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 2 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. 3 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 4 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