Author: Steve McGrath

Strategies for effective green retailing

Plus lessons from Coca-Cola, Dell and Timberland

Retailers go green for two reasons. One, consumers favor products they believe are green. Two, it’s the right thing to do.

One in three American consumers are more likely to choose environmentally responsible products, and 70 percent of Americans are paying attention to what companies are doing about the environment, according to an Opinion Research poll. Across the water, two out of three UK adults say environmental concerns influence their purchasing decisions.

Does the time and expense of green retailing to these consumers pay off? The jury is still out on that one, so the smart retailer at least considers going green. Fortunately, good green retail marketing is by definition good for the planet. It’s not greenwashing. To be effective, green retailing actions must be able to withstand reasonable scrutiny. They’re changes that matter, in ways however small, to the planet and your business.

Step one: the inventory
If you want to go green, the first thing to do is conduct a thoughtful inventory of how your business affects the environment. Consider both the obvious and less obvious impacts. Let’s say you sell cars. Obvious impacts include the gas they burn, the emissions they spew and the pile of tangled metal that eventually goes to the landfill. The less obvious effects include the production of electricity to illuminate your lot; the trees that die for your paperwork; and the impact of trucking new cars to your showroom. Less obvious still are the natural resources that go into the vehicles’ parts, the energy produced in refining those materials, and all the subsequent consequences of manufacturing.

With this inventory, you learn pretty quickly the infinite breadth of your environmental footprint. The good news is you don’t have to fix everything at once. The inventory simply introduces you to accountability and defines the scope of areas where you can become more sustainable. (This step also tells you how critics might attack you should you be so foolish as to make overly aggressive green claims.)

With your environmental impact inventory complete, here are some options for going green and some examples of companies that employ them:

Green your product
Any product can be greened up. Downsize the vehicles you sell, for example, and make room for some hybrids. Or use greener materials. Payless Shoes now offers a full line of eco-friendly footwear, purses and accessories that use natural fibers like organic cotton, hemp, jute (plant), recycled rubber and plastic, water-based glue and (for packaging) 100-percent recycled boxes printed by soy-based ink. No metal or pesticides in the sourcing chain and no excess raw material extraction. (Sorry, ladies, no pumps either, but you can still get some elevation, see right.) The marketing benefits are immediately clear: Why else would this post mention Payless? How else would Payless have caught our eye on Reuters?

Green your most visible operations
Whole Foods Market banned the use of plastic grocery bags at its 280-plus stores starting on Earth Day 2008. In the ensuing year, it says it has kept an estimated 150 million plastic bags out of landfills. The campaign helped energize customers to triple their use of reusable bags – themselves made of recycled materials. The company also sells a special reusable bag for $29.99, each sale of which feeds 100 kids in Rwanda. That’s good marketing, and it’s hard to be cynical about feeding the hungry.

Green the building
Timberland opened a “carbon neutral” store in New York City last week with reclaimed wood, salvaged brick, efficient lighting and non-VOC paint. These green features hit the consumer between the eyes. Although less visceral, Timberland’s LEED certifications for its mall stores are also important for green credibility.

Green your energy consumption
Dell, for example, announced last week it gets 26 percent of its global electricity needs from renewable energy sources, up from 20 percent in 2008, and powers nine of its facilities with 100 percent renewable energy. Twenty-six percent doesn’t sound like a whole lot, but the company wisely uses credible third parties to compare itself favorably with competitors in technology and in big business. Dell also uses another tactic…

Buy renewable energy certificates
Renewable energy certificates, or RECs, are commodities that an organization can purchase from a renewable energy producer (solar, wind, biofuels) to conceptually offset the harm the first company’s power sources are causing. Purchasing a REC subsidizes renewable energy production and effectively increases the cost of emitting carbon. It’s of limited green retailing value except in bolstering a claim of progress toward carbon neutrality.

All of these measures can be effective, but they have the potential of doing more harm than good. Few media stories are more withering than a point-by-point analysis (of how a company took its green claims a little too far. So just be careful what you say and how you say it:

  • Modesty is always nice, lest you provoke observers to note all the ways you are not yet green.
  • Align green retail actions with your product. The auto industry needed greening, so Toyota greened an auto, the Prius. Coca-Cola, a beverage company, is vowing to replenish the supply of the world’s most popular beverage: water. Alignment resonates. If your building is LEEDS certified but your product pollutes, your overall message is weak.
  • Try to be correct. The Treehugger blog skewered an Italian architect for a stunning creation billed as the “first zero CO2 office building in Milan.” Among other things, the building is elevated on 13-meter pyramid-like “stilts,” effectively driving occupants onto elevators just to get inside. On a roll, the blog even complained about the carbon footprint of manufacturing photovoltaic panels for the roof.
  • Prepare for surprises. As BusinessWeek.com reported, Coca-Cola until recently assumed that most of its emissions came from manufacturing or its trucks. It discovered the lion’s share came from cold drink equipment – the coolers, vending machines and fountain dispensers. This gear includes potentially damaging refrigerants and insulation and consumes a lot of electricity. This unexpected source accounted for about 15 million metric tons of emission every year – almost twice that of the trucks and manufacturing combined.

These examples should give you some direction in planning your next step in green retailing. Remember, if it’s good for the planet, it’s good for business. Because it’s hard to profit without a planet.

Green business may need a little white-collar entrepreneurship

Do you ever have a flash of inspiration, then shrug it off thinking it probably couldn’t pan out?

Shai Agassi never does. His back-of-the-napkin conversation with an engineer has quickly become perhaps the most viable plan for making all-electric cars feasible (hybrids still depend on fossil fuel). Agassi has a clever solution to “range anxiety,” the pervasive consumer worry that electric cars are prone to stranding their owners on deserted roads. His solution? If you run low on juice, don’t plug in for half a day; just switch the battery out. In the time it takes to pump a tank of gas, a robot would whiz out to your car, reach underneath, pluck out the battery and pop in a new one. If anyone can make that fanciful notion real, suggests the New York Times Magazine, it’s Agassi.

The 41-year-old Israeli-American has already created a software company, sold it for $400 million, started a SAP division that went from zero to $2 billion annually, and turned down the SAP CEO job. He has Israeli President Shimon Peres and Renault-Nissan behind his new venture, Better Place, and $400 million in investor backing. He is described as fearless, brilliant and charismatic, and a rhetorical steamroller in the face of objections.

Agassi is an exemplar of innovation (versus mere inspiration), a distinction about which we blogged a few weeks ago. He demonstrates the underappreciated need for clean, green and sustainable businesses to be as fiercely entrepreneurial as any other.

Unfortunately, the world often sees green concerns as starkly at odds with those of business, and every SUV or Superfund site in America reinforces the canard. Agassi, however, makes an eloquent case that classic entrepreneurship will be essential to green business success. He also trusts in the free market to drive demand for electric cars. In fact, he says, cheap electricity will subsidize those cars the same way that cheap minutes let carriers subsidize wireless handsets. (Agassi is, however, counting on government subsidies – to automakers, consumers and infrastructure builders – to kick start the market.)

Keep your eye on Better Place. This one promises to be a wild ride. If Agassi has his way, it won’t burn a drop of petroleum.

If you’re green, prove it

Green is wonderful, especially if you’re savoring it in the forest on a pillow of sun-drenched moss.

As a marketing term, though, green is getting old. Overuse and spin have dulled the verdant halo. Increasingly “green” label may be warning wary consumers they might be getting jerked around. Same with sustainable, fresh, local, organic, natural, recyclable and energy-efficient.

Consumers do want to buy green, and despite the recession, four out of five consumers claim they do (survey results). Unfortunately, one in three doesn’t know how to verify green claims. Translation: when consumers buy green, often they don’t really know what they’re buying.

Since buyers need information and sellers need credibility, the next wave of green marketing will rely heavily on proof – documentation and certification – just as cars rely on JD Power, and as buildings rely on LEED certification.

Says the Federal Trade Commission: “Claims that a product or service is ‘environmentally friendly,’ ‘environmentally safe,’ ‘environmentally preferable,’ or ‘eco-safe’ or labels that contain environmental seals – say, a picture of the globe with the words ‘Earth Smart’ around it – are unhelpful for two reasons: First, all products, packaging and services have some environmental impact, although some may have less than others. Second, these phrases alone do not provide the specific information you need to compare products, packaging, or services on their environmental merits. Look for claims that give some substance to the claim – the additional information that explains why the product is environmentally friendly or has earned a special seal.”

So what’s the seal of approval for green claims? There are options for niche segments of the industry, but no universal seal.

A hundred years after introducing its venerable seal of approval, Good Housekeeping wants a similar role in green affairs, at least when it comes to consumer goods for the household, like appliances, toys, cosmetics, food, beverages. The magazine is launching a green seal in the April issue.

The nonprofit Green Seal,  unrelated to Good Housekeeping, also covers consumer goods, but skews toward the institutional and B2B market with categories in construction, food service, office products, transportation and utilities. It has been certifying products since 1992. Green Seal’s bona fides are here Certified Green Seal products and services are here.

The Federal Trade Commission doesn’t have a seal, but offers guidelines for avoiding false or misleading green claims, over which it has some enforcement power. Here are its suggestions for businesses trying to comply with its “Green Guides” against deceptive green marketing. It defines terms like biodegradable, compostable, recyclable, recycled content and ozone- friendly.

The data center community is pushing for special LEED standards specifically for power-hungry facilities packed with servers. The criteria would be entirely different from green homes or office buildings.   GreenerChoices.org, launched by the nonprofit publisher of Consumer Reports in 2005, provides information on appliances, cars, electronics, food and home/garden products. It gives ratings and provides calculators.

Two generally respected labels are USDA Organic for food and ENERGY STAR  from the U.S. Environmental Protection Agency and the U.S. Department of Energy. The Today Show suggests greenercars.org, responsiblepurchasing.org and www.cosmeticsdatabase.com.

The Boston Globe recently explored this miasma of green confusion around the carbon footprint issue. The article surprisingly revealed that microwaving food (they don’t call it nuking for nothing) is greener than baking it and that bottled water from Fiji or France is probably greener (again, from a carbon standpoint) than Poland Springs. The reason? Bottling plants in France typically use nuclear power-generated electricity, and Pacific Islands plants typically use geothermal-powered electricity. It’s fossil fuels in the United States. Bottom line: tap water is your best bet.

Dassault Systèmes SolidWorks Corp. of Concord, Mass., (disclosure: a client), is developing software that fosters intelligent green decisions long before products hit the market – in the design phase. DS SolidWorks makes widely used 3D computer-aided design software, and the new product, code-named “Sage,” will detail in real time the environmental impact of parts, assemblies and design decisions that go into new products.

The software will feature a dashboard that not only provides information on carbon footprint but also on air impact, water impact and energy consumed in manufacturing. The high-end version will roll up the impact of a product across its environmental life cycle and also include information on energy consumption throughout a product’s usage phase.

So those are all the yardsticks. Are you unconfused yet?

Even if we could objectively measure, certify and label products from a perfect set of all-encompassing green standards, we’d still have problems like this: Which is better, buying a new eco friendly hybrid or driving your oil-burning microbus into the ground?

In the meantime, if you’re marketing a green product that’s really green, go to one of the authorities, document your environmental impact, and get certified.

eBay might be kinda sorta green

eBay is going public about going green (surprise), announcing a Green Team “committed to doing even more to help the world buy, sell and think green every day.” But will the green tint stick?

Well, they’ve got a huge solar power installation. Their business happens to promote reuse, which is better than recycling. They pay for cradle-to-cradle packaging and carbon credits. And who’s to say their heart isn’t in the right place? But beyond that…?

Well, there are plenty of newly manufactured consumer items for sale on their site. A lot of small parcels zooming all around the world 24 x 7 (some $2,000 in goods per second, in fact) doesn’t do much in the way of reducing fossil fuel consumption. And, as the New York Times points out, the ad campaign will be on virgin paper. Ouch! The article proves yet again that even modest pretensions to green goodness are subject to scrutiny.

Credit eBay for doing some good work. But from a marketing perspective, it’s hard to own the green leadership mantle when, by all appearances, your carbon footprint is about the same as everyone else’s.

Big green claims invite scrutiny

The morning paper provides an object lesson in green PR: be careful what you claim.

The Wall Street Journal deconstructs and essentially debunks Dell’s claim of carbon neutrality, saying Dell failed to include in its carbon footprint things like “the oil used by Dell’s suppliers to make its computer parts, the diesel and jet fuel used to ship those computers around the world, or the coal-fired electricity used to run them.”

In fairness, the carbon footprint is an elusive and arbitrary concept. If I ride my bike to work, I’m saving gas and sparing the atmosphere of exhaust. Then again, my bike parts come all the way from Japan. Then again, an American car has a ton of manufactured parts compared to just 25 pounds of bike. Then again, riding makes me hungry, increasing demand for food that has left a carbon footprint as it’s cultivated, processed, packaged and shipped. Ad infinitum.

The Journal further complicates the carbon neutrality question by delving into Dell’s purchased environmental “credits.” Nonetheless, the paper is even-handed, quoting Bill Burtis, spokesman for Clean Air-Cool Planet, saying Dell is “going farther than most corporations” in trying to minimize its environmental impact. The story does not directly challenge the truth of any specific claim in Dell’s August 2008 press release, of which there are many laudable ones. Still, this was not the story Dell wanted to see.

How green is your Prius?

The Toyota Prius presents another example of a green-positioned product that could be a lot greener. The Journal spotlights a pair of mechanics transforming Toyota Priuses into plug-in electric vehicles, doubling the fuel efficiency of the world’s most popular hybrid. The souped-up (down?) machines still use gasoline, just half as much as the off-the-rack Prius, which gets 50 mpg.

If  you prefer biodiesel to electricity, check out this Motor Trend story on a Beverly Hills doctor purportedly using fat from liposuction surgery to power his SUV and his girlfriend’s Lincoln Navigator. This Wired story casts some doubt on the doctor’s assertion. Another green claim, albeit a dubious one to begin with, comes under scrutiny and bites the dust.

Greenest of them all

Wired brings all this abstraction and ambiguity down to earth in its list of Top 10 Green-Tech Breakthroughs of 2008. Number one? A humble cement plant. Really. And unlike the other cases, the environmental benefit seems concrete unassailable.

While traditional cement making requires a lot of heat (and thus, fossil fuel), “Calera’s technology, like that of many green chemistry companies, works more like Jell-O setting,” says Wired. “By employing catalysis instead of heat, it reduces the energy cost per ton of cement. And in this process, CO2 is an input, not an output. So, instead of producing a ton of carbon dioxide per ton of cement made — as is the case with old-school Portland cement — half a ton of carbon dioxide can be sequestered.” More here.

Bottom line? To be effective, green claims must be sincere, true, defensible, quantifiable and ready for close examination. Dell, it appears, may have pushed the sincerity envelope by declaring it had achieved carbon neutrality. Although the company is neutral by the marketing department’s yardstick, it’s not by the Journal’s. And who’s yardstick ultimately matters most?

Nothing says green like … Wally World?

Who’s greenest? Warm and fuzzy Apple? Crunchy Whole Foods Market? Or supposedly sinister Wal-Mart, the company that’s big-boxing America with help from the Chinese?

That’s right, Wal-Mart, according to a new report issued by the Ceres investor coalition of Boston.

The report uses a “Climate Change Governance Framework” to evaluate how 48 US companies and 15 non-US companies are addressing climate change through board of director oversight, management execution, public disclosure, greenhouse gas emissions accounting, and strategic planning and performance. Some of the largest global companies in 11 consumer and technology sectors were evaluated using a 100-point scoring system based on this framework.

Wal-Mart scored a 69 to Apple’s 28 and Whole Foods’ 27. The median score was 38.

Starbucks, another brand with nefarious intentions in the eyes of large pockets of consumers, came in at 52. Leading the ranking were buttoned-up Big Blue (79), Tesco (78) and Dell (77).

Hey, it’s just one ranking on one narrow set of criteria, but for me it’s a poignant reminder of the power of brand, trusted or not, to at least occasionally trump reality.

Kamen segues into LED lighting

Inventor Dean Kamen has taken his three-acre island off the grid by retrofitting the buildings and grounds with LED lighting – some in dazzling colors – to cut power consumption in half. What power he does still need comes from wind and solar. The catch? It wasn’t cheap. Check out the details and the slide show.

Photo credit: John Brandon Miller, The New York Times