Small Green Business and Greenwashing

Introduction

For all types of businesses especially retailers it is a challenge communicating to consumers their green initiatives in a clear way that the consumers can understand them. Most businesses have been trying to sell their products, while at the same time focusing on active reduction of their negative impacts on the environment. Such business has been leading proactively in changing business practices to achieve responsible global citizens. Consumer awareness has also increased, which has led to the clamor for environmentally responsible companies. Unfortunately, some marketers and manufactures have taken advantage of this significant increase in the demand for green products to mislead consumers in to purchasing products that do not deliver on their promise. In spite of this, the development of green technologies and innovation has continued (Olson, p. 3-16).

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Definition of a green business

Various definitions have been put forward on what a green business entails. These definitions enumerate the factors that determine the qualities of a green business. Therefore, green business could mean a venture that reduces negative impacts of the environment, observes the environmental regulations. Has a marketing campaign that is slick green and publishes a report on its Corporate Social Responsibility (CSR); uses good environmental systems; is able to sustain its operations in to the future indefinitely; enriches or improves the environment within which it carries its operations. Therefore, a green business can be defined as an entity that has been set up with an aim of achieving a sustainable society by adopting processes and products that do not have negative impacts on the environment. It can also be a business, which over time has adapted its processes and products to reduce their negative impact on the environment (Stern & Ander, p. 27-39).

Green washing

With the increased eagerness from the public to behave responsibly towards the environment, businesses have developed marketing strategies aimed at misleading customers to buy their products claiming that they are complying to environment safety requirements. As a result, business are not developing products to support a healthy environment but are just misleading their customers by putting up campaigns either in their packaging or in advertisements to dupe the unsuspecting customers. Various researches have found that the amount of environmentally sensitive products and processes has increased. However, the level of greenwashing has also gone up, which cancels the benefits gained from the environmentally friendly products (Windsor, p. 12-14).

Greenspace Company

Greenspace is a business that specializes in green products for business and home. Among its wide range of green products are paints, which they claim to be non-toxic, flooring, and countertops, which they claim to be eco-friendly. Through the Green guides provided by the Federal Trade Commission (FTC), one can be able to determine if the claims are qualified or whether they are just another type of greenwashing (Greenspace, p. 1).

Paints

Non-toxic claims

The company makes claims that its paints are non-toxic. These claims are qualified based on the following reasons. Most paints are associated with toxicity. Therefore, those that are non-toxic qualify as environmentally friendly, because the toxic aspect was initially present. They are scientifically proven based on the Green seal certification, which is a reputable quality assurance institution. For instance, the American Pride paint is proven to have no chemicals that contain carcinogens as well as zero Volatile Organic Content (VOC). However, the superiority claims made on the paint cannot be proven, because they are not based on third party research results (Greenspace, p. 2-11).

Certification and seals approval

Green seal has certified the company’s products, which is green compliance assurance institution. The areas of certification are clearly spelled out. For instance, the Yolo paint has zero VOC and no harmful chemicals. It is flooring materials particularly the timber has been certified by the Forest Stewardship council, which is an independent and reputable agency. It observes compliance with responsible logging requirements as well as ethical human resource procedures and practices. The company also states that its bamboo flooring products have been made in factories with ISO certification (Greenspace, p. 2-11).

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Qualifications and disclosures

The company has generally met this requirement in all of its disclosures. Vetrazzo one of its flooring products is claimed to have been made of 100% glass that is recyclable. Paperstone, which is another flooring product, has 50% post consumer recycled paper. Lastly, among flooring products there is Eco Top, which has 50/50 blend of bamboo. This affirms excellent disclosure of qualification among flooring products. Although the company states that most of its bamboo flooring products are environment friendly, they do not provide the exact details of compliance. For instance, the glue used is said to emit less formaldehyde below the standards set by US OSHA. However, the company does not state by how much are their emissions less. This casts doubt on the claims and makes the claims deceptive (Greenspace, p. 2-19).

Differences between benefits of product, package and service

This requirement has largely been met in the company’s presentation of its products. The company has stated clearly that the non-toxic aspect is in its paint and not the packaging. The Yolo paint for instance has given figures that state its qualification such 40 % solid content. The American Paint has Zero percent of VOC, which shows that the whole of the product is VOC free. The company also states that its wool carpet is suitable for people with allergies, because it is made from non-toxic materials. However, this benefit has not been proved by any scientific research (Greenspace, p. 2-19).

On flooring materials, there is Vetrazzo, which is made of recyclable glass that make 85% of the whole product. Paperstone a flooring product is claimed to have been made from ware-based phenolic resin, which is obtained from cashew nuts. This a natural source and is biodegradable. However, the percentage of content is not stated, which disqualify the claim. Still on the flooring products, there is Eco Top, which has been certified by Forest stewardship Council as having a 50/50 bamboo blend. This is a qualified claim, in addition to stating the figures; an independent third party has certified the qualification. All these benefits are associated with the product and the company clearly states this in its presentation. In addition, the benefits have been stated clearly in terms of quantity except for paperstone (Greenspace, p. 2-19).

Comparative claims

Greenspace has failed in this context, for instance, the company states that its American pride paint is the highest rated among the leading paints according to their lab tests. This is not a qualified claim because there is no an independent party to verify this claim. Therefore, their lab tests cannot be a standard for substantiating their superiority. Hence, claiming that the products are the most environmentally friendly is just a green washing tactic (Greenspace, p. 2-19).

Degradable claims

The FTC guidelines regard as deceptive any misrepresentation that a product or its package is degradable, biodegradable or oxo-degradable. It should also state the period it takes to degrade and the extent of degradation. Greenspace Company claims that its wool carpet is fully biodegradable after reaching its lifecycle. This claim is valid because it is made of materials, which are all biodegradable. These include 100% wool and degradable synthetic. However, the degradable claims have some weaknesses in that they do not state the period of degradation (Greenspace, p. 2-19).

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Consumer Perceptions as a factor in promoting Greenwashing

Consumer perception refers to the understanding of customers of various claims made by marketers about environmentally products, packaging processes or services. One thing that has enabled many marketers to succeed in deceiving customers is their ability to configure customer perception. Hence, they are able to make claims that say one thing but mean the other. However, unsuspecting customers who are striving to acquire environmentally friendly products are not able to realize that the marketing claims are deceptive. Therefore, to understand how the marketers are able to circumvent the set guidelines it is important to compare the guidelines against the customer claims and the resultant customer perceptions (FTC (2). P. 55).

Certification and seals claims

This they do to affirm their products as environment friendly. When businesses use independent bodies to certify their products and dealings, it reduces the burden of proof from the customers. The customers will no longer use guesswork to determine, which products are environmentally friendly and which ones are not. In addition, independent third party certification helps in technical products, which customers have difficulty in understanding details about their manufacture. This shows that customers perceive that all products that have claims of certification have met the conditions required. They believe that products with any claims of third party approval are superior to those that do not have (FTC (2). P. 55-62).

Marketers have taken advantage of this reliance on certification by customers to make deceptive claims of their [products, processes and services. Some businesses make false claims of certification by independent third parties. For instance, some businesses claim to have been certified by a particular third party, yet this is not true. However, unsuspecting customers regard such an approval as valid. Hence, they end up being deceived. Moreover, some businesses claim to be certified by some bodies, which do not exist. For instance, a business claims to been certified by a certain institution, yet that body does not exist. However, most customers do not take their time to verify if such bodies are in existence, because they are only interested in a certification claim as proof. Therefore, they end up being deceived in to purchasing unsatisfactory products (FTC (2). P. 55-62).

Degradable claims

The FTC guide stipulates that any degradable claim needs to be substantiated with reliable scientific evidence. The guides state that such a claim should meet two conditions; first state the product or package’s ability to degrade on customary disposal. Secondly the guide requires that the claim should state the extent of degradation, whether its part or whole of it that degrades and after how long. However, most customers often seek the claim degradable and they certify that product as degradable. A case in point is a research conducted in 2006 to find out consumer perceptions on biodegradable items. The research found out that 60 percent of those interviewed believed that a biodegradable item would decompose within a year. In addition, 83 percent thought that biodegradable items could degrade when disposed in a landfill, which is not true (FTC (2). P. 66-69).

This reaffirms the wrong perceptions that customers have, which marketers take advantage of to promote deceptive claims. Therefore, some businesses would make claims of degradation without substantiating such degradability claims, such as the extent of degradation, the period or the environment necessary for degradation. However, customers only look for degradable claim, because they think that all products are all environment friendly. Therefore, there is need for customers to have information about degradation and to know what to look for in order to validate those claims made by marketers (FTC (2). P. 66-69).

Compostable claims

The current FTC guide requires that marketers substantiate their compostable claims. This include using scientific evidence in explaining to what extent the product is going to decompose and the conditions required for decomposition. For instance, the marketers should explain if the product will only decompose under some special facility or program. Some composting facilities are not available in some areas, such as yard-trimming composting programs. Therefore, any product that needs such conditions must stipulate that (FTC (2). p. 75-78).

Most consumers do not know that some products labeled compostable need special conditions. They believe that such products any decompose within their home composts. Some customers believe that there are products that need special conditions to be composted. However, they do not know whether they have such facilities around their homes. In addition, some think that they actually have those facilities yet they do not. A case in point is a research that was done by APCO. The consumer research was on biodegradable and compostable products. According the research findings, 28 percent of the respondents said they did not know if they had a large-scale composting facility within their proximity. 43 percent of those interviewed referred to the wrong composting facility as a large-scale composting facility. Having known consumer perceptions, which are less informed of the required composting facilities, marketers are able to promote their deceptive campaign. This is in spite of clear guidelines that stipulate the required communication (FTC (2). P. 74-78).

Recyclable claims

It can also qualify as recyclable if it can be reused in the production of another product or package through a determined recycling program. The guide also requires that marketers stipulate the availability of recycling programs for the waste material. Some manufactures will recycle products for the customers. Hence, making a general claim on the ability to recycle valid. For instance, some dealers often ask customers to return the used products to the company for recycling (FTC, p.2. para. 1-4).

Most customers only believe that once a product has been labeled degradable, that is enough for the product to qualify as an environmentally friendly product. They rarely check whether the claim that the product on the product or package is conditional. For instance, some marketers might claim that their products are recyclable. However, unsuspecting customers who believe all products labeled recyclable can be recyclable in any condition, end up being deceived. Therefore, how customers view the aspect of recyclable items determines the possibility of marketers’ success in making deceptive claims (FTC (2). P. 80-83).

A study was carried to investigate consumer perceptions on how the understood the phrase made with recyclable materials. 35 percent of the respondents, which was the majority, stated that the entire product was made with recyclable materials. Only 15 percent were able to configure correctly that the phrase did not mention anything about the amount of recyclable materials in the product or package. Some times marketers use such terms to imply that their products are entirely recyclable. Therefore, it needs customers to be able to determine whether the terms used are detailed enough to provide qualified information on whether a product is recyclable.

Free-of and non-toxic claims

Some claims are unqualified because the products have never been associated with toxicity. Some marketers might claim that their products do not contain a certain substance that destroys the environment, yet the same the same product may contain another product that still destroys the environment. However, most customers believe that once a product has been declared free-of a given harmful substance then it is friendly to the environment (FTC, p.2. para. 5-6).

Some customers focus on figures to determine those products that are environment friendly. However, a product can claim to have reduced its level of toxicity significantly. The focus should be what standards those reductions are being compared. For instance, a product can claim to have reduced its toxic levels by 50 percent. However, it is upon the customer to determine what the initial levels were before, in order to know if such reduction is significant. A claim of free-of toxicity may mean that a product will have no harmful substances for a given period. However, customers who only focus on that claim to determine appropriate products may end up being duped. Most customers do not question those broad claims of reduced toxicity. As a result, marketers take advantage of their narrow understanding to promote their unqualified claims (FTC (2). P. 107-109).

The Sins of Greenwash on Family Products

The clamor for green products has intensified to a higher scale than has ever been witnessed. Furthermore, they have increased their advertising significantly – nearly three times, which has largely contributed to greenwashing. A report published in 2007 showed seven sins of greenwashing, which has resulted from marketers efforts to cash on the growing demand for green products. The research also revealed that most customers were focused on doing the right thing but were increasingly skeptical of the many claims that are misleading. Since then, marketers, consumers and policymakers as well as activists have used the seven sins as a standard to evaluate any environmental claims (TerraChoice, p. 1-2).

Risks of Greenwashing

There are signs that marketers are increasingly responding to consumer demand for green products. However, greenwashing has also increased, which if unchecked can result in great risks. First, customers who intend to do good, will be misled in to buying goods that do not deliver the environmental promise that they make. Secondly, there will be an increase in competition from illegitimate environmental claims, which will result in loss of market share from marketers with legitimate environmental claims. As a result, real environmental innovation will be slowed down in the market (Schaper, P. 66-77).

Thirdly, persistent greenwashing will lead to skepticism in all environmental claims. As a result, customers will become pessimistic on the chance of attaining better green products. This will in turn lead to low demand in green products and less effort directed towards achieving green products. Lastly, increased greenwashing can result in loss of drive power towards sustainability. Hence, there will be no incentive of moving towards sustainable products. Therefore, there is need to find out the level of greenwashing and come up with ways of discouraging such acts. This includes empowering consumers with practical tools and rewarding genuine efforts as a way of encouraging sustainable innovation (Schaper, P. 76-92).

Research findings of Greenwash on family products

A research carried out by Terachoice environmental marketing research firm found out a wide range of results – some are bad while some are good. The research also found out that an increase in the demand for green products has also led to an increase in green advertising, which has resulted in an increase in greenwashing. On a more focused level, the research found out that greenwashing on family products such as cosmetics and cleaning products had increased. These include products like window cleaner, toothpaste and diapers (TerraChoice, 3-5).

This research was done on products in North American stores on 2219 products. This is sin is committed when marketers or manufacturers gives an impression either through words or images that they have been endorsed by a third party, which in reality does not exist. As the level of greenwashing and the concern thereof increases, most experts and consumers turned to third party endorsements as a way of validating environmental claims Therefore, most dealers in green products went for eco-labeling as a way of assuring their consumers that their products met the required standards. However, some marketers took advantage of this need to introduce fake labels. Therefore, the companies adopted some images that appeared as official stamps and seal of approval (TerraChoice, 5-6).

One of the family products that were characterized by this sin is the kids’ products. The main reason behind this is that most parents desire to provide extraordinary care to their children. In addition, research on consumer perceptions suggest that new parents are more focused on environmental issues than any other category of consumers. As a result, marketers have paid more attention to toys and baby products whereby some have helped them while some have exploited them. Some of the products affected by the environmental claims are as follows (TerraChoice, 7-8).

Natural claims, whereby most marketers claim that their products are either naturally derived or are based on natural materials. In the research carried out in North America, 39 percent of the products investigated were found with such claims. Organic claims was the second most common claim, whereby 76 baby products made this claim. However, only 21 were certified by as valid. Some products also claimed to be BPA-free, which included 44 baby products. Therefore, most manufacturers and marketers of kids’ products had mainly committed two sins – sin of false labels and the sin of no proof (TerraChoice, 7-8).

Cosmetics

There is a growing conscience on the use of these products arising fro the fact that we use them on our bodies. Experts such as advocates and regulators have increased their scrutiny on the ingredients of these products. Not surprisingly, the research carried by TerraChoice in 2010 identified healthy and beauty products as a major category common with greenwashing. Some of the claims made were as follows first, there is natural. Over 263 products were found to have claims of having an aspect of natural content (TerraChoice, 8-9). (1)

There were soaps that were claimed to be naturally refreshing, some lotions were marketed as naturally pure and some made of naturally driven ingredients. However, none of these clams were specified resulting in the sin of vagueness. Organic was the second most common environmental claim in this category, whereby 139 products were found with this claim. Although making this claim is not a sin, lacking a third party certification to support the claim results in the sin of no proof (TerraChoice, 8-9). (1)

Cleaning Products

The demand for green cleaning products has led to a rapid increase in the development of formulations and methods as well as technologies in this category. Furthermore, there has been an increasing association of home cleaning products with air quality and chronic diseases such as asthma. As a result, more cleaning products have been introduced with a claim of green. However, these claims have mostly resulted in greenwashing. Out of those products investigated, 124 were found to have claims of biodegradability. Most of those claims were not verified, which resulted in misleading claims and a sin of NO proof. In addition, most of the jargons were not explained, resulting in the sin of vagueness. However, independent and reputable bodies certified only a third of these claims (TerraChoice, 9-10). (1)

Recommendations for businesses dealing in green products

There is a general agreement that green products have immense benefits for us as human beings and for our environment. However, greenwashing has negatively affected the efforts of well-intending businesses. Generally, there are steps that a manufacturer and marketer can take to secure the trust of consumers that has been adversely eroded. First, the dealer should be self-honest. This refers to identifying and accepting all the impacts that a product has on the environment. After acknowledging, the dealer should address them systematically. Secondly, the dealer should produce the products, make valid claims about them and seek customers’ opinion on how the products can be improved progressively. The dealer can explain the progress made to the consumers, but should not overstate it. Establish a long-lasting relationship with the customers, whereby they can constantly contribute on how the product can be improved (TeraChoice, p. 18). (2)

For those dealing in baby products as well as toys, measures to be taken are outlined below. First, be transparent and show proof. Being confident that your product has attained some qualification is not enough, because parents will need proof. Therefore, the dealer should search for the facts and make them available for the customer. The dealer can then build an open dialogue with the customer and this will build the consumer’s trust. Secondly, the dealer should be ready to learn from the others. This involves having a keen interest on the experiences of those dealers that went through the same path of green innovation. The dealer should take note of their drawbacks and avoid them. Lastly, adopt or build a certification system as quickly as possible. There is increased scrutiny of products by customers and those products that are able to secure indisputable trust will be the main beneficiary (TeraChoice, p. 22). (2)

There are also some key issues to put in to consideration for those dealing in cleaning products. First, explain the claim. Making a claim about a product such as environmentally friendly is not in itself a sin. Lack of explanation of what is meant by the claim is the problem. No manufacturer has produced a product that is environment friendly yet. It is even worse when more than one dealer makes such claims. As a result, a manufacturer should be honest with his customers on what he means by making such a statement. Secondly, the producer should always lean on legitimate certifications. This can be done by partnering with the certifiers in endorsing their products. This authenticates the certifications, because it appears that the dealer is actually working with the certifiers (TeraChoice, p. 23). (2)

Recommendations for consumers on how to benefit from the green products

It is apparent that consumers are the most affected by greenwashing, because they end up not realizing the value for their money. In addition, their disappointment results in wastage of the benefit in the purchased product. However, there are measures that the consumer can take to ensure he or she is able to trust the stores dealing in green products. These measures can also force the dealers to reduce greenwashing and focus on developing more environment friendly products. First, as a consumer one should always support green products whenever possible. This they should do in spite of their suspicion, because any claim of green is most probably an exaggeration rather than falsehood. As a result, the market will adjust appropriately, because each time a consumer chooses a green product, he or she will be asking for change (TeraChoice, p. 21). (2)

Secondly, the consumer should go for products that offer the most reliable proof. There are some reliable standards and certifications such as Eco Logo, which the consumer can choose when purchasing products. In addition, a consumer should choose products that provide more information that is detailed over those that do not. Any dealer that is making reliable claims is more likely to provide more information about the benefit than those that do not. Therefore, by choosing more information over less and reliable certification, the consumer will more likely end up with a “greener” product. In addition, the consumer will be communicating to the dealers on the need for more information by each purchase (TeraChoice, p. 21). (2)

Consumers can rely on watchdog groups such as Enviromedia. This web based watchdog group that assesses companies’ green messages based on their green actions. It therefore, provides an interactive forum for users to rate the ads against the performance of their products. Therefore, companies listed with a high score will always strive to retain their positions in the chart. As a result, they will send green messages that they are able to deliver. On the other hand, those companies with a lower rating and those not in the chart will seek to increase their rating. Therefore, such organizations will provide consumers with information on the most reliable companies, from which they buy products (Leber, para. 4-6).

The FTC also needs to set up a rating system, where they can rank the companies based on their level of compliance to the greenwashing rules. This is an effective way of securing their trust of consumers to legitimate organizations, because the FTC does not have vested interest and can be trusted by consumers. This rating system can also be a platform to encourage companies to be involved more in green innovation. In stead performing the policing role, which affects the rate of innovation negatively, the rating system can provide an incentive to invest more in innovation. As a result, companies will be striving for a higher rating and the reputation associated with it, while consumers will be seeking highly rated organizations. In the end, the consumers will be able to trust the stores and the stores will be focused on reducing greenwashing and increasing innovation in green products (Leber, para. 4-6).

The government and certification bodies can also play a major role in securing the consumer’s trust to green products. The government should provide a list of reliable certifying institutions. This will enable customers to counter check if those companies that advertise themselves as certifiers are actually in existence. In addition, the customers can verify if such institutions are licensed to carry out that task. Reliable certifying institutions can help consumers by publishing the companies or business they have certified. This includes their names, the products and processes they have endorsed as well as the validity period of that certification. Therefore, the consumers will be able to identify those companies that use the names and fake logos of reliable certifiers to claim their endorsement (Leber, para. 4-6).

Conclusion

Greenwashing is real problem that faces consumers, retailers, marketers and manufacturers. However, consumers are the most affected because they cannot establish which organizations are advertising what they can deliver. In addition, they end up disappointed and not realize the value for their money when they purchase products that have exaggerated their performance. Producers and other dealers who have legitimate claims have also been victims of greenwashing from illegitimate claims. Green space is one company that deals with green products. Rom the assessment of their products it is apparent that the company has largely met the FTC guidelines on promotion of its products. However, some few areas need to be addressed, such as providing of enough details about the claims made.

Those propagating greenwashing have been successful, largely because of customer perceptions. Customers have no adequate information to help them make decisions on the advertisements and claims made. Researches carried on consumer perceptions by independent organizations have proved that what customers understand from the claims are not what was actually meant. Unfortunately, marketers have realized that and they are using that opportunity to cash from the ignorance of consumers. They make claims, which may be within the law but their impact is not what the law intended. Therefore, the marketers have managed to use deceptive claims to make money from customers.

Studies done by research firms such firms have revealed that there is an increase in demand for green products. The increase in demand has led to the development of technologies and methods as well as misleading advertisements on green products. Various ways in which companies with legitimate claims can attract ant secure consumer trust, which has significantly reduced include, being honest and developing relationships through, which they can work with customers to improve the products to the required standards. Consumers can also seek to gain detailed information on products to help them in identifying legitimate claims made by marketers. These they can obtain from the rating agencies as well as the reliable certifying bodies.

References

Friend Gil, Kordesch Nicholas and Privitt Benjamin, The truth about green business. Upper Saddle River: Que Publishing, 2009

FTC. (1). Green Guides. Summary of Proposal. (n.d). Web.

FTC (2). Proposed Revisions to the Green Guides. (With table of contents). (n.d). Web.

GPO Access. Electronic Code of Federal Regulations. (2011). Web.

Greenspace. Eco-friendly products improve your environment. (n.d). Web.

Leber Jess. The FTC’s Green Guide: Greenwashing Crackdown or Missed Opportunity?. Change. (2010). Web.

Olson, Eric G. Better green business: handbook for environmentally responsible and profitable business practices. Upper Saddle River, NJ: Wharton School Publishing, 2009

Schaper, Michael. Making Ecopreneurs: Developing Sustainable Entrepreneurship. Burlington: Gower Publishing, Ltd., 2010

Stern, Neil Z. and Ander, Willard N. Greentailing and other revolutions in retail: hot ideas that are grabbing customer’s attention and raising profits. Hobboken, NJ: John Wiley and Sons, 2008

TeraChoice. TeraChoice website. 2011. Web.

Windsor, Sam. An Introduction to Green Process Management. Milwaukee, WI: ASQ Quality Press, 2010

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