The business case for green marketing


The business case for green marketing

Last year, when Joel Makower declared the end of green marketing, it seemed less-than-convenient timing for releasing a book on the subject. But as it turned out, the timing was perfect. Just when green marketers were beginning to question their raison d’etre, a global expert reminded us of the opportunities inherent in communicating corporate sustainability and continuing with sustainable product development.

In his book Greener Products: The Making and Marketing of Sustainable Brands, Al Iannuzzi, senior director of EH&S with Johnson & Johnson, offers comprehensive, case-based reasoning for why and how greener products can be essential to an organization’s growth. If you’ve ever wondered if weaving sustainability into your brand is worth the effort, read on to find out where the ROI is — even if you think your customers don’t care.

Consumers can be short-term thinkers and reluctant to spend more for green. Mounting scientific evidence underscoring humanity’s contribution to climate change hasn’t made consumer demand more rational; greener products still represent less than 2 percent of the market in most categories. Until the reality of limited resources catches up with corporate executives, only innovative enterprises and Fortune 500 companies are investing in greener products. This fact does not overshadow the other benefits of developing greener products and marketing initiatives, or at least a corporate sustainability communications strategy, for any company.

In addition to satisfying growing consumer demand, Iannuzzi’s book identifies other drivers for enhancing corporate sustainability and marketing greener products, including:

  1. Retailer demand. Consumer demand is not the same as customer demand. While consumers can be fickle, B2B customers, particularly large retailers, have consistent incentive and pressure to manage their environmental impacts, whether for reputation or waste reduction reasons, or increasingly both. As Iannuzzi told me in a 2011 interview, “Walmart is our largest customer in the world. Their focus on sustainability helps to reinforce the importance of our initiatives to our business.”
  2. B2B purchasing. Johnson & Johnson is motivated by more than demands from the world’s biggest retailer. “This same idea is cropping up with our medical products customers as well,” said Iannuzzi. “Hospitals are focusing more on sustainability because they run 24/7 and produce a constant stream of waste.” The process such enterprises are taking to cut waste and increase social responsibility within their supply chain has grown in sophistication. Companies from every industry are rolling out scorecards that require proof of product sustainability. Iannuzzi explains in his book, “Walmart’s Supplier Sustainability Assessment and Packaging Score Card are well known, but there are other very influential companies with sustainability scorecards of their own.” He adds, “Kaiser Permanente and Procter & Gamble have also issued mandatory supplier scorecards. These two companies have a combined annual purchasing power of $121 billion!” Such industry giants are effectively mandating sustainability, giving hundreds of thousands of smaller suppliers a reason to get on board with greener product development and marketing, sooner rather than later.
  3. Socially Responsible investment. “Stock prices can plummet if there is a slip-up with a product’s environmental performance,” says Iannuzzi. “One of the first examples of this was Nike when their stock price was impacted because of poor worker and environmental conditions at contract manufacturing sites.” The Dow Jones Sustainability Index and FTSE4 Good are just a few of the social responsibility indices that evaluate sustainability performance for investors. Iannuzzi explains, “Failure to adequately address product stewardship issues such as potentially toxic materials in your product, not adequately addressing product end-of-life issues, or failing to initiate sustainability programs at your suppliers, can hurt your rating in these indices.”
  4. Eco-Innovation. According to Jim Fava’s chapter on Lifecycle Assessment in Greener Products, environmental strategies can be said to occupy four levels of sustainability, the most innovative of which can be classified as “shaping the future.” This happens when firm develops products and services for current and future market conditions, addressing unmet societal needs by proactively integrating economic growth, environmental health and safety, and social wellbeing into its operations and business practices. Iannuzzi points out that innovative thinking isn’t just for products. For example, Brita water filters (a Clorox product) capitalized on growing demand for a sustainable alternative to bottled water by devising an innovative marketing campaign and website to communicate sustainability benefits. Whether developing and marketing a new product or repositioning an existing one, companies are using eco-innovation to build leading brands.
  5. Regulations. More than a competitive advantage, sustainability is now a requirement to doing business in the global marketplace. Beginning in Europe, with requirements for developing more sustainable packaging and mandatory take-back requirements, such regulations have expanded around the world. Greener Products covers this topic in its enormity. For specifics on how to market green without breaching regulations, check out this exclusive excerpt.

Green marketing is about much more than attracting consumers. From reputation enhancement to tax incentives, companies profit by marketing greener products and customers benefit from buying them. As Iannuzzi reports, it’s not a question of if, but when.

For more of his in-depth advice on green marketing considerations from Iannuzzi, visit his four-part series on my blog EarthPeople Speak.

Symbol arrow by Harper via Shutterstock. Photo collage by GreenBiz Group.