IT SEEMS THAT every time I open the newspaper, turn on the television or check for online news, some company is touting its environmental commitment. I am encouraged to use reusable shopping bags, purchase more concentrated detergent and wear organically grown, cotton T-shirts. Done in the name of saving the planet, these promotions, not coincidently, highlight the corporate responsibility of the product or service’s purveyor.
Two questions arise in my mind when I see such marketing. The first is: Can you really save the planet by buying stuff? The second is: How do you identify a good corporate citizen?
I won’t attempt to answer the first question. But I’ll try to address the second.
Green products or services may have environmental benefits, but companies that promote them also hope to serve their firm’s short- and/or long-term financial interests. While this is exactly what companies should do, it doesn’t mean that they are necessarily more socially or environmentally responsible than their competitors. They may be, but all we can say for sure is that they have identified some benefit to being perceived to be green.
If you can’t tell from its products and services alone, how do you judge if a firm really is environmentally responsible, or if you are a victim of disinformation or greenwashing? It’s tough. While there are some ways to tell if a green product claim is bogus, there is no standard measure for the environmental performance of the entire firm. Or rather, there are dozens, and they are all different. Unlike financial markets, there are no uniform requirements for what environmental information must be reported, no standard analysis and no generally accepted criteria for rating performance. That is why a company may receive awards for its environmental initiatives one week and be vilified for environmental misdeeds the next. What are motivated citizens to believe, and what can you do? How can you decide if a company is really contributing to something you believe in, or whether it is just making a buck?
Here are a few clues.
• Green companies strive to be green through and through. In addition to offering environmentally preferable products or services, they also understand how their business supply chain and operations affect the environment, and are making efforts to minimize their impacts;
• Green companies allocate resources to improving their environmental performance;
• Green companies have objectives and targets for improving their overall environmental performance, not just in the marketing area; and
• Green companies are not afraid to report on their environmental performance. They don’t just publish glossy brochures filled with smiling children and nature scenes.
Ultimately, we need uniform, generally accepted environmental accounting principles and methods of analysis that enable consumers and investors to interpret and objectively compare one firm’s environmental performance to that of its peers. But don’t hold your breath. While there is some convergence in environmental and social reporting, thanks to the efforts of the Global Reporting Initiative, there is a burgeoning industry of “rankers and spankers” out there. These firms combine information gathered through their own questionnaires with publicly available information, and then apply their own “proprietary” criteria and analysis, resulting in ratings that have nothing in common with the ratings of the next rank-and-spank firm.
So by all means, let’s reward companies that are genuinely superior environmental performers by giving them our business. But it may be a while before it’s easy to separate the wheat from the chaff.
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