Capturing the Green Advantage for Consumer Companies

Capturing the Green Advantage for Consumer Companies

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Capturing the Green Advantage for Consumer Companies

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    Nearly all the consumers in our survey reported being confused when shopping for green products and uncertain about exactly what being green means, what benefits it provides, and how to tell if a product is green. Unfortunately, consumers gave manufacturers and retailers a low ranking as sources of trusted information—well below organizations perceived to be independent and objective. When presented with a list of 13 sources of information about green products, most of the survey participants in nearly all countries ranked independent consumer reports as the most credible source, followed by academic and scientific publications, family and friends, and nongovernmental organizations (NGOs) and public-interest groups. Manufacturers were ranked eighth, and retailers were even closer to the bottom of the list.

    Yet when we asked consumers how they judge whether a product is truly green, one-half to three-quarters of respondents in each of the countries we surveyed admitted that they rely on product advertisements, although an even greater portion said they are skeptical about advertising claims. Consumers told us they often consult labels, too, even though they don’t always believe them. Survey participants in all countries said they usually assume that a product is green if it carries clear labeling about its environmental impact. Yet only 28 percent said that they understand the differences among various symbols for green certification. And the vast majority of consumers, especially in Europe, consider many certification labels to be misleading. (See “USDA Labels for Organic Foods.”)

    USDA Labels for Organic Foods

    When organic products began to hit the shelves in the 1970s—and for several years thereafter—the efforts of government agencies and NGOs in the United States to certify them created chaos. Both private organizations and individual state governments began to generate their own standards, resulting in overlapping standards as well as countless arguments among labeling agencies about how to certify products containing multiple ingredients.

    These varying and conflicting claims forced industry players that wanted access to foreign markets to take on either the costs of private accreditation or the equally steep costs of having their overseas shipments certified one at a time. Finally, the U.S. Department of Agriculture (USDA), with participation from several retailers (including Whole Foods Market), came to the rescue with a single USDA label for all organic foods. The USDA program set standards for organic farming and handling, and its seal may be used only on agricultural products that are between 95 and 100 percent organic (there are penalties for misuse). So far, 10,000 companies participate in the program and 25,000 products have been certified.

    In fact (as Exhibit 7 shows), lack of good information and lack of awareness of green product offerings seem to be the biggest reasons why consumers don’t purchase green products. When we asked survey participants who said they do not shop regularly for green products why they don’t, 34 percent said they are unaware of green product offerings in the categories in which they shop. Lack of choice (“I’m not satisfied with the range of green product offerings”) and relevance (“I don’t think green issues are relevant in this product category”) were the next most commonly cited reasons for not shopping green. Clearly, retailers and manufacturers have some work to do in making green options and benefits more visible to consumers. It is interesting that price (“I perceive green products as unreasonably priced”) ranks below these factors as a barrier to green shopping.

    As expected, the reasons for not purchasing green also vary by category. In financial services, air travel, toys and games, fragrances, and wine and spirits, consumers reported that lack of product awareness and a perceived absence of choices are the main barriers. And even when consumers are aware of green alternatives that they believe offer better quality, they still think there is insufficient choice in many categories. Some worry that if they make a habit of purchasing green products, they will be boxed into limited options. About 8 percent of survey participants said they had stopped purchasing green because of a lack of choice.

    We estimate that companies lose, on average, nearly 20 percent of potential purchasers when consumers aren’t adequately informed about their green-product offerings. Some companies are rising to this challenge by improving their advertising of green products and striving to earn consumers’ trust in their green credentials. One popular strategy is to partner with respected NGOs and government agencies for the purpose of solving an environmental problem. Not only are such partnerships likely to have a greater impact than efforts undertaken by companies on their own, but the company also benefits from the associated publicity and goodwill while avoiding claims of greenwashing. (See “Partnering with NGOs.”)

    Partnering with NGOs

    Unilever provides a good example of partnering for green action. At one time, the company produced a brand of packaged frozen fish, but because overfishing had led to a serious decline of its fishing stock in the 1990s, it feared for the future of its fishing business. In response, Unilever worked with the World Wildlife Fund (WWF) to create the Marine Stewardship Council (MSC), which established what has become the leading global standard for certifying sustainable wild-capture fisheries. To be certified to the MSC standard, fisheries must prove that they do not overfish their stocks, that their fishing practices do not damage the marine ecosystem, and that they have strong management systems in place to ensure compliance.

    Initially a WWF project that was jointly funded by Unilever, the MSC became a completely independent nonprofit in 1999. Today the organization certifies 7 percent of the world’s edible wild-caught fish. Many other companies, including Metro, Whole Foods Market, Sainsbury’s, and Wal-Mart, have started sourcing from MSC-certified fisheries.