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"They say I'm old-fashioned, and live in the past, but sometimes I think progress progresses too fast!"
-- The Lorax, Dr. Seuss
On any given weeknight, you're bound to see at least one commercial from a S&P 500 company touting the "green-ness" of its products.
Some of these environmental initiatives are authentic, while others reek of shenanigans. Environmental activists often refer to such phony green ads as "greenwashing," and inquiring bloggers are quick to expose their inaccuracies.
It ain't easy being green ...
Overplayed and erroneous green campaigns could actually backfire on these faux-green companies. In fact, a recent report from Nielsen Online called greenwashing a "failed corporate strategy" and encouraged greater transparency in green advertising.
As shareholders of companies that claim to help the environment, it's important for us to hold management to a higher standard, for if they don't it could deteriorate shareholder value.
Choosing the harder right
If guilty greenwashers seek repentance, they should heed the examples of three private but influential green companies: Patagonia, New Leaf Paper, and Recreational Equipment (REI).
California-based outdoor-clothing retailer Patagonia is a longtime environmental steward. It's launched a fresh salvo in the battle for green advertising transparency with its website's Footprint Chronicles campaign.
Footprint Chronicles interactively tracks the creation, manufacturing, and distribution of various Patagonia products and points out the "good" and "bad" environmental contributions made throughout the process. For example, their Puckerware shirt travels 13,550 miles from its point of origin in Turkey to distribution in Reno, Nevada, creating 17 pounds of CO2 emission during the process.
San Francisco's New Leaf Paper is a cutting-edge producer of post-consumer paper that is working to dispel the image we all have of recycled paper -- flimsy, overabsorbent, and unreliable.
Taking on the notoriously polluting paper milling industry is difficult, with powerhouses such as International Paper (NYSE: IP) and Domtar (NYSE: UFS) competing with their own green efforts, but New Leaf's innovative techniques for creating high-quality recycled paper keep it ahead of the game. In fact, current New Leaf customers include Apple (Nasdaq: AAPL), Gap (NYSE: GPS), and Bank of America (NYSE: BAC).
Not only has outdoor-gear co-op REI been named one of Fortune magazine's "100 Best Companies to Work for in America" for 11 consecutive years, but it's also a model corporate citizen of Planet Earth. Among other things, REI donates a percentage of its profits to environmental causes, sponsors outdoor service projects and youth programs, and purchases about 20% of its energy from renewable sources.
If you think their environmental efforts are adversely affecting business profits, you'd be mistaken -- REI generated more than $1.3 billion in sales in 2007 and rewarded its co-op members with a return on membership equity of 10%.
Don't be a Once-ler
Granted, Patagonia, New Leaf, and REI have the luxury of not being under the scrutiny of Wall Street analysts and their quarter-by-quarter mind-sets. Still, the three unsung environmental heroes nevertheless serve as tremendous examples of the inspiration, dedication, and follow-through that we should demand from publicly traded companies claiming to be green. Environmental stewardship isn't just good for business -- it's the right thing to do.
