Building Successful Green Partnerships

Companies are increasingly partnering with environmental groups to find mutually beneficial solutions to environmental issues.  For example, as mentioned in BusinessWeek this week, Greenpeace is working with companies like McDonalds and Cargill to ensure sustainable farming practices in the Amazon.  For these companies, such an alliance with a green non-profit helps boost their green credentials, shape their brand image and even mitigate consumer wrath in the form of protests, boycotts or lawsuits. (“Hugging the Tree-Huggers”, March 12, 2007)

It is not surprising then that the provocateurs of the TXU takeover – Kohlberg Kravis Roberts & Co, (KKR) and Texas Pacific Group (TPG) – secured the blessing of both Environmental Defense (ED) and the National Defense Resource Council (NDRC) – two of the most respected and influential environmental non-profit organizations – before publicly announcing the buyout deal last week.

As part of the buyout, TXU agreed to scrap 8 of 11 planned coal plants plus invest in both conservation efforts and renewable energy projects in exchange for the environmental groups’ blessing.  In doing so, the potential new owners of TXU are hoping to mitigate the brand (and market) risk posed by the ongoing lawsuits to stop the plants from being built; the owners also hope to avoid  the associated negative press the lawsuits generate.   

Yet, yesterday’s Wall Street Journal (WSJ) revealed another side to the story that may perhaps undermine the green credibility that ED and NRDC’s endorsements provide. (“Environmental Groups Feud Over the Terms of the TXU Buyout”, March 3, 2007).  While seemingly a win for environmental groups and the company alike, the deal did not adhere to all the essentials that make for a winning partnership. 

Marketing Green believes three underlying principles are critical for green partnerships to succeed: 

  • Authenticity: Businesses must have genuine intentions to be greener and back this up with clear results.
  • Corporate Transparency:  Ensure full disclosure to your consumers, critics and the financial community.
  • Alignment with the Right Partner: Companies should make sure that the green organization that it aligns with can credibly speak on behalf of all of a company’s critics.

As the WSJ reported, the TXU deal may not have adhered to these principles.   

First, according to an investor call transcript, C. John Wilder, the current TXU CEO, stated that he would restrain from building new coal plants “unless our customers face reliability issues, shortages leading to higher prices, or our competition propose plants that are expected to have a meaningful impact on market dynamics.”  This statement seems to undermine the authenticity of TXU’s green strategy as, according to the WSJ, such conditions could appear as early as 2009 and give TXU the excuse to break its current pledge and build new plants. 

Second, TXU’s intentions were apparently less than transparent during negotiations with the green organizations.  Again, according to the WSJ, Wilder later told analysts that at the time of the buyout the company was already “reshaping [its] development program to focus on a smaller number of plants”.  Such a statement reflects a lack of corporate transparency about its true intentions, while undermining the apparent environmental gains that ED and NRDC negotiated to secure. 

Finally, while ED and NRDC are two of the most respected environmental organizations, it is unclear whether they represented the interests of all affected parties when they signed on to this buyout deal.  For example, while plans were shelved for 8 plants, 3 in Texas are sill on the drawing board, leaving locals fuming over the deal. 

For marketers, a partnership with a green organization is great way to brandish a brand’s green credentials.  Yet, as TXU’s experience suggests, the success of the partnership requires corporate authenticity, transparency and partnership with the organization(s) that best represent the affected parties.


4 Responses to Building Successful Green Partnerships

  1. Janice says:

    I recently attended 2 webinars on ‘eco-friendly’ products and the message was the same for both – you can market the concept all you want, but if the customer doesn’t get the same performance, or has to pay a higher price, they won’t buy it. None of the component suppliers want to try to develop the products because the demand is not enough to justify the capital equipment changes/improvements that would have to be made (and believe me, the changeover is NOT simple) and for the all the talk about recycling – WHAT recycling? In USA, we have stuff in landfills that will be there for the next 1000 years!
    An example is the hospital industry with the disposable gowns and masks – lot of material used but they have no mechanism to recycle (and would be hampered severely by regulatory issues if they tried) so where is the incentive except for a lot of hassle? And the products would be more expensive – hospitals that try to control costs won’t look on this favorably. The materials are out there to manfacture the disposables – and without an audience, they will remain ‘out there’.

  2. Hello,

    We have an exciting children’s green character brand and have recently partnered with the New Jersey Nets basketball franchise as they become the 1st NBA team to “Go Green”. We are looking for other partnership opportunities where we can get more exposure in our quest to teach children at a young age how to go green.

    I would appreciate someone contacting me to see how you can assist us in this.
    Thank you very much.

    Jennifer Nagassar
    William the Garbage Truck
    “Greening The World One Truck At A Time”

  3. […] it comes to defining a successful green partnership, our fellow green marketing colleagues really hit the […]

  4. I read this post fully on the topic of the comparison of most recent and earlier technologies, it’s remarkable

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