Carbon Neutral Leisure

Events such as the 2006 World Cup and Super Bowl XL, as well as leisure destinations such as ski resorts, are beginning to market themselves as “carbon neutral”. This implies that the equivalent carbon released is offset through planting trees, investing in renewable energy sources or similar.

Much of this is self-serving: ski resorts are aggressively shifting to renewable energy sources, in large part, because climate change threatens to reduce ski season and profits. (On August 1, Vail Resorts became the latest ski report to announce that it was purchasing 100% renewable energy, making it the second largest US corporate purchaser of renewable energy after Whole Foods. This followed a similar announcement by Aspen Skiing Company in March).

Moreover, carbon offsetting is also a way to generate positive PR. For the ski industry, this is a boon. Often criticized for harming the environment (e.g., clearing forest for new trails), ski resorts have embraced renewable energy, giving them something positive to talk about with consumers.

Yet, beyond generating favorable buzz, carbon neutral leisure is a new opportunity for product managers and marketers alike. Specifically, this trend does the following:

Recognizes the potential of an emerging segment: the eco-conscious consumer. A new consumer segment is emerging, one that is defined less by their green politics than by its purchasing power, receptiveness to a climate change message and willingness to do something about it if consumers feel that their actions will make a difference. Consumers in this segment are open to paying incrementally more to participate in leisure activities if they believe that they are making a positive contribution.

Marketers should embrace this openness and capitalize on it in messaging and promotions. For example, not only will Vail Resorts offset carbon emissions from its operations, but it has launched a promotion offering consumers a free one-day lift ticket in exchange for signing up for renewable energy for one year. It also offers consumers the ability to purchase “tags” to offset carbon emitted during their drive to the mountain.*

Raises consumer expectations regarding what it means for a product to live up to its brand promise. As an eco-conscious segment emerges and the idea of carbon neutral leisure becomes more familiar, brands should expect that they will be increasingly expected to demonstrate that they are living up to their brand promise, rather than just talking about it. This will be especially true if the brand is positively associated with the environment. For example, eco-tourists, zoos visitors and concert-goers could soon expect these leisure activities to be carbon neutral, driving the potential for broader adoption of carbon offsetting in the near future. For marketers, the best defense may be an aggressive offense: embrace carbon offsetting and leverage as a source of competitive differentiation.

Creates new channels for building awareness about climate change. While those that produce carbon neutral events generate positive buzz for themselves, they also build awareness of – and educate consumers on – the impact of global warming. Where else to generate awareness for a global issue than at a truly global event like the World Cup? (FIFA organizers contracted with MyClimate to offset carbon emissions though offsetting programs in South Africa. Project details and video).

Non-profit marketers should take advantage of this emerging channel and work closely with event producers to develop win-win opportunities – generating PR for the event while building awareness for and educating consumers on climate change.

*Additionally, Bonneville Environmental Foundation has worked broadly across the industry create “Mini-Green Tags” to offset emissions by individuals.

Eco-friendly Packaging Premium

CPGs design packaging to serve many functions; one critical role is to enhance consumer perception of product value. Typically, CPGs do this by using a bigger box or more expensive or flashier material than necessary. Yet, CPGs and retailers alike are under pressure to reduce this waste.

A new generation of biodegradable packaging by companies such as EarthShell and NatureWorks (a Cargill company) is emerging as a cost efficient alternative. While this is great news for the environment, it may be somewhat surprising to marketers that the benefits from biodegradable packaging may not stop there. Studies suggest that consumers may be willing to pay a premium for products that use these materials. Research conducted by Grapentine on behalf of NatureWorks found that “50% of those surveyed would pay 20 cents more for products” in NatureWorks’ biodegradable polylactide packages [made from corn starch] versus more traditional petroleum-based plastic containers. (“Marketers See ‘Green’ in Nature-Friendly Packages”, BrandWeek, April 3, 2006)

Moreover, eco-friendly labeling may serve as an essential point of differentiation for products, especially for those where biodegradable packaging becomes a tangible expression of a product’s brand promise. Biota Spring Water – sold in biodegradable containers – is one example (see video of bottle decomposition).

Lower cost, higher prices, differentiated brands…retailers ranging from Whole Foods to Wal-Mart are taking note…so should marketers.

Wal-Mart Turns Over a Green Leaf and Generates Buzz

Eco blogs are buzzing this week over Fortune Magazine’s lead article (“The Green Machine,” August 14, 2006) The world’s largest retailer has learned that green is good for business. Much of the chatter questions Wal-Mart’s true intentions; after all, this is a company that has been a magnet for bad PR for paying low hourly wages, offering poor employee healthcare benefits, discriminating employees based on gender, and for putting mom and pop retailers out of business when it comes to town.

But, business is business and Wal-Mart is learning that consumer needs and attitudes are evolving. Latent markets exist for eco-friendly products – if the price is right. One example: Sam’s Club sold nearly 200,000 organic cotton tops ($14) and bottoms ($10) within ten weeks. To create these new markets, Wal-Mart is leveraging its overwhelming purchasing power to keep costs low and to motivate suppliers to bring innovative, eco-friendly products to them. The result: Wal-Mart has the potential to reshape the landscape when it comes to eco-certified products and eco-friendly packaging.

Wal-Mart has a long way to go to demonstrate to the skeptics that this positive PR is genuinely deserved. Nonetheless, with curious bed fellows such as Greenpeace, Wal-Mart has come a long way.