GREEN MARKETING: OPPORTUNITY FOR INNOVATION

Chapter 9: Work from the Inside Out

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Table of Contents Featured Cases Table of Exhibits

The backlash to marketers' questionable green marketing activities of the early 1990s taught us a valuable lesson: consumers' environmental concerns cannot be exploited by merely communicating superficial product tweaks and regulatory-driven corporate responses. In other words, it is not enough to talk green, companies must be green. Environmental issues represent a question of survival for millions of people around the world; as Mobil and other companies learned the hard way, retaliation from consumers, environmentalists, regulators and the media against companies who they feel are exploiting the environment can be serious, swift, and enduring.

In the words of Roy Spence, president of Austin-based GSD&M advertising, "What you stand for is just as important as what you sell." To successfully develop and market environmentally sound products and services, it is necessary to adopt a thorough approach to greening that reaches deep into corporate culture. Start with the CEO and don't stop until the pencils at corporate headquarters are "green." Many companies across the nation and around the world have already begun to substantially green their operations, bring their employees on board, and communicate their initiatives. They are finding that such greening helps them create exciting new products while helping them save money, recruit productively, and keep shareholders happy.

Following are the hallmarks and strategies of the companies that are in the vanguard of corporate greening and, as such, are best able to take advantage of the many opportunities of environmental consumerism.

Integrity

Understand the key environmental issues facing your business and address them with integrity; to give only lip service is to invite scrutiny by government, environmentalists, and the media, as well as rejection by consumers quick to spot companies with insincere or incomplete environmental programs.

Conduct a thorough environmental audit to assess current performance and establish a benchmark upon which to measure progress. This will ensure that your company is in compliance with key environmental regulations, and has a topflight environmental management system in place. Shoot for compliance with ISO 14001, the management-auditing component of the newly emerging ISO 14000 series of voluntary international environmental quality standards described in Chapter 1. To build credibility and win the public’s confidence, have your audits certified by an independent third party or voluntarily report your results to the EPA and the public.

Pro-Active

Go beyond what is expected by regulators and other stakeholders. Pro-actively commit to solving emerging environmental problems like ozone layer depletion or protection of rainforests. S.C. Johnson, for example, eliminated chlorofluorocarbon propellants in its aerosol products a year ahead of government mandate, and was the first company in its industry to do so. York International leapfrogged competition by being the first in its industry to use an alternative refrigerant in air conditioner chillers.¹

Being pro-active projects leadership, and sends a message to investors that the company is in good hands. Because regulators are less likely to impose restrictions on companies whose actions transcend minimum standards, it allows companies to help define the standards by which they will be judged. A pro-active stance also affords the greatest opportunities to find cost-effective solutions to environmental ills and beat competitors in meeting regulations and consumer expectations. Southern California Edison, for example, has already pledged a 20 percent reduction in carbon dioxide emissions by 2010.

Finally, pro-active companies are better prepared to withstand the scrutiny that overtly "green" companies often face. For instance in 1994, a controversial report in Business Ethics magazine put into question The Body Shop's pioneering socially and environmentally conscious practices. While the retail cosmetic chain's stock price plummeted, there is very little evidence that the Body Shop’s clientele switched their purchasing habits as a result of the criticism. It is hypothesized that customers may have perceived the company’s environmental performance to be so high, they were willing to discount new facts that were emerging.²

A Visible and Committed CEO

With consumers scrutinizing products at every phase of the life cycle, environmentally pro-active companies recognize that corporate greening must extend to every department—manufacturing, marketing, research and development, consumer and public affairs, and so on. Only a committed chief executive with a clear vision for his or her company can add the necessary weight to the message for all employees and other environmental stakeholders to realize that environmental soundness is indeed a priority.

The need to start with the Chief Executive Officer cannot be over-emphasized. The consumer backlash against Exxon over the 1989 oil spill in Alaska's Prince William Sound may have been caused as much by CEO Lawrence Rawls' delayed appearance on the scene as it was by outrage over the environmental degradation that resulted.

In the age of environmental consumerism, chief executive officers of such leading edge companies as Ben & Jerry's, Patagonia, Tom’s of Maine, and Interface win their consumers' trust by projecting a personal commitment to the environment. These executives help to forge an emotional link between the company and its customers, acting as a symbolic police officer who watches over corporate operations and ensures environmental compliance. Such CEOs are especially believable because they are perceived as having a personal stake in the outcome.

Empowered Employees

CEOs, of course, are only as effective as their employees. For it is only when employees are aware of the issues and given the authority to make changes will greener products be developed and environmentally sound practices be put in place. Use innovative and thought-provoking education and incentive programs to empower employees to develop ecologically sound processes and products. For example, many companies now expose their employees to outside speakers who talk about trends in demographics, technology, the economy and the environment.

At Coca-Cola, all employees participate in an Environmental Development Program that dismisses many of the myths and realities of environmental issues and outlines Coca-Cola's accomplishments. Ted Turner distributes copies of Lester Brown's State of the World to all new producers and reporters, while at Texaco, employees engage in an electronic environmental education program, and scores on a follow-up quiz help to determine year-end bonuses.

Consider an innovative approach to training pioneered in Sweden with remarkable results. Called "The Natural Step," The program teaches employees the key principles of nature to use as a guide in making their day-to-day activities more ecologically attuned.

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CASE STUDY: Introducing the Natural Step: An Innovative Approach To Sustainability Training

In 1989, while working to cure leukemia in children, Dr. Karl-Henrick Robert concluded the best way to prevent many cancers from occurring in the first place is by cutting down on factors in the environment linked to the disease. Together with a group of leading scientists, environmental activists, economists, and politicians, Dr. Robert established the four "system conditions" essential for sustainable living that underlie The Natural Step (TNS) Training Program he developed.

The four system conditions are:

1. Materials from the earth’s crust must not be allowed to systematically increase in nature.
2. Persistent substances produced by society must not systematically increase in nature.
3. The physical basis for the Earth’s productive, natural cycles and biological diversity must not be systematically deteriorated.
4. There must be fair and efficient use of resources with respect to meeting human needs.

Armed with these fundamental principles, and coupled with the belief that "every successful society educates its children early and its adults continually about what is critical to survival." Proponents of The Natural Step now teach environmentally safe behaviors to people in several countries around the globe, including Canada, Britain, New Zealand, Poland and the United States.

With the backing of King Carl Gustaf XVI, The Natural Step has distributed informational pamphlets to every school and household in Sweden, and has won the support of over 25 percent of all Swedish companies including IKEA, Electrolux, and McDonald’s Sweden, who are using the program to transform their businesses.

IKEA, which began using the program in 1991, provides basic environmental training not only to all its employees but also to its suppliers. Each division applies TNS principles to its own needs. As a result, only certified tropical hardwood from sustainable sources are allowed in IKEA products, and designers have come up with new products such as a couch with a hidden worm-composting box inside.

At Electrolux, truly CFC-free refrigerators and freezers as well as reduced costs and increased sales come from the incorporation of TNS principles into corporate policy. Electrolux now reduces carbon emissions by shipping 75 percent of its products in Europe by rail instead of by truck. As a result of TNS and a high level of awareness among consumers, Swedish paper companies have switched to almost entirely chlorine-free paper.

Noted author, environmentalist, and businessman Paul Hawken heads up the U.S. branch of TNS, founded in 1995. With a lofty goal of training 100 Fortune 1000 companies and one million people within five years, it focuses is on creating a defined training system that can be licensed to various organizations, from businesses to municipalities.³

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"Greening" is a Continuous Process

Environmental marketing has been described as a race without a finish line. Because definitive answers to the questions of green are not always available and absolute environmental excellence is more of an ideal rather than a realistic goal, it's best to view corporate environmentalism as a series of small steps on a learning curve. Take an inventory of emissions and byproducts, develop a plan, set measurable goals, and work toward them. Constantly integrate, learn, and refine your products and processes. To help integrate environmental programs into corporate culture, consider incorporating efforts into ongoing Total Quality Management Programs.⁴

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CASE STUDY: One CEO’s Environmental Odyssey

According to Ray Anderson, CEO of Atlanta-based Interface, Inc., a leading maker of commercial carpet, carpet tile, and other interior furnishings, responsible management of the Earth's resources is a question of business survival. In Anderson's words, "Sustainability is the key to achieving the resource efficiency that will be necessary for manufacturing companies such as ours that hope to survive, much less flourish, in the 21st century." Setting his 24-year-old, $1 billion company on course "to become the first name in commercial and industrial ecology worldwide," Anderson is encouraging Interface, with products sold in over 110 countries, to incorporate environmentalism into every corner of the firm. Despite a product line that is based heavily on petrochemicals, Anderson is determined to make his company the paradigm of sustainability and zero waste. He believes that Interface's own impact can be magnified by influencing others; so, Interface's example has infinite potential to make the world a better place to live.

Interface's first step towards sustainability begins with the implementation of a three-part educational program. The first is the adoption of environmental training for the entire work force, to include training in the principles of The Natural Step for all 4000 employees worldwide. The second is an internal "EcoSense" program which outlines a seven front approach to sustainability and focuses on resource depletion, landfill use, pollution, and energy waste. The third part aims to increase employees' overall environmental awareness at home as well as in the workplace. By extending positive environmental steps beyond the office walls, Interface hopes to affect attitudes and extend the impact of the internal environmental program - QUEST (Quality Utilizing Employee Suggestions and Teamwork).

At Interface, education translates into profitable innovation. As of 1995, the company entered a revolutionary new phase, and raised the environmental bar in the process - they began leasing carpets through a unique Evergreen Lease Program. Under the program, Interface actually retains ownership of its carpet tile, making itself, the manufacturer, responsible for the maintenance, repair, and ultimate recycling of the carpet tile. By assuming full life cycle responsibility for its products, Interface not only assures that the recycling loop will be closed, it maximizes the potential to reuse natural resources while preventing a voluminous and potentially hazardous source of waste from going into landfills. The Evergreen Lease is especially effective with carpet tile because only worn tiles are replaced, thus eliminating the need to install a whole new carpet, but providing a rolling, progressive face lift that goes on theoretically as long as the building stands.

If Interface has its way, one day its carpeting may be not just recyclable but biodegradable as well. In 1995, the R&D division developed a fully compostable carpet made of natural and degradable fibers, now undergoing testing. Meanwhile, the company continues to explore other initiatives and technologies brought about by heightened awareness internally for responsible and profitable management of environmental issues.

Interface may be in the earliest stages of its journey toward becoming a sustainable company, but it is already profiting significantly in the process. Through QUEST, part of the company's overall environmental initiative, Interface has saved more than $20 million. Thanks to QUEST, the company now produces 100% post-industrial recycled nylon carpet, enjoys a 25 percent improved efficiency of turnover for beams of yarn, a 16 percent reduction in hexane solvent usage with the implementation of a new carpet-drying procedure, and a 75 percent reduction in scrap yarn from beams at one of their manufacturing sites. In addition, Interface has retrofitted machinery that consumes less energy, and steam water used for dyeing is starting to be recaptured.

These, along with many other efforts, have boosted efficiency and waste reduction while lowering operating costs and thus increasing profits. The company encourages employees to identify new ways in which the company can achieve its 1997 goal of reducing their waste by 50 percent relative to the amount produced in 1994. By the company's own calculations, this represents a possible savings of approximately $35 million.

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Communication

When it comes to environmental performance, it is not enough for a company to simply assert a strong commitment to environmental cleanup and preservation. It must be publicly accountable and viewed as continuously improving its environmental performance. ?

Regularly report on progress by issuing annual environmental reports and field special advertising and public relations efforts. In addition to environment-related messages, some companies such as Ben & Jerry's Homemade, Inc., of Waterbury, Vermont, even go so far as to issue annual social audits of their firm’s community-oriented activities.

Contrary to what many in industry may think, public disclosure of information is not to be feared as a competitive disadvantage or an invitation to litigation. Its benefits outweigh the risks. As noted by Art Kleiner writing in the Harvard Business Review:

Openness is a key factor in building credibility and quelling consumer concern about the adverse environmental impacts of a firm’s activities. As interest in Shopping for a Better World suggests, consumers want to know who they are buying from. The guidebook helps to demystify the manufacturers behind the products, providing consumers with a peek inside. So, establish credibility and build relationships with consumers by opening the doors–conduct plant tours, disclose information honestly and clearly, and run special environmental hotlines.

In Germany, chemical manufacturers recognize that the mysterious nature of their manufacturing plants creates suspicion among community residents. To help overcome the fear that results manufacturers embarked on a campaign of openness, conducting plant tours for local residents and interested parties. In the United States and Canada, chemical manufacturers such as Dow Chemical and Polaroid utilize similar openness strategies as part Responsible Care, an industry-wide program. Seeking to re-establish credibility and bring the industry's image more in line with consumer expectations, the Responsible Care program sets out a code of standards and practices in the areas of health, safety and the environment, and requires member companies to establish objectives, develop strategies and action plans, and monitor and report progress to the public – good or bad.

Communications can help to counter a negative environmental image and address consumer skepticism head on. Once on the black list of eco-warriors, McDonald’s reversed its negative image by communicating a number of substantive initiatives including internal, behind-the-counter greening and other activities visible to restaurant patrons as well as other stakeholders. Big pronouncements like "We’re willing to buy $100,000,000 in recycled products this year," and "We use the most recycled paper," supported by bold moves like the switch from polystyrene clamshells to source-reduced quilt-wraps and use of recycled furniture has catapulted McDonald’s to the top of consumers’ lists of environmentally reputable companies.⁷

1. "The Hole Truth," Green Business Letter, Makower, Joel, ed., January 1996, p. 8.

2. Miller, Joyce, and Francisco Szekely, "Becoming Green: Can Companies Do it Cost Effectively?" Corporate Environmental Strategy, Volume 3, Number 2, December 1995, p. 63.

3. Scott, Mary, "Will It Be a Natural Step Here?" Business Ethics, January/February 1996, p. 18; Banks, Jim, ed., "The Natural Step for Designers," Green Design, Spring 1996, Volume 2 Number 3, p. 3; Eronn, Robert, Swedish Institute, "The Natural Step - A Social Invention for the Environment," Number 401 December 1993, p. 7.

4. A good resource for companies intending to integrate environmental programs into Total Quality Management Programs is the Global Environment Management Initiative located in Washington, D.C. Founded for the purpose of helping business assert leadership in the era of environmental management, it has helped to spearhead the practice of Total Quality Environmental Management, along with a journal of the same name. Members include Eastman Kodak, Colgate-Palmolive, AT&T, DuPont, Weyerhaeuser, and others.

5. Personal communication with Lisa Cape, February 14, 1997.

6. Kleiner, Art, "What Does it Mean To Be Green?" Harvard Business Review, July-August 1991, p. 42.

7. Stisser, Peter, "A Deeper Shade of Green," American Demographics, March 1994, p. 28.