“We make soap.”  That was the response of Method Home Products co-founder and chief greenskeeper Adam Lowry when asked what his company does.  Of course, that’s just the tip of the iceberg.  Method is well known as a model “green business.” One of the founding B Corporations, in 2007 Method changed its corporate structure to institutionalize its commitment to people and the environment (as well as profits).  Adam sits down with show host Donald Simon to discuss what it means to be a benefit corporation in Episode 20 of The Wendel Forum (originally aired on Green 960 AM radio on June 18, 2011).

Adam Lowry and Donald Simon in Studio

Adam Lowry and Donald Simon in Studio

So, what are B Corporations?  They are companies that choose to publicly measure themselves against metrics that include social and environmental missions.  (By the way, Wendel Rosen is also a certified B Corporation).  The certification program is administered by B Lab, a non-profit organization based out of Pennsylvania.

Currently, Adam and Donald are part of a working group that is promoting the passage of Assembly Bill 361 (Huffman) pending in California legislature.  AB 361 would create a new corporate structure (think C Corporations or S Corporations) available to companies that want to build social and environmental values into their core mission.  The Benefit Corporation form of entity would protect the corporate officers (and hold them accountable) for socially- and environmentally-driven decisionmaking. It requires transparency and verification (trust, but verify) from those companies choosing to take its form.  Donald and Adam discuss specific examples of what this might mean in real world application for companies, including their duties to shareholders. Remember when Ben & Jerry’s ice cream was sold?

We’ve discussed the problem of greenwashing and false environmental marketing claims at The Wendel Forum before.  Adam suggests that there is a natural shakeout happening currently for businesses that are not as green as they say they are.  B Corp Certification and a future benefit corporation form of corporate organization would promote transparency and require third party, independent, recognized standards (that are credible and comprehensive) to battle greenwashing and provide additional certainty for consumers.

Next Steps for AB 361 in California

Donald will be a part of the group going to testify before the California Senate Banking and Financial Institutions Committee on June 29, 2011, in Sacramento regarding AB 361. 

If you are interested in supporting the legislation, you are encouraged to submit a letter to your elected officials.  Here’s a template to get you going: Template letter of support for AB 361.
Post Links:

Interview with Adam Lowry of Method: Episode 20 of The Wendel Forum(27.48 minutes)

Method Home Products website: http://methodhome.com/

B Corporations / B Lab website: http://bcorporation.net/

Green 960 AM radio website: http://www.green960.com/main.html

Wendel Rosen’s B Corp Listing: http://www.bcorporation.net/wendelrosen

Around the Capital legislation tracking website: http://www.aroundthecapitol.com/Bills/AB_361/20112012/

Article mentioning the sale of Ben & Jerry’s ice cream: http://dowser.org/b-corp-better-laws-for-business/

Previous post about Environmental Marketing Claims:  https://thewendelforum.com/2011/03/08/environmental-marketing-claims/

Template letter of support for AB 361: https://thewendelforum.files.wordpress.com/2011/06/template-letter-of-support-for-ab-361.doc

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Walking to work the other day, I saw a Toyota Prius festooned with advertisements for a local auto body shop.  While I certainly noticed the Prius as I stood waiting to crossing to the street, what really caught my attention was the prominent representation that this auto body shop was “environmentally friendly.” 

What, I wondered, could that mean?  While the Bay Area Green Business Program has worked with auto body shops to help them become certified as a green business, this program doesn’t focus on the marketing message of any particular business.

Since I had no idea what the auto body shop’s marketing message meant, I jumped on the internet to see if I could find an explanation.  What I found was that there were a lot of apparently “environmentally friendly” auto body shops.  As I perused their various web pages and/or advertisements, I became convinced that these auto body shops (and/or their attorneys) had probably never heard of the Federal Trade Commission’s Green Guides

Fresh off of a revision, the new and improved Green Guides attempt to offer understandable guidance for often incomprehensible environmental marketing claims.  The main points of the Green Guides are: 1) advertisers need to be able to substantiate their claims – i.e., they have to have a reasonable basis for making the claim; and 2) the more specific a claim is, the more likely that it will not run afoul of the FTC’s guidelines.  You see, the FTC looks at all advertising from the consumer’s perspective: what message does the advertising actually convey to consumers?  The Green Guides view environmental claims by the meaning that consumers give them, not necessarily the technical or scientific points that the advertiser is trying to make.   In other words, if a consumer could be mislead by the message, the message is misleading.

So, what do you do to ensure compliance?

First, read the guidelines.  They are written in easy to understand prose.  There are a lot of guidance examples, and the categories are broken down by specific types of claims.  The Green Guides and other useful information about the Guides can be found at http://business.ftc.gov/advertising-and-marketing.

Second, common sense should be your guide.  If you do not have competent and reliable scientific evidence, which the FTC views as “tests, analyses, research, studies or other evidence based on the expertise of professionals in the relevant area conducted and evaluated in an objective way by qualified people using procedures generally accepted in the profession to yield accurate and reliable results,” you should think twice about your claim.  It doesn’t matter what you hoped to achieve with your ad, it only matters what the consumer would be able to understand from your ad.

Third, err on the side of caution.  Specific points are advisable over general claims.  An unqualified general claim of environmental benefit may convey that the product has far-reaching environmental benefits, which may not be true (or, at least, understood by the consumer).  So, in the case of those auto body shops, their claims of being “environmentally-friendly” would not be deceptive if that representation were followed by clear and prominent language limiting the “friendly” representation to the product attribute for which it could be substantiated, and if the context didn’t create any other deceptive implications.

Finally, it doesn’t hurt to educate yourself on useful (and not-so-useful) marketing concepts.  A survey released this week of nearly 300 members of Sustainable Industries’ audience, conducted by the Sustainable Branding Collaborative, a Portland-based firm, shows that what most consumers and businesses want is transparency.  Don’t make claims that you can’t support.  A link to the report can be found on the Sustainable Industries website.  Or, you can check out our friends over at BBMG.  They released a 2009 Conscious Consumer Report, which explores the consumer’s confusion and limited reliance on trust marks – labels that attempt to “certify” a product’s environmental attributes.  BBMG has found that consumers cannot readily understand the clutter of the hundreds of trust marks that are in the marketplace today.

So what’s my message on environmental marketing claims?  Say what you mean, mean what you say, and above else, you better be able to prove it.