Tuesday, April 27, 2010

Greenwashing Sin #8 or an Important First Step?

Al Gore recently came under fire after his organization took money from Dow Chemical to raise “awareness about the need for clean water”. Dow is regularly criticized for buying Union Carbide, the company that owned the pesticides factory responsible for the death of 20,000 people in Bhobal, India.

For years, environmental organizations have found dangerous levels of highly toxic chemicals in rivers, lakes, and other water supplies close to other factories owned by Dow. Hundreds of thousands are still forced to drink the polluted water. Apparently for those close to Dow’s headquarters in Saginaw, Michigan, eating fish or touching the water in the Saginaw River is a no-no. But apparently, Dow sponsors a walleye fishing tournament near Saginaw on an annual basis. You can't read this without a feeling of irony.

The Al Gore event is meant to campaign for cleaning water of controversial chemicals, chemicals that Dow manufactures and uses which end up in rivers, lakes and water systems.

Is this greenwashing in the form of hypocrisy? Or is this genuine?

Greenwashing is defined as the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service. There are seven popular sins:

1. The sin of the hidden trade-off
2. The sin of no proof
3. The sin of vagueness
4. The sin of worshiping false labels
5. The sin of irrelevance
6. The sin lesser of two evils
7. The sin of fibbing

None of these sins speak directly to this sort of behaviour where companies are engaging in initiatives that contradict the very nature of their core operations. The sin of the hidden trade-off and irrelevance is somewhat related but not really. Does this mean that we need an 8th sin – The sin of hypocrisy whereby companies distract or divert attention away from their unsustainable operations to isolated and philanthropic initiatives that work to clean up the mess they create? They’re technically not lying. Or is this something else?

To explore this question further, let’s think about the options managers consider when trying to be more sustainable. One option is to do nothing. With increased pressure, this is becoming a less viable option. Studies show that more than 80% of companies report something related to sustainability online. Another option is to do something that is meant to offset (perceptually or not) the negative impacts of their core business. Here they can be philanthropic by supporting a random charity or an event that is trying to clean up the mess that they’re making. They may even create a small isolated product line to offset the negative effects of their traditional product line only to disband it after creating the impression of being green – like Nike’s trash talk shoe. The objective of course is to shift the negative image consumers and stakeholders have developed of these companies. To me, this is the easy way out but a natural response because of the growing pressure to do something yet the low costs and minimal disruption to core operations. From an economic point of view, this is completely rational and likely the reason why this is such a popular strategy.

The more difficult option involves rethinking their core business. But why do something like this when you can avoid dramatic change and show that you’re at least being responsible for the mess you’re making? But as these articles indicate, more and more consumers and activists are growing critical of this approach.

A happy medium perhaps is for organizations receiving funding from these companies to put in place conditions that go beyond commitment to the event. For instance, could Al Gore’s team or Live Earth (also partnering with Dow) have required Dow to engage in subsequent partnerships with environmental organizations to reduce their toxic output a certain amount by a given year as a condition of the sponsorship? Or could companies use this event to announce an initiative that demonstrates a change to their core operations? This is beneficial to the company because it’s considered to be less like greenwashing. It also introduces them to potentially lucrative partnerships granting them ideas and resources to make this happen which, in an increasing regulatory environment, implies a potential first mover advantage over competitors. For the public organization receiving funding, they are perceived to be less of a hypocrite by accepting funding from an organization that is responsible for the negative effects that these organizations are trying to address and more of a change agent. Not only are they putting on this event/initiative but they are building long-term commitments by these organizations and instigating change.

My issue with the many articles that criticize these sorts of partnerships is that they follow the typical ‘us versus them’ perspective - the environmentalists versus the toxic company. This is an old and outdated dichotomy and arguably doesn’t get us anywhere. Rather than keeping this black or white (allowing sponsorship or not), let’s talk about some of the grey area where we’re challenging companies to collaborate for long-term change and we’re challenging environmentalists to sit at the table with the company. The companies need to admit that they need the help and ask for it from those organizations out there who want to elicit change. Dow’s denial strategy here doesn’t help. Many companies get defensive when it comes to these sorts of things. But don’t the animosities on both sides need to be overcome; a swallowing of pride, so to speak? This may be the first step. Until this happens, I think Dow may be full of shit and the environmental groups are not helping.

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