ECO-LABELING: Green or Smokescreen?

Instead of putting sustainability plans on hold until the economy improves, the vast majority of businesses are forging ahead. Despite their belief that North America is in a recession, 83% of corporate managers plan on increasing green investments over the next two years. Even more startling, 74% of those who believe North America is in a depression are spending more on green. And, more than half say their companies purchased more green products during the depths of the recession than ever before.

This data comes from the 2009 EcoMarkets Summary Report released by environmental marketing firm TerraChoice. The annual report is based on a survey of 580 business-to-business and business-to-government purchasing managers in the United States and Canada from April to July 2009.

Pressure from the government is partly responsible for green's staying power, according to the report. More than three-quarters of respondents say the Obama Administration is influencing green spending, but corporate leadership also plays a major role. More than half (55%) of respondents say senior managers are driving green purchases, while 44.5% say regulatory compliance is the main objective. A slightly smaller percentage (44.3%) say employee demand is motivating green purchases.

Although the business case for sustainability remains strong, the actual process of selecting materials, products and equipment is proving to be a tangled mess of uncertainty. The reason, according to Scot Case, vice president of TerraChoice, is the growing trend of “greenwashing.” More and more companies are making misleading, or downright dishonest, claims about sustainability. And consumers aren't the only ones being fooled. Any corporate or operations manager responsible for recommending or purchasing products should be on the lookout for phony claims.

Over the past 15 years, more than 500 labels, logos and certifications have flooded the global market, says Case. Only three — EcoLogo, Green Seal and EnergyStar — conform to ISO 14024, the standard for environmental labeling. Case, who served as the executive director of the EcoLogo progam, explains that EcoLogo and GreenSeal are more comprehensive in scope than EnergyStar, which only addresses energy efficiency.

Spotting Fakes

Although EcoLogo and GreenSeal are the only comprehensive labels that meet voluntary ISO standards, according to Case, that doesn't mean they are the only credible eco-labels in existence. So, how does a buyer detect a green smokescreen?

Case offers a few suggestions. “A credible eco-label addresses multiple environmental issues across a product's entire lifecycle,” he says, “from raw materials and manufacturing to packaging, shipping and how the product will be used. Most importantly, the claim should be independently verified by a third party through an open, transparent, public process.”

Case advises companies to watch for seven red flags, which he calls “the seven sins of greenwashing,” that could indicate a sham. The sins include:

1. Hidden tradeoffs: the suggestion that a product is green based on a single environmental attribute (such as recycled content) without attention to other important environmental issues.

2. No proof: an environmental claim that cannot be substantiated by easily accessible supporting evidence or reliable third-party certification.

3. Vagueness: a claim that is poorly defined or broad in scope (“chemical free” or “all natural.”

4. Irrelevance: a claim that may be truthful but not important. The most common example is claiming not to use chlorofluorocarbons (CFCs) when CFCs have been banned for nearly 30 years.

5. Lesser of two evils: a claim that may be true within a specific product category, but the category as a whole is of questionable environmental value.

6. Fibbing: environmental declarations that are simply false.

7. Worshipping false labels: giving the impression of third-party endorsement when no such endorsement exists.