EPD's &Transparent, Non-Deceptive Green Marketing

TILBURG UNIVERSITY

Bachelor thesis

Environmental Product Declarations & Transparent, Non-Deceptive Green Marketing

Esther van der Lugt ANR: 147420 Thesis supervisor: Bert van de Ven Liberal Arts and Sciences Faculty of Humanities July 2011

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

Table of Contents 1. Green Marketing, EPD’s and the need for Transparency and Non-Deceptive Marketing Claims 3 The moral aspects of green marketing 3 Greenwash and unintentional Deception 5 Transparency 5 Research aims and methods 6 2. EPD Methodology and Deceptive Green Marketing 7 The Methodology of the Environmental Product Declaration 7 Deception in Marketing 9 Deception in Green Marketing 10 3. A Normative Framework for Transparent, Non-Deceptive Green Marketing 12 Transparency 12 Relevance 14 Comprehensiveness 15 Accessible Proof and Data Quality 16 Clarity 16 4. EPD’s and Transparent, Non-deceptive Green Marketing 20 EPD’s and Relevance 20 EPD’s and Comprehensiveness 22 EPD’s, Accessible Proof and Quality of Information 23 EPD’s and Clarity 25 EPD’s and the Virtue of Accuracy 26 5. Conclusion 28 Discussion 28 Conclusions 29 Recommendations for Future Research 31 6. Bibliography 33

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

1. Green Marketing, EPD’s and the need for Transparency and Non-Deceptive Marketing Claims

The sins of greenwashing have received ample scholarly attention, as well as the scorn of the popular press. In a narrow definition greenwashing entails the intentional misleading of consumers to establish a green image which is not based on actual environmental performance but on make belief1. It is theorized that this phenomenon spoils the market for genuinely “green” products by harming consumer freedom, creating distrust, hampering product differentiation and green innovation (Davis, 1992, p. 81-83; Prakash, 2002, p. 293). Yet another, under exposed aspect of this phenomenon, namely unintentional deception, has the same negative consequences because consumers cannot distinguish between intentional and unintentional deception and may similarly punish the firm with a boycott (Cone, 2011, p. 2, 6). The importance of this aspect of greenwash has also been emphasized by Ottman, whom believes that most greenwash concerns unintentional deception, because companies often do not know how to formulate accurate claims and have not investigated their products environmental impact thoroughly (Ottman, 2011, preface p.xiv). Recently, there is a new trend that may be the solution to the vices of greenwash: radical transparency, or full product transparency, operationalized and ardently promoted by InterfaceFLOR by means of Environmental Product Declarations (EPD’s). EPD’s go well beyond the mainstream green marketing practice by presenting “the good, the bad, and the ugly” and are stated to be transparent, truthful, objective and third party verified (www.interfaceflor.com; www.environdec. com). But is this a useful marketing tool to prevent unintentional deception? For assessing this question, a normative framework for transparent and non-deceptive green marketing will be formulated. Subsequently, this framework will be used to asses to which extent EPD’s can contribute to transparent, non-deceptive green marketing.

The moral aspects of green marketing The moral dimension of green marketing has primarily been explored from two angles: green marketing as corporate social responsibility and the moral aspects related to execution of green marketing (Crane, 2000b, p. 146-151). But first of all: What is green marketing? The field of green marketing2 emerged in the 70’s when green business practices became more popular. It entails the same activities as conventional marketing (targeting, design, positioning, pricing, logistics, promotion) but follows up green business processes, and only then a green product

1 An exploration of the concept of greenwash will be presented in chapter 2. 2 Other names for green marketing: Environmental marketing, ecomarketing, enviropreneurial marketing, sustainability marketing.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt ought to be marketed as such. This holistic character is emphasized in Peattie’s definition of green marketing: “Green marketing is the holistic management process responsible for identifying, anticipating and satisfying the requirements of customers and society, in a profitable and sustainable way” (Rex & Baumann, 2006, p. 568). Ottman defines green marketing in a more narrow sense, merely related to environmental product characteristics, rather than referring to sustainability: “Green Marketing must satisfy two objectives: improved environmental quality and customer satisfaction” (Ottman et al., 2006, p. 24). In this thesis I will primarily focus on the aspect of promotion of products with improved environmental attributes. It has been argued that social responsibility is or at least should be one of the core moral values of green marketing. Social responsibility refers to the way companies take responsibility for their negative externalities, such as environmental degradation. This responsibility towards stakeholders and society at large assumes a moral agency of the firm, which is not merely a response to external pressures but is internally motivated by the concern for society and the environment (Crane, 2000b, p. 148-149). From this perspective, green marketing can be seen as a matter of good or ethical corporate conduct.

The execution of green marketing is also subjected to moral principles due to the impact on consumers, society and the goal of a more sustainable society. It has been claimed that green marketers should aim at truthfulness, and should not deceive or engage in greenwash, based on the assumptions that the consumer is harmed financially and consumer freedom is violated3 (Crane, 2000, p. 147-148). Hereby the deceit eventually hinders green product differentiation and innovation and Davis (1992, p. 82) argues that untruthful green marketing is a serious obstruction on the way to a more sustainable society. Besides the harmful consequences of deception, truthful green marketing can be pursued for other moral reasons. Deception in marketing the ethical reveals disrespect for the implied moral principles and the importance of having a corporate moral character (Stoll, 2002, p. 125-126). Virtue ethics provides a useful framework for defining the good company, and places an emphasis on the intent of companies. Central is the assumption that companies can also have a moral character and develop moral virtues (Murphy, 1999, p. 111; Solomon, 1993), by means of the cultivation of good habits and best practices (Murphy, 1999, p. 109). Van de Ven (2008, p. 341-349) has argued that ethical conduct can be marketed in a virtuous manner: as long as marketing is used as furthering the good cause, not using it merely as a sales argument, and if the company strives for truthfulness (for which the virtues of accuracy and sincerity are crucial). Bernard Williams argued that the virtue of

3 The consumer freedom of choice has been

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt sincerity makes a company state what it believes, and the virtue of accuracy, which is deemed especially important, makes companies invest in finding out whether what they believe is accurate. According to Van de Ven the virtue of accuracy is imperative for marketing corporate social responsibility in a virtuous manner (Van de Ven, 2008, p. 348). In short, it can be stated that a virtuous company that engages in green marketing out of moral responsibility should strive for truthfulness in marketing.

Greenwash and unintentional Deception On the contrary, the phenomenon of greenwash leads to questions regarding the truthfulness and the good intentions of green marketers. Several studies have revealed the damaging effects of greenwash on the credibility of green marketing (Karna et al., 2001; Peattie, 1999; Priesnitz, 2008; Polonsky, 2001; Ottman, 2011; Grant, 2009). Nevertheless, these studies primarily focus on the intentional character of greenwashing. The Cone study on the other hand reveals the potential dangers and probability of unintentional deception in the field of green marketing (Cone, 2011). For the consumer all deception is the same, because he or she cannot distinguish between good and bad intent from the looks of an advertisement. The Cone study reveals that unintentional deception of consumers is likely due to the average consumer’s lack of knowledge regarding green claims. A large segment of consumers (41%) equates “green” with environmentally beneficial, whereas very few, if any product indeed is. Thus, if claims are not precise, they are likely to deceive the consumer, who also displays a tendency to punish firms of which they perceive have willfully deceived them, by boycotting their products (Cone 2011; p. 1-6). In addition, Jacqueline Ottman, a scholar and practitioner of green marketing with 20 years of experience in the field, believes that most deception is unintentional, often due to a lack of knowledge how to formulate accurate green claims (Ottman, 2011, preface p. xiv).

Transparency To combat deceptive green claims it has been proposed that green marketing should be transparent (Ottman, 2011, preface p. xx ; Grant, 2009, p.48), or even radically transparent (Goleman, 2009; http://agreenliving.org). But what is transparency? Rawlins (2006, p.7) defines transparency as: “Transparency is the deliberate attempt to make available all legally releasable information— whether positive or negative in nature—in a manner that is accurate, timely, balanced, and unequivocal, for the purpose of enhancing the reasoning ability of publics and holding organizations accountable for their actions, policies and practices”.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

More recently, Goleman (2009) has pleaded for radical transparency: Companies should educate themselves and consumers regarding their product’s total environmental impact (from resource extraction to product disposal) by using Life Cycle Assessment, an environmental assessment tool. This idea of radical transparency has been implemented by InterfaceFLOR and coined “Full Product Transparency”, which they have operationalized by means of Environmental Product Declarations (EPD’s) (http://agreenliving.org). EPD’s are claimed to be objective, transparent and truthful due to third-party verification (www.ulenvironment.com). In their most basic form the EPD resembles a factsheet summary of the environmental impacts of a product during the entire life cycle. Currently, EPD’s have become more popular on the business-to-business market4 and the governments of France and Japan are investigating the options of EPD’s as prerequisites for entering their markets (Schenk, 2009, p. 7).

Research Aims & Methods As has been argued, unintentional deception is an urgent problem for the success and credibility of green marketing and likewise for businesses that aim at virtuousness. In theory EPD’s seem to provide the solution to unintentional deception. But can EPD’s help prevent unintentional deception and offer transparency? To answer this research question, I will develop a normative framework which will be employed to assess the usefulness of EPD’s for transparent, non-deceptive green marketing. Transparency plays a leading role in this research and it bears great promises for green marketing, but what does this popular concept entail from a moral, theoretical and practical point of view? The development of the framework and the assessment of EPD’s will be materialized by means of literature research concerning the involved disciplines: marketing, business ethics, philosophy, LCA and the various academic expertises connected to the interdisciplinary subject of transparency. This thesis will be structured as follows. Firstly, the methodology of EPD’s will pass in review, and thereafter the problem of deceptive (green) marketing shall be scrutinized further in chapter 2. Furthermore, a normative framework shall be formulated and the relationship between the virtue of accuracy and the implementation of this framework will also be theorized in chapter 3. Subsequently, the normative framework tool will be used to explore the usefulness of EPD ’s for the development of transparent and non-deceptive green marketing claims (chapter 4). In the last chapter the concluding remarks regarding the research question will be presented, as well as recommendations for further research.

4 Skania, Volvo, ABB, Siemens, Akzo-Nobel are a few examples of wellknown companies that have developed EPD’s.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

2. EPD Methodology and Deceptive Green Marketing

Before assessing whether EPD’s can contribute to transparent and non-deceptive green claims, firstly, the aim, application and methodology of EPD’s will be scrutinized, and secondly, a review of the conceptualization of deception in (green) marketing will be presented. The practical aspects of greenwash will also pass in review.

The Methodology of the Environmental Product Declaration Three primary objectives of an EPD can be discerned:1. It informs a company which processes contribute most to the environmental load during a product’s life cycle. 2) It aims to provide accurate, non-deceptive information5 to the consumer about the environmental impact of a product. 3) The goal of the stimulation of green consumption and production (Schenk, 2009, p.4). Although the same functions apply to eco-labels, the difference between the latter and EPD’s is that EPD’s do not require or claim a certain level of environmental performance. EPD’s are thus equally open to all companies, as long as they follow the required methodological steps and allow for third-party verification. Due to the complexity of the information, EPD’s have originally been designed for the business-to-business market and are published online, however, although not common practice, EPD’s could also be used for consumer products (Baumann & Tillman, 2004, p. 268). Currently EPD’s are voluntary in nature, but there are experiments with large scale, obligatory implementation of EPD´s by governments (Schenk, 2009, p. 7). For this analysis the International EPD System will be reviewed, which was created in 2007 and based on the Swedish EPD system (www.environdec.com). The Swedish EPD System was known for having the most rigid verification process and being one of the oldest in the market, since 1995 (Baumann & Tillman, 2004, p. 269). Other national EPD schemes such as from Canada and Japan use different LCA methodologies6and are developed for national rather than international markets (Lee & Park, 2001, p. 534). According to the ISO 14025 technical report7, four steps should be followed when creating an EPD. These stages will be described in chronological order. The first step in developing an EPD is to

5 The ISO has developed standards for eco-labels and environmental declarations, and these purposes are stated as follows: “the overall goal of environmental labels and declarations is, through communication of verifiable and accurate information, that is not misleading, on environmental aspects of products and services, to encourage the demand for and the supply of those products and services that cause less stress on the environment, thereby stimulating the potential for market-driven continual environmental improvement.” 6 The Japanes and Canadian system do not include the final Life Cycle Assessment stage, thus do not link emissions to environmental impact categories such as climate change and so forth, and only present the emission data. 7 This is one of the most authoritative guidelines for formulating an EPD.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt find or develop a Product Category Rule (PCR), then to execute a Life Cycle Assessment (LCA), consecutively formulate the EPD, and lastly arrange third-party verification of the EPD. As mentioned, in the first step an existing PCR should be searched, and if non-existent, a PCR should be created in dialogue with stakeholders. A PCR is a document in which the rules for the formulation of an EPD of a certain product category are stated, and this is important for allowing a fair comparison of products that share the same function (Fet & Skaar, 2006, p. 52 table 3; Schenk 2009, p. 4; www.environdec.com). The PCR states which and how information should be presented in the EPD, the methodological choices for the execution of the LCA, and criteria for the verification of the EPD, along with general rules for EPD’s as mentioned in the ISO 14025 (Fet & Skaar, 2006, p. 51-52). The International EPD System offers a standardized format for setting up PCR’s: The PCR Basic Module, and can be downloaded for free on the International EPD Systems website. Three steps are followed in the creation of a PCR: inviting other interested parties (branch organizations, interest organizations, competitors), the creation of the PCR together with these parties under supervision of a PCR coordinator of the International EPD System. Thereafter the PCR proposal is published on the International EPD Systems website’s forum and the open consultation phase allows all stakeholders to comment upon the proposal. Lastly, Independent LCA experts are invited for the Technical Committe, which has to approve the PCR (www.environdec.com). Secondly, an LCA should be performed in accordance with the PCR and the criteria of the ISO 140408 LCA- standard. This form of standardization is important, because there are many ways of performing an LCA (Wenzel, 1998, p. 282-283;) and due to the fact that the reproducibility of LCA results is problematic, (Baumann & Tillman, 2004, p.73-75; Finnveden, 2000, p.229-230) even when the same methodological choices are used for reproduction (Finnveden, 2000, p.229-230). In general an LCA consists of four phases: the goal and scope definition, inventory analysis, impact assessment and interpretation. In the first phase it is documented what the purpose of the study is, by whom it is commissioned, and the functional unit9 , temporal, geographical and general methodological limitations of the study, and the products system boundaries10 are mentioned. Furthermore, important methodological choices should be justified and documented so that the study can be peer- reviewed by colleagues and verified by a third party. In the second stage, the inventory analysis, a flowchart is constructed which shows the processes that are included in the analysis. For each process data are collected regarding material inputs and outputs, and depending on the circumstances, marginal, site specific or average data can be used. The outputs leaving the system

8 ISO 14040: Environmental Management and Life Cycle Assessment- Principles and Framework 9 A functional unit describes which function the product must be able to perform. An example of a functional unit is: “Lighting for a Dutch household, equivalent to a 75 Watts light bulb, for 1000 hours of lighting.” 10 The system boundaries reveal which processes are included in the analysis.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt boundaries are called the environmental load, and per functional unit the environmental load is calculated. In the subsequent stage, the environmental impact assessment, the environmental loads are connected to the relevant impact categories (for instance the emissions of methane are related to climate change). Lastly, the results are presented in the EPD (Baumann & Tillman, 2004, p. 268- 274). As mentioned, the presentation of the results must be in conformity with the requirements stated in the PCR and the ISO 14025, and verified accordingly. Examples of often included environmental impacts are: global warming, ozone depletion, acidification, eutrophication. Furthermore companies can choose to publish the quantities of water, (renewable) energy and toxical substances that are utilized throughout the lifecycles of the product. Lastly, the EPD should be verified by a third party, when it is validated if the EPD is compliance with the requirements in the PCR and the ISO 14025 (Fet & Skaar, 2006, p. 52).

Deception in marketing Before analyzing the usefulness of EPD´s in the perspective of transparent and non-deceptive green claims, deception in green marketing should be further analyzed. Unfortunately, neither in environmental science literature, nor in legal literature is there to be found a consensus regarding the minimum standard that a green product should meet (Gibson, 2009, p.424). Thus, firstly, what precisely is a deceptive claim, and secondly, how does it manifest itself in the field of green marketing, and which role does intent play? The general definitions regarding deceptive claims do not provide a decisive answer with regards to the aspect of intent. According to the definition of the Federal Trade Commission (USA), a claim can be labeled “deceptive” when two conditions are met: 1. Representation must be likely to mislead consumers acting reasonably under the circumstances, 2. Representation must be “material”, thus likely to affect consumer’s choices (Gibson, 2009, p.433). The FTC thus disregards whether a claim is intentionally or unintentionally deceptive. In David Gardner’s (1975, p.42) definition of deception, the beliefs and expectations of consumers take precedence over the beliefs, expectation and intentions of marketers: “If an advertisement (or advertising campaign) leaves the consumer with (an) impression(s) and/or belief(s) different from what would normally be expected if the consumer had reasonable knowledge, and that impression(s) and/or belief(s) is factually untrue or potentially misleading, then deception is said to exist.” On the contrary, Masip et al. (2004, p. 148-164) stress the willful deception of marketers as a precondition: “the deliberate attempt, whether successful or not, to conceal, fabricate and/or emotional information, by verbal and/or non-verbal means, in order to create or maintain [in someone] a belief that the communicator considers false”. Yet Boush et al. have argued that this

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt definition refers more to spontaneous rather than market communication, and therefore it does not apply to marketing practices. They even contend that all market communications are “consciously planned, designed and executed by communication professionals”, and therefore non-intentional deception does not exist in market communications (Boush et al. , 2009, p. 7). I would like to argue that ruling out unintended effects as non-existent is disputable: Who is to say that all marketing communications are so consciously planned and designed that they leave no room for mistakes or unintentional consequences? Nevertheless, Boush et al.’s argument does provide the insight that deception is a socio-cultural construct, thus is defined by the context in which it occurs.

Deception in Green Marketing In the context of green marketing, greenwash has been frequently debated, yet there is no clear academic definition of greenwash (Devauld & Green, 2010, p.2). The notion of greenwash is derived from “whitewash”, which is the intentionally covering up of malpractices. Furthermore, Webster’s New Millennium Dictionary of English defines it as: “The practice of promoting environmentally friendly programs to deflect attention from an organization’s environmentally unfriendly or less savory activities.” Another definition (Lyon & Maxwell, 2006, p.5) points towards deception by not mentioning the whole truth: “the selective disclosure of positive information about a company’s environmental or social performance, without full disclosure of negative information on these dimensions.” These definitions refer to the intentional character of greenwash, and show that deception is more sophisticated than the act of lying about product characteristics11. The broader definition of greenwash as published by Terrachoice (2010) is frequently quoted in law and green marketing studies (Avallone 2006; Gibson 2009; Woods 2009; Lyon & Maxwell, 2006, Peter Seele, 2007) and is more inclusive and practical in describing deceptive green claims. According to Terrachoice greenwash consists of one or more of 7 sins: 1. Sin of the hidden trade-off12 2. Sin of no proof13. 3. Sin of Vagueness14 4. Sin of Irrelevance15 5. Sin of lesser of two evils16. 6. Sin of

11 Deflecting attention points towards this conclusion, however selective disclosure can be either intentional, or unintentional, as one can also be selective due to a lack of investigation. 12 This entails making claims about one positive characteristic while not taking into perspective the products entire lifecycle. 13 If claims are not backed up with accessible data proving one’s claims. 14 Statements such as “all natural” are so vague that it gives the consumer too much discretion of interpretation, thereby easily lead to deception. 15 Mentioning green credential that do not exceed merely legal requirements or despite truthfulness, are given the impression that they are environmentally less harmful yet in practice the effects are so small that they are not relevant. 16 Claims that hide the fact that the entire product category simply has a very negative impact on the environment, such as cars.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt fibbing17. 7. Sin of worshipping false labels18. This definition does not differentiate between intentional and unintentional deception, as it does not regard the motives behind the described acts that lead to the deceptive claim. This broader definition of greenwash is also taken into perspective in legislation, for instance the FTC’s Green Guides19 and the Australian Green marketing and the Consumer Law state that deceptive claims are those claims that are likely to mislead. They pay special attention to vague terms20 that should be avoided to prevent deception: environmentally friendly, environmentally safe, sustainable, organic, natural, green, energy efficient, recyclable, biodegradable, carbon neutral, “renewable” or “ green” energy, and the use of unqualified graphics and pictures. Regardless of these acknowledged types of greenwash, governments have formulated voluntary guidelines and judge green claims on a case-by-case approach instead of enforcing strict prohibitions (Gibson, 2009, p. 433; www.accc.gov.au;www.ecfr.gpoaccess.gov).

In summary, similarly as there is no consensus in marketing literature regarding the question what a deceptive marketing claim is and which role intent plays, neither is there consensus regarding this subject in green marketing. However, the definitions of the FTC, Gardner and Terrachoice, thus viewing the issue from a consumer and legal perspective, stress the importance of the likeliness of deception (determined by reasonable consumer expectations) rather than the company’s intent to deceive. The earlier mentioned Cone study (2011. p. 1) may shed a light on what reasonable consumer expectations are: If green claims are not precise they are likely to be interpreted as meaning “environmentally beneficial” and thus can be expected to lead to deception21. Terrachoice’s operational definition of greenwash shows other practical elements of deceptive green claims and thereby which types of green claims are probable to deceive the consumer. These practical elements of greenwash will be further scrutinized in the next chapter, and transformed to a normative framework for transparent, non-deceptive green marketing.

17 This sin relates to plainly false statements. 18 This is a distinct false claim, as it gives the impression that the product has been verified by an independent party. 19 Also known as Guides for the Use of Environmental Marketing Claims. 20 If there is no easily accessible substantiation of the claims. 21 Since there are few if any products that are environmentally beneficial.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

3. A Normative Framework for Transparent, Non-Deceptive Green Marketing

Now that it is established that unintentional deception is also part of the definitions of deception and greenwash, the question remains what a company should and should not do in order to prevent unintentional deception. To examine this question, a normative framework shall be developed in this chapter, for transparent and non-deceptive green marketing. Firstly, the virtue of accuracy will be introduced in more detail, since it has been claimed that the virtue of accuracy is imperative for truthful marketing, which a very important characteristic of non-deceptive green marketing. Secondly, the concept of transparency will be further explored since it has been claimed that green marketing should be transparent. Thirdly, from the literature about transparency, marketing and greenwash a set of normative criteria to prevent unintentional deception will be derived. The relationship between the practical elements of greenwash22 and transparency will also be reviewed. Fourthly, from a theoretical perspective it will be assessed what the importance of the virtue of accuracy is for realizing these normative criteria.

As mentioned before, whereas the virtue of sincerity will lead to the statement of what one believes, the virtue of accuracy concerns the effort one is willing to take to verify these beliefs. If a company is sincere yet lacks the virtue of accuracy, deception can still occur since beliefs can be inaccurate. For this reason, Bernard Williams considers the virtue of accuracy as more important than the virtue of sincerity to arrive at truthful statements. The virtue of accuracy entails the ability to overcome internal and external obstacles in the search for truthfulness, thus how one deals with the investigative costs (time, money, effort) in the pursuit of truthfulness. Internal obstacles are the unwillingness or laziness to check one’s beliefs, and the tendencies, desires and wishful thinking that hinder the investigation of the truth, which can lead to self-deception ( Williams, 2002, p. 87-88, 123- 129). External obstacles are a matter of “the world’s being resistant to our will (..)resistant to being discovered, interpreted, unraveled, changed” (Williams, 2002, p. 125), hence have to do with scientific uncertainties and practical hindrances in the pursuit of truth. After the formulation of the normative criteria for transparent and non-deceptive green marketing, the role of this virtue in this context will be theorized.

Transparency As previously mentioned, it has been proposed that green marketing needs to be transparent. But what is transparency from a theoretical and practical perspective?

22 As defined by Terrachoice (2010).

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

Transparency has been conceptualized in various academic disciplines: finance, policy, information technology, semantics and the academia. This has led to a diverse set of definitions, yet there is no agreement with respect to the conceptual underpinnings of transparency (Dubbink, 2007, p. 209). Nevertheless, certain practical elements recur. The earlier mentioned operational definition of Rawlins (2006, p. 7) refers to the practical elements and goals of transparency: “Transparency is the deliberate attempt to make available all legally releasable information—whether positive or negative in nature—in a manner that is accurate, timely, balanced, and unequivocal, for the purpose of enhancing the reasoning ability of publics and holding organizations accountable for their actions, policies and practices”. According to the Merriam Webster (2011) definition, transparency is “characterized by visibility or accessibility of information especially concerning business practices”. In addition, transparency ideally is associated with the aim for truthfulness (Kaptein, 2003, p. 20; Dubbink et al. 2009, p. 393), enhancing consumer freedom and facilitates moral accountability (Dubbink et al., 2009, p. 393; Turilli and Floridi, 2009, p,107), and thereby theoretically seems to be the answer to deception. Whether the goals of consumer’s accurate decision making and organizations accountability are accomplished depends on the operationalization of transparency. Menendez-Viso (2009, p. 158) postulates that there is a difference between making information public and achieving visibility, and the practice of extensive sustainability reports reveals that more information can make crucial information less visible (Kaptein, 2003, p. 25; Kaufmann & Vishwanath, 2001, p. 43; Dubbink et al. 2009, p. 393). To accomplish these goals of transparency, there are a few elementary criteria to which transparency should adhere23, such as accessibility, relevance, comprehensiveness, quality of information or accuracy and clarity (Kaufmann & Vishwanath, 2001, p.42-44; Turilli & Floridi, 2009, p. 108; Drew & Nyerges, 2010, p. 36-37; Kaptein, 2003, p, 29). Rawlins (2006, p. 6-7) also incorporates these elements yet uses other terms (accurateness and unequivocal relate to the quality of information, balanced relates to relevance24). Accessibility entails that information should be readily available for the consumer, that the utilized media to disclose information are accessible for interested parties. Another aspect of transparency is relevance, which may depend on the user (Kaufmann & Vishnawath, 2001, p. 42-43). Kaptein (2003, p. 35) argues that relevance takes precedence over the aspect of comprehensiveness or completeness, since more information can lead to the invisibility of relevant information. Furthermore, the quality of information should be warranted, such that it is truthful, accurate and

23 There are more transparency criteria, but I will not go into these due to the limited scope of this paper. Rawlins also incorporates these elements yet uses other terms (accurateness and unequivocal relate to the quality of information, balancing positive and negative information relates to relevance). 24 Rawlins acknowledges that the amount of information that is made available should depend on the relevance for the stakeholder.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt verified (Drew & Nyerges, 2010, p. 36-37). Likewise, Drew and Nyerges mention the aspect of clarity: Information should be readily understandable, contain no hidden meanings, avoid jargon, be precise and simple (Drew & Nyerges, 2010, p. 36-37). For reasons of clarity and to match the analysis of the remainder of the paper, I have adapted Rawlins transparency definition25:“Transparency is the deliberate attempt to make accessible all legally releasable information—whether positive or negative in nature— in a way that the objectives of relevance, comprehensiveness, quality/accuracy and clarity of information are accomplished, for the purpose of enhancing the reasoning ability of publics and holding organizations accountable for their actions, policies and practices”.

Subsequently the practices of greenwash as defined by Terrachoice will be reviewed regarding their link to unintentional deception26, and based on further literature review normative criteria will be proposed. Since virtuous behavior not only involves refraining from undesirable behavior, but foremost developing the good habits that virtues are, I will advocate normative criteria that regard primarily the “do’s”, which imply the “do not’s”.

1. Relevance One of the aspects of unintentional deception in green marketing concerns the Sin of Irrelevance, as formulated by Terrachoice (2010):

Committed by making an environmental claim that may be truthful but is unimportant or unhelpful for consumers seeking environmentally preferable products. ‘CFC-free’ is a common example, since it is a frequent claim despite the fact that CFCs are banned by law.

If there is no intent to mislead the consumer then this Sin is a failure of selecting the relevant information, which is a lack of relevance, a criterion of transparency. As previously mentioned, what is relevant partially depends on the user of the information (Kaufmann & Vishnawath, 2001, p.43), and involves balancing positive and negative information (Rawlins, 2006, p.7). Unintentional deception is likely due to the lack of knowledge of the consumer (Cone, 2010, p. 1; Israel, 1993, 7), and Ottman (2011, p. 112) stresses the importance of educating the consumer regarding green claims and environmental issues. Consumers have also indicated that they want more explanation pertaining the green claims (Cone, 2011, p.1), thus from this perspective consumer

25 This definition is based on literature about transparency from various academic fields: Business ethics, information technology, policy and financial studies. 26 The Sin of Worshipping False Labels (making reference to a label that does not provide any truthful information regarding the green credentials of a product) and the Sin of Fibbing (plain lying) are connected to intentional deception and therefore not relevant for this analysis.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt education seems relevant. Moreover, it has also been argued that consumers do not always act in their own or society’s best interest, and that therefore companies have the duty to promote the right consumption values and educate the consumer (McGee & Spiro, 1988, p.41-42). To prevent unintentional deception, the aspect of relevance is imperative and based on the literature I suggest the following normative criterion:

Green marketers should aim at relevance, by satisfying consumer’s information needs and educating consumers27.

2. Comprehensiveness The next element of unintentionally deceptive green claims concerns The Sin of the Hidden Trade- off:

This sin is committed by suggesting a product is ‘green’ based on an unreasonably narrow set of attributes without attention to other important environmental issues. Paper, for example, is not necessarily environmentally preferable just because it comes from a sustainably harvested forest. Other important environmental issues in the paper making process, including energy, greenhouse gas emissions, and water and air pollution, may be equally or more significant (Terrachoice, 2010).

John Rosch, a commissioner of the FTC referred to Terrachoice’s Sin of the Hidden Trade-off as opposed to responsible green marketing since it distorts the overall impression regarding a product’s greenness. He distinguishes a trend that consumers demand more life-cycle-specific claims (Rosch, 2008, p. 9) and Ottman (2011, p. 131, 143) argues that scrutinizing a products full life cycle is imperative to prevent (unintentional) deception. A life cycle approach is also crucial for acknowledging which processes contribute most to a products environmental impact, and thereby stimulates continual environmental improvement as conveyed in Ottomans’ definition of green marketing (Ottman, 2006, p. 24). If a green claim is deceptive due to focusing on a too limited set of environmental assets, without the marketer intending to mislead, this pitfall entails a lack of comprehensiveness, another aspect of transparency. Instead, a life cycle approach has been advised to warrant comprehensiveness and prevent unintentional deception. Therefore, the following normative criterion is proposed:

27 This implies that irrelevant statements should be avoided.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

Green marketing should aim for comprehensiveness by means of a life cycle approach regarding products environmental impact28.

3. Accessible Proof & Data Quality The next to be avoided pitfall of unintentional deception concerns The Sin of No Proof:

Committed by an environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification. Common examples are facial or toilet tissue products that claim various percentages of postconsumer recycled content without providing any evidence (Terrachoice, 2011).

This Sin relates to the doctrine of substantiation which was declared by the FTC in 1972, which is still a crucial element in the advertising of food and health related products (http://www.nutraceuticals world.com/contents/view/27187). However, in the field of green marketing strict regulation and enforcement with regards to unsubstantiated claims is lacking, for instance the FTC acknowledges that they have insufficient means and knowledge to deal with contemporary green claims, moreover that the Green Guides are outdated (Minetti, 2009, p.36; Fliegelman, 2010, p. 1030-1043). Notwithstanding the legal aspects of substantiation, leading green marketing scholars take the view that green claims need to be substantiated with easily accessible evidence to prevent deception (Polonsky, 1998, p. 285-286; Ottman, 2011, p. 152; Bauman & Tillman, 2004, p. 260). When the claims of green marketing contain unreliable statements or are truthful but lack (accessible) proof, it can be argued that the claim is not transparent enough, in the sense that the information quality is not warranted or that the claim does not provide accessible, third party verified proof. This brings us to the next criterion:

Green marketing should aim at quality of information by third party/ scientific verification and make information accessible for consumers29.

4. Clarity The following element of unintentional deception concerns Terrachoice’s Sin of Vagueness.

28 This means that a too narrow set of environmental attributes should not be used to claim greennes. 29This implies that a company should not utter marketing claims that are not backed up by reliable evidence.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

Committed by every claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer. ‘All-natural’ is an example. Arsenic, uranium, mercury, and formaldehyde are all naturally occurring, and poisonous. ‘All natural’ isn’t necessarily ‘green’.

Keeping the Cone study in mind, this Sin can easily lead to unintentional deception, since consumers do not know how to interpret vague statements as “green” or “environmental friendly”, and associate this with environmental improvement, a claim which is difficult to substantiate since very few products improve the quality of the environment (Cone, 2011, p.1). Other examples of vague language or generic claims are environmentally safe, sustainable, organic, natural, green, energy efficient, recyclable, biodegradable, carbon neutral, “ renewable” or “ green” energy, and ought to be avoided (Davis, 1991, 17; Polonsky, 1998, p. 285-286). Ottman, whom has provided companies with advice about green marketing for the last 20 years urges green marketers to be precise and meticulous in their claims (Ottman, 2011, p. 131-134). As mentioned, both the FTC as the Australian Competition & Consumer Commission mention that vague claims should be avoided (FTC, 1996; Australian Competition & Consumer Commission, 2011). A similar pitfall for green marketers concerns the use of unclear or vague images, coined “Sugestive Pictures” by Futerra Sustainability Communications, which may create the impression that a product is “good” for the environment, or that it is a “natural” product, without any further or accessible explanation (Futerra Sustainability Communications, 2008). Devauld and Green (2010) have analyzed the ads of Shell’s “Don’t throw anything away, away there is no away” campaign, which featured flowers circling out of smokestacks. The study revealed that the ad was likely to give consumers the idea that Shell’s products do not cause polluting emission but provide a positive contribution to the natural world, and are thereby misleading. Thus, generic claims and puffery images may be accepted in regular marketing, on the contrary, in green marketing they can be expected to produce an untruthful impression, therefore I propose the next criterion:

Green marketing should aim at clarity and understandability by precise, easily understandable language and pictures30.

All things considered, consumer orientedness seems to lie at the heart of all these criteria, since each of the elements aims at the fulfillment of the information needs of consumers. It also seems clear that due to the underlying theme of consumer orientation, one can assume a certain degree of interdependence, dynamics and overlap between these normative criteria.

30 By means of this normative criterium it is indicated that vague claims should be avoided.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

The Virtue of Accuracy Living up to these normative criteria to get an adequate notion of consumers information needs presupposes considerable investments in time, money and effort. The virtue of accuracy is therefore imperative for overcoming the internal and external obstacles related to preventing unintentional deception, and implementing transparency accordingly. On the other hand, there are limits to consumer orientation and the costs involved in the strife for transparency. McGee and Spiro (1988, p.42)have rightfully noted that the extent to which companies can pursue consumer orientation or act as society’s moral harbingers is limited, since their resources are finite. Businesses have other moral obligations that may conflict with (the expenses and endeavors involved in the operationalization of) transparency, and Turilli and Floridi (2009, p.107, 109) posit that the gathering of information itself should incorporate the ethical principles of accuracy and fairness31. For instance, complete transparency is said to conflict with company freedom, and may be at odds with the obligations a company has towards employees, stakeholders and society at large as creators of wealth and welfare. Also, companies may equally have moral obligations regarding confidentiality and privacy of suppliers, consumers and employees (Dubbink et al., 2008, p. 393; Turilli & Floridi, 2008, p. 107-109). In this respect, the virtue of accuracy is also relevant. Bernard Williams (2002, p. 134) has argued that in certain situations the investigative costs involved in acquiring scientific certainty are too great from a reasonable point of view. The virtue of accuracy is the practical knowledge to decide which efforts are reasonable32, and therefore imperative for striving to realize these criteria.

From the analysis of the literature it has become clear that unintentional deception can largely be attributed to a lack of transparency, as the practical elements of unintentional greenwash can be linked to a lack of the elements of transparency. Due to the ineffectiveness and negative moral consequences of complete transparency, it seems feasible that relevance should take precedence over the comprehensiveness of the information disclosed. Furthermore, in the scenario of green marketing a life cycle approach appears fruitful for providing a transparent image concerning the products environmental impact, yet also in this respect not all data should be disclosed, merely the relevant findings. In conclusion, the literature research has revealed that the claim of certain green marketing scholars that transparency is the solution to greenwash at least holds for unintentional deception. Thus, if EPD’s can provide transparency in accordance with the hereby formulated

31 They propose that a company should be transparent about the way the information has been produced, thus being transparent about one’s transparency. 32 Since the situations and therefore moral obligations involved differ per company and situation, it is not feasible to formulate universal rules about the exact level of transparency.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt normative criteria, EPD’s should be suitable to decrease the likeliness of unintentional deception. But will this assumption hold its ground, or are the claims regarding the transparency of EPD’s misleading? The next chapter will explore this matter.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

4. EPD’s and Transparent, Non-deceptive Green Marketing

EPD’s are marketed as truthful, third-party verified green marketing claims. UL Environment, an environmental advice company that works together with Terrachoice, refers to EPD’s as “meeting the highest level of transparency” (www.ulenvironment.com). Another article claims that EPD’s provide truthful comparison of products, a comprehensive outlook regarding a products entire life cycle and that they are good tools to prevent greenwashing (www.europeancleaningjournal.com). Furthermore, the stated goals of EPD’s are to deliver “relevant, understandable and credible information” (www.environdec.com). If EPD’s are a viable means to materialize transparency then it would be an effective tool to decrease the likeliness of unintentional deception. By reviewing LCA and EPD studies with regards to the normative framework, it will be explored if EPD’s can live up to the ambitious aims of transparency and non-deceptiveness, and lastly, what the importance of the virtue of accuracy may be in this perspective.

Before assessing these criteria, first a short recap of what is presented in the EPD: the description of the company, organization, product or service and the LCA results per life cycle phase (raw materials, manufacturing, distribution, use and disposal) in absolute numbers. Furthermore, companies can choose to mention other environmental, safety and health information regarding responsible use of the product. Elementary is the mentioning of the certification body and the registration number of verification (Baumann & Tillman, 2004, p. 270-271).

1. EPD’s and Relevance The first normative criterion as formulated in the previous chapter states: Green marketers should aim at relevance, by satisfying consumers’ information needs and educating consumers.

It has been proposed that relevance of information is determined by consumer information needs and stakeholder participation. Assessing whether EPD’s provide relevant information is difficult, as a variety of consumers have different information needs, and therefore I will assess the condition of visibility of relevant information, balanced information and consumer education. As mentioned, relevance should take precedence over comprehensiveness in terms of the amount of information which is disclosed to warrant the visibility of crucial information. The amount of information provided per EPD differs considerably: from 4 pages (EPD Akzo-Nobel MEHEC, 2002) to 84 pages (EPD Vattenfall AB Nuclear Power, 2010), but most recent EPD’s that are listed on the International EPD System website on average count 15-25 pages. This variation in size and scope is

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt related to different PCR’s requiring different environmental aspects to be presented, and certain products are more complex in terms of processes than others. Besides the information presented in the EPD, methodological choices are explained in the PCR. PCR’s are approximately 15-25 pages33. It can be argued that this format of communicating a products environmental performance allows for an abundance of technical/methodological information, which hinders the visibility of relevant information. Nevertheless, a consumer can choose to view only the EPD, or both documents, depending on one’s information needs. Furthermore, to increase the visibility of relevant information, Christiansen et al. (2006, p. 18) suggest that the front page of the EPD should contain a summary of the main findings, which is currently lacking in the International EPD System. The balance of positive and negative information is in theory warranted in the EPD: although a company could be labeled pollutive, the figures connected to this detrimental score will nevertheless be published. The effectiveness of this balanced information, thus if it enhances consumer decision making, depends on the intelligibility of this information. Whether EPD’s in general are intelligible for business-to-business consumers will be explored in the clarity section. EPD’s also provide opportunities for educating consumers. First of all, in every EPD the impact categories are explained, and companies can choose to advise B2B consumers about reducing the environmental aspects in the use and disposal phase, as Fet et al. (2006, p.51-52) suggest. Several of the EPD’s that I have examined make references to academic literature explaining the methodology of the EPD and LCA. Thus the EPD methodology, responsible use and disposal of the product, and general information regarding environmental impacts can be used to educate the consumer. On the whole, the presentation of relevant information in the EPD is difficult to assess, due to the variability in consumer information needs (depending on the company or sector). With regards to the visibility of information, it varies per EPD. Assessment of the EPD and PCR in more detail will involve considerable time and effort, and unintentional deception can occur due to an abundance of technical details. The “summary” improvement suggested by Christiansen et al. can improve consumer’s ability to distinguish between the main, relevant findings and details, and thereby could enhance consumer decision making, an overarching goal of transparency. Furthermore, the aim of balanced information seems to be met in the EPD format but if this can prevent unintentional deception depends on the clarity of the EPD. Lastly, consumer education offers opportunities in the EPD format to prevent unintentional deception.

33 I have viewed 40 of the PCR’s presented on the International EPD System website, www.environdec.com

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

2. EPD’s and Comprehensiveness

The normative criterion states:

Green marketing should aim for comprehensiveness by means of a life cycle approach regarding products environmental impact.

According to the ISO 14025 technical report, one of the functions of EPD’s is to inform the company and consumer about the relevant environmental impacts of a product (www.environdec.com). Since most contemporary products stem from complex and global industrial processes, the analysis should be comprehensive in nature. EDP’s are based on LCA, of which it can be argued that it is the most comprehensive environmental analysis tool currently available for products. Firstly, LCA takes into consideration the various stages of a products life cycle (resource extraction, production, use and disposal), secondly, it is suited for a global analysis. Thirdly, it considers a wide array of impact categories. All-in all, due to the combination of these environmental impact assessment aspects which are to a lesser extent present in other environmental analysis tools than in LCA, it may be the best tool to provide a complete overview of products environmental impacts (Huppes & de Haes, 1994, p. 17-22; Wrisberg et al., 2002, p. 45-47; Finnveden & Moberg, 2005, p. 1170; Baumann & Tillman, 2004, p. 65-69). However, it is also stated that a combination of environmental assessment tools can give a more comprehensive overview (Finnveden & Moberg, 2005, p. 1170). The goal of EPD’s is to provide the relevant environmental impacts, thus not necessarily take into consideration all processes or impact categories. Therefore it can be decided that certain life cycle phases are left out of the analysis, provided that solid argumentation is documented in the PCR34. Due to the presentation of quantitative information per life cycle stage, the consumer can see which life cycles are included in the analysis. Neither is there a minimum set of environmental impact categories, but to warrant comprehensiveness Christiansen et al. (2006, p. 39) suggest a minimum of 7 impact categories. Furthermore, there are no strict rules regarding system boundaries or allocation (Baumann & Tillman, 2004, p. 79-90). Thus, the actual degree of comprehensiveness depends for a large part on the PCR. Furthermore, the general limitations in LCA methodology also lead to less comprehensiveness than may be assumed, which will further be elaborated upon in the section of data quality. As put forward in the previous chapter, stretching comprehensiveness too far in the sense of complete transparency can have a negative impact on moral responsibilities, for instance the privacy

34 For instance that certain data are not accessible or that certain phases of the proces are estimated not to have a significant environmental impact.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt of employees, suppliers and stakeholders involved in the processes. Although InterfaceFLOR markets EPD’s as Full Product Transparency and thereby evokes associations with radical or complete transparency, EPD’s do not publish business-specific data that could lead to a competitive disadvantage35 and neither the reports by the verification body (www.environdec). Therefore, in theory, privacy is warranted in EPD’s. All-in all, an EPD isn’t necessarily comprehensive, and may leave out important processes and impact categories, depending on the requirements of the PCR. This can lead to unintentional deception, if these omissions create an inaccurate image of the environmental impact, or if the consumer believes that the absolute numbers represent the total environmental impact. Nevertheless, to date LCA offers the most comprehensive analysis of products environmental impact and the EPD format also allows for protection of privacy.

3. EPD’s, Accessible Proof and Quality of Information

Green marketing should aim at quality of information, by third party/ scientific verification and make this information accessible for consumers.

Environmental impact assessment is a complex process with possibly variable results: Measurements are not made in a controlled laboratory setting and there is still a high degree of scientific uncertainty. For instance, there is still little known what impact numerous chemicals have on the environment in the long term (Goleman, 2009, p. 168). Logically, these difficulties also apply to the LCA context (Finnveden, 2000, p. 229-230) and in the LCA community there are fierce debates about certain elementary LCA topics such as system boundaries and allocation. The former issue raises the question: Which processes should be included in the analysis? Although the ISO 14041 recommends that the system boundaries are determined by the principle of relevance 36, the system boundaries are often determined by (research) resources (processes are omitted due to a lack of time, data or financial resources). In the latter approach important processes may be left out (Baumann & Tillman, 2004, p. 79-89). For a further review of system boundary modeling I would like to refer to Reynolds et al. (2000) and Baumann and Tillman (2004). The issue of allocation is equally disputed: Many processes have multiple inputs and outputs, therefore the question arises how the emissions are allocated among different processes. The ISO 14041 advises to avoid allocation, for instance by system expansion or subdivision but this is often not possible. And when allocation is not avoidable,

35 For instance, the names of suppliers are not published. 36 Does a change of materials affect certain processes? If not then the process is not relevant and can be left out.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt the conflicting opinions regarding the best fashion of allocation (based on physical or causal relationships) complicate scientific legitimization(Baumann & Tillman, 2004, p 79-89, 110-126; Ekvall & Finnveden, 2000, p. 206-207). For a critical review of allocation methods, see Ekvall & Finnveden (2000) and Raynolds et al., (2002). Furthermore, reproducibility of LCA studies is often problematic, and many articles are written about the different types and sources of scientific uncertainty connected to LCA, and the problems concerning assessing this uncertainty in LCA (Finnveden, 2000, p. 233-234; Bjorkland, 2002, p. 65-70). The acquirement of the data is another aspect which may compromise the quality of information. Frequently average data from LCA databases are used, rather than site specific data, since site-specific measurements are more costly. Thus what is measured is the past environmental impact, and not the actual environmental impact (Baumann & Tillman, 2004, p. 100-105). Furthermore, it is well known that LCA databases contain data gaps and are of variable quality (Bjorklund, 2002, p.66, 70)and the utilization of different databases for different EPD’s decreases the comparability of EPD’s (Christiansen et al., 2006, p. 6). Furthermore, since the PCR is crucial in the determination of which LCA methods are to be used, quality of data depends on the quality and scientific basis of the PCR. Due to these issues37, to quote Raynolds et al.: “ LCA can often be very subjective, potentially resulting in questionable and highly debatable results”. For this reason third-party verification is deemed essential (Raynolds et al., 2002, p.38). The Swedish EPD system had a rigid verification scheme (Baumann & Tillman, 2004, p. 269) and this served as a basis for the International EPD System. EPD’s thus may meet the requirements of the normative framework on this aspect. Furthermore, information should be made accessible. In general, EPD’s of the International EPD System are easily accessible on the website of individual companies, as well as on the website of the International EPD System (www.environdec.com) if one registers free of charge. EPD’s on product labels are rare due to their comprehensiveness and due to their time consumingness they are generally considered to be more suitable for B2B consumers (Baumann & Tillman, 2004, p. 270- 271). PCR’s are also accessible through the website of the International EPD System (www.environdec.com). To summarize, EPD’s score positive on accessibility for the B2B consumer and providing third party verified proof, however raise doubts concerning the quality of data. Due to the latter issue consumers can be unintentionally deceived, for instance if the consumer takes the numbers too literal, as being the precise representation of the actual products environmental impact. In the literal

37 There are more methodological issues that are considered that impair the quality of information, but in my LCA course at Utrecht University (2010-2011) these were the main focal points. I would like to refer to Baumann & Tillman (2004) for a comprehensive overview of methodological issues concerning data quality.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt interpretation, the consumer may conclude that the company is “green”, whereas accurate data may lead to a different judgment. Thus, the quantitative EPD information should rather be seen as an approximation of a product’s environmental impact. All-in all, these features of EPD’s can lead to unintentional deception, but by educating consumers about these methodological issues companies may be able to decrease the likeliness of unintentional deception.

4. EPD’s and Clarity

Green marketing should aim at clarity and understandability by precise, easily understandable language and images.

As stated in the relevance section, EPD’s provide balanced information by mentioning both positive and negative aspects. Yet, the effectiveness of this balance depends on the intelligibility of information, the latter being an aspect of this normative criterion, clarity. Consumers need to be able to discern positive from negative information. The textbook of Baumann and Tillman starts with an illustrative excerpt from The Hitch Hiker’s Guide to the Galaxy, in which Deep Thought states that the answer to all questions in the universe is 42. But what does this number mean? The authors have chosen this example to emphasize that LCA also depends on qualitative information, and that a crucial aspect concerns the interpretation of quantitative information (Baumann & Tillman, 2004, p. 7-8). Christiansen et al. (2006, p. 4) state that few consumers can relate this quantitative information to actual environmental impacts. Although the balance of information may be present, if consumers cannot understand it, it cannot aid to accurate decision making, then it is potentially misleading. With regards to the intelligibility of EPD’s, the comparability of different products and their environmental performance is another point of interest. Comparison can improve understandability and make EPD’s more suitable for quick decision making. However, it is difficult for non-experienced EPD-users to compare EPD’s with each other due to the complexity of the information (Christiansen et al., 2006, p. 15). Moreover, only EPD’s that share the same PCR can be compared, due to the possible difference in methodology when it concerns different PCR’s (Fet & Skaar, 2006, p. 51-52). Christiansen et al. argue that to improve comparability and thereby the understandability of EPD’s, a graphical reference to an average product should be included (Christiansen et al., 2006). In this manner consumers can quickly grasp how the product scores compared to the average product, thus what entails a good or a bad score, relative to this average product. Concerning the next aspect of the normative criterion, namely the preciseness of the information, the section of data quality already revealed that the preciseness of the information raises serious issues, and I will not comment further on this matter.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

Unfortunately I have not been able to find studies that have investigated the aspect of “Suggestive Pictures”. Therefore, I have viewed 40 of the EPD’s on www.environdec.com38, and in these EPD’s all graphical representations were related to the products LCA results (flow charts, diagrams, tables), or concerned pictures of products, processes and logo’s of eco-labels. I have not been able to discern the use of suggestive pictures as described in the Futerra Greenwash Guide and the Devauld & Green (2008) analysis39. However, since this is not a comprehensive review, my conclusions are preliminary and merely aim to provide an illustration of the graphic information contained in EPD’s, and the presence of unqualified images. Thus, with regards to this normative criterion the EPD reveals considerable disadvantages, first of all because the EPD ‘s can be difficult to interpret. It seems reasonable to assume that due to this lack of intelligibility, the effectiveness of balanced information is decreased. Overall, these problems regarding intelligibility do not enhance accurate consumer decision making. Furthermore, substantial knowledge regarding LCA methodology is therefore necessary to prevent unintentional deception, and a general awareness that the quantitative data are neither necessarily comprehensive nor precise. All-in all, the clarity of EPD’s would have to be improved to decrease the likeliness of unintentional deception.

EPD’s and the Virtue of Accuracy The study of Manzini et al. (2006, p. 121) reveals that the development of EPD’s can lead to considerable costs and efforts. Due to these involved efforts it can be argued that the virtue of accuracy is a prerequisite for developing an EPD. The literature research has revealed that EPD’s can be deceptive, even if there is no intent to mislead, and I would like to stress that the virtue of accuracy is also important to decrease the likeliness of unintentional deception in the EPD setting. Educating consumers regarding the methodology of EPD’s would require extra effort, but seems a useful means to decrease the chance of unintentional deception. The virtue of accuracy can equally be important to decide if the investigative costs necessary to create an EPD and decrease the chances of unintentional deception are reasonable. In this respect, Bernard Williams has described this ability as an aspect of the virtue of accuracy, since not all investigative costs are worthwhile.

In conclusion, it seems that there are considerable disadvantages connected to EPD’s when these are used to prevent unintentional deception and enhance the transparency of green marketing. The element of relevance was difficult to assess on such a general level due to varying consumer

38 This is the website of the International EPD System. 39 In the sense that EPD pictures would refer to the product being environmentally friendly, “natural” or other difficult to substantiate claims.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt information needs. Nevertheless, it appears that the amount of information presented in the EPD can be perceived as too detailed, and thereby make relevant information invisible and does not contribute to accurate consumer decision making, but this also depends on the PCR . Therefore, a summary of the main findings would most likely improve consumer decision making. The balance of positive and negative information is present but the effectiveness is decreased due to the fact that intelligibility of the information is problematic for most consumers. Also with regards to the quality of data there are substantial disadvantages, which can equally lead to unintentional deception. Therefore, I would like to conclude that EPD’s are not as transparent as often claimed, and that extra effort is required to decrease the chance of unintentional deception, for which the virtue of accuracy is also important.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

5. Conclusion

In this chapter firstly the limitations of the study will be discussed, thereafter the concluding remarks will be presented, as well as the recommendations for further research.

Discussion With regards to my findings, I have not found large discrepancies with literature. The normative framework research has confirmed assertions of Ottman and Grant that transparency is a solution to deception, at least when it concerns unintentional deception. A point of discussion concerns the aims of the formulated normative framework for transparent and non-deceptive green marketing. This description of the framework may give the impression that it is a framework to prevent all deception. However, Gardner’s definition of deception has revealed that likeliness of deception is an important aspect of deception and therefore the aim of the framework has not been to prevent all deception, which seems an unrealistic exercise, but rather to decrease the likeliness of deception, more specifically unintentional deception. Furthermore, the relationship between successful green marketing and a more sustainable society, in the sense of clean production and consumption, has not been explored further. Scholars from the de-growth movement could point out that green marketing not only should emphasize cleaner production and consumption, but also consuming less. Nevertheless, the questions: What is necessary for environmental improvement? Consuming and producing cleaner, consuming less, or both? are part of the growth-degrowth debate, and not central to this thesis. With regards to the extensiveness of this study or selection of criteria for the normative framework, some suggestions for improvement may be in order. First of all, although the Sins of Greenwash by Terrachoice are rather undisputed in greenwash literature, others aspects could also have been included in the framework. Futerra Sustainability Communications have also published a greenwash guide, which features 10 aspects of greenwash. Although most of these criteria overlap with Terrachoice’s sins, it could have been possible to include more criteria of Futerra Sustainability Communications in the framework. Nevertheless, I have chosen not to do so, since Futerra’s elements have not been cited frequently in literature. Nevertheless, other criteria regarding transparency could have been included. For instance Drew and Nyerges (2004) and Rawlins (2006) mention stakeholder involvement as important part of transparency. Yet I have chosen to leave this aspect out of the normative framework because of the conflicting opinions regarding this aspect. Christiansen et al. (2006, p.45) argue that stakeholder participation can conflict with the science- based goals of the EPD, and therefore should be minimized. The dangers of stakeholder involvement

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt are also voiced by Finnveden et al. (2009, p.15). This does however not invalidate that it may be useful to incorporate other elements in the normative framework. Another possible improvement may entail a more elaborate application of each of the normative criteria to the EPD format. Nevertheless, the aim of applying this normative framework is to explore the main issues regarding EPD’s as a means of preventing unintentional deception and providing transparency. The methodology of LCA is in this respect very important as it forms the basis of the EPD system, and I have included the main academic discussions such as allocation, system boundaries and the interpretation of LCA data, which can lead to deception. Allocation, system boundaries, uncertainty and interpretation are recurring themes in LCA literature and are presented as crucial elements in introductory courses of LCA methodology40. Nevertheless, it can be argued that other aspects are also relevant. With regards to the conclusions, I would like to mention the following limitations of this study. First of all, this research applies to the International EPD System, and not all EPD’s, as many countries have their own EPD systems. Furthermore, only unintentional deception has been examined, thus my conclusion that unintentional deception concerns a lack of transparency, does not necessarily apply to intentional deception.

Conclusions The green marketing literature reveals that unintentional deception is an important aspect of the greenwash problem. Companies may feel the moral urge to do the utmost to prevent unintentional deception, as they respect consumer autonomy and feel socially responsible to contribute to structural environmental improvement. Radical transparency has been proposed as the solution to deceptive marketing, and InterfaceFLOR has made it a selling point, naming it Full Product Transparency. Although they promote Full Poduct Transparency as something novel, it is not, due to the use of EPD’s which have been on the market for more than a decade. In general EPD’s are presented as objective, factual, reliable, third-party verified information and most of all, as transparent. The central question of this research has therefore been: Can EPD’s help prevent unintentional deception and offer transparency? The research has shown that deception, according to Gardner’s theoretical and Terrachoices’s practical definition, includes both intentional and unintentional deception. In the former definition, the likeliness of the consumer being deceived is a central aspect. By further examining the unintentional aspects of these Sins, it has been established that the practical examples of unintentional green deception reveal a lack of transparency, with regards to either relevance,

40 They have been emphasized in the LCA course of Dr. Evert Nieuwlaar and Dr. Martin Patel, Utrecht University, 2010-2011.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt comprehensiveness, quality of data and third-party verified proof, and clarity. Literature research indicated that relevance is an important aspect of preventing unintentional deception, and has priority over the amount of information that is disclosed (comprehensiveness). Consumers can equally be misled by too little information (vagueness) as by too much detail, or unbalanced information (irrelevance). Likewise, clarity is an important aspect of transparency. Therefore these consecutive elements have been included in the normative framework. Furthermore, consumer orientation is an underlying feature of all these aspects of transparency, which all aim at enhancing consumer decision making. It has also been shown that due to this underlying feature, these elements of transparency partially overlap and are interdependent. For instance balanced information (relevance) can only increase consumer decision making if this information is also understandable (clarity). And if the quality of data is not warranted, establishing clarity in green marketing is in vain. EPD’s are said to aim at transparency and truthfulness, yet the literature research indicates that there are considerable obstacles inherent in the EPD format. First of all, the realization of these aims are very dependent on LCA methodology and the requirements as formulated in the PCR. For instance, certain EPD’s can be perceived as too detailed and thereby make information less visible. EPD’s also lack a short summary of the main findings. Although the information seems to be balanced, the effectiveness thereof depends on the intelligibility of this balance of positive and negative information. Christiansen et al. (2006) have shown that consumers often are not able to interpret if the presented information concerns a positive or negative environmental performance. Furthermore, due to the dependence on LCA, the quality of data can also be questioned. Within the field of LCA it is well known that data quality is a problematic issue. Similarly, the subjective nature of certain methods of allocation and setting system boundaries make scientific legitimization of methods difficult. Consumers can be unintentionally misled if they interpret the quantitative data as too literal, and represent actual environmental impacts (rather than past impacts) whereas in general they should be seen as approximations instead of precise scores. Companies should be well aware of these pitfalls and likeliness of unintentional deception, and anticipate on them if they aim to prevent this type of deception. On the other hand, certain criteria of the framework are met. EPD’s provide opportunities in terms of consumer education (relevance), accessibility (data quality) and providing a comprehensive picture. Consumer education is important to prevent unintentional deception and enhance environmental awareness, a crucial step in making society more sustainable. Furthermore, although the comprehensiveness of the EPD depends on the PCR, LCA nevertheless is the most comprehensive environmental assessment tool available for products. However, there is significant space for improvement concerning consumer orientation.

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

Since the substantial effort connected to operationalizing transparency in general and the creation of the EPD, the virtue of accuracy seems a prerequisite. Moreover, this virtue should also aid in the assessment whether the costs involved in the creation of the EPD are not unreasonably high, given the fact that companies also have other moral obligations. Furthermore, this virtue seems important for decreasing the likeliness of unintentional deception in the EPD format, as this would require extra effort to educate consumers. All-in all, it can be concluded that EPD’s are not as transparent as often claimed, and may not be as helpful to prevent unintentional deception and offer transparency. InterfaceFLOR’s claims regarding Full Product Transparency and EPD’s as providing truthful, accurate and objective information do not do justice to the results that EPD’s can provide in terms of transparency, and can even be perceived as deceptive. Because InterfaceFLOR states that they have years of experience with LCA studies, and thus are well aware of the methodological issues, it can be questioned if these deceptive EPD claims are unintentional.

Recommendations for Future Research

Further literature research could be employed to substantiate the normative framework for green marketing, and whether it would be useful to add certain normative criteria, or replace current ones. In addition, it could also be examined if the normative framework in its elementary form can be adjusted to fit other marketing areas, for instance the marketing of products or services where factual information is very important, such as financial services. Moreover, this research raises fundamental questions regarding the aims and practices of green marketing. As this research has shown, there are many pitfalls in the field of green marketing that can lead to unintentional deception. Even if a company invests substantially in investigating their products environmental impact, unintentional deception is likely. First of all, all environmental impact assessment tools face a large degree of scientific uncertainty and data collection remains problematic, and secondly, due to consumers lack of knowledge regarding green claims and environmental impact assessment. With regards to EPD’s, companies have to educate consumers about the methodology to prevent unintentional deception, and make more modest claims about EPD’s in general. However, by stating that EPD’s are approximations of environmental impacts rather than the actual environmental impact would make EPD’s far less appealing as a marketing tool. The findings raise a dilemma: Would it not be safer to invest in greening one’s business but abstain from making green claims? But this may, just as in the case of unintentional deception, lead to a hampering of green product differentiation, competition and innovation and in the end also the goal of a more sustainable society. Likewise, not making green claims would also deny consumers their

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

(ethical41) choice, as they cannot know which products aim at environmental improvement. This dilemma could be further explored in future research.

41 It can be argued that making a choice for environmentally less harmful products an ethical choice. In literature consumers that make such choices are called ethical consumers, see John Thφgersen’s The Ethical Consumer. Moral Norms and Packaging Choice, in the Journal of Consumer Policies issue 22 (1999).

EPD’s &Transparent, Non-Deceptive Green Marketing Bachelor thesis Esther van der Lugt

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