Innovative Black Carbon Certificates Fuel Traditional Cookstove Replacement

Recently, the Gold Standard Foundation, a leading standards organization for climate mitigation projects, launched a first-of-its-kind program to certify the reduction in black carbon emissions when traditional cookstoves are replaced with more efficient ones. While these certificates do not have monetary value in and of themselves, they have the potential to transform funding for cookstove replacement by providing donors with verified outcomes.

Black carbon or soot is generated from the incomplete burning of biomass – wood, animal dung or brush – as well as polluting diesel engines. It is second to carbon dioxide in its contribution to global warming. But, the detrimental impact of soot does not stop there. It also compromises water security for millions by accelerating glacial melt where it settles.

And worse, traditional cookstoves – responsible for up to 25% of black carbon emissions worldwide – are the primary cause of indoor air pollution for 3 billion people, causing the premature deaths of 4.3 million, including 500,000 children.* Not only does soot contribute to global warming, but a global health crisis too.

There has been a concerted effort by organizations such as the Global Alliance for Clean Cookstoves to replace traditional stoves with cleaner ones. Indeed, these programs have had success: since 2010, more than 20 million cleaner and more efficient cookstoves and fuels have been adopted by people in developing countries, largely in urban areas.

Yet, this effort has been hampered by a myriad of challenges, with cost being one of the most vexing. At $10-100 apiece, modern cookstoves are simply out of reach for many of the world’s poorest households.* Moreover, familiar benefits from such a purchase are often hard to put a value on, things such as time saved gathering wood or reduced risk of respiratory disease.

Cookstove replacement programs already attract financial support from carbon credits generated by reducing associated carbon dioxide emissions. But, current protocols neither quantify black carbon emissions nor measure its reduction. It is this gap that this certificate program seeks to fill.

And, by doing so, black carbon certificates have the potential to generate even greater benefits than carbon credits alone. Here’s how. These certificates:

• Attract funding from a wider range of sources given that they tackle issues beyond climate change including water security and human health. Donors could include governmental and non-governmental organizations, as well as multi-national corporations such as Unilever which already invests heavily in sustainable living initiatives around the world.

• Can generate greater premiums for associated carbon credits than otherwise would be expected because of the added benefit of certifying black carbon reduction too. Additional funding will accelerate stove replacement by subsidizing the purchase price and ongoing maintenance fees or distribution costs, especially in harder to reach rural areas.

• Provide a powerful signal to the market that demand for more efficient cookstoves is about to scale. To date, only 4% of traditional stoves have been replaced.* This leaves a massive market opportunity yet to be tapped and ripe for further innovation.

Reducing black carbon emitted from traditional cookstoves benefits human health and the environment. Though not a monetary instrument in and of itself, Certified Outcome Statements have the potential to accelerate cookstove replacement by attracting greater funding from donors that seek results-based outcomes. Replacement programs – certified to benefit both people and the planet – should ignite greater interest in this effort by all of us.

* Source: The Gold Standard Foundation

Growing Business Opportunities in Home Lighting, Heating

A ban on incandescent light bulbs took effect in the European Union last month, making more efficient lighting technologies — including compact fluorescent lightbulbs (CFLs) and light emitting diodes (LEDs) — standard across Europe. Such a milestone reminds us that market shifts — whether spurred by regulation or innovation — open up new opportunities for businesses to sell greener products and services to consumers.

Many of these emerging opportunities focus on efficient home energy solutions for consumers. Here are two that businesses should consider:

Next-generation lighting

The European Union isn’t the only region phasing out traditional incandescent lightbulbs. In 2007, the United States passed a similar regulation that effectively eliminates many of those bulbs by January of 2014. Initially, this mandate spurred demand for CFLs, likely from niche consumers willing to pay a higher price for an emerging technology that promised lower electrical usage and longer product life. But, since 2008, CFL purchases have declined each year, despite a precipitous drop in price.

Today, according to the U.S. Department of Energy, two thirds of the energy savings potential from CFLs has yet to be realized. As such, with the U.S. pulling out of the recession and consumers more willing to open their wallets, businesses have an opportunity to spur demand for next-generation lighting products.

Retailers are showing renewed interest in efficient bulbs. Ace Hardware, for example, recently declared Oct. 18 to be Annual Light Bulb Day to raise national awareness for CFLs and other lighting technologies. It also offered discounts on purchases to motivate foot traffic and drive sales.

Alternatively, Ikea has chosen to bypass CFLs: It plans to stock LEDs exclusively by 2016 because it believes the rapidly evolving technology will likely outperform CFLs in the near future. By picking a winner in the lighting category, IKEA generated a lot of buzz for its stores and interest in this emerging technology.

Utilities and utility regulatory boards are also spurring demand as they comply with state energy-efficiency mandates. For example, Efficiency Vermont, an organization authorized and funded by the Vermont Public Service Board to promote energy efficiency, launched a successful campaign to increase the use of CFLs. The campaign tackled the perception that CFLs were more expensive by advertising 99-cent bulbs available at participating retailers. It also created a sense of urgency (“good while supplies last”) to drive demand. The campaign was so successful that it doubled the number of CFLs sold per month.

Natural-gas home heating

Meanwhile, another home-energy opportunity is emerging: converting home heating systems from heating oil to natural gas. Not only would shifting to natural gas greatly reduce carbon emissions and improve local air quality, but — in most cases where gas lines are nearby — would also generate very positive returns for homeowners.

Technology innovation is precipitating this opportunity by unlocking vast amounts of natural gas in shale formations across the country. Many such formations are concentrated in the northeast, a region that historically has relied more on heating oil, partly because of the region’s limited pipeline capacity for bringing gas from the Gulf of Mexico. With natural gas supplies increasing, the residential price has dropped dramatically from its peak in 2005-2006.

Simultaneously, the residential price of heating oil has grown dramatically, providing even more incentive for households to switch to natural gas. In fact, according to the Energy Department, the average heating-oil-heated household now spends more than three times as much on heating ($2,298) as the average natural-gas-heated household ($724).

Of course, many of the developments in natural gas are the result of hydrofracking, a controversial extraction process. Many believe that hydrofracking risks contaminating aquifers used for drinking water, although the degree of risk is up for debate. And while greener fracking technologies are emerging, they haven’t yet reached commercial scale. Still, the benefits of shifting away from heating oil to natural gas may outweigh the costs.

If shale gas extraction continues, there are many ways that businesses can promote natural gas conversion to consumers. Certainly, energy companies can motivate their own customers to make the switch through the use of incentives. Utilities such as Con Edison are already helping to coordinate clusters of property owners to convert together, thereby lowering the upfront costs for individual customers.

Banks also can promote natural gas conversions by extending loans to help consumers make the switch. One such loan program by People’s United Bank covers the upfront conversion costs for Southern Connecticut Gas and Connecticut Natural Gas customers.

Market shifts in regulation and technology are enabling new opportunities to provide efficient home energy solutions for consumers. Many businesses are already starting to take advantage of this. Those that aren’t yet should take note: As the U.S. continues to emerge from the recession, consumer appetite for such solutions is only likely to increase.

How to Grow Consumer Attachment to Green Brands

Marketers work hard to create an emotional link between consumers and the brands those marketers promote. But that kind of attachment is not easily won and must be nurtured over time. Experts say one way to create that emotional link is by aligning a brand’s identity with the consumer’s sense of self; that is, with a person’s understanding of who they are and what they want to be.

But which sense of self are we talking about? The actual one based on how consumers perceive themselves today – or the ideal one based on who they aspire to be? Answering that question has profound implications for brands, including green brands, in terms of how they should build brand attachment with consumers.

Lucia Malär, an assistant professor of marketing at the University of Bern’s Institute of Marketing and Management, and several of her colleagues recently published an article in the Journal of Marketing that explores the relationship between the consumer’s actual and ideal sense of self. While this academic study did not directly address green brands, there are important lessons green marketers can take away from it.

According to the paper, consumers generally form greater emotional attachments with brands that align to how consumers view themselves, rather than what consumers aspire to be. For green brands this is not a trivial consideration — especially when you consider that, for many consumers, the notion of being green is a goal they aspire to.

Malär et al. identify three attributes that have a significant impact on consumer attachment: the degree of product involvement, the level of consumer self-esteem and the propensity for public self-consciousness. Here are some thoughts on how these characteristics can help green marketers better engage consumers:

Product Involvement. The paper defines product involvement as a consumer’s engagement with a product, largely determined by how relevant consumers perceive that product to be in their lives.  Malär et al. observe that highly engaged consumers have a positive emotional attachment with brands that align to their actual sense of self, while less engaged consumers have positive attachment with brands that focus on consumers’ ideal sense of self.

At the same time, it’s not necessarily true that less eco-engaged consumers will respond positively to brands aligned to their ideal self. While consumers may be aspirationally green, they simply may not be familiar with the products that can help them achieve this aspiration.

Green marketers might first need to educate consumers about green brands before those brands can become relevant in their lives. One powerful tool is to communicate a goal-driven message around green products, while showcasing their actual use by people that consumers can readily identify with. That’s what Mitsubishi did when it created a demonstration program for electric car technology in the town of Normal, Ill.

Self-Esteem. Malär et al. say consumer self-esteem is an essential part of emotional brand attachment — as consumers seek out brands that reinforce or enhance their own perceptions of self worth. This means consumers with higher self-esteem have a positive emotional attachment to brands that reinforce their actual sense of self. At the same time, consumers with lower self-esteem have positive emotional attachment with brands that enhance perceptions of their ideal sense of self.

Given the relative newness of green as a branding category, it may make sense for green marketers to interpret self-esteem as a consumer’s confidence in their ability to make greener choices that are right for them. When engaging green-confident consumers, brands might therefore want to emphasize evidence that confirms the consumer’s self view.  For example, green brands should praise consumers for taking eco-friendly actions.

In contrast, when engaging less confident consumers, a brand may want to shape the perception of what it means to be a greener product, and to actively facilitate their purchase. Such brands might want to show consumers what they could achieve with these products, and provide a roadmap for them to get to their goals.

Patagonia provides a great illustration of this through its Common Thread Initiative.   While most companies market only new products, Patagonia launched a “Buy Less” campaign — to shape consumer perceptions regarding responsible consumption: reduce, repair, reuse and recycle. The campaign reinforces its point by actively facilitating the buying and selling of lightly-worm merchandise from Patagonia through eBay.

Public Self-Consciousness. Professor Malär and her colleagues identify public self-consciousness as a consumer’s awareness of how others perceive them. People with high public self-consciousness have a positive emotional attachment to brands that focus on consumers’ actual sense of self, while those with low public self-consciousness have a positive attachment with brands that focus on consumers’ ideal sense of self.

Green marketers should take advantage of this factor by providing ways for consumers to receive public accolades for eco-friendly behavior. One way might be to embed gaming elements such as badges, points and leader boards into networked products.

Reward companies such as RecycleBank and Practically Green have already made gamification a core part of their offerings. Moreover, car companies such as Ford and Nissan have begun to incorporate similar concepts into the dashboards of their hybrid vehicles to reinforce eco-friendly driving behaviors.

Alternatively, brands can encourage the use of social media apps, like the one Opower recently launched, can enable consumers to share and compare energy savings.

It’s interesting to note that, while Malär et al. address emotional brand attachment, they do not tackle rational brand attachment. But such an attachment can be an important brand driver for consumers — especially when products have a direct and measurable impact on the environment. As such, when it comes to green products, rational brand attachment has the potential to amplify the emotional.

One emerging example of how to cultivate rational brand attachment is the Obama Administration’s Green Button initiative.  This program will provide millions of consumers with access to their energy data. It might also spark the development of innovative ways to leverage that data, in an effort to motivate consumers to reduce their energy use.

Brand marketers face considerable challenges in establishing and nurturing brand attachment. Those attachments not only require an assessment of brand identity, but also exploring the mindset of the intended consumers — that is, how they actually perceive themselves today or ideally in the future. Green marketers can take advantage of this relationship by aligning their brands to the mindset that best promotes eco-friendly behaviors by consumers.

Green Product Paradox: When Too Much Good Is Bad for the Environment

A common mantra in green marketing is that if you want the masses to buy your product, focus your messaging on more traditional attributes such as price, quality or service.  A product’s “greenness” is likely secondary for many mainstream consumers. For green marketers then, the holy grail may be to offer a product that is competitive on dimensions both traditional and eco-friendly.  This would result in the greatest number of products sold and greatest impact on the environment.

But, things are not always that simple.  Consider the scenario when an innovative green product spurs new demand across an entire product category, rather than just replaces the existing generation of products in market. Is the individual product still green if the aggregate impact of the category is greater than what it replaced? 

Take, for example, household lighting.  Most of us are aware that switching from incandescent to fluorescent light bulbs can result in a dramatic reduction in energy use.  But, overall adoption has been relatively modest in comparison to the potential market, likely due to the premium price commanded for the bulbs. 

Today, an even newer generation of lighting technology is on the commercial horizon.  Solid state lighting, described as a “souped up” version of the light emitting diodes (LEDs) that are commonly used today to illuminate electronic displays on alarm clocks and audio equipment, promises to provide lighting at a fraction of the energy used by today’s bulbs.  (“Not Such a Bright Idea”, The Economist, August 26, 2010)  Mass adoption of such technology could have significant implications for the environment given that 6.5% of the world’s energy is used for illumination.

In many ways, we should celebrate such technology fixes given their benefits to the environment.  For marketers, solid state lighting clearly has the potential to be one of those “holy grail products”. Yet, green products such as solid state lighting also present a paradox in that their adoption in mass might actually be detrimental to the environment. How could this be the case?  Well, according to J Y Tsao and colleagues at the Sandia National Laboratory, cheaper lighting that sips energy will likely increase overall demand and uses for light, and with it, overall energy consumption.  (J Y Tsao, et. al., “Solid-State Lighting: An Energy-Economics Perspective”, Journal of Physics D: Applied Physics, August 19, 2010)

The rationale? Today, Tsao et. al., contends that consumers underconsume indoor light – with current fixtures providing 1/10th of the illumination as ambient outdoor light on cloudy days and 1/60th of ambient outdoor light on sunny ones.  Tsao rationalizes that there is plenty of room to consume more – including in new ways that have yet to be thought of.

As evidence, Tsao et. al., models historical lighting use and adoption rates for new technologies – from gas lanterns to fluorescent bulbs – and extrapolates forward demand based on the amount of light produced (measured in lumens) and cost per lumen.

Historic trends clearly indicate that consumer demand greatly increased when cost dropped and other attributes – such as faster turn on/off and greater cleanliness – expanded lighting uses.  Extrapolating into the future, Tsao et. al., predicts that with solid state lighting, demand has the potential to increase10x by 2030 and with it, perhaps a 2x increase in energy use.  How paradoxical. 

It is important to note that the green product paradox is not isolated to LED lighting.  Increased demand for electric cars, for example, could result in a similar dilemma if the added electricity load needed to power the vehicles is generated using higher polluting coal.

As such, the green product paradox presents quite the challenge for a marketer.  For individual companies, such products can be both profitable and (at least appear) socially responsible.   It is only by looking at the forest from the trees – and perhaps a little into the future – does it become apparent that, in aggregate, such products may, paradoxically, have a negative impact.

A sustainable brand might try itself to mitigate any impact that its products may have.  But, this will only have broad impact if it ultimately compels competitors to follow suit.  Given this, marketers should recognize that a solution to the paradox may not lie within an individual company’s grasp.  Alternatively, it may take an industry consortium to make the necessary product changes or evolve consumer expectations.  Or, it may take collaboration across industries to have lasting impact.  In both examples cited above, a shift to lower-polluting sources for energy generation would mitigate an increase in demand for both products.

Overall, the green product paradox presents a difficult challenge for green marketers.  Doing good for the planet may not always be as a simple as motivating purchase of greener goods.  In some cases, it just might be too much of a good thing.

Defining Green Brand Leadership

“We will not be measured by our aspirations.  We will be measured by our actions”                   

— Wal-Mart CEO Lee Scott in making sustainability part of his core strategy

Great brands today understand that return on investment (ROI) using hard dollars is not sufficient to assess the overall impact of environmental initiatives.  Today, social norms regarding the environment are changing and consumers are increasingly holding brands accountable for what they do (and don’t do) rather than just what they say.  As a result, more and more companies are making investment decisions that incorporate brand impact and brand risk into their equations. 

Wikipedia defines brand as the “embodiment of all information connected to [a] product and serves to create associations and expectations around it.”  Though intangible, a brand may generate significant value for a company based on its ability to create differentiated experiences for consumers – and enable the company to generate and sustain future cash flows as a result. 

One way to view a brand is that it can enable companies to charge a premium for what may ordinarily be perceived as a commodity product.  Take for example Coca-Cola, the #1 brand based on the 2007 BusinessWeek/Interbrand survey.  According to the Brand Finance 250 annual report, Coca-Cola has the highest brand value – over $43 billion or nearly 40% of its total $110 billion enterprise value – in a highly competitive beverage market.   

While taste is indeed an important differentiator, Coca-Cola is able to charge a premium for its products – and generate significant brand value – primarily due to the strong brand loyalty of its customers. 

Increasingly, leading brand companies are recognizing that environmental issues have the potential to impact brand value – positively or negatively – and are taking action.  Coca-Cola clearly understands this and is aggressively responding with bold initiatives that are intent on shoring up its green credentials. 

For example, consumers today are less willing to accept that a plastic bottle will take 1,000 years to decompose in a landfill.  By proactively redesigning its bottle to reduce material use and pledging to recycle 100% of bottles sold in the US, Coca-Cola is clearly taking action to stay ahead of consumer brand expectations – and by doing so, defending (or perhaps enhancing) its brand value.

Does reduced material use lower production costs for Coca-Cola?  Absolutely.  Does committing to recycling 100% of its bottles help attract new customers?  Not necessarily.  Regardless, recycling bottles impacts its brand value – and ability to continue to sustain future cash flows – by strengthening connections with existing customers and mitigating potential risk to its corporate reputation as a result of negative PR.

Today, many leading brands like Coca-Cola are responding to consumer concerns about the environment by making investments that strengthen or shore up brand value.  Marketing Green believes that there are five actions that define green brand leaders. These five actions need to be considered by companies looking to green their brands: 

Be accountable.  Companies should acknowledge that environmental issues such as climate change are real and that, despite good intentions, they are part of the problem (and can be part of the solution). At this point, businesses are likely to alienate few consumers with such a statement and can begin to attract the growing group of consumers looking for green brand leadership.    

Additionally, businesses should audit their own operations and the lifecycle of their products – including sourcing, use and disposal – to determine their environmental impact and track these metrics over time. Indeed accountability, now considered one of the top pillars of successful marketing communications, cannot be underestimated when it comes to the environmental space.

Consumers are becoming increasingly savvy and increasingly demanding when it comes to the environment.  Companies should not be shy in setting high goals for themselves when it comes to the environment; if there’s any time to admit the future needs to be different than the past, it’s now.  

Be transparent.  More and more, leading brands are providing public disclosures of their environmental and social impact.  Today, in fact, 43 of the top 100 brands – including 12 of the top 15 – make public disclosures based on sustainability guidelines set by the Global Reporting Initiative. 

This reporting framework – first proposed by Boston-based non-profit CERES, endorsed by the United Nations Environmental Programme and supported by a consortium of leading brands including Alcan, BP, Ford, GM, Microsoft, RBC Financial and Shell – has become the de facto standard for environmental and social reporting globally.  Currently, more than 1,250 companies in over 60 countries are making disclosures using this framework. 

Another way that companies are demonstrating transparency is through partnerships with non-governmental organizations (NGOs) such as the National Resource Defense Council and Environmental Defense (ED).  NGOs provide credibility for a company because consumers view them as industry watch dogs. 

Certainly, one of the best partnership examples is the one forged between Wal-Mart and ED to make Wal-Mart’s operations and supply chain more sustainable.  In effect, Wal-Mart – not ranked in the BusinessWeek/Interbrand survey because it operates internationally under different brand names – has turned to a respected NGO to endorse its environmental efforts. 

This partnership hold such promise that ED announced last year that it was adding a staff position in Bentonville, AR in order to coordinate ongoing work with the retail giant.

Be credible.  Today, consumers are skeptical; too many companies have tried to green wash hollow environmental efforts.  As such, companies must work hard to build credibility and earn consumer trust over time.   

One way for a company to do so is to first green its internal operations, followed by its products and services, and then its marketing communications.  This way, companies ensure that they take responsibility for their own actions before encouraging consumers to do so with their products or through their messaging. 

But this is not the only way to gain credibility with consumers.  Companies like Toyota (# 6 ranked brand) started by greening its products (eg, hybrids) first.  The risk for a company, however, is that over time its own product enthusiasts are likely to challenge how the product is made.  In the case of Toyota, hybrid owners are now pressuring it to green its operations and manufacturing facilities and Toyota is taking action, according to Marjorie Schussel, National Manager of Corporate Communications, at the recent Green Conference sponsored by Ad Age. 

In contrast, Dell (#31 ranked brand, in contrast to #3 IBM and Dell archrival #12 ranked HP) started with its marketing communications first, declaring that it was going to be the greenest IT company on earth.  In doing so, it essentially admitted that its operations and products were not green yet but that it had every intention to make them green over time.  To help facilitate this transformation, Dell created a site called IdeaStorm to solicit input from its customers on ways by which it could go green. 

Be an enabler.  Leading brands should recognize that consumer expectations have changed.  It is not enough for a company to green its products; consumers expect the products that they purchase to help reduce the environmental impact in their own lives too. 

Recent research by Umbria, a marketing intelligence company, supports this.  Averill Doering, a consumer research analyst with Umbria, made the following observation: “[Consumers] see the [environmental] problem. They want to do something about it.  And, they want the companies they buy from to help them do it.” 

Such consumer expectations raise the bar and imply that consumers may hold companies responsible for the environmental impact of the products that they buy – across the entire lifecycle.  Consumers may increasingly care not just about product sourcing, but about its use and disposal too.  The emergence of eco-labels may serve to reinforce these consumer expectations as they will provide consumers with the necessary information to make greener choices by comparison shopping.  

Leading brands only need to witness the growth in hybrid sales – 49% during the first seven months of 2007 over the same period in 2006 – to recognize that consumers are actively seeking products that enable them to be greener.  Today, every major automobile company is following suit and is accelerating development and commercialization of greener automobiles. 

Be visionary. Visionaries are willing to make bold decisions that redefine their strategy or reshape industry dynamics.  Today, there are many emerging green visionaries.  Among them is Wal-Mart. 

In June of 2004, a pivotal meeting took place between CEO Lee Scott, Rob Walton, Board member and son of the late founder, and Peter Seligmann, Co-founder and CEO of Conservation International.  Walton and Seligmann were friends and had often discussed the potential impact that Wal-Mart could have as the largest global retailer if it were to change the way it did business.   

The pitch to Scott: Wal-Mart had long been criticized for its labor practices, employee health benefits and environmental record.  Given its buying power as the world’s largest retailer, Wal-Mart was in a unique position to affect change in the retail space and do so in a way that would greatly reduce its impact on the environment while saving money, growing revenue and positively impacting its brand image. 

Over time, Scott has essentially turned this pitch into Wal-Mart’s modus operandi.  Not only did Scott set ambitious goals regarding sustainability – 100% renewable energy, zero waste, products that sustain our resources and environment – but he has made it a central component of his strategy and brand positioning.   

Wal-Mart first demonstrated the demand for more sustainable products when it began selling organic cotton yoga outfits through Sam’s Club: 190K sold in less than 10 weeks. This year, Wal-Mart challenged itself to sell 100MM compact fluorescent light bulbs (CFLs) and has already surpassed that goal.  To do so, it combined its marketing muscle to heavily advertise the CFLs in its stores, and purchasing clout to be able to drive down the cost substantially over just one year ago. 

Moreover, Wal-Mart is intent on making its suppliers more sustainable.  Earlier this year, Wal-Mart launched Sustainability 360º, a program intended to enlist its employees, suppliers, customers and local communities to help reduce environmental impact.  This month Scott hosted a Sustainability Summit to connect Wal-Mart suppliers with vendors that could help them become more sustainable.  

Finally, Wal-Mart has expanded its brand positioning to include not just its long time low cost promise, but also “affordable, sustainable products that help [customers] live better every day.”  “Save Money. Live Better” is now the Wal-Mart tag line.    

Increasingly, companies recognize that environmental issues can impact brand value.  In response, leading brands are increasingly incorporating brand metrics into their evaluation criteria for green investments; they are also taking action to green their operations, products and marketing communications.   

Smart brand marketers should think twice about simply focusing on near-term green revenue and cost savings opportunities; the path for sustaining growth needs to also start with greening the brand.

Green Brand Disconnect

This week’s cover story in BusinessWeek featured the experience of Auden Schendler, corporate director of environmental affairs at the Aspen Skiing Company (ASC), as he tried to convince his senior management that going green was worth the investment (“Little Green Lies,” October 29, 2007).

 

            

From an outsider’s perspective, one might think that ASC would be highly receptive to eco-friendly investment opportunities, as the company has incorporated green as a core brand pillar and a central theme in its marketing communications.  Yet, as Schendler points out, things are not always at they appear; apparently, ASC is not as green as its brand might suggest.

In one example, Schendler points out that in the past, senior management has resisted even modest investments in proven technologies – such as compact florescent light bulbs (CFLs) in hotel rooms – that yield measurable cost savings and a positive ROI.  The rationale: CFLs are not aligned with the brand experience ASC wants for its customers.  As one hotel manager said, “Fluorescent light would suggest a waiting-room ambience, jeopardizing the establishment’s five-star rating.” 

Such a world view, however, does not seem to acknowledge evolving social norms and consumer expectations regarding green.   According to a recent JD Powers Hotel Guest Satisfaction Survey, 75% of hotel guests are willing to participate in environmental programs.  In the luxury hotel category, an even higher percentage of guests are willing to participate: 87% of Baby Boomers, 95% of Gen Xers and 79% Gen Yers.  Based on this consumer data it seems that ASC may be underestimating their guests’ interest in and expectations for green as part of their hotel experience. 

As such, it seems that ASC’s decision not to invest in CFLs may be at odds with current consumer sentiment.  In fact, CFLs have already gone mainstream.  Today, many luxury hotels already use CFLs for lighting.  Their light quality has improved tremendously.  And, retailers are selling them aggressively, despite the fact that incandescent light bulbs are more profitable for them.  In fact, Wal-Mart has sold over 100MM of these bulbs this year alone.  

Moreover, not investing in CFLs seems contrary to ASC’s own brand positioning and communications in the market.  In fact, just weeks before the BusinessWeek article ran, ASC launched a new advertising campaign that, according to the Salt Lake Tribune, used “high-profile skiers and snowboarders to tout the resort operator’s environmental record and urging others to take action, too.”   This campaign is supported by a lightly branded microsite called Save Snow which educates visitors about what ASC is doing and what others can do to reduce climate impact.   

Ironically, the campaign also includes plans to send 40,000 CFLs to its customers.   

 

So, marketers should take note.  Consumers are increasingly willing to participate in environmental programs at hotels, and especially at luxury ones.  

Hotels should not be afraid to invest in green initaitives including CFLs.  Not only can such programs provide attractive ROIs, but, for companies such as ASC, they can ensure that the consumer experience aligns with their brand positioning in the market.  For ASC, the decision not to purchase CFLs is, at best, inconsistent with its brand.  At worst, the company risks that its marketing efforts are perceived as green washing.

Green Consumer Behavior – Part III: Changing Behavior without Changing Attitudes

Marketers have historically faced an uphill battle when it comes to marketing eco-friendly goods.  Simply put, it is difficult to influence consumer purchase behavior without first impacting attitudes and values.  These values, however, take a concerted effort over a long period of time to change. 

As a result, corporate marketers tend to stay clear of awareness and education communications, preferring to target consumers lower in the purchase funnel who are already predisposed to green messaging.  The reason for this is self-evident: when it comes to green, acquisition campaigns have higher and more immediate financial returns than awareness campaigns. 

Yet, for marketers, the opportunity exists to influence environmentally friendly behavior without necessarily shifting attitudes.  This effect has been subject of academic investigation including a study conducted by Professors John Thøgersen and Folke Ölander of the Aarhus School of Business (Denmark) examining the relationship between “value priorities” and “environmentally-friendly consumer behavior.”   

As part of this study, Thøgersen and Ölander examined the impact of recycling on the values and behaviors of Danish consumers over the course of one year. (“Human Values and the Emergence of a Sustainable Consumption Pattern: A Panel Study,” Journal of Economic Psychology, 2002).  The results of such investigation reveal several key findings that green marketers should consider:

First, the study reconfirmed that values drive behavior (while the converse relationship was not found to be statistically significant).  While not surprising, this result confirms that marketers face an uphill battle if they are to influence environmentally friendly behavior without first addressing values. 

Second, the study found that values are very stable and are difficult to impact in the “short and medium term.”  Finally, behavior change, the authors concluded, is hindered not only by values but by “behavioural inertia, created by forces [such as established habits] that are independent of – or at least not related in a simple way to – values”.    

Yet significantly for marketers, the study also suggests that for those that already hold environmentally friendly values, environmentally friendly behavior can evolve over time if consumers are provided the opportunity to engage in this behavior.  Thøgersen and Ölander concluded that “when new opportunities for environmentally-friendly behaviour are offered, consumers holding ‘environmentally-friendly values’ adjust their behaviour to be more consistent with their values.”  This finding implies that consumers who hold green values will demonstrate greener behavior if presented with relevant products or services.   

For marketers, the findings of this study help to uncover several opportunities to consider: 

Cultivate “greener than average” behavior: Half the products sold in the market are simply greener than the other half.  As such, marketers of “greener than average” products should make this a source of differentiation to attract consumers receptive to green messaging or cross-sell/up-sell existing customers to even “greener” products. 

For example, Honda is currently running a campaign to build awareness about how fuel efficient its cars fleet is.  With an average fuel economy of 30.1 MPG, Honda claims to sell “greener” products (inclusive of both hybrid and conventional engines) that are more than 20% more fuel efficient than the US average over the past 10 years. 

While such positioning can build awareness for its automobiles’ fuel economy, Honda can also leverage this campaign to build loyalty and even drive resale with its existing consumer base.  To do so, Honda must reinforce and cultivate “greener” behavior through congratulatory messaging at the time of purchase (ie, through “You made the right choice for you and the environment” messaging), as well as through results-based messaging throughout the customer lifecycle (ie, through “By driving a Honda, you have prevented 1000 lbs of CO₂ from being released into our environment this year over an average vehicle.  Collectively, we are making a difference” messaging).  When it comes to resell, Honda should then try to up-sell a customer to an even greener vehicle or model. 

Target nascent green value holders:  Marketers should seize opportunities to speak with broader audiences who may not hold strong green values, but may be developing a greater affinity for environmental causes. These individuals may be more receptive to the green message when it is contextually relevant.   

The upcoming Live Earth concert may be one such opportunity.  Planned for 07/07/07, Live Earth will reach an estimated 2 billion people globally.  Sponsorship of this concert provides marketers with the opportunity to build brand awareness, educate consumers and even drive acquisition. 

Take advantage of government regulation that mandates behavior change:  As more governments grapple with how to reduce carbon emissions, governments will take action in order to accelerate change in consumer behavior.  One intriguing example is fluorescent light bulbs, often cited as low hanging fruit in the effort to slow global warming. 

For example, the adoption of fluorescent light bulbs by consumers has been slow for a variety of reasons: unconventional shape (though companies have started to change this), harsh ‘industrial’ light emitted, and high initial price (though bulbs last longer and save significant money on electricity bills over time).  

Despite these hurdles, several retailers have taken on the challenge.  For example, Home Depot sold 60MM fluorescent light bulbs last year while Wal-Mart intends to sell 100MM this year.  However, without significant change in consumer attitudes (combined perhaps with aggressive marketing tactics or financial incentives), these goals may fall short. 

Recently, however, legislatures have stepped up to fill the green behavior void – with legislation passed (EU, Australia) or up for consideration (California and Canada) to effectively phase out incandescent bulbs (by making efficiency standards higher than what can be currently achieved by current technology).  In effect, regulation would force consumers to switch en masse to more efficient light bulbs – and do so without first influencing consumer attitudes. 

Energy Efficient Home Listings

In today’s soft real estate market, home buyers increasingly are willing to wait to get what they want, at a price they are willing to pay. Moreover, as the cost of heating and cooling a home has increased significantly over the past few years, consumers are also paying increased attention to monthly energy bills associated with properties they are considering. Buyer hesitation is leaving sellers in the lurch and realtors without commissions. The current environment is ripe for a new marketing message, especially one that can turn issues that are detremental to home sales – like higher fuel prices – into an advantage.

Realtors should:

Market a home based in its energy efficiency. Energy efficiency has become a true differentiator in this market. Whenever possible, realtors should market homes based on comparable energy efficiency – focusing on monthly cost savings and reduced impact on climate change.

Encourage buyers and sellers to take advantage of FHA Energy Efficient Mortgages (EEM). These mortgages allow home owners to tack on 100% of the cost for energy efficiency improvements to an already approved mortgage (up to $4k or 5% of the value of the home, up to a maximum of $8k, whichever is greater). US Department of Energy is a good source for information on EEMs.

Buyers should consider investments that yield even modest improvements in energy efficiency, as they can result in significant reductions in monthly energy bills. Sellers should consider how these investments will reduce anticipated energy bills and improve a home’s salability.

Engage customers by providing educational content and hands-on tools. Consumers have not traditionally focused on opportunities to improve energy efficiency. Realtors should provide appropriate materials to educate both buyers and sellers.

Moreover, realtors should provide energy cost savings calculators that enable consumers to understand the impact of investments in energy efficiency. Wisconsin Public Service provides a comprehensive one.