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The 6 Dangers CEOs Face when Communicating "Green"
December 14th, 2009
Organizations large and small are looking to their values, branding themselves as "green" and "good." Unfortunately, green marketing allows more than a few of them to make claims that are widely regarded as greenwash. This results in an eco-saturated marketplace cluttered with greenwashed products and services that at best create confusion and at worst taint truly green goods, services and accomplishments. By Michael Sater
We believe that sustainability is ultimately about transparency. Those organizations that have a clear Corporate Social Responsibility (CSR) policy partnered with authentic and transparent communications set their brand's reputation apart from the competition. Saying you do well is not enough: You have to actually take the measures you publicize and communicate them clearly and honestly. A company that does it right quickly realizes that effective and transparent communication is key to maximizing investments, as well as transforming the company and its brand. Company executives understand that the organizational and technological innovations they put in place yield both bottom-line and top-line returns.
Nike, Coca-Cola and Seventh Generation are excellent examples. Each of these corporations not only communicates the right things, they "walk their talk" right down through their supply chains -- that is, they do what they say they will and make positive, measurable changes in their operations and their communities. And when they fall short of targets, they are fast to acknowledge the lag and begin an open discussion about how to achieve a better result next time. The result of this transparency: They get tremendous media attention -- and customer loyalty.
Despite these examples, too many firms are paying the price for failing to acknowledge and avoid the six dangers in communicating green:
1. Danger of Inflating Sustainability Claims
The effort to make adherence to GHG caps -- and specifically CO2 emission limits -- Never exaggerate your company's sustainability efforts.
Exaggerated claims in today's sustainability world have tangible consequences to the bottom line. CSR depends on real, demonstrable results. So, tell your story -- but be transparent and clear. It helps build trust and credibility with your stakeholders.
According to TerraChoice, which measured the uptick in green advertising claims in five of the largest US publications over the past two years, in 2009, 10% of all ads have included sustainability claims -- a rise of 42% in just two years. This trend has made the greening of products and services big business. Although investors are eager to pump money into new green technologies, and businesses are looking for green advantages, it doesn't take much digging to uncover inflated claims and outright lies.
For instance, earlier this year, the Federal Trade Commission (FTC) filed complaints against K-Mart, Tender Corp. and Dyna-E for false claims those companies made about their products' "greenness." In a statement about the three cases, the FTC said that "with the recent growth in 'green' advertising and product lines, the agency will continue its efforts to ensure that environmental marketing is truthful, substantiated, and not confusing to consumers."
2. Danger of Hiding the Facts
Forget about hiding the truth from your stockholders and the public. Today, companies only succeed when they acknowledge the complexity of the issues they're addressing and their own imperfections. In order to be credible, focus on communicating your firm's results and performance and lay out what more your company needs to do to reach its goals. If necessary, go outside to reputable sustainability consultants to assist you.
Your audiences expect transparency In fact, it's almost as important as the results themselves. Being transparent about both your successes and your setbacks enables your company to continuously improve.
Corporations that don't heed this advice risk a loss of trust, according to the July 2009 release by Edelman, world's largest independent PR firm, of its mid-year global Trust Barometer findings. Edelman reported that in 2009, in the U.S., trust in business collapsed, dropping 20% over the course of one year; levels are at the lowest in the barometer's 20-year history. The study found that for companies needing to rebuild their audiences' trust, high on the firms' priority lists should be making progress on environmental initiatives and partnering with third parties.
Simply put, the danger of opacity is that it is often seen as deception and thanks to the information age and instant global communication provided by social media, we'll always know and never forget that a company has been less than truthful.
3. Danger of Touting Unverified Claims
Don't just claim your company is working toward environmental sustainability -- prove it!
Third-party certification is a required tool for communicating the values of each product, service and organization. It impacts your brand reputation, and your ability to do business and make a bigger profit. Any organization will have employees working to make the company more sustainable and responsible, but outside, neutral third-party monitoring/verification of a company's claims is crucial to public acceptance.
External verification of your claims and progress isn't limited to audits. It may show up as familiar trustmarks like EnergyStar(TM) on packaging, sustainability scorecards, life cycle analysis and in advertising and social media. According to Mitch Baranowski, founding partner of BBMG, an advertising agency focused on connecting consumers with forward-thinking brands, "trustmarks help companies"... provide an objective, third-party seal of approval that demonstrates their follow-through on social and environmental claims."
4. Danger of Ignoring Employees
Don't forget one of your most important groups of advocates: Your employees.
Research over the last decade has made a convincing case that companies whose employees feel highly engaged outperform companies with less engaged workers in just about every important metric: growth, profitability, productivity, innovation and so on.
Take Costco, for example: The culture of the company flows downward from CEO Jim Sinegal and his focus on employees and, by extension, customers. As a result, Costco chalks up considerable improvements in its product mix and sales due to alert employees, whose per person sales are considerably higher than those found at key rival companies.
Another company that recognizes the power of employees as advocates is Xerox. "We've been amazed by the volume of positive, thoughtful comments from Xerox people worldwide after we released our first comprehensive global citizenship report last year," said Hector Motroni, Chief Ethics Officer of Xerox. "There is tremendous power in ensuring that your people know you're a company with a heart and soul that stands for 'something more.'"
5. Danger of Failing to Back Up Claims with Metrics
That which gets measured gets done. In a world of growing accountability and increasing scrutiny, this notion emphasizes that if an activity is important to your business, it should be results-oriented, with data measuring those results.
Too many companies continue to resist measuring their waste and their water, their energy and their impact, in a misguided attempt to appear no so bad. In this era of increased public scrutiny, in order to claim any form of improvement, a corporation needs to have a methodology -- such as sustainability scorecard requirements -- for measuring the items it wants to change. Businesses are used to protecting their methodology as a corporate secret but when it comes to reporting, a firm must avoid saying "because we said so" and instead show how it arrived at its conclusions. With metrics systems for CSR progress increasingly discussed and debated, take the time to explain to stakeholders exactly how you took the measurements.
In charting their carbon footprint, UPS uses the leading global standard, the World Resources Institute and World Business Council for Sustainable Development's Greenhouse Gas Protocol. UPS publically states this in their CSR report and on their website.
David Douglas, Vice President of Eco Responsibility at Sun Microsystems sums this up well when he advises: "Make sure you talk about how you measured your results... We are careful to build metrics into our social and eco-responsibility programs so that we can track our progress...and so that our stakeholders can hold us accountable. Without metrics, and transparency around our choice of metrics, we would not be able to continue to engage our stakeholders to work with us."
6. Danger of Isolation
At no other time in history has it been as vital to business success to proactively build broad relationships. The business environment is competitive and sometimes ruthless but you are not in this alone. In the new paradigm, businesses must partner to some extent for success. From consumers to employees, supply chain to NGO's, investors to government agencies, sustainable brands are proactive in building relationships with their stakeholder base.
Modern leadership recognizes that engagements and healthy relationships raise brand awareness. Neville Isdell, CEO of Coca-Cola believes that "companies must change the way they connect with society or society will reshape business."
Idell stresses that "companies must connect the bottom line of their businesses with their social conscience. Their philanthropic aims must match their core business and the values of their employees. Companies must be connected across four channels: the communities they serve, governments and non-governmental agencies of social change, philanthropies and values of employees," he said. Global companies must become local partners or risk alienation.
If you saw yourself and your business in one or more of these six dangers, it's time to get proactive and embed the proper practices and transparencies into your short-, medium- and long-term strategies. Being proactive is a company's first line of defense: It enables businesses like yours to address issues of concern and be in better control of your messages and destiny. When you communicate, do so clearly, with transparency and without inflating your accomplishments or hiding your mistakes. Put neutral, reputable third-party certification systems in place, and use them to verify your claims. Engage your employees in your efforts and let them help build the key relationships that will raise brand awareness. Offer valuable insights and perspectives to key stakeholders and give your business additional avenues of influence and opportunity to get the facts out.
Even if you are not inclined to adopt such proactive steps at this time, you will likely be required to pursue environmental sustainability by your supply chain in the future. For instance, WalMart has increased pressure on its suppliers to account for their environmental sustainability if they wish to continue selling to the world's largest retailer. And even if you are not in WalMart's supply chain, you are in somebody else's, and they will likely be in the WalMart supply chain, which means you -- in turn -- will need to take action.