ByELIZABETH O'BRIEN
1. Sure, we ll go green -- as long as we make money at it.
Al Gore s An Inconvenient Truth brought environmental concerns to the masses in 2006. But many firms were already going green, working to create more eco-friendly systems and products. The motivator? The market, says Steve Schueth, president of First Affirmative Financial Network, a Colorado-based network of advisers. Fact is, green initiatives like energy efficiency can save companies a lot of money, says Schueth, and the good PR doesn t hurt business either. What makes a company green, according to Jack Robinson, manager of the $186 million Winslow Green Growth fund (WGGFX)
2. There s lax enforcement of our claims.
The Federal Trade Commission puts out guides to help marketers avoid deceptive eco-friendly claims. Most important, claims must be specific to the product and shouldn t overstate environmental benefits, says Laura DeMartino, assistant director of the FTC s enforcement division. Yet enforcement has been meek and passive, says Mindy Lubber, president of Ceres, a Boston-based environmental coalition. In the past 15 years, the FTC has brought roughly a dozen actions against firms, one of which yielded a $4.2 million settlement in 2006 with a Nevada firm claiming its device would increase cars gas mileage by 27 percent. (Environmental claims are an area the commission has focused on and will continue to focus on, says DeMartino.) To be fair, the FTC has a broad mandate and must allocate resources to cases that have inflicted the most harm. I don t think enforcement is the main issue, says Joel Makower, executive editor of GreenBiz.com, an environmental-resources site. Most of the blame for this falls on consumers, he says -- many want to shop green, but few are willing to pay more or otherwise go out of their way to do so.
3. Looks can be deceiving.
When you think green business, you probably think of niche companies like Seventh Generation, with its line of eco-friendly cleaning products, marketed to conscientious consumers. And while small firms certainly contribute to the greater good with their green products and practices, their biggest impact often lies in their ability to force the big guns to green up their act by eating into market share, says Bob Lilienfeld, editor of green-living newsletter The ULS Report. If you really want to see green business making an impact, be prepared to adjust your expectations. Take Wal-Mart. The world s largest retailer has been making serious efforts to improve its environmental record. It s the elimination of waste that s driving it, says Wal-Mart (WMT)
4. If we re not seeing the big picture, we re not so green.
Sure, laundry detergent made from essential geranium oils sounds lovely, but what you might not know is that the real eco-benefits in household cleaning products come from concentrating ingredients. Natural ingredients or not, smaller packaging reduces plastic and other materials and allows more goods to be shipped at once, saving fuel. Wal-Mart sells only concentrated liquid laundry detergent, for example, an effort the megaretailer says will save more than 400 million gallons of water, 95 million pounds of plastic resin and 125 million pounds of cardboard over three years. Naturally, this also benefits retailers, since they can fit more units of a concentrated product on shelves. But consumers need to be better educated to do their part. For example, while locally grown food has gained traction in recent years among environmentally conscious shoppers, all things considered, it s not always the greenest way to go. Fact is, 18-wheelers can move far more produce in one trip than a local farmer. And that s only part of the pollution equation: It s the 10,000 cars bringing one [head of lettuce] home that s the problem, Lilienfeld says.
5. Don t tell anyone, but we re actually listening to customers...
Late last year Clorox announced a recycling program for the Brita water filters it produces. What sparked the move? An online campaign led by Beth Terry of Oakland, Calif., through her Web site Takebackthefilter.org. But that s still pretty rare. Not enough consumers are talking to companies, Makower says. (A spokesperson for Clorox says the company had actually begun working on a recycling process for Brita filters before Terry s campaign.) And when consumer activists do pipe up, Makower says he sees them criticizing behaviors companies can t realistically change. For example, critics have accused Clorox of greenwashing -- engaging in deceptive environmental practices -- because even as the company rolls out more environmentally friendly products, they say it continues to manufacture other questionable lines that account for the bulk of its revenue. That s the wrong approach, according to Makower, who says consumers need to embrace big companies eco-friendly efforts. Want to make a difference? Focus on specific, obtainable goals, he says; that way you ll have a better chance of effecting change.
6. ...and to our investors.
Investors who want to do good with their money have lots of options: As of 2007 there were 173 different socially and environmentally screened mutual funds with $171.1 billion in assets, according to the Social Investment Forum, a Washington, D.C. based industry association. Of these, about 50 focus on the environment. Even as skittish investors yanked an estimated $225 billion from stock funds last year through November, roughly $1.5 billion flowed into green funds during that same time, suggesting green-minded investors don t sweat the stock market s ups and downs as much as others do. Environmentally conscious investors are also more active: The number of shareholder resolutions on climate change grew from nine in 2000 to 57 in 2008, an 84 percent jump, according to Ceres. What s more, these resolutions are attracting a significant amount of votes from shareholders, up from an average of 7.8 percent in 2000 to 23.5 percent in 2008. It s not that they ll actually pass -- a majority of stockholders don t vote, and many of those who do vote with the company. But according to Ceres, when participation hits 30 percent or more, companies tend to start responding.
7. We might be green, but we re first and foremost a business.
Green companies aren t just good for the environment. Businesses that embrace eco-friendly initiatives tend to adopt other good governance measures as well. Chipmaker Intel, for example, which ranks high on green initiatives, likewise gets good marks in areas like accountability in executive pay and philanthropy. The company also supports education from New York to New Delhi, promotes volunteerism in employees and promotes environmentally friendly practices in its supply chain. Since when have businesses become such altruists? They haven t. These companies are being smart about the bottom line, says Ceres s Lubber, since they know in today s world failing to address issues like climate change or workplace diversity represents a financial liability. Countries around the globe are setting limits on pollution and instituting so-called cap-and-trade programs that put a price on carbon emissions; U.S. firms that aren t taking steps now to reduce emissions will literally pay a high price, especially if the U.S. follows suit with its own cap-and-trade program as expected. For companies to survive, they need to come into the 21st century, Lubber says, and realize that environmental and good-governance initiatives are now simply a cost of doing business.
8. Green business still has a lot of gray areas.
The auto industry may be happy to publicize its hybrids, but you won t hear car companies talk about the millions they spent in 2007 lobbying Congress against stricter fuel-emissions standards. Banks, meanwhile, broadcast their investments that help fight climate change, but they re not about to turn away creditworthy coal producers who want a loan. These industries aren t isolated cases. Take Fiji Water. The company has implemented a host of initiatives, including investing in renewable-energy sources and recycling. But Fiji makes bottled water, a product environmentalists shun. The firm s core business, they argue, involves taking a precious resource from developing countries, packaging it in wasteful bottles, transporting it across continents and selling it in countries that don t need it. (Thomas Mooney, senior vice president of sustainable growth for Fiji, says bottling the water in a landlocked part of the U.S. would have a worse environmental impact.) To assess a company s green efforts, you start from the question, 'How less negative are you? says Gary Niekerk, who works in corporate responsibility for Intel.
9. We re not going green until we re good and ready.
Earth-loving yogurt eaters email Stonyfield Farm s Hirshberg all the time, asking why the company s plastic cups aren t recyclable. In fact, it s no oversight. An extensive analysis Stonyfield commissioned found the lightweight cups they use actually have a lower environmental impact over the course of their entire manufacturing-and-use cycle. According to the study, Stonyfield saves more than 100 tons of plastic a year this way. It s criticism like this that make companies trying to implement green intiatives cringe. While Stonyfield battles public perception by describing its choice of nonrecyclable cups on its Web site, many firms choose to stay mum about their green efforts, especially when they re still in development. In the 1990s, for example, Levi s began blending organic cotton into some of its jeans but didn t go public with it until it rolled out its Levi s Eco jeans line, made from 100 percent organic cotton -- grown without pesticides or chemical fertilizers -- in 2006. This is an area where companies are walking more than they re talking, Makower says.
10. There s no such thing as 100 percent green.
It s simple physics: Any action creates waste, Lilienfeld, says. No company or consumer can claim a perfect environmental record. Even the act of recycling represents a failure to reduce or reuse, environmentalists say. Every time you put something in the recycling bin and feel good about it, you reward yourself for your consumption, Lilienfeld says. So what s a conscientious consumer to do? Start by buying less, say experts. Green products are designed to make you feel virtuous, but they re still stuff. Don t forget you re being marketed to, even with eco-friendly wares, says Meaghan O Neill, editor of PlanetGreen.com. For example, companies entice you to buy their bottles of environmentally friendly cleaning agents, complete with forest images on the package, when you might be able to get the job done just as well with a mix of vinegar and baking soda. Similarly, buying clothes secondhand may be better for the environment than a new garment from an eco-friendly catalog made of 100 percent organic cotton (it still has to be shipped). Sometimes, say eco-warriors, the greenest thing consumers can do is leave their wallets home.
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