schools and other organizations have realized a 35 percent rate of return on their investments in energy-efficient lighting technologies. They now save, on average, more than 45 percent on lighting bills and prevent approximately 6.3 billion pounds of carbon dioxide emissions from entering the environment yearly while creating a more pleasant and productive work environment for their employees. Among the Green Lights success stories, Johnson & Johnson has slashed operating costs by $3.6 million per year and the University of Texas M.D. Anderson Cancer Center attributes $225,000 in annual savings to its Green Lights initiatives.

Top managers at the Gap, for example, believe energy-efficient lighting and other internal measures pay off in more comfortable and healthful workplaces for employees, and this in turn leads to a competitive edge. Notes Maria Moyer-Angus, Gap's director of environmental affairs, "Where you gain advantage in the competitive apparel industry is by getting the best and brightest people. We do everything we can to recruit and keep employees." She believes Gap's environmental measures lead to improved air quality and aesthetics, which employees value highly.⁷

Manufacturers of ENERGY STAR labeled products also sign an MOU to voluntarily develop new technologies and enhance their products to meet agreed-upon ENERGY STAR guidelines for energy efficiency. In return, they earn the right to display the ENERGY STAR logo on their products and promotions, and can take advantage of unique new sales opportunities being created as a result of an Executive Order requiring the Executive Branch to procure high efficiency products that cut down on operating costs throughout their lifetime. Today, 90 percent of all computers, faxes, and printers on the market are ENERGY STAR compliant. Among its many participants, Compaq, Pitney-Bowes, and Ricoh have won special ENERGY STAR and Green Lights participation awards for their efforts in the program.

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Opportunities for Technical and Financial Support. Need some new product ideas and the money to get them from drafting board to market? Consult your local green bureaucrat. Many government agencies today can provide a ready source of new product technologies and funding. In the United States, just two possibilities include the Forest Products Laboratory (FPL) and the Alternative Agriculture Commercialization and Research Board, facilities of the U.S. Department of Agriculture.

Founded in 1910, the USDA's Forest Products Laboratory, located in Madison, Wisconsin, is the largest forest products research laboratory in the world. With the goal of improving the use of wood so as to help conserve and better manage wood resources, lab researchers develop technologies, and test prototypes that allow wood residuals to be fed into manufacturing processes, analyze the economic feasibility of these technologies, and help develop standards and codes for the use of recycled products.

The other alternative is the Agricultural Research and Commercialization Corporation (AARC), a venture capital firm wholly owned by the U.S. government. Created in conjunction with the 1990 Farm Bill, AARC's mission is to stimulate rural economies by supporting markets for industrial uses of agricultural and forestry ("bio-based") products. To date, AARC has invested in $28 million in over 60 projects, leveraging a total of $93 million in the process. Some of the recipients of its support include Trailblazer paper made from kenaf by Vision Paper; Shadow Lake, Inc., producers of Citra-Solv cleaner and degreaser made from an extract of orange peel; and Gridcore Systems International.⁸

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CASE STUDY: Gridcore Systems International Benefits from Government Support

While researching alternative building materials, Robert Noble, an architect, discovered spaceboard, a new type of building panel developed by the Forest Products Laboratory. Immediately, he saw the tremendous potential for spaceboard, a material that can be manufactured from various recycled or agricultural fibers, and - due to a honeycomb interior design - is just as strong and several times lighter than conventional fiberboard. He created Gridcore Systems International in 1992 to bring this unique material to market.

Gridcore is now under contract with the Forest Products Laboratory, enjoying an exclusive license to commercialize the technology for a variety of applications, expiring in 2004 (concurrent with patents on spaceboard). Gridcore Systems International, in turn, pays an ongoing royalty to the federal government based on production and sales.

Because of its association with the Forest Product Laboratory, Gridcore was able to get special attention from the AARC, who has made equity investments in Gridcore totaling $1.4 million.

Four years after its founding, Gridcore is a full-scale commercial operation with the capacity to produce 13 million square feet of Gridcore subpanels. This capacity translates into potential yearly revenue estimated of around $10 million, a level of production and marketing that would make the company profitable in 1997.⁹

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Ideas for Action

Ask the following questions to assess opportunities for enlisting the support of government stakeholders.

• What legislation is in effect or underway on the federal, state, and local levels that will affect our brands and company?
• What steps can we take to promote self-regulation and avoid mandatory regulations?
• What voluntary programs being conducted by the local, state, or federal government can we join to help to preempt legislation, and gain advantage and set standards in our industry?
• What opportunities exist to market our participation in voluntary government programs to our consumers and other stakeholders?

Environmental Groups

One of the most pronounced developments among environmental groups since the late 1980s and early 1990s is their growing willingness—and in some cases outright desire—to join together with industry for mutual gain. While extremist groups still undertake such activities as spiking trees in the fight to save the spotted owl, a growing number of once fiercely anti-industry groups are softening their stance. They realize that since businesses control many of the resources and yield much of the power in a market-based economy, joining with them is the best way to clean up the environment, encourage more responsible consumption, and pave the way for a sustainable society.

Some groups such as the Council on Economic Priorities realized early on that positive action could be had by using market-based forces; their Shopping for a Better World Guide, a popular guidebook on corporate environmental activities is one example.

These days, other groups leverage market-based forces, too. Previously hostile environmental groups such as the Environmental Defense Fund, which helped engineer a ban on the DDT pesticide in 1972, and Greenpeace, the original "rainbow warriors," realize that working positively with industry can help achieve mutual objectives. For example, Greenpeace's plan for an environmentally sound athletic village complex helped Sydney, Australia, win the right to host the Olympics in 2000.¹⁰ Even Green Seal has turned about. Initially a self-pronounced enviro-cop issuing only hard-to-come-by seals of eco-approval, it now runs the Green Seal Partners Program, advising corporations industry on environmentally preferable product procurement.

Many environmental groups are not only open to entrees from industry, but they offer creative ways to enlist industry's support. Develop positive relationships with environmentalists via

• corporate philanthropy
• joint industry/advocacy group alliances
• industry/advocacy group roundtables
• cause-related marketing campaigns
• new product alliances???

Corporate Philanthropy. Corporate philanthropy, consisting of deductible gifts made through a foundation arm or at least noted as such by a corporation in IRS filings has historically been an effective marketing and public relations tool. Donations to charities and the arts, for example, has long helped such major corporations as Mobil, IBM, and Philip Morris burnish their leadership images and make friends with society's influentials. Although it has been criticized as a form of propaganda, environmental giving helps companies to create awareness among influential environmentalists and eco-conscious consumers for their corporate environmental efforts. It also creates more favorable impressions for a company overall. Eastman Kodak, for example, sends contributes to environmental causes including World Wildlife Fund’s Windows on the Wild environmental education program, to which $2.7 million has been contributed over a six-year period in the form of a "no-strings-attached" grant.

Tap into consumers' desires to support environmental causes by matching employee donations to popular advocacy groups. Individuals are eager to donate money to environmental groups. According to Roper, 25 percent of adults contribute money to environmental groups from time to time. IBM, for example, matches employee donations on a dollar for dollar basis; 5 percent of all corporate contributions go to environmental causes.¹¹ Join Earthshare (Washington, D.C.), an employee-giving program like that of the United Way, which channels money to 43 worthy environmental and conservation groups. Corporate partners include Allstate, Gap, Mattel, Nissan, Sears, and Time Warner. Annual giving is about 8 million per year.¹²

Partner with other companies in their philanthropic efforts, with facilitation by not-for-profits. For example, the Conservation Alliance, formed in 1989 as the Outdoor Industry Conservation Alliance, represents a coalition of 36 manufacturers of outerwear and recreational equipment and others joined together to help protect North America's outdoor recreation areas. Since its founding in 1989, the organization, which includes Patagonia, REI, Northface, and Outside Magazine among its members, has given nearly $2 million to conservation groups throughout North America.

Industry and Environmental Group Alliances. Environmental groups are often aware of cutting edge ideas and technologies that can help industry stay in the forefront of change, reduce costs and develop new products. Their credibility often helps to pave the way for the industry-generated initiatives that result. Representing a sea of change in their orientation, environmentalists can be enlisted as industry consultants. McDonald's discovered the upside benefits of teaming up with environmentalists when they and the Environmental Defense Fund pioneered the now famous alliance that helped embolden other large corporations and environmental groups to join efforts to achieve mutual goals. That alliance has led to the Paper Task Force.

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CASE STUDY: Successful Alliance Between McDonald’s and Environmental Defense Fund Alliance Leads to Paper Task Force

In 1992, McDonald's allied with the Environmental Defense Fund (EDF) and created a 42-step waste-reduction action plan. Three years later, they reunited with the EDF and together with four other organizations created The Paper Task Force. Composed of McDonald’s, Johnson & Johnson, Prudential Insurance Company of America, Time Inc., and Duke University — representing $2 billion worth of purchasing power — the Paper Task Force yielded a comprehensive report with several recommendations intended as a road map for corporate purchasing managers who want to minimize the environmental impact of the paper they buy.

The Paper Task Force lived up to its expectations. Prudential and Duke University now reduce their consumption of paper through the use of electronic mail and procurement systems instead of paper- based alternatives. McDonald’s incorporates consideration of its paper suppliers' forest management practices into its annual supplier business review process, and Time Inc. plans to survey its suppliers regarding their forest management practices.¹³

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Fred Krupp, EDF President, notes that his organization’s approach represents a new, third stage in environmentalism. If Teddy Roosevelt’s conservation movement marked the first stage, and if the second stage reflects efforts to reverse pollution of air, water, and soil spurred by Rachel Carson’s publication of Silent Spring in 1962, then, argues Krupp, we are now in a third stage, where "Environmentalists... have to help find alternate ways to meet the social needs that lie behind the pesticides and power plants that threaten harm." For Krupp, this translates into finding market-based incentives, such as tying waste-reduction to money savings at McDonald’s.

Believes Krupp, "Advocates can stand at the edge of the system and see who can shout the loudest. It’s more powerful and constructive to piece together solutions." Krupp’s philosophy and market-oriented reputation helped to win over his first corporate client. Remembers Shelby Yastrow, general counsel for McDonald’s, "I knew they couldn’t try to talk us into doing something if it was economically unreasonable. Fred wouldn’t come in and ask us to go to Wedgewood china."¹⁴

Industry and Advocacy Group Roundtables. Representing a growing area in relations between two former adversaries, industry/advocacy group roundtables allow industry participants to engage in constructive dialogue with environmentalists. Both parties share information so as to better understand each other’s points of view and bring about workable solutions.

One of the most visible of these roundtables is CERES, the Coalition for Environmentally Responsible Economies. A coalition of investor, environmental and labor groups, CERES encourages member companies to endorse and practice the CERES Principles (a 10-item code of corporate environmental conduct formerly called the Valdez Principles after the Exxon oil spill of March 1989) (see Appendix A).

Companies that endorse the CERES Principles pledge to monitor and improve their behavior in such areas as protecting the biosphere, sustainable use of resources, energy conservation and safe products and services. Companies must also report on their progress with these pledges. Six Fortune 500 companies - Bethlehem Steel, General Motors, Polaroid, Sun Oil, Arizona Public Service, and H. B. Fuller - have already signed the CERES Principles, along with more than 80 other small and midsize companies including Timberland, Aveda and Stonyfield Farm.

While some corporate executives may be fearful of entering into an in-depth relationship such as that involved with endorsing the CERES Principles and disclosing the requisite information, this is not the case at Sun Oil. J. Robert Banks, the company’s VP of Health, Environment, and Safety testifies to the benefits, "All I can tell you is after a year’s worth of being in partnership [with CERES] we couldn’t be happier. It has produced a tremendous amount of value-added to our corporation. We value [CERES] inputs and ideas in the things we’re doing. We hadn’t had that before. They bring perspectives that are different."¹⁵ Consider signing the CERES Principles. Given growing support among America's corporate elite, they could soon represent de facto standards for corporate environmental reporting.

Cause-Related Marketing Programs. Best known as strategic promotional efforts in which businesses donate a percent of product sales to a not-for-profit group or cause, cause-related marketing allows businesses to make an impact well beyond that associated with just writing a check. With cause-related marketing, everybody wins. Consumers can contribute to favorite environmental programs in their communities with little or no added expense or inconvenience; environmental partners enjoy broadened publicity and the potential to attract new members and financial support; and business sponsors and their retailers and distributors can distinguish themselves in a cluttered marketplace, enhance brand equity and build sales. No longer viewed as a short-term promotional tactic, all signs point to cause-related marketing as a mature, long-term strategic business practice approached with increasing sophistication by some of the largest companies in America.

Now more than ever, cause-related marketing can tip sales in the sponsor’s favor. According to the 1997 Cone/Roper Cause-Related Marketing Trends report, 76 percent of consumers polled by Roper in 1996 said they were likely to switch brands and a similar percentage would switch retailers when price and quality are equal if associated with a good cause, up from 66 percent in 1993.

In addition, the degree of skepticism which exists with cause-related marketing has declined dramatically since the early 1990s. Then, 58 percent of consumers suspected that cause-related marketing was "just for show." But today, only 21 percent of consumers say they wonder "if the company's motives are good" when they evaluate a cause-related marketing campaign.

Not surprisingly, cause-related marketing is no longer practiced by smaller "green" companies such as Ben & Jerry's, or Millstone Coffee who conducts regional programs in the Pacific Northwest. Today, giants like MCI, Canon, and General Motors team up with environmental groups such as the Arlington, Virginia-based Nature Conservancy, who offer an attractive menu of cause-related opportunities including licensing the use of the group’s name and logo on merchandise and conducting worthwhile educational programs.

Growth in sponsorship dollars underscores corporate America's interest in cause-related marketing. According to the Chicago-based IEG Sponsorship Report, for example, spending on cause-related marketing is expected to reach $600 million in 1996, nearly double the $314 million in sponsorship support just 3 years earlier.¹⁶ Canon's experience is representative of what sponsors can achieve.

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CASE STUDY: Canon: Where Cause Related Marketing Reinforces Leadership

At Canon, a corporate philosophy of "kyosei"—living and working together for the common good—guides the company toward cause-related marketing that reinforces the company's position as a market and environmental leader.?

It began with the Clean Earth Campaign in 1990 which donated $1 to be divided between the National Wildlife Federation and The Nature Conservancy for each Canon toner cartridge returned to the company. The five-year effort resulted in the recycling of several million toner cartridges along with a corresponding donation. The success of the program inspired Canon to deepen and enhance their cause-related marketing efforts.?

Among other initiatives, the company now supports "NatureServe," a comprehensive program for sharing with the public The Nature Conservancy's scientific knowledge and expertise on natural resources, and "Expedition Into The Parks," a program with the National Parks Foundation to inventory and protect rare plant and animal species found in national parks.?

These initiatives help Canon U.S.A., Inc. show its environmental concern to its 9,800 employees in the Americas and serve as a model to other companies. The depth and scope of these efforts allow Canon to promote their participation credibly to all stakeholders via such vehicles as the PBS series Nature and ads in National Geographic.¹⁷

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Follow these success strategies to take maximum advantage of opportunities for cause-related marketing:

• Pick a cause that reflects your company’s values and one that employees and customers can get excited about. Also, reinforce brand imagery by creating a thematic mesh between your product's benefits and the particular cause - Arm and Hammer’s brand baking soda’s linkage with the Clean Water Action fund is a good example.
• Choose an organization that is equipped to support your logistical and marketing efforts.
• Partner with a organization where your company will get adequate attention—such questions of scale are particularly important to smaller companies.

New Product Development. Looking for creative ideas for product ideas? Brainstorm with an environmentalist. It was a resourceful environmentalist who first suggested to Bryan Thomlison, then head of marketing for Church & Dwight's Canadian division, that Arm & Hammer brand baking soda be used as an environmentally preferable cleaning agent. Sales which had been flat for seven years, grew 30 percent in 35 months.¹⁸ This idea, and others that have since been culled through committed relationship-building with other environmentalists on Thomlison's extensive database, translates to an estimated $75 million of the company's $500 million sales annually.

The S.C. Johnson Co., makers of Glad and Pledge, are now developing the next generation of products with the environment in mind with a not-for-profit group, Alliance for Environmental Innovation, composed largely of the original McDonald's/EDF waste-education task force. And Amory Lovins of Colorado's Rocky Mountain Institute, an energy think tank based in Snowmass, Colorado, now works with the automotive industry to turn his concept for hyper cars, designed for super-efficient energy use, into reality.

Ideas for Action

Ask the following questions to assess opportunities for enlisting the support of environmental groups.

Suppliers

Suppliers are a logical place to turn for support in balancing consumers' environmental demands with primary product benefits. Their vested interest and closeness to their own products and technologies enables them to offer creative ways to reduce environmental impact of specific products and bring new product innovations to the table. Acknowledging this, S.C. Johnson holds annual Supplier Days. Representatives brief suppliers of ingredients, packaging and other inputs on the corporation's environmental objectives and progress, and educate them on key developments in the field of life cycle analysis, product stewardship, and other green product development tools. Outstanding supplier initiatives are shared and rewarded.

McDonald's came to appreciate the value of consulting with suppliers on eco-matters when attempting to reduce the amount of material disposed of by its stores. When asked to replace corrugated cartons with shrink-wrap to protect paper napkins during shipment, the paper napkin supplier surprised McDonald's source reduction team by suggesting a more potent alternative: alter the "dimpling" pattern on the napkins. This seemingly minor alteration enabled the supplier to pack 25 percent more napkins in each box, reducing packaging and shipping costs accordingly.¹⁹

Sometimes the only way to solve complex environmental problems is by joining with suppliers and others. Ethan Allen happily discovered this when they turned to Ametek, the supplier of the polypropylene foam sheets used to protect their furniture during shipment. They turned Ethan Allen's need to reduce disposal costs into a win-win-win situation for themselves, their customer, and the United Parcel Service.

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CASE STUDY: Ethan Allen Teams up with Ametek to Recycle Foam Packaging

To help reduce disposal costs, Ametek Inc., of Paoli, Pennsylvania, a manufacturer of expanded polypropylene, developed an integrated program for collecting and recycling the foam cushioning used by its customer, Ethan Allen, to protect furniture surfaces during shipment. Ametek pays Ethan Allen 10 cents for each pound of used cushioning shipped back to its facilities for recycling. Shipping is prepaid by Ametek using the United Parcel Service's Authorized Return Service, a national package retrieval program originally developed in 1990 for Canon's toner cartridge retrieval program.

Since compacting the light, bulky foam is essential, Ethan Allen was required to invest in machines that compact the foam into a dense, easy-to-handle cube averaging eight cubic feet and weighing roughly 55 pounds. UPS provides pre-addressed shipping labels and makes daily pickups, eliminating need for Ethan Allen to collect and warehouse what customarily would be a full truckload of material.

Prior to the program, polypropylene waste resulting from Ethan Allen's home-delivery operations filled one eight-yard dumpster per day on average, costing the company from $600 to $700 per dumpster each month to have this material removed for disposal. In this unique recycling program's first year, Ethan Allen home delivery centers diverted 10,000 pounds of polypropylene foam from landfills.

Since the program was launched, used packaging volume has been reduced by 85 percent and hauling costs have been reduced by 70 percent.²⁰ This innovative foam recycling program has helped Ametek strengthen ties to its customer while providing Ametek with a reliable source of clean, used material for recycling into new sheets.²¹

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Notes

1. Gallup Poll conducted for Waste Management, Inc., 1995.

2. Recycling Report No. 0185, published by Keep America Beautiful, as quoted in California Recycling Review, Summer 1996, p. 3.

3. "Chemical Times and Trends," CSMA Journal, October 1995, p. 57.

4. Makower, Joel, ed., The Green Consumer Letter, Tilden Press, January 1994, p. 2.

5."Members Tell How They Use CSMA's Chem+Life Program," Household and Personal Products Industry magazine February 1994, p. 46.

6. Personal communication with Mark Eisen, environmental marketing manager, November 13, 1996.

7. "Minding the Store," Green Business Letter, Makower, Joel, ed., February 1996, p. 7.

8. Personal communication with Ron Buckhalt, director of marketing, Alternative Agricultural Research and Commercialization Corporation, February 14, 1997.

9. Steuteville, Robert, "From Laboratory Concept to Real World Sales," In Business, November/December 1996, pp. 12-13.

10. "Greenpeace Means Business," Green Business Letter, Makower, Joel, ed., 1994, p. 3.

11. "Corporate Environmental Philanthropy," Green MarketAlert, Carl Frankel, ed., October 1993, p. 5.

12. Personal communication with Kalman Stein, executive director, December 9, 1996.

13. "Paper Task Force Offers Paper Purchasing and Use Recommendations," Business and the Environment, Cutter Information Corp., January 1996, p. 9.

14. Gutfield, Rose, "Environmental Group Doesn't Always Lick 'Em; It Can Join 'Em and Succeed," Wall Street Journal, August 20, 1982, p. B2.

15. "Into the Fast Lane. GM Could Help Make CERES Reporting Vehicle of Choice," Green Business Letter, Makower, Joel, ed., March 1994, p. 5.

16. IEG Sponsorship Report, Chicago, 1996. Note: These sponsorship figures do not break out environment-related events per se. However, since 1993, according to the Cone/Roper 1996 survey, support for environment efforts has moved from a fourth priority at the local level to second place as a cause-related focus.

17. Personal communication with Russell Marchetta, July 18, 1997.

18. Earth Enterprise Tool Kit, International Institute for Sustainable Development, 1994, p. 102.

19. Conversation with Lewis Barton, February 26, 1997.

20. "Business Partnership Packages Services to Create Closed Loop Recycling Program," Ethan Allen press release, April 4, 1993, pp. 2-4.

21. Forcini, Hallie, "Ethan Allen Makes, Saves Money," Green Packaging 2000, November 1993, p. 4.