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Green marketing
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According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe.[1] Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term.[2] Other similar terms used are Environmental Marketing and Ecological Marketing.
History
A green market in the Lower East Side Green Market, New York City .[3]
The term Green Marketing came into prominence in the late 1980s and early 1990s.[4][5] The American Marketing Association (AMA) held the first workshop on "Ecological Marketing" in 1975.[6] The proceedings of this workshop resulted in one of the first books on green marketing entitled "Ecological Marketing".[7] A recent survey discovered that 94 percent of all consumers prefer to do business with companies that demonstrate that they care about the environment. Almost 80 percent said they would pay more for environmentally friendly products.[8]
According to Jacquelyn A. Ottman, (author of Green Marketing: Opportunity for Innovation) from an organizational standpoint, environmental considerations should be integrated into all aspects of marketing — new product development and communications and all points in between.[9] The holistic nature of green also suggests that besides suppliers and retailers new stakeholders be enlisted, including educators, members of the community, regulators, and NGOs. Environmental issues should be balanced with primary customer needs.
The green market at Union Square (14th street), New York City
The past decade has shown that harnessing consumer power to effect positive environmental change is far easier said than done. The so-called "green consumer" movements in the U.S. and other countries have struggled to reach critical mass and to remain in the forefront of shoppers' minds.[10][11]While public opinion polls taken since the late 1980s have shown consistently that a significant percentage of consumers in the U.S. and elsewhere profess a strong willingness to favor environmentally conscious products and companies, consumers' efforts to do so in real life have remained sketchy at best.[12] One of green marketing's challenges is the lack of standards or public consensus about what constitutes "green," according to Joel Makower, a writer on green marketing.[citation needed] In essence, there is no definition of "how good is good enough" when it comes to a product or company making green marketing claims. This lack of consensus -- by consumers, marketers, activists, regulators, and influential people -- has slowed the growth of green products, says Makower, because companies are often reluctant to promote their green attributes, and consumers are often skeptical about claims.
Despite these challenges, green marketing has continued to gain adherents, particularly in light of growing global concern about climate change. This concern has led more companies to advertise their commitment to reducing their climate impacts, and the effect this is having on their products and services.
Principles of Green Marketing
Adopted By the Board of Directors of the
American Wind Energy Association
• Summary
• Power from Emerging Renewable Resources
• Make a Difference
• Avoid Distinctions between "Existing" and "New" Renewables
• Fully Disclose Product Contents
• Document Claims
• No Excessive Prices
• No Advance Premiums and Donations
• Universal System of Price
• Support Public Policies that Advance Sustainable Energy Goals
AWEA has developed the following principles in an effort to foster a credible market in environmentally-preferable electric services and one that results in meaningful changes in the electric system as a whole. AWEA will periodically revisit these principles, adding and modifying recommendations where appropriate, as the green market evolves and new information is gained. (Note: these guidelines apply to utility "green pricing" programs as well as green marketing that occurs in a competitive retail market.)
Summary of Principles
Issues Related to Product Content and Related Claims
1. Include power from emerging renewable resources (wind, solar, biomass, geothermal).
2. Make a difference. Marketed renewables should be above and beyond any renewables requirements. Ratebased resources should be marketed only under certain circumstances.
3. Avoid distinctions between "existing" and "new"renewables.
4. Fully disclose product contents and provide information to allow on-going product verification (in the absence of uniform disclosure requirements).
5. Document claims that power from undesirable sources is not being supported.
6. Do not charge excessive prices.
7. Do not collect premiums in advance and avoid donation programs.
8. Other Issues.
9. Support a universal system of price, fuel mix and emissions disclosure.
10. Support public policies that advance sustainable energy goals.
Principles and their Rationales
Include power from emerging renewable resources (wind, solar, biomass, geothermal).
Green marketing can improve the environmental profile of the U.S. electricity supply if marketers sell a power product that includes a substantial fraction of wind, geothermal, biomass (including landfill gas) and/or solar resources. The generation of power from these renewable resource technologies produces few or no air emissions, no carbon (no net carbon, in the case of biomass), and do not cause irreparable damage to river ecosystems. They will be most vulnerable in competitive markets and can most benefit from consumer support. While "green" is difficult to define, and arguments can be made that natural gas and large hydropower are less environmentally harmful than coal, oil, and nuclear power, green-customer demand is unlikely to exceed the supply of large, existing quantities of gas and hydro resources. To make a difference in the amount of emerging renewable resources in the electric system, "green" endorsements should be limited to portfolios that include substantial amounts of wind, solar, biomass and geothermal resources. The balance of the product should contain no greater fraction of nuclear- or coal-fired power than would otherwise be provided by the system mix.
TOP
Make a difference. Marketed renewables should be above and beyond any renewables requirements. Ratebased resources should be marketed only under certain circumstances.
Green marketing can make a difference by building total consumer demand for renewables and ultimately increasing the supply of renewables in the marketplace. This argues against creating artificial distinctions among renewable resources (see next principle). There are, however, some situations in which it would be inappropriate to market certain renewable resources. These situations may include those in which: (a) consumer purchases would clearly not make a difference in the total demand/supply picture, (b) consumers would be treated unfairly, or (c) an unfair advantage for existing power providers (i.e., utilities) would be created in competitive markets. All three could occur at once.
Example 1 -- Mandated Renewables. Where a marketer is required by law to have a certain amount of renewable power in its resource portfolio, marketing that power separately at a premium would make no difference in the total amount of renewable energy in the system. Similarly, consumers should not be asked to pay extra for environmental practices that are already required by law (e.g., hydro spills required to protect fish). In these cases, green consumers would simply be picking up a larger share of the tab that would otherwise be shared by all consumers, and markets for other renewables would be dried up. If the marketer wishes to sell the mandated resources to consumers along with additional benefits (e.g., offering consumers a long-term fixed rate in exchange for their purchase), it should clearly inform consumers that the renewable power would be generated regardless of their purchase in order to avoid misleading them.
Example 2 -- Renewables Already Paid for by Ratepayers. In some cases, the cost of renewable capacity and/or energy is included in the rates being paid by utility customers. This may occur when costs are included in a utility's ratebase, when a utility passes contract costs through to ratepayers, or when ratepayers are paying the costs in a fixed stranded-asset charge. (a) Where renewable resource costs are already being paid for by consumers, they should be marketed at a premium only when the green sales result in additional generation from those resources and a commensurate price is charged. Otherwise, the green marketing would result in cost-shifting or double-charging. (b) Resources that are already being charged to consumers by a utility should not be sold in competitive markets outside of the utility's territory. A utility should be able to market renewable resources when they have been removed from rates and placed within an unregulated subsidiary. Otherwise, utility shareholders assume no risk and gain an unfair competitive advantage against companies who do not have access to ratepayer-subsidized resources and must take additional risks to participate in the green market. Absent a rate case or other adjustments to lower rates to reflect the green sales, utility shareholders would gain at the expense of ratepayers, who would no longer have access to the green resources they have paid for. In some cases, sale of the green resource could result in greater generation from local fossil fuel resources, leaving local consumers environmentally disadvantaged.
TOP
Avoid distinctions between "existing" and "new" renewables.
Markets work effectively by rewarding the lowest-cost producers, whether they are existing producers or new entrants. Building demand for renewable resources will attract competitors and influence incremental investment decisions made in the power industry in favor of a renewable resource (the investment may be in refurbishing existing equipment or in a new plant). Each purchasing decision can make a difference in pushing toward that next investment in renewable energy supply. Some believe that the total amount of renewables in the system can be increased the fastest by drawing a distinction between "existing" and "new" resources, and by favoring the latter. We believe this is inappropriate for a number of reasons.
First, a new project may not need support while an existing project might. For example, a new project whose "above market" costs are being fully covered by a government subsidy may not need additional consumer support, whereas an existing project receiving market prices that are inadequate to sustain operations may. Second, from an environmental perspective, it makes no sense to build a new project (new roads, power lines, etc.) while an existing project languishes, if it is possible to maintain or repower the existing project at the same or lower cost. Third, definitions of "new" are problematic (e.g., when does "new" become "old"?). Fourth, it is unfair to penalize early investors in renewable energy by classifying their product as somehow inferior. It is best to allow the market to displace existing renewable resources when new ones of greater value or lower cost are available.
This principle does not mean that marketers cannot tout a new project if that's what they are doing and selling. However, marketers should not imply that new is better simply because it is new, or that existing renewables are somehow unworthy of support simply because of the fact that they were built earlier.
Fully disclose product contents and provide information to allow on-going product verification (in the absence of uniform disclosure requirements).
In the absence of uniform public disclosure requirements, green marketers should voluntarily disclose portfolio contents to consumers, including percentages of emerging renewable resources, in all product advertisements and billing statements to the maximum extent practicable. Marketers should also provide all necessary information to government agencies and private organizations seeking to verify those claims. Otherwise, it will be difficult, if not impossible, for consumers to know what they are purchasing and for interested parties to verify green claims.
Document claims that power from undesirable sources are not being supported.
Where marketing and advertising claims involve the exclusion of nuclear- or coal-fired power, those resources must not be supported in any way by the green purchase (with the exception of incidental system power balancing requirements and ancillary services). Electrons and dollars are fungible, so the marketer must prove that consumer dollars do not in any way support the bads.
Do not charge excessive prices.
Reasonable prices for renewable energy products would be a natural outcome of a market that is vibrantly competitive and in which consumers have good information. And, where consumers have choices, informed consumers can be trusted to decide whether product benefits are worth the price. However, many consumers are unaware that the cost of renewable energy has fallen dramatically in the last decade, and if excessive prices are charged for renewable energy it will give the public the impression that renewables cost more than they actually do, which could decrease support for public policies promoting renewables and reduce the size of the market for renewables. Green marketers that charge prices that are clearly out of proportion to the actual cost of renewable energy, after factoring in reasonable marketing costs and rewards for risks taken, should expect some criticism.
TOP
Do not collect premiums in advance, and avoid donation programs.
Collecting premiums in advance invites abuse. Consumers should not be asked to pay for someone else's investment when they get nothing in return. Green purchases that are product- oriented rather than donation or promise-oriented are likely to be more successful. Collecting expressions of interest or agreements to purchase power when it becomes available are more appropriate methods of securing consumers.
Other Issues
Support a universal system of price, fuel mix and emissions disclosure.
To encourage a market in "green," consumers must have information that allows them to comparison shop among all suppliers on the basis of the costs and the environmental characteristics of their resource portfolio. This necessarily requires disclosure of price, fuel mix, and emissions on a consistent basis—not just for those claiming "greenness," but for all suppliers. Without uniform disclosure requirements, the burden will fall on green marketers to investigate their competitors' portfolios and educate consumers about them—a difficult and expensive task. Even then, consumers may be mistrustful of green claims. Any green marketer with a worthy product has an interest in disclosure requirements because it will give legitimacy and value to its product. In a truly competitive market with full disclosure, we can expect competitors to "bid up" the amount of renewables to attract environmentally-concerned consumers. Disclosure mechanisms should be designed to minimize public and private administrative costs, such as a "tradable tag" approach.
Support public policies that advance sustainable energy goals.
Encouraging individuals to take responsibility for the environmental impacts caused by their own personal electricity consumption is an important element of moving to a more sustainable electricity supply. Green marketing is also an important part of advancing renewable energy in the marketplace. However, green marketing it is not an adequate substitute for public policies that correct the market failures that will hinder renewables and cleaner fossil resources in the market and that set the electric industry on a sustainable course. Moreover, in order for consumers to have the choice of purchasing renewable energy, we must have strong renewable energy industries. Given the high entry barriers in the electric industry, we must ensure that a meaningful base of renewables is built into the system. The green marketer who is truly interested in significantly advancing renewables will:
• support transmission and system operation rules that treat intermittent renewable resources fairly,
• support strong renewable energy and environmental policies in the states and Congress,
• not represent green marketing as an adequate substitute for either of the above.
From Wikipedia, the free encyclopedia
Jump to: navigation, search
According to the American Marketing Association, green marketing is the marketing of products that are presumed to be environmentally safe.[1] Thus green marketing incorporates a broad range of activities, including product modification, changes to the production process, packaging changes, as well as modifying advertising. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term.[2] Other similar terms used are Environmental Marketing and Ecological Marketing.
History
A green market in the Lower East Side Green Market, New York City .[3]
The term Green Marketing came into prominence in the late 1980s and early 1990s.[4][5] The American Marketing Association (AMA) held the first workshop on "Ecological Marketing" in 1975.[6] The proceedings of this workshop resulted in one of the first books on green marketing entitled "Ecological Marketing".[7] A recent survey discovered that 94 percent of all consumers prefer to do business with companies that demonstrate that they care about the environment. Almost 80 percent said they would pay more for environmentally friendly products.[8]
According to Jacquelyn A. Ottman, (author of Green Marketing: Opportunity for Innovation) from an organizational standpoint, environmental considerations should be integrated into all aspects of marketing — new product development and communications and all points in between.[9] The holistic nature of green also suggests that besides suppliers and retailers new stakeholders be enlisted, including educators, members of the community, regulators, and NGOs. Environmental issues should be balanced with primary customer needs.
The green market at Union Square (14th street), New York City
The past decade has shown that harnessing consumer power to effect positive environmental change is far easier said than done. The so-called "green consumer" movements in the U.S. and other countries have struggled to reach critical mass and to remain in the forefront of shoppers' minds.[10][11]While public opinion polls taken since the late 1980s have shown consistently that a significant percentage of consumers in the U.S. and elsewhere profess a strong willingness to favor environmentally conscious products and companies, consumers' efforts to do so in real life have remained sketchy at best.[12] One of green marketing's challenges is the lack of standards or public consensus about what constitutes "green," according to Joel Makower, a writer on green marketing.[citation needed] In essence, there is no definition of "how good is good enough" when it comes to a product or company making green marketing claims. This lack of consensus -- by consumers, marketers, activists, regulators, and influential people -- has slowed the growth of green products, says Makower, because companies are often reluctant to promote their green attributes, and consumers are often skeptical about claims.
Despite these challenges, green marketing has continued to gain adherents, particularly in light of growing global concern about climate change. This concern has led more companies to advertise their commitment to reducing their climate impacts, and the effect this is having on their products and services.
Principles of Green Marketing
Adopted By the Board of Directors of the
American Wind Energy Association
• Summary
• Power from Emerging Renewable Resources
• Make a Difference
• Avoid Distinctions between "Existing" and "New" Renewables
• Fully Disclose Product Contents
• Document Claims
• No Excessive Prices
• No Advance Premiums and Donations
• Universal System of Price
• Support Public Policies that Advance Sustainable Energy Goals
AWEA has developed the following principles in an effort to foster a credible market in environmentally-preferable electric services and one that results in meaningful changes in the electric system as a whole. AWEA will periodically revisit these principles, adding and modifying recommendations where appropriate, as the green market evolves and new information is gained. (Note: these guidelines apply to utility "green pricing" programs as well as green marketing that occurs in a competitive retail market.)
Summary of Principles
Issues Related to Product Content and Related Claims
1. Include power from emerging renewable resources (wind, solar, biomass, geothermal).
2. Make a difference. Marketed renewables should be above and beyond any renewables requirements. Ratebased resources should be marketed only under certain circumstances.
3. Avoid distinctions between "existing" and "new"renewables.
4. Fully disclose product contents and provide information to allow on-going product verification (in the absence of uniform disclosure requirements).
5. Document claims that power from undesirable sources is not being supported.
6. Do not charge excessive prices.
7. Do not collect premiums in advance and avoid donation programs.
8. Other Issues.
9. Support a universal system of price, fuel mix and emissions disclosure.
10. Support public policies that advance sustainable energy goals.
Principles and their Rationales
Include power from emerging renewable resources (wind, solar, biomass, geothermal).
Green marketing can improve the environmental profile of the U.S. electricity supply if marketers sell a power product that includes a substantial fraction of wind, geothermal, biomass (including landfill gas) and/or solar resources. The generation of power from these renewable resource technologies produces few or no air emissions, no carbon (no net carbon, in the case of biomass), and do not cause irreparable damage to river ecosystems. They will be most vulnerable in competitive markets and can most benefit from consumer support. While "green" is difficult to define, and arguments can be made that natural gas and large hydropower are less environmentally harmful than coal, oil, and nuclear power, green-customer demand is unlikely to exceed the supply of large, existing quantities of gas and hydro resources. To make a difference in the amount of emerging renewable resources in the electric system, "green" endorsements should be limited to portfolios that include substantial amounts of wind, solar, biomass and geothermal resources. The balance of the product should contain no greater fraction of nuclear- or coal-fired power than would otherwise be provided by the system mix.
TOP
Make a difference. Marketed renewables should be above and beyond any renewables requirements. Ratebased resources should be marketed only under certain circumstances.
Green marketing can make a difference by building total consumer demand for renewables and ultimately increasing the supply of renewables in the marketplace. This argues against creating artificial distinctions among renewable resources (see next principle). There are, however, some situations in which it would be inappropriate to market certain renewable resources. These situations may include those in which: (a) consumer purchases would clearly not make a difference in the total demand/supply picture, (b) consumers would be treated unfairly, or (c) an unfair advantage for existing power providers (i.e., utilities) would be created in competitive markets. All three could occur at once.
Example 1 -- Mandated Renewables. Where a marketer is required by law to have a certain amount of renewable power in its resource portfolio, marketing that power separately at a premium would make no difference in the total amount of renewable energy in the system. Similarly, consumers should not be asked to pay extra for environmental practices that are already required by law (e.g., hydro spills required to protect fish). In these cases, green consumers would simply be picking up a larger share of the tab that would otherwise be shared by all consumers, and markets for other renewables would be dried up. If the marketer wishes to sell the mandated resources to consumers along with additional benefits (e.g., offering consumers a long-term fixed rate in exchange for their purchase), it should clearly inform consumers that the renewable power would be generated regardless of their purchase in order to avoid misleading them.
Example 2 -- Renewables Already Paid for by Ratepayers. In some cases, the cost of renewable capacity and/or energy is included in the rates being paid by utility customers. This may occur when costs are included in a utility's ratebase, when a utility passes contract costs through to ratepayers, or when ratepayers are paying the costs in a fixed stranded-asset charge. (a) Where renewable resource costs are already being paid for by consumers, they should be marketed at a premium only when the green sales result in additional generation from those resources and a commensurate price is charged. Otherwise, the green marketing would result in cost-shifting or double-charging. (b) Resources that are already being charged to consumers by a utility should not be sold in competitive markets outside of the utility's territory. A utility should be able to market renewable resources when they have been removed from rates and placed within an unregulated subsidiary. Otherwise, utility shareholders assume no risk and gain an unfair competitive advantage against companies who do not have access to ratepayer-subsidized resources and must take additional risks to participate in the green market. Absent a rate case or other adjustments to lower rates to reflect the green sales, utility shareholders would gain at the expense of ratepayers, who would no longer have access to the green resources they have paid for. In some cases, sale of the green resource could result in greater generation from local fossil fuel resources, leaving local consumers environmentally disadvantaged.
TOP
Avoid distinctions between "existing" and "new" renewables.
Markets work effectively by rewarding the lowest-cost producers, whether they are existing producers or new entrants. Building demand for renewable resources will attract competitors and influence incremental investment decisions made in the power industry in favor of a renewable resource (the investment may be in refurbishing existing equipment or in a new plant). Each purchasing decision can make a difference in pushing toward that next investment in renewable energy supply. Some believe that the total amount of renewables in the system can be increased the fastest by drawing a distinction between "existing" and "new" resources, and by favoring the latter. We believe this is inappropriate for a number of reasons.
First, a new project may not need support while an existing project might. For example, a new project whose "above market" costs are being fully covered by a government subsidy may not need additional consumer support, whereas an existing project receiving market prices that are inadequate to sustain operations may. Second, from an environmental perspective, it makes no sense to build a new project (new roads, power lines, etc.) while an existing project languishes, if it is possible to maintain or repower the existing project at the same or lower cost. Third, definitions of "new" are problematic (e.g., when does "new" become "old"?). Fourth, it is unfair to penalize early investors in renewable energy by classifying their product as somehow inferior. It is best to allow the market to displace existing renewable resources when new ones of greater value or lower cost are available.
This principle does not mean that marketers cannot tout a new project if that's what they are doing and selling. However, marketers should not imply that new is better simply because it is new, or that existing renewables are somehow unworthy of support simply because of the fact that they were built earlier.
Fully disclose product contents and provide information to allow on-going product verification (in the absence of uniform disclosure requirements).
In the absence of uniform public disclosure requirements, green marketers should voluntarily disclose portfolio contents to consumers, including percentages of emerging renewable resources, in all product advertisements and billing statements to the maximum extent practicable. Marketers should also provide all necessary information to government agencies and private organizations seeking to verify those claims. Otherwise, it will be difficult, if not impossible, for consumers to know what they are purchasing and for interested parties to verify green claims.
Document claims that power from undesirable sources are not being supported.
Where marketing and advertising claims involve the exclusion of nuclear- or coal-fired power, those resources must not be supported in any way by the green purchase (with the exception of incidental system power balancing requirements and ancillary services). Electrons and dollars are fungible, so the marketer must prove that consumer dollars do not in any way support the bads.
Do not charge excessive prices.
Reasonable prices for renewable energy products would be a natural outcome of a market that is vibrantly competitive and in which consumers have good information. And, where consumers have choices, informed consumers can be trusted to decide whether product benefits are worth the price. However, many consumers are unaware that the cost of renewable energy has fallen dramatically in the last decade, and if excessive prices are charged for renewable energy it will give the public the impression that renewables cost more than they actually do, which could decrease support for public policies promoting renewables and reduce the size of the market for renewables. Green marketers that charge prices that are clearly out of proportion to the actual cost of renewable energy, after factoring in reasonable marketing costs and rewards for risks taken, should expect some criticism.
TOP
Do not collect premiums in advance, and avoid donation programs.
Collecting premiums in advance invites abuse. Consumers should not be asked to pay for someone else's investment when they get nothing in return. Green purchases that are product- oriented rather than donation or promise-oriented are likely to be more successful. Collecting expressions of interest or agreements to purchase power when it becomes available are more appropriate methods of securing consumers.
Other Issues
Support a universal system of price, fuel mix and emissions disclosure.
To encourage a market in "green," consumers must have information that allows them to comparison shop among all suppliers on the basis of the costs and the environmental characteristics of their resource portfolio. This necessarily requires disclosure of price, fuel mix, and emissions on a consistent basis—not just for those claiming "greenness," but for all suppliers. Without uniform disclosure requirements, the burden will fall on green marketers to investigate their competitors' portfolios and educate consumers about them—a difficult and expensive task. Even then, consumers may be mistrustful of green claims. Any green marketer with a worthy product has an interest in disclosure requirements because it will give legitimacy and value to its product. In a truly competitive market with full disclosure, we can expect competitors to "bid up" the amount of renewables to attract environmentally-concerned consumers. Disclosure mechanisms should be designed to minimize public and private administrative costs, such as a "tradable tag" approach.
Support public policies that advance sustainable energy goals.
Encouraging individuals to take responsibility for the environmental impacts caused by their own personal electricity consumption is an important element of moving to a more sustainable electricity supply. Green marketing is also an important part of advancing renewable energy in the marketplace. However, green marketing it is not an adequate substitute for public policies that correct the market failures that will hinder renewables and cleaner fossil resources in the market and that set the electric industry on a sustainable course. Moreover, in order for consumers to have the choice of purchasing renewable energy, we must have strong renewable energy industries. Given the high entry barriers in the electric industry, we must ensure that a meaningful base of renewables is built into the system. The green marketer who is truly interested in significantly advancing renewables will:
• support transmission and system operation rules that treat intermittent renewable resources fairly,
• support strong renewable energy and environmental policies in the states and Congress,
• not represent green marketing as an adequate substitute for either of the above.