The Push to Define 'Green' – Stratfor Public Policy Report

By Kathy Morson

Mainstream businesses are launching new green initiatives and eco-friendly products each week in an effort to capitalize on society’s apparent shift toward a more environmental ethic. While this bodes well for the overall environmental movement, as the once-niche issue now receives prominent media attention, a crucial question is emerging: Who defines “green” — businesses or environmentalists?

Since the early 1990s, some environmentalists have labeled certain green business initiatives as “greenwash” — suggesting the initiative is less eco-friendly than the corporate spin on it would have consumers believe. These growing allegations demonstrate a clear point of contention between business and environmentalists. Most green business efforts essentially are attempts to improve upon traditional products by somehow making them more environmentally benign, such as by reformulating the product or increasing its energy efficiency. However, environmentalists, especially those in the sustainable consumption movement, want businesses to change their products fundamentally in anticipation of shifting consumer values — and thus consumer demand.

A new public policy debate is forming that attempts to address these issues and define the term “green.” A green certification program is the most likely outcome of these conflicts, though even that is unlikely to quell the debate over values that will always surround elements of the sustainable consumption movement.

Green Corporations on the Rise

In recent months, a wide range of so-called “green products” has appeared on store shelves. Among these are biodegradable gift cards, high-priced designer cloth bags and eco-chic baby products such as diaper bags made from renewable resources and bedding made from organically grown products. Meanwhile, major cereal companies are offering organic options and gasoline-electric hybrid cars are gaining a significant customer base.

In addition to the barrage of product choices, corporations are announcing new policies and reinvigorating older ones that focus on reducing the companies’ impact on the environment. The major retailer Target, for instance, recently gained media attention for its efforts to reduce excess product packaging. The program is part of Target’s larger sustainable products initiative that includes increasing recycled content of products, pressuring suppliers to phase out the use of certain chemicals in products and offering nontoxic cleaners, compact fluorescent light bulbs and more organic food choices. Target also announced it is working to improve its environmental footprint at its stores and corporate offices by using more renewable energy power and reducing the overall generation of waste. In instituting the new policies, Target is both recognizing the growing market for green products and reacting to the environmental policies announced in 2006 by its competitor, Wal-Mart.

On the other end of the spectrum is the General Electric Co. (GE). An early mover on green initiatives, GE is spending millions of dollars creating and promoting environmental technologies such as cleaner coal and nuclear and renewable energy under its Ecomagination program. As a result, the company, intentionally or not, is shaping the debate on domestic and global climate policy. CEO Jeffrey Immelt, however, denied in a recent speech at Stanford University that he is an environmentalist, saying he is in the business of selling products. He said his business strategy regarding environmentalism is to bet on a variety of environmental technologies and hope that at least one of technologies pays off — and that GE can lead the way in profiting from it.

Although both Target and GE have launched environmental initiatives, they are doing so for different reasons. The growing corporate sea of green is creating a problem for environmentalists — corporations are in the driver’s seat, releasing products and initiatives based on what they define as green, which may be markedly different from the environmentalist definition.

Plastic Bags

At issue in the green-labeling debate, then, is not simply determining whether a product is green, but which product is greener than another. The need for a clear hierarchy of green is apparent in the current policy debate over the use of disposable plastic bags. This past spring, the city of San Francisco banned the use of disposable plastic bags in grocery stores and drug stores, becoming the first U.S. city to do so. The measure followed restriction or outright bans on the bags in Ireland, Bangladesh, France and Uganda.

As more and more U.S. cities follow San Francisco’s lead, a likely unintended effect of the bans will be an increase in the demand for paper bags. This poses a problem for environmentalists, who oppose the use of disposable plastic bags because of the litter they cause, but also oppose the use of paper bags, whose production they say requires more energy and creates more water pollution than producing plastic bags — not to mention that paper bags use virgin tree fibers.

Some groups, then, are beginning to promote the message that the only true environmentally friendly bag is a reusable cloth bag, which national retail chains are beginning to offer. However, even cloth bags pose environmental risks because of pesticide use on the cotton fiber and toxic chemicals in ink. Then there is always the possibility that the bag has been made in a sweatshop.

The sustainable consumption movement is attempting to resolve this major ideological debate by arguing that the problem is best solved not by wrangling over which bag is best, but by changing society’s throw-away mentality. While this approach might succeed in the long run, it avoids some consumers’ immediate concern over which bag they should choose. On the other hand, businesses see the bans on plastic bags not as a wider disposal issue but as a narrower issue: finding a plastic bag replacement.

Green Hierarchy Discussions

The grocery bag debate clearly shows the need for determining gradients of green so that environmentalists can steer consumers toward the least environmentally harmful product. To this end, discussions are developing on how to sift through and prioritize the various green initiatives.

As an informal forum, the blogosphere is beginning to compile corporate green initiatives and serve as a clearinghouse on these developments. Activists groups such as Greenpeace have begun to comment on their respective Web sites about the growing green movement and are calling certain green initiatives “greenwash.”

More formally, a new online forum has been introduced by the Element Agency, a communications firm that works closely with environmentalists, to serve as a sifter and tracking mechanism for all things green. The firm describes its new forum as a place to “dissect trends in green marketing and corporate social responsibility as well as monitor and track noteworthy companies, environmental news and campaigns.”

The Shades of Green

While “greenwash” certainly exists in the marketplace — where products of little environmental benefit get a significant green marketing push — the current trend in corporate environmentalism is a far cry from that which followed Earth Day 1990, when even getting lip service on the issue was considered progress. The public now assumes that companies care (to some degree) and that they will back up their green claims with action.

Although the debate over defining green is complicated, environmentalists are pushing strongly for it, so as to avoid having the definition co-opted by large businesses seeking financial gain on the emerging green market. On the other side, businesses also have a large stake in this debate.

Corporations are spending millions of dollars on green products and initiatives because they believe they will make a profit and receive first-mover advantage on this growing trend. As more and more businesses jump on the bandwagon, however, the first movers risk losing their competitive advantage. They fear that consumers, facing more and more green choices, might have problems differentiating between the innovators’ products and the “less green” ones from their competitors.

Some businesses, therefore, are banking on government labeling programs as a way to certify their greenness. Major computer manufacturers, including Dell, HP and Lenovo, are participating in a recently launched initiative by the U.S. Environmental Protection Agency (EPA) called EPEAT — the Electronic Product Environmental Assessment Tool. EPEAT is designed to promote greener electronics by giving credits for electronics that avoid certain materials, have less packaging and are more easily upgradeable or recyclable. The program has divided more than 600 product registrations into gold, silver and bronze ratings categories. Large institutional and government purchasers have begun to integrate the tool into their procurement decisions, offering a solid and predictable market demand for producers participating in the program.

One of the first environmental labeling programs — U.S. EPA and the U.S. Department of Energy’s Energy Star program — also is gaining more traction as retailers and utility companies increasingly offer rebates for products meeting the energy efficiency guidelines.

Beyond government-backed labeling programs are a variety of labeling regimes outlined by nonprofit agencies, such as the U.S. Green Building Council’s Leadership in Energy and Environmental Design program, which provides a tiered certification system to rate a building on environmental and energy efficiency criteria. Another, GreenSeal, provides a green certification label for a variety of products, including eco-friendly paint, soaps and cleaning products.

It is unclear how the green-labeling debate will unfold, but a conflict is emerging. As businesses begin to take on green initiatives and develop products that consider lifecycle effects, they will want to know that their real advances are protected from the “greenwash” label. At that same time, they want assurances that the less environmentally benign products of competitors are not considered equivalents — even if the competitor slaps on a green marketing campaign.

Historically, the companies working hardest to solve problems would ally with a realistic green group (a group willing to champion progress, even if it did not reflect the environmental ideal) that would endorse significantly advanced products. In response, idealistic environmental organizations would label both the company and the green group that endorsed the product as “greenwashers.” The key point of contention was that the company was fixing the problem that the environmentalists had defined — such as plastic bags — without addressing the underlying value.

The challenge, then, is for idealistic sustainable consumption advocates to identify products that meet their criteria and for businesses to demand clarity as to what represents a true environmental advance. A broad certification system would allow these two sides to meet in the middle, though it would require that both make concessions. Neither side has yet come out in support of such a system — so continued inaction will be quite telling.