Managing Environmental Risk by Looking through the Rear-view Mirror

June 1, 2008

A recent survey by The Economist Intelligence Unit identified both the top influencers of – and benefits derived from – corporate environmental risk management (CERM) programs.  Two things are curious about these survey results.  First, customers and investors rank relatively low in influence (fourth and seventh, respectively) despite the fact that “better corporate reputation” among these groups ranks as the primary benefit for launching CERM in the first place. 

 

Second, “regulators” and “government” exert significant influence – second only to “executive management” – on companies to initiate CERM programs; in terms of benefits, however, “improved relations with regulators” ranks only eighth.

 

Risk Manager Responses from Recent Survey by                    The Economist Intelligence Unit

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The high level influence of regulators and government suggests that corporations consider regulatory compliance as the primary measure of CERM success.  This focus is understandable given the stiff fines imposed for non-compliance.

 

Moreover, it also suggests that corporations believe that regulatory compliance is the way to improve its reputation with customers and investors.  Yet, while compliance is arguably important with customers and investors, it is simply the place to start.

 

When it comes to customer and investor groups, focusing solely on regulatory compliance is like driving a car by looking through the rear-view mirror.  Quite simply, regulations do not necessarily reflect current consumer and investor expectations regarding corporate actions toward the environment; instead, they reflect those held in the past when the regulations were passed.

 

This is an important distinction because consumer and investor expectations regarding corporate environmental responsibility continuously evolve.  As such, it is likely that current expectations have far surpassed current regulations in place today.  Take climate change, for example.  There is a growing consensus that carbon must be regulated, yet no binding limits yet exist in the US.  

 

There are other cases where customers or investors actively challenge management’s environmental policies.  For example, led by members of the Rockefeller family, ExxonMobil shareholders have made it clear that they believe that when it comes to climate change, compliance with existing regulations is not enough for this oil giant.

 

As such, corporations that primarily focus on regulatory compliance are likely falling short when it comes to improving their reputation with consumers and investors.  Instead, management should try to better understand current customer and investor expectations toward the environment, and how these sentiments evolve with time.  This will require corporations to take action that go beyond current regulatory mandates.  It will also require recognition that customers and investors hold greater “influence” on CERM decisions than what is commonly realized today.


Reframing Global Warming Across the Political Spectrum

May 5, 2008

These days, green marketers are challenged to efficiently reach consumers and effectively impact their attitudes and behaviors.  There are many reasons for this of course: consumer attitudes are still evolving, familiarity with green products is just emerging and purchase behavior is inconsistent within and across categories.  As such, marketers tend to look for targetable demographic groups or behaviors that have a higher propensity for green. 

 

In this political year, it is interesting to examine whether political ideology, and more specifically, party identification as a Democrat or Republican is an indicator of interest in green. 

 

Today, there is a common perception that Democrats are more pro-environment than Republicans.  Indeed, on issues like global warming, it is not hard to see why.  According to a recent Porter Novelli/George Mason University consumer survey, Democrats consider global warming a “serious problem” nearly 2:1 over Republicans.  Additionally, only half as many Republicans as Democrats feel that by taking action they can impact global warming.

 

           Beliefs Regarding Global Warming by Political Affiliation

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Yet, this perception may not necessarily reflect behavior.  In fact, when it comes to taking action, Republicans act more similar to Democrats than their views on the environment may suggest.  In fact, Democrats perform, on average, only one more green action  (from a list of 14 that includes using less energy, recycling, buying energy-efficient appliances, and buying organic food) than Republicans. 

 

For marketers, this observation may provide an opportunity.  Republicans may be as receptive to green as Democrats if marketers can reframe the underlying environmental issue and the messaging that is communicated to them.  Attitudinal research based on political party affiliation may provide clues to how this may be done.  Here are a few examples that marketers may want to consider:

 

Reinforce local benefits:  At the recent conference, Professors David Konisky, Jeff Milyo and Lilliard Richardson at the University of Missouri presented research that examines how attitudes toward government involvement change based on the type (ie, pollution, resource preservation, global warming) and geographic scale (ie, local, national, global) of the environmental issue.

Based on their research, Konisky et. al., determined that “party identification and political ideology are the strongest predictors of environmental attitudes”.  More specifically, “Republicans are much less likely to support further government efforts to address environmental issues.” 

Interestingly, Republicans were much more apt to favor governmental intervention if the issue affected people locally, or even nationally, rather than globally.  In speaking with Professor Konisky last week, he expressed his belief that “people tend to want the government to address proximate problems.”  One way to increase interest is by “reframing the climate change issue as one of local impacts [to] generate more concern for this issue relative to other issues.” 

While Konisky et. al., focused on attitudes toward governmental action, marketers should test the hypothesis that sentiment will carry over to campaigns that build awareness regarding climate change as well as influence purchase behavior.

 

Position as a leader:  A recent national survey conducted on behalf of the Civil Society Institute and its Results for America project (CSI/RFA) indicates that Republicans are more apt to favor action on global warming if the US is positioned “to lead – not follow – other nations” on both climate policy and clean tech.  In fact, while only 45% of Republicans (vs. 86% of Democrats) agree that we need “national leadership on global warming,” two-thirds of Republicans want American to take the lead on policy and technology development.

 

As such, marketers have an opportunity to test a leadership message when communicating with consumers regarding green.  Such a message may resonate well with consumers, and especially in categories in which a company is in a leadership position today (eg, General Electric, Toyota) or in which no clear established leader exists globally (eg, renewable energy, electric cars).  One recent example is Tesla, the California-based automotive up-start that established itself arguably as the leading electric car company with its weekend launch of a car that can go 225 miles without recharging and 0 to 60 in 4 seconds.

 

Focus on measurable impact:  Across the political spectrum, the “number of ‘green’ actions” is not strongly correlated with political party affiliation, but rather level of concern about climate change.  According to the CRI/RIA survey, those that believe that both global warming is dangerous and that action to mitigate it is efficacious perform more than 40% more green actions than those who do not – regardless of political persuasion. 

 

Marketers should consider a duel message to clarify not only the impact of global warming as well as the effectiveness of measures to mitigate it.

 

One example, laundry detergent, was mentioned by Joel Makower in his presentation at the Green and Good conference late last year.  Many brands focus on the environmental impact of the formula itself, advertising that a consumer can reduce his/her footprint by using a formula with a less burdensome manufacturing process and chemical makeup. 

 

Yet, as Makower pointed out, most of the impact from washing clothing is not from the manufacturing or distribution of the detergent but the heating of the water (according to GreenYour, this ranges from 85-90% of the total energy required for the washing).  As such, Tide and other brands that offer a cold water formula have an opportunity to message not only how well their products clean clothes but that they greatly reduce the carbon footprint from washing simply by not heating the water.


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Konisky, David, Jeff Milyo, and Lilliard Richardson, “Environmental Policy Attitudes, Political Trust, and Geographic Scale,” abstract presented at the Western Political Science Association annual meeting, March 20-22, 2008.


Making What’s Inconvenient Matter

May 1, 2008

An Interview with Matt Williams, EVP/Partner at The Martin Agency and Planning Director for the “We Can Solve It” Campaign


While many consider the release of Al Gore’s An Inconvenient Truth to be a turning point regarding consumer awareness about climate change, consumer surveys indicate that much work is still left to be done.


In fact, six months after the movie’s release, an
ACNielsen online consumer survey found that North Americans were the least aware of and concerned about global warming of all respondents from the 46 markets surveyed.

Moreover, North Americans were only half as likely as South Americans (Argentina, Brazil and Chile) – those surveyed that were most aware and concerned – to believe that climate change was “a direct result of human actions”.

This month, however, there is reason to hope. Al Gore’s Alliance for Climate Protection is back with an ambitious 3-year, $300MM campaign to raise awareness of – and to influence behavior regarding – global warming.


Recently, Marketing Green spent some time with Matt Williams, EVP/Partner at The Martin Agency. Today, The Martin Agency serves as the lead agency for the Alliance and is in charge of the campaign’s brand strategy, among other roles.


Willams serves as the Planning Director on this campaign. As such, his role is to uncover insights that will motivate consumer changes in attitudes and behaviors. In many ways this is a daunting challenge for a marketer, given the enormity of the task at hand as well as its importance to the overall effort to solve global warming. Here are his words:


MG: In launching this campaign, what was the Alliance’s primary objective.


MW: The Alliance’s WE campaign is designed to bring public opinion past the tipping point, and compel our elected leaders to take action on climate change. We only have a short window to act, and what we need is a massive, sustained effort to mobilize millions of people – that’s what this effort is all about.


MG: Describe some of challenges that you faced in tackling an issue as daunting as climate change.


MW: Climate change is a huge challenge, and the vast majority of people realize the urgency and enormity of the threat. But, human nature being what it is, a challenge this large can be almost paralyzing.

We had to break through the assumption that the climate crisis is too big for a regular person to tackle. We had to tell people that, yes, this is an urgent challenge, but like other massive challenges, if we put our differences aside and band together to solve it, we can do it. Adding elements of optimism and solvability to the urgency of solving the climate crisis was the key challenge of the campaign.

MG: Is it realistic to expect a marketing campaign to have a significant impact on attitudes and behaviors regarding climate change?

 

MW: The advertising is just one piece of the Alliance’s 3-year effort – and it’s a multimillion dollar, national ad campaign, stretching from coast to coast in every type of media.

 


The Alliance has also launched a program of online engagement and activation, providing opportunities for citizens get and stay involved; and is partnering with organizations that will work across the political spectrum to reach people in their day-to-day lives.


As these efforts work together and build momentum over the life of the campaign, we expect to mobilize millions of people for solutions to climate change.

MG: What is your campaign idea? What were some of the consumer insights from which it was derived?

 

MW: We know consumers are frustrated with partisan bickering. We know the vast majority of Americans accept the reality of the climate crisis and want to engage in solving it, but they don’t know how to get involved.

And we know that consumers view the climate crisis as too large and urgent a challenge to be held hostage by political gridlock. The campaign idea is that we have to set aside our differences and come together to solve the climate crisis. If we don’t come together, the problem won’t be solved—it’s too big.


But if we come together, we can speak with a unified voice to demand solutions. The campaign and the WE idea are designed to create a motivating sense of energy and optimism and to invite everyone to participate in solving climate change.


MG: What are the key elements of the campaign? Overall, how are inpidual tactics integrated across channels? Conversely, inpidually, how were each tactic tailored for each channel?


MW: In terms of the ads themselves, we’re combining television – because of its reach to the broad audience we’re trying to speak to – with print, in issue-specific publications aimed at key groups, and online ads that can be carefully targeted as well.


Every ad, in mass media or online, drives traffic to http://www.wecansolveit.org, the Alliance website. At the site, consumers can find a wide variety of information about the climate crisis and ways to get involved—from petitions to government leaders to local events. They’ll also have the chance to join the Alliance by giving us their e-mail address. So this is more than ad campaign—it’s an integrated effort to engage consumers, and turn that engagement into real action.

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MG: How will you drive viral marketing? What is the role for social media? How do you build grassroots support for action?

MW: The online and grassroots components of the campaign will provide opportunities for inpiduals to get and stay involved in ways that make sense for them. Our cutting-edge online organizing and activation, built around the website, will give people a spectrum of activities to keep them engaged on the issue, from taking action in their personal lives to working in their schools and communities to joining calls for government action on all levels.

 


We’re also using the “network effect” – getting the word out through ready-to-use content (like embeddable videos) and social media that enable communities and inpiduals to engage on the issue, spread the word and become local champions.

 


The Alliance has created partnerships with local and national groups to get the word out on the grassroots level, so consumers not only see the WE brand in media outlets and online, they feel it through other groups and activities that are important in their lives.

 


We’re also looking at ways for consumers to use elements of our campaign to create their own WE content, to help build viral momentum and actively involve consumers in creating the WE brand with us.

MG: How involved has Al Gore been in the planning of this campaign?

 

MW: Vice President Gore has been an integral part of the WE Campaign’s development from start to finish. The Alliance and the We campaign are built on the idea that the climate crisis is urgent and solvable, and VP Gore’s goal is to ensure that we get the word out as effectively as possible.

MG: How did you incorporate innovative approaches in this campaign? What are they and how did they impact the consumer experience in a novel way?

 

MW: The entire campaign is rooted in a brand idea that will unify every effort, in mass media, online and grassroots. The idea of bringing Unlikely Alliances like Newt Gingrich/Nancy Pelosi and Pat Robertson/Al Sharpton together is an attention-getting way to make our point about coming together to solve the crisis.
That theme will continue in the future and in other parts of the campaign, and has great potential for interesting and involving messages in every medium.

We’ll also use the couch from the TV, print and online ads as an icon for coming together.


The creation of the WE mark gives us a symbol that people everywhere can use to display their commitment to solutions. WE can become part of people’s lives beyond the campaign.


Also, our focus on Influencers as a media target is designed to communicate our message to people who start conversations. When millions of Influencers engage their network members and policymakers in a discussion about solutions to the climate crisis, the conversation will take on even greater momentum.


It’s an amazing privilege for us to be involved with the Alliance in helping address this incredibly important challenge.


Action by Governors Highlights Shifting Sentiment on Green

April 24, 2008

Last week, I had the opportunity to witness a milestone being reached in the effort to fight global warming:  officials from 18 states – representing a majority of the US population – signed an agreement at Yale University that committed their states to action on global warming. 

While some states like California and New Jersey have already put formal carbon reduction targets into place, this agreement clearly reflects growing national support for action.

 

Governor Jon Corzine of New Jersey Signing the Governor’s Declaration

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Governor Kathleen Sebelius of Kansas Addressing the Conference

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Marketers should take careful note.  Shifting political winds are more than a sign that legislation is on the horizon; they also may reflect a change in consumer sentiment that is fueling them. 

 

For marketers, three themes emerged that they should consider:

 

The time is running short for companies to be first movers on green.  Conference participants expressed their belief that action on global warming was all but inevitable with a new administration – regardless of party affiliation.   As such, the window of opportunity is closing for brands to be an early mover on green.  Once Congress mandates change, it will take more effort for a company to convince consumers of their green authenticity than if they did so now on their own volition.  (See also Marketing Green’s “Waning Opportunity to be Early Mover on Green”).

 

Consumer perceptions of green are evolving.  The image of environmentalists as tree huggers is fading.  In fact, Governor Schwarzenegger claimed that being an environmentalist today is “hip, cutting edge, self-confident, sexy”.  What more could companies want when it comes marketing green?

 

Governor Schwarzenegger at the Conference

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Brands must adapt to changing consumer sentiment on green.  As consumer attitudes on green evolve, companies must also reposition their brands to maintain relevance with consumers.  Marketers should note that at least two factors will help accelerate this shift in consumer sentiment.

First, Al Gore’s Alliance for Climate Protection is launching a 3-year, $300MM campaign to propel consumers to take action on climate change. 

Second, consumers may use their purchasing power to influence corporate behavior on green.  While Americans are voracious consumers, they do not like to do so at the expense of others.   For example, the vast majority of Americans are firm believers in child labor and worker safety laws.  

Today, headlines focus on food shortages and the civil unrest that it has caused in many poor nations.  Corporations that are perceived to be perpetuating food shortages through their activities (eg, competing with local farmers for water rights, promoting the use of biofuels that divert cropland away from food production) may feel the wrath of consumers that use their purchases to express their opinions. (See also Marketing Green’s “Green May Be Ho Hum for the Holidays But It’s Here to Stay”).

 

For marketers, such undercurrents are important to monitor closely.  Consumer sentiment is shifting and will inevitably reach a tipping point.  Smart companies will take action ahead of time to avoid ending up on the wrong side of the line.

 


Shopping for Green Online

March 4, 2008

An Interview with thepurplebook Founder Hillary Mendelsohn

With the exception of a few select product categories, growing consumer interest in green has not yet translated into substantive changes in purchase behavior by mainstream consumers.  Like many nascent categories, green faces many barriers to widespread adoption. 

In many ways, product adoption in the green space is a classic chicken and an egg problem: uncertain demand leads manufactures to limit the number of products they launch.  Limited products and product choice, in turn, curtails demand.  However, this only tells half the story as there are many reasons why demand is limited. 

Even with those receptive to a green message, marketers are challenged by low familiarity with green products.  This, in turn, hampers consumers from effectively navigating the category as well as making informed purchase decisions.   

Where do consumers turn for credible information today?  Product companies?  Not necessarily, as consumers are increasingly skeptical about green marketing claims.  Fellow consumers?  Uncertain, as their peers are likely to have equally limited experience with green products.  

Can consumers rely on standards?   Perhaps.  Standards have been adopted in certain categories and many more are on the way.  Yet, rollout of new standards takes time; familiarity with what existing ones mean (i.e., how green is green?) is still limited.    

Instead, consumers today may turn to credible third party sources for guidance.  One such source is the recently launched thepurplebook green, a complete guide to green shopping online.  With an extended following already, thepurplebook series enters the green market with significant brand awareness…and credibility as a reliable source for online shopping information.  Indeed, just weeks after launch, thepurplebook green is planning a second printing.

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Recently, I had the opportunity to speak with thepurplebook Founder Hillary Mendelsohn.  We discussed growing consumer interest in the environment, the role that purchases play for consumers to express their convictions on green and the role that thepurplebook green plays in facilitating green purchases.  Here is what she had to say: 

MG: Does consumer concern for the environment translate into increased purchase of green products? 

HM: Purchasing power holds two powerful acts for the consumer.  First, purchasing green allows the consumer to feel better about his/her choices and particularly for personal care products, food and household items there are positive health-oriented reasons  to make such purchases.   

Second, other than voting, this is the consumer’s strongest voice to the corporations at large.  Purchasing green holds corporate America more accountable for creating green options, and ultimately having greener practices internally. 

For both of these reasons, the ‘voice’ that purchasing green gives the consumer has and will continue to increase the sales volume of green products. 

MG: What types of green products do consumers purchase?   

HM: Consumers are purchasing based on their lifestyles.  Young families are focused on greener/healthier cleaning, food and personal care items.  Older consumers are building or remodeling green.  The overall theme is that people are beginning to care about shopping more responsibly and are looking for ways to make better choices.   

It is the job of thepurplebook green and those of us that care about this concern to point them in the right direction. 

MG: Are consumers purchasing green products or brown products that are now greener? 

HM: The answer is both.  But the victory lies in the fact that they are making the effort to make better choices.  We must educate, create standards and make sure products do not lack in quality, style or cost too much.  If we can show consumers that they do not have to compromise on quality, taste or price, we can have everyone purchasing green. 

MG: What was the origin of the book?  Did it evolve out of a passion for green or a business opportunity similar to your other books or a little of both? 

HM: I knew very little about being green prior to starting this book.  I was happily writing online shopping guides when one evening, a friend invited me to see a screening of An Inconvenient Truth.  I sat in the darkened theater thinking about how I had contributed to this huge problem, and the legacy my children will inherit.   

Then I thought, if I were to become part of the solution instead, what would that look like?  Being an online shopping expert, I went to the web to see what I could find as far as earth-friendly fare was concerned.  It was slim pickings and hard to find anything at all. 

I thought, if I apply my skill set and focus exclusively on green product, I will educate myself, and create a book that might help make being green easier for others.  That said, I am a business professional, and what I have discovered, is that green makes sense and makes money – they are not mutually exclusive.   

I do hope this book is wildly successful, as that will mean people are adopting change and I have done my part. 

MG: Who is your target audience?  What beliefs do they hold about the environment?  What are their demographics?  Are they consistent with their behavior? 

HM: The beauty of this book is that it is meant for the eco-neophyte as well as the eco-savvy.  There is education and information for those who want to learn more and great resources for those who already know why they are making  better choices but can’t find the product.  There isn’t a demographic, but rather those wanting a greener lifestyle.   

The idea isn’t to exclude anyone, but to include everyone open to making greener choices whether it is their first or someone who lives dedicated to the greenest lifestyle possible.  This is doable for everyone.  The more we encourage choice and change, the more people will adopt greener lifestyle habits. 

Consistency lies within the consumer having good experiences with green products.  Once they have found good products, they do stick with them. 

MG: How should merchants approach you for inclusion in the book?  What is the criteria for inclusion? 

HM: Any merchants who wish to be considered for inclusion in thepurplebook Green, can log on to www.thepurplebook.com and submit their site for inclusion.   

Our criteria includes the following:  You must be able to complete the transaction online using a secure server, the site must be reasonable to navigate, customer service policies must be clearly stated and fair and a phone number is required for all sites. 

MG: How do you determine how green a company is?  Do you use a ratings system?  

HM: We have familiarized ourselves with all of the certifications currently used and have tried to glean a working knowledge of what is and isn’t green.   If we have questions, we contact the site and we do our very best to deliver consistent, quality information to our consumers. 

If we question it, or a site is not completely green but has a substantial green offering, we let the consumer know that too.  We are all trying to just to do better than we were yesterday, and need to keep that in mind and not judge too harshly. 

This is a relatively new area and we all have much to learn.  No one knows it all – yet.  All of the sites listed in the book are exceptional or they would not be there; however, we do make a special acknowledgement for those sites that also package and ship green.


Green Content Syndication: Part I – “Deconstructing” Websites

January 20, 2008

Traditionally, publishers have viewed websites as content destinations, challenging marketers to drive traffic to specific websites in order to engage consumers with relevant content.   

Today, the model has changed.  Increasingly, publishers are uncoupling online content from its host site; marketers are learning to syndicate this content online or encouraging others to do so virally.  Jupiter Research has defined this trend as “website deconstruction”. 

Moreover, emerging and established content platforms, including news aggregators, video sharing and social bookmarking sites, enable content to exist on its own in the online world and allow users to have greater control over its distribution.  

Today, a two-step process has emerged for marketers to facilitate content distribution:

Active distribution: Publishers need to first distribute content to multiple users via RSS feeds to readers, widgets, personalized home pages, news aggregators and even mobile devices. A broad list of readers and aggregators can be found here

                          Downloadable and Customizable Widget 

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Publishers can also syndicate content to users by seeding bloggers or by distributing assets to third-party websites through platforms such as Blogburst, Voxant and Magnify.  Each one has a different distribution mechanism.  Blogburst facilitates distribution of blog content through 200 established news channels such as Reuters and FoxNews, for example. 

    Marketing Green Blog Posting on FoxBusiness.com via BlogBurst

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Voxant, in contrast,  syndicates news from mainstream sources to third-party websites; Magnify distributes video.  Magnify provides a widget that can be easily customized (based on content preferences) and downloaded onto third-party sites.  Publishers can make their content available for distribution simply by creating a channel on Magnify to do so.  Currently, Magnify offers 119 channels of content relating to “Nature and Environment”.

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Passive or viral distribution: In addition to actively pushing content out to a variety of sources, marketers need to ensure they position their content to be further distributed by consumers.  Today, users increasingly share and recommend content to their peers.  By doing so, individuals not only share content with other users, but they empower these users to make recommendations to friends and contacts in their networks.  For marketers, such a network effect can have an exponential impact in driving reach; it also costs marketers virtually nothing to achieve.   

 

Examples of users facilitating passive content distribution include sending viral emails, posting video content on YouTube and veoh, bookmarking an article on Digg and del.cio.us or linking to personal pages within MySpace. 

 

While all general interest sites host content related to the environment, there are many websites that focus exclusively on the green space.  Examples include video sharing sites ecolive.tv, emPivot, Green.tv, GreenEnergyTV, RiverWired and URTH.tv; bookmarking sites ecoblogs, Hugg and hunuh; and a multitude of social networking sites including Care2 and Zaadz (See also Marketing Green’s “Green Marketing on Social Networks” and “Sharing Green Videos Online” postings).

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In a conversation with Marketing Green earlier this week, Shmuel Benhamou, a founder of the recently launched ecolive.tv, makes the case for green vertical sites: “Videos are one of the most efficient and interesting ways to spread the ‘green’ message throughout the world.  Yet, today, it is very hard to find good green videos on YouTube and others user generated content sites.  Ecolive.tv wants to promote green videos to a targeted audience.”

Notably, syndication blurs the lines between publisher and user, as everyone has the chance to distribute content.  Moreover, it also blurs the distinction between content, either professionally or user-generated, and advertising.  Increasingly, content serves as advertising and advertising is enjoyed as content. 

One great example of advertising distributed as content in the green space is a commercial for a European wind energy company, Epuron, syndicated on YouTube.

Marketers: Think differently about your digital strategy.  Uncouple content from specific websites and distribute directly to users or through intermediary sites.  Encourage consumers to share content with their peers and across social networks.  If done right, syndication can act as a digital channel accelerator by driving reach and generating impact far beyond the cost required to facilitate it.  It is a must for most marketers today.  You scarcely can afford not to.


Corporations Foster Dialogue On the Environment

January 14, 2008

While many corporations leverage the Internet to distribute information about environmental initiatives, a few companies are going much further by facilitating two-way dialogue with stakeholders.   

Some companies may view such dialogue – via email, web forums, chat rooms and video – as risky, as it may open them up to public scrutiny.  Moreover, this sentiment may be especially true today for those brands that compete in carbon-intensive industries. 

Nonetheless, companies that are bold enough to enter into a dialogue tend to find that the rewards outweigh the risks.  Dialogue creates a direct channel to stakeholders that can be used to gather feedback, build credibility, and engender more loyalty by showing a more human side of the company. 

In other cases, companies are using dialogue to activate stakeholders – including customers, suppliers, employees, partners and shareholders – as change agents by soliciting new ideas. 

There are several examples of dialogue in the environmental space.  Here are just a few: 

British Telecom: It seems that on most corporate sites today, users are hard pressed to find a specific contact to forward their concerns to, let along an email address that does not deliver to a general mailbox. 

BT is different in this regard as it offers a detailed listing of contact names and email addresses to send questions specifically regarding corporate social responsibility, corporate environment programs and environmental supply chain management.

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Shell: Shell periodically conducts webcasts with senior-level executives on topics such as its annual Sustainability Report.  Interviews address questions solicited from stakeholders via email.   

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Dell: When Michael Dell declared that he wanted to build the “greenest PC on earth,” his company launched IdeaStorm as a platform to solicit “direct feedback from, [its] customers, suppliers and stakeholders” on how to do just that.  Moreover, IdeaStorm engages its stakeholders as change agents by encouraging them to promote their ideas and discuss them online with Dell and other users.

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General Motors: Chevrolet just announced a bold move in the green space by inviting the public to enter into a direct dialogue regarding GM flagship division and actions that it is taking to reduce its environmental impact. Through a New York Times advertisement, Beth Lowery, GM Vice President for Environment, Energy and Safety Policy asked the public to “talk” with Chevy about mutual concerns for the environment and what Chevy is doing to address them.   

Lowery asks the public to submit questions through a New York Times microsite that will be published in the Friday Op/Ed section.

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While many marketers perceive direct dialogue as too risky, many companies have fully engaged with stakeholders on many sensitive topics including the environment.  For many, a direct channel to the customer provides a way to generate feedback as well as to solicit new ideas.  Others focus on creating a more human way to connect with stakeholders. 

Regardless, dialogue is consistent with key attributes of leading green brands including accountability, transparency and credibility. More companies need to overcome their fear of potential negative feedback and join the dialogue on green issues. If done correctly, dialogue will more likely mitigate than engender consumer backlash in the future.  

(Full disclosure: GM is a Digitas client)


Investing in Green Innovation

January 2, 2008

As companies plan their green investment strategies for 2008 and beyond, they should take into account that caps on carbon emissions are all but inevitable in the future.  In fact, it is highly likely that caps will be in place in the US within the next few years.  The 187 nations that attended the UN climate conference last month in Bali (including the US) agreed to negotiate a successor agreement to Kyoto by the end of 2009.  Perhaps more importantly, Congress already has several climate bills under consideration.

How aggressive will carbon reduction targets be?  A recent Human Development Report by the United Nations Development Programme concluded that developed nations needed to reduce carbon emissions by greater than 80% from 1990 levels by mid-century in order to advert the worst impact of climate change.  Under any implementation scenario, carbon caps will likely be imposed over many years, if not decades, providing a window of opportunity for companies to adapt to and compete in this new world order.

In many ways, the imposition of carbon caps will reset the current competitive landscape.  Those businesses able or willing to adapt more quickly to this changing landscape will likely secure a competitive advantage by differentiating their brand or products, or by improving their cost basis. 

Despite the arguments for moving quickly, many companies will likely delay investment in green as long as they can, and do so for seemingly good reasons.  First, exact targets are uncertain.  Second, the timeline for implementation may take years, if not decades. 

Finally, the misuse of financial practices may preclude smart green investment.  A recent Harvard Business Review article, Christensen et. al., suggests that there are three ways that incorrect financial practices suppress investment in innovation.  Marketing Green believes that as green investments are largely investments in innovation, it is very likely that the misapplication of financial practices that impede innovation may also hinder prudent investments in green.  (Clayton Christensen, Stephen Kaufman and Willy Shih, “Innovation Killers: How Financial Tools Destroy Your Capacity to Do New Things”, Leadership & Strategy for the Twenty-First Century, Harvard Business Review, January 2008).  Here is how:

Cash flow modeling: Companies often do not fairly compare the projected discounted cash flow from a new investment with that generated from current operations because they assume that current cash flow will remain constant in perpetuity. 

In fact, as Christensen et. al., explain, this may not be the case: in the absence of continuous “innovation investment”, the more likely outcome is a “decline in performance” in existing operations.  Without this downward adjustment, however, financial analysis creates a “systematic bias” against innovation in new products or processes – green or otherwise.  

Asset lifetime: Financial managers may mistakenly assume that that an asset’s usable lifetime should be based simply by its depreciation period, rather than its “competitive lifetime”.  Said differently, even though the continued use of an existing asset generates a more attractive return in the near-term (typically because capital equipment costs are already sunk and therefore not included in the calculation) than an investment in a new asset, it may not be the best decision for a company if it wants to maintain its competitiveness (and cash flow) longer-term. 

A famous example cited by Christensen et. al., is the case of Nucor and US Steel.  Nucor invested in new minimills that yielded a low average cost of production. Instead of following suit, US Steel stuck with its existing mills because the marginal cost of producing incremental steel was lower than investing in minimills (because it was simply putting excess capacity to use) and therefore more financially attractive in the short term.  

In this case, US Steel relied on marginal cost analysis to inform near-term production decisions that was insufficient for making longer term investment decisions.  As Christensen et. al., point out, “When creating new capabilities is the issue, the relevent marginal costs is actually the full cost of creating the new.”  As a result, US Steel’s average production cost remained much higher than Nucor’s and Nucor was able to out compete US Steel longer term.  

Applied to the green space, many companies may decide to defer investment in greener technologies given the upfront capital requirement to do so.  This decision may extend the life of less efficient technologies, manufacturing processes or products in the market.  Yet, it may prove disadvantageous longer term as other competitors or new entrants make more aggressive investments that generate a more sustainable competitive advantage when carbon caps become more restrictive longer term. 

Quarterly earnings: Companies that focus on quarterly earnings may systematically under invest in innovation as they are not rewarded by the market for doing so.  Given that the time horizon for green may take years to pay off, green initiatives may likely be underfunded relative to initiatives that are able to contribute sooner to earnings. 

Marketers need to think strategically about their investment in green.  Caps on carbon emissions will reset the competitive playing field, though they may be imposed gradually over years, if not decades.  Early movers  may enjoy a competitive advantage in the market based on their brand, products or cost position.   

There is a good chance companies will underinvest in green due to regulatory uncertainty and the misuse of financial practices that may favor investments that yield near-term benefits at the expense of long term competitiveness.  

Marketers must understand and compensate for bias that leads to underinvestment in green.  Formulate a strategic vision for green, properly balance the risks and rewards and invest for the long haul.  Your shareholders will thank you.


Green May Be Ho-Hum for the Holidays, But It’s Here to Stay

December 12, 2007

So far, this holiday season has seen a rather muted push on green by retailers, both in terms of the products they sell and the messages they communicate to consumers.  Marshal Cohen, Chief Industry Analyst at NPD Group, recently suggested that such lack of enthusiasm by retailers reflects waning interest in green.  Cohen stated: “It’s basically a card that a lot of people played while it was hot and trendy…and it got overplayed.”  

Indeed, early signs suggest that retailers left their Birkenstocks home for the holidays.  While most retailers are taking steps to green their operations and supply chains, few have taken steps to green the shopping experience.  Reuters recently reported that retailers such as Target, Wal-Mart and J.C. Penney recognized green as a trend but does not have plans to promote green merchandise this holiday season  (Barneys is apparently a notable exception).  A spokesman for J.C Penney added: “It’s something that is growing in importance with the customer…[but it’s in] its early days.”  

But, could it be the case that after so much hype early in the year, the green trend has faded just as it was getting off the ground? 

Marketing Green believes just the opposite: as a trend, green is just getting started.  Quite simply, the apparent lack of enthusiasm shown by retailers this holiday season reflects the fact that we are still early on the adoption curve.  Here’s why: 

Green products popular today are not necessary gift ready.  Green products that have been adopted by the mass market – including compact florescent light bulbs and hybrid cars – may not make the best stocking stuffers.  Moreover, unlike organic foods, clothes made from organic cotton have not been adopted by the mass market yet.  As such, it is not surprising that we do not see a sudden surge in demand for these items this season. 

Consumers may not equate green with spreading holiday cheer.  When it comes to giving a gift that is overtly green, consumers may worry that they may be perceived by friends and family as the Grinch.   While social norms are changing, being green today is still in many regards a personal virtue rather than societal expectation.  As such, gift-givers may fear that giving a green gift may be perceived by recipients as politicizing the holidays.   

Retailers fear being accused of greenwashing.  Today, few standards are in place to determine how green is green.  Without them, retailers are left to their own devices to determine what is eco-friendly – and, as a result, are left exposed to criticism by outsiders who may think otherwise.  As such, many retailers today are focused more on greening their internal initiatives than greening specific products. 

While interest in green may wax and wane, marketers must remember that we are still in an early adoption cycle for green.  Regardless of how successful this season is for green, as a trend, green is here to stay.  In fact, there are five global influencers that will ensure that as a trend it grows, spreads and matures.  

Changing physical environment.  While the melting of the ice caps may still be an abstract concept for most, consumers are beginning to experience erratic weather patterns that are likely – though not certainly – being caused and/or exacerbated by global warming.   Indeed, Oxfam recently reported that weather-related natural disasters have increased four-fold over the past two decades while geologic-related ones (eg, earthquakes, volcanoes, etc) have remained steady.   Such visible signs will likely increase and intensify with time, providing a constant reminder that something in our world is not in balance.   

Increasingly concerned consumers:  In the US today, consumers have a high awareness of climate change as an environmental concern, but arguably relatively low awareness of the severity of its impact – especially on the poor who are least responsible for its cause but most vulnerable to its adverse affects.  As Hans Verolme, Director of Global Climate Change Programmes for World Wildlife Fund stated, “There’s no escaping the facts: global warming will bring hunger, floods and water shortages.”

Marketers should be prepared that such a realization may cause a sea change in how American consumers view the brands that they purchase.   Americans may be voracious consumers, but they do not like to do so at other people’s expense.  As a consumer issue, therefore, climate change mitigation may be similar to enforcing fair labor laws or worker safety practices  – it is just what you do or risk a backlash from consumers. 

Leadership by business: Some may find it surprising that many global corporations are strong proponents of action on climate change.  Indeed, 150 leading companies – including US multinationals Coca-Cola, GE, Nike, Johnson & Johnson and Sun Microsystems – have already signed a communique on climate change and presented at the UN conference this month in Bali that calls for legally binding targets for carbon emissions. 

So why would global companies lead the charge?  Corporations know that mandates on carbon emissions are inevitable.  The sooner government acts to set acceptable carbon emission levels, the faster business can respond and plan for the future – by modifying capital investment decisions or commercializing new products, for example.  

Moreover, once global emission caps are put into place, standards will be developed within each product category that determine how green is green.  Without standards today, companies decide for themselves to what level they should green their products.  In this situation, the burden is on the consumer to decide how competitive products stack up while leaving well-intentioned companies vulnerable to greenwashing accusations by critics that disagree with their claims. 

Where standards have emerged though, green products have taken off.  One great example is the creation of the Leadership in Energy and Environmental Design (LEED) certification that set standards for green buildings.  The result: 20% growth in green buildings in 2005, followed by 30% growth in 2006.    

Watchdog role of Non-Governmental Organizations (NGOs):  In many ways, NGOs serve as watchdogs for industry on environmental issues.  Today, such organizations enjoy increasing clout, fueled by increased membership and financial backing over the past few years.  More than ever, NGOs are flexing their muscle by challenging corporate activities that they deem as destructive to the environment or deceptive to consumers.   

Interestingly, even companies that are viewed as leaders on green do not get a pass by NGOs when activities are deemed inconsistent with their competitive positioning on green.  For example, despite (or as a result of) earmarking a combined $70 billion toward green investments and loans, both Bank of America and Citigroup were recently the target of a grassroots campaign by Rainforest Action Network to the fact that these banks also fund coal-fired plants, a primary contributor to global warming.    

Today, consumers can also serve as watchdogs as well by rating corporate green activities through sites such as Greenwashing Index, Do the Right Thing and Climate Counts.    

Involvement by governments: Today, there is growing global support for action on global warming.  Signs of this momentum are perhaps nowhere more prevalent than in the US and Australia – two countries that have long been holdouts for global action.  Over the past couple of weeks, there has been a sea change in Australia, as Kevin Rudd, the newly-elected Prime Minister, signed the Kyoto accord as one of his first acts of government.  Moreover, the US Senate Committee on Environment and Public Works voted last week for an ambitious 70% reduction in carbon emissions by 2050.   

So, marketers should take note.  Early signs are that green may not bring holiday cheer to retailers. Nonetheless, green marketers should remain steadfast.  Though consumer focus on green may fluctuate, green as a trend is here to stay.  Five key influencers will not only ensure that is the case but accelerate its growth over time.   


Green Marketing on Social Networks

December 1, 2007

Participation in social networks continues to grow seemingly without bounds as more people seek to connect, share and collaborate with likeminded individuals online.  Today, hundreds of millions of online users have already signed up, with an increasing number belonging to more than one network. 

For green marketers, social networks provide a compelling channel to communicate with consumers that have an affinity for green or are at least open-minded enough to listen.  Today, those users can be found across a wide variety of social networks, including both general interest and vertically focused networks that connect those interested in social responsibility or, more specifically, in the environment. 

Marketing Green has identified six different types of social networks that appeal to those with a green affinity.  Each network type provides the opportunity for users to connect, share and/or collaborate with others online.  And because many view green as a social cause, participation in such networks can generate both personal as well as societal benefits.   The six types of social networks include the following:   

Interaction sites connect online user to facilitate offline interactions.  For example, online users can connect with other likeminded individuals for dating or socializing on sites such as Care2, Earthwise Singles, dharmaMatch, Green Drinks, Green Passions, Green Party Passions, Planet Earth Singles and VeggieDate.  Alternatively, online users can find out about green events, political rallies or local meet ups on social action sites such as Leonardo DiCaprio’s 11th Hour Action, Care2, Do SomethingMeetup, Step It Up, TakingITGlobal, and WorldCoolers.  

Other sites allow members to arrange carpools on sites like GishiGo, GoLoco, pooln and WorldCarShare (Yahoo Groups), as well as rent, loan or reuse products (rather than purchase new or dispose of as waste) on sites like freecycle, gigoit, loanables and rentoid. 

                   Marketing Green’s Six Types of Green Social Networks

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Commitment sites enable users to share a personal pledge to make their lives more eco-friendly.  On certain Commitment sites, users can even collaborate with others to support their pledge or to encourage others to make similar pledges.  Examples include sites such as Actics, Low Fly Zone, Make Me Sustainable, PledgeBank, The Carbon Diet, Who On Earth Cares (Aus), Yahoo Green and the “I Am Green” page on Facebook.   

Utility sites enable consumers to connect and share online with others that have a green affinity and/or want to live a greener lifestyle.  Examples include general interest networks such as Facebook, MySpace, Tribe and Yahoo Groups (focused on green), as well as vertically focused networks such as beTurtle, Care2, Common Circle, Dianovo, ecoMetro, Eco-munnity, Good Tree, Green Bin, Holistic Local, Lime, Neutral Existence, rethos, TheNag (UK), Zaadz and Zelixy among others.   

Sites like Baagz are emerging that should, in theory, enable users to connect with a far greater number of online users across the Internet, rather than simply those within a particular social network.  Considered an early Web 3.0 application, Baagz leverages semantic web principles to allow software agents to connect people with common interests by reading embedded tags in web content (rather than natural language descriptions). 

Shopping sites allow consumers to connect and share green purchases and product reviews.  Examples include FiveLimes and Sustainlane.  Additionally, traditional social shopping sites such as Kaboodle, StyleHive, ThisNext and Wists include a wide range of eco-friendly (eg, organic) products.  

Today, online users have the opportunities to integrate their favorite purchases into their personal profile page on sites like Facebook using a Yahoo web application called “My favorite Things”.  This application enables users to share favorite products, create a wish list and send virtual gifts to friends online.  Importantly, integration of social shopping into Facebook enriches personal profiles and allows users to connect based on shopping preferences.  

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Alternatively, consumers have the option to connect with other likeminded consumers based on their brand and/or product affinity.  One example is Toyota’s community site for hybrid owners, Hybrid Synergy Drive.  Another example is Method’s community of advocates. 

Engagement sites enable users to share ideas and collaborate on new ones.  These social networks tend to attract members from specific vertical sectors.  Examples include local community sites such as ecoTreadsetters (Yokohama Tire), Gusse and Transition Towns (UK); innovation sites such as Green Building Forum (UK), Sustainability Forum and wattwatt; and business forums such as OpenEco (Sun) and OPEN Forum (American Express) among others.

Activism sites enable collaboration to promote change through social and political activism.  Example sites include: 2People, Care2, ChangeDo SomethingGreenVoice, idealist, just cause, Razoo, TakingITGlobal, tree-nation, Wiser Earth and Youth Noise among others.    

For marketers, such social networks provide a rich opportunity for messaging to consumers with a green affinity.  Today, there are three primary ways in which marketers can communicate with consumers through this channel: 

Search.  Marketers can bid on contextually relevant search keywords within social networks and provide relevant and engaging content on linked landing pages. 

Awareness and Engagement.  Marketers can actively engage consumers by placing corporate profiles within social networks, by facilitating the creation of user generated content and by encouraging viral marketing.     

The placement of profiles on social networks is a great way to build awareness within and across peer groups online.  Users connect to a brand or a cause as an expression of their online identities.  Those that do can be effective advocates for a brand (or cause) and brands should actively engage them as such.  Moreover, this simple link in a personal profile can provide a powerful way to build awareness within the user’s extended network as it provides a de facto endorsement of the brand or cause by a trusted source. 

Additionally, it is important to note that the creation of user-generated content itself can facilitate viral marketing efforts though sharing of content between consumers or via content sharing sites such emPivot, RiverWired and YouTube.  Moreover, users may bookmark favorite green content or websites on hunah, Hugg, del.icio.us, Digg and StumbleUpon, encouraging others to also view the content or visit the site as well.

Targeting.  Marketers can target consumers within a social network through direct ad placement where possible and appropriate.  

Importantly, Facebook has made an announcement that has major implications for how marketers can communicate to members going forward.  Essentially, Facebook said that it will allow marketers to target members with ads based on its user’s personal profiles, social connections and even the recent activities of each user’s extended network. 

This announcement marks a significant departure in the way social networks have been organized to date.  Until now, marketers have had limited opportunity to serve ads directly to users within the social network.  With this change, marketers will now have the opportunity to target consumers directly based on attitudinal, behavioral and demographic attributes included directly in or inferred from personal profiles and connections online.    

So, marketers should take note.   Social networks are proliferating and consumer participation seems to be growing without bounds.  For marketers, social networks provide an increasing number of opportunities to communicate with online users that either have a green affinity or perhaps are connected to someone that does.  To have the greatest impact, however, marketers should ensure that they align their messaging with the mission of each type of social network.  Done right, marketers can have a powerful impact on their brands and the bottom line.


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