Navigating the Wilderness of Green Business Certifications

The Sweet Candy Co. in Salt Lake City reduced the amount of waste it sent to landfills and cut its water and energy use. Now it has an appetite to tout its efforts to make its business operations more eco-friendly.

But when looking at all the options, the company decided that getting a green business certification may be the answer, though it was hard to choose from among the mass of them on the market.

"I’m not super-fluent in this field and I’m trying to head up a (sustainability) team, but I’m confused myself," said Rachel Sweet, the Sweet Candy Co.'s vice president of marketing.

She's looking for a certification that "stands for something."

"I'm concerned about all the different certifications that are coming out and what they're going to end up meaning in consumers' minds," Sweet said.

As more companies strive to display their green credentials, a crop of certifications are springing up to fill the need but they vary in rigor and oversight. There is no consistency among them and no national authority in charge of setting uniform standards. "The problem is, it's a new, emerging area," said Tom Hinton, president and CEO of the American Consumer Council (ACC). "As a result, there is a lack of credible organizations trying to fill the demand for certification. Until you have a few other industries and nonprofit organizations step forward, consumers and companies run the risk of subscribing to a certification process that may not deliver all that it's propped up to be."

The ACC launched its Green C Certification in the U.S. in June (see sidebar) after seeing a trend four years ago: Consumers wanted to support the green movement by buying from companies known for environmental stewardship, Hinton said.

"As we researched the field of environmental compliance, we found no consumer-focused, universal criteria that companies or organizations could use to tell consumers they were 'environmentally compliant' or acting responsibly," Hinton said. "So we acted to fill the gap as a nonprofit organization that represents the voice of the consumer."

The ACC isn't alone. The Green Business Alliance in Boca Raton, Fla., debuted a certification program this year, while EarthRight Business Institute of Park City, Utah, and Sustainable Business Network of Washington, D.C. are now conducting pilot programs with plans of launching final products in late 2008 and early 2009, respectively. The city of Los Angeles also is reportedly developing one modeled after the Bay Area Green Business Program, which started 12 years ago.

It can fatten a company's bottom line, according to Cliff Waldeck, owner of Waldeck Office Supplies in San Francisco, which is certified through San Francisco County.

"In the process of being certified green, you're going to save money because you're consuming less electricity and water," Waldeck said. "You're recycling and reusing a lot more."

Having your business certified can earn your company a special logo to market to customers.

"From business point of view, it makes sense. It's a PR story you can share with your customers, but also a positive story for your company that you can talk about," Sweet said. "If you can make a customer and consumer hopefully understand they will make a better investment in you by buying your product because you in turn have positive practices, that's very positive."

Michigan-based Concept to Promotion displays its logo from the Institute for Green Business Certification on its website and has seen the benefits of showing off its certification. "One of our customers, the University of Michigan, wanted to see a copy of the certification and wanted to know what we had done and asked very detailed information," said Human Resources Manager Karen Walker. "Haworth Office Furniture, which is very green, was interested in the fact that we were certified."

Many companies have no experience with making their practices more environmentally friendly, so certifications can provide a step-by-step road map.

"You can read a book or procedure but I would not have become well informed enough to do a self-audit," Walker said. "There was no way I could have done that. It would have been so time consuming to educate myself."

Sweet, who sees companies sticking green labels on everything, believes certifications should vouch for a business dedicating time and resources to reduce its ecological footprint. Her company can probably now meet the minimum standards of the EarthRight Business Institute's program, which she is strongly considering, but she wants to wait until she can measure progress of her company's new eco-friendly initiatives.

"I'm very cautious about our company going out too much too soon without a lot of history under our belts when there's so much greenwashing going on," Sweet said.

Credibility in the Marketplace

The certification market is growing quickly as companies try to get competitive advantage with consumers by being the "first in their industry" to earn the Green C Certification or some other designation, said the ACC's Hinton.

He believes that nonprofits, rather than for-profit companies, are ideally positioned to certify companies for green business practices. For one thing, they serve the public good, not their bottom line.

"Typically, I have found that while they are good people, (for-profits) exist to generate clients and revenue from those clients," Hinton said.

Hinton argues that businesses should think about three things when considering a certifier:

• First, the program should have high standards and rigorous criteria that demand a close examination of the applicant's environmental compliance and sustainability practices. The standard should be set by a credible organization that has received input from a variety of stakeholders, such as environmental and business groups, and government agencies.

• A credible certification should have an independent verification process to ensure applicants are worthy of the certification and actually doing what they claim.

• Finally, the certification should have marketplace value and credibility, such as the Green Seal and Forest Stewardship Council certifications.

But the distinction between nonprofit and for-profit can be a "red herring" since some nonprofits may operate with agendas that could bias the results, said Linda Brown, executive vice president of Scientific Certification Systems in Emeryville, Calif., a for-profit certifier of products and performance for the forestry, sustainable agriculture and green building industries, among others.

Fees shouldn't be contingent on the certification. "They should have no vested interest in the outcome," Brown said.

Companies should look for potential conflicts of interest between the certifier and business or product and evaluate the professional stature of the certifying staff, she said. There should also be a level of transparency that allows anyone to look at the standards required for a certification.

Even self-verification programs, which have less oversight, can still have value, said Ceil Scandone, regional program coordinator of the Bay Area Green Business Program, which is independently verified by a utility or county agency. "If you have integrity and resources, even the self-verifications have a use as an educational tool," she said.

Hinton applauds any company that tries to improve its environmental practices. Often, companies must often go through a self-verification process because it a new area in terms of environmental compliance.

"Having said that, once that company tries to market its certification, then I think it's imperative for the company to have a seal of approval from a credible nonprofit certification program," Hinton said. "It will give the company greater credibility in the marketplace."

Yet certifications can go in the opposite direction. Some standards can be too stringent to attract participation, said Stephan Sylvan of the U.S. Environmental Protection Agency. Trying to reduce near term environmental impacts won't happen if only a small part of the market participates.

"The monitoring and verification work is critically important to maintain credibility of the initiative and confidence of the buyers. That's really key," said Sylvan, who coordinates the EPA's dozens of voluntary programs, such as Energy Star And WasteWise. "It is possible in some cases for people to go too far and chill the market. Some level is important but striking that balance is key."

Tilde Herrera is associate editor at GreenBiz.com.