Companies' 'Green' Claims Often Misleading: Experts

These days--and especially around Earth Day--companies want to be seen with an environmental halo.

But experts say many are guilty of "greenwashing" -- claims that mislead consumers, by words or image, about the environmenal impact of their products.

Consumers are catching on, however. And that could undermine the growing green movement in corporate America--and possibly invite government regulation.

“The timeframe for companies to get away with greenwashing is shrinking because the consumers are getting…much more skeptical of these kinds of these green claims,” says Scot Case, vice president of US operations for TerraChoice, an independent environmental marketing.

One possible result, he says, is that the “green consumer movement is going to collapse because consumers will walk away from false claims.”

Clorox Clorox's new 'Green Works' line joins widening array of natural cleaning products, a segment growing 20 percent a year while household cleaners are in decline.

That would hurt many mature consumer products, such personal care and home improvement supplies, where green products are the fastest growing segment.

Rampant corporate dissembling has already led government regulation in Britain and Australia where officials now impose heavy fines for false claims.

In the U.S., the Federal Trade Commission has stepped up a review of its own  environmental marketing standards and is currently holding public hearings.

Six Sins of Greenwashing

In a study of 1,018 products from six “category-leading big box stores,” TerraChoice found that all but one made claims that were either “demonstrably false or that risk misleading intended audiences.”

The firm, which has identified six broad categories of greenwashing sins, declines to name sinners --or the singular saint--preferring to allow for a “genuine misunderstanding” on appropriate standards.

There is, for instance, the "sin of irrelevance." Aerosol cans now commonly sport environment-friendly green dots because they have no ozone-depleting chlorofluorocarbons. But only a minority explain, in small print, that CFCs were outlawed in 1978.

Another example: paper products are widely labeled "recyclable" though they may not have been.

“Everyone has thrown their hat in the ring to be green, but now comes the time…for companies to not just say they are green, but to prove it,” says David Lockwood, director of research for Mintel, a market research firm.

The growth potential for the green market is huge because ”the great majority of respondents still believe their shopping decisions can make a difference in the world,” a recent Mintel survey noted.

Grassroots Internet Policing

But that requires confronting greenwashing.

A growing array of vetting services can help. Consumer Reports launched its greenerchoices.org screening service on Earth Day in 2005, while a recent Nielsen report noted that blogosphere criticism of dubious corporate claims doubled between 2006 and 2007.

In January, the advertising faculty at the University of Oregon launched greenwashingindex.com, an open forum for posting and commenting on company advertising.

"Dirty" industries like utilities and automobile companies are favorite targets for ridicule.

Among the most pilloried was a coal industry association ad, which used Kool & the Gang’s "Celebrate."

Even those with an easier case to make, can overdo it. An ad by Toyota – which makes the market-leading hybrid Prius - showed a car made of wood, which could later biodegrade, to burnish the 'greenness' of its vehicles.

“These ads just don’t cut any more,” says Deborah Morrison, an advertising professor at Oregon University. “I see how my teenagers watch these ads – they are quick to call the B.S. – they are looking for authenticity.”

“The issue of climate change is too important to be screwing around,” adds Kevin Tuerff, president of EnviroMedia Social Marketing, an environmental marketing firm in Austin, Texas. “The changes that are coming…are going to have big impacts so it is in companies best interest to get their house in order when comes to sustainability, and then go out and tell their message to consumers.”

Possible Third-Party Solutions

But for all the skepticism there also still appears a fair amount of gullibility.

Almost half of Americans erroneously believe products marketed as “environmentally friendly” actually have beneficial impacts, according to a survey conducted for Boston College’s Center for Corporate Citizenship. Ninety percent say companies making environmental claims need to prove it. Close to 60 percent favor government enforcement but even more support self-policing by industry.

The most popular option is third party certification--the route many leading companies are taking, especially if they have environmental baggage. That may have been the thinking of Clorox , which launched of a line of natural cleaning products Monday.

Clorox won the endorsement of the venerable Sierra Club – which in exchange is getting an undisclosed percentage of sales

“It is literally unprecedented for us to put out logo on a product  - we are 116 years old - so that’s a significant change for us,” said David Willet, the Sierra Club’s national press secretary. 

The move sparked considerable controversy within the organization founded by naturalist John Muir, with several state chapters formally protesting the decision. This included the Florida chapter, which was suspended for four years by the national board in March - another first.

While acknowledging the highly coincidental timing of the suspension order several national staffers insisted the move was aimed to end long-standing factional fighting which had effectively paralyzed the state organization and was not related to the Clorox protests, as some press accounts have maintained.

Fortunately for companies, most experts say, consumers don’t expect them to turn a new green leaf overnight but say transparency becomes even more important.

“If the consumer does not understand exactly what that product has done to improve its environmental performance, the green washing flags go off,” says Case. “People are recognizing every single purchase has hidden human and environmental impacts and as a result people are trying to buy a green version of just about everything.”

© 2009 CNBC.com