For consumers, more incentives to go green

Eliot Winks was buying a plane ticket when a chance to be environmentally responsible presented itself during online checkout. For an additional fee, about $25, Expedia.com offered to offset the carbon dioxide generated by his trip through its partnership with TerraPass, a carbon-offset provider.

“It was a nice added bonus to using the Expedia website, which I couldn’t do if I’d bought the ticket directly on the airline website,” explains the Rev. Winks, an Anglican priest with a young family in Towson, Md.

After a little research, he felt confident that his donation was going to meet with viable implementation.

“At the end of the day, though, people can say whatever they want to say, and unless I go to Nebraska to see the wind farm, there’s a balance between trusting what you read and a leap of faith that your money is going where they say it’s going to go.”

The environment is the latest entrant in the field of cause marketing. Increasingly, consumers have the option to check a box and make a small donation to an environmental cause to offset the impact of their purchase. Companies such as U-Haul, Delta, Continental, Orbitz, and Travelocity all offer some form of incentive option. In Ticketing lets concert-goers plant “one tree per ticket” by adding $2.95 to their ticket purchase. From computers to cars, companies are greening their brands with environmental incentive programs. But in the absence of regulation, the onus is on consumers to make sure the company keeps its promise.

For some, incentives are an easy, affordable means to take action against large problems, such as global warming. Others are skeptical. Janna Howley, a marketing manager with FreshFarm Markets in Washington, D.C., skips the green-incentive option, though she describes herself as an avid environmentalist.

“If a business wants to become ‘greener,’ make it part of the core values of the company,” she says, “Don’t pander to me by attempting to convince me that the one tree you planted in my name is going to solve the problem. I’m perfectly capable of writing my own check to those local and national organizations whose track records of changing policy and making positive impacts are well documented.”

An unregulated market
Currently, the Federal Trade Commission does not regulate green incentive programs, although it is reviewing its “Green Guides,” an outline of principles for environmental marketing claims. There are some voluntary standards set for carbon-offset groups; the Green-E Climate Protocol for Renewable Energy, which certifies TerraPass, is considered one of the best.

But new standards and certifications pop up all the time, and it’s hard to track how many of these programs exist, how many customers are participating, and the effectiveness of the programs.

“It’s kind of like the Wild West out there, and that’s why we’re glad that there’s this credible certification program [Green-E],” says Julia Bovey, media relations manager for the Natural Resources Defense Council (NRDC). “That’s why we have to reiterate to people that purchasing offsets is not a panacea, and the first course of action for those who want to fight global warming or save energy or save the planet is to make changes in their daily lives.”

The green incentive process is multi-tiered. Most companies partner with a nonprofit organization or other entity that actually does the good works for which consumers are paying. Programs may offer to plant a tree on the customer’s behalf or to work with a carbon-offset provider to make the purchase as carbon-neutral as possible.

At Expedia.com, for example, customers can add $6.99 per person for a short-haul flight or up to $28.99 per person for an international trip to have TerraPass use that cash for offsetting programs. Though an Expedia representative says the program is not its most popular product, it has grown steadily. In the two years since the company first offered the program, customers have booked 88,843 flights with the TerraPass option – a tiny fraction of the close to 17 million tickets Expedia sold in the United States last year.

Activists like Ms. Bovey are concerned that consumers could take these incentives as a cure-all for issues such as global warming. “If you’re really toying with whether or not to spend this $15, I think the first thing you can ask yourself is ‘what if I bought $15 worth of highly efficient light bulbs?’ ” she says. “Now if you already have a pantry full of efficient light bulbs and recycled paper towels and toilet paper, maybe you want to spend the $15, but it makes a lot of sense to do the really real actions in your daily life first before you talk about doing offsets.”

For Winks, his Expedia purchase was one of many steps he’s made to reduce his carbon footprint, such as buying a fuel-efficient car. “At least for me, this has got to be part and parcel of a more integrated approach,” he says.

Consumer attitudes, company response
Bovey states that NRDC research shows that companies aligning with a green message are raising their image with consumers as knowledge and concern about issues like global warming rise.
Dell launched “Plant a Tree for Me” in the US in January 2007 and has since rolled it out in Europe and Canada. Customers can add a donation of anywhere from $4 for a laser printer to $40 for a server, and Dell’s fulfillment partners, The Conservation Fund and Carbonfund.org, will use the money to plant trees that offset the carbon dioxide produced by powering the equipment.

“This program is consistent within a much larger framework of commitment that we have towards climate leadership, and it’s not a gimmick at all,” explains Mark Newton, Dell’s environmental policy manager. “It’s a way for us to tee up a really meaningful conversation with our customers, and they have responded extremely well towards it.”

Dell will not disclose how many customers have signed up for the program; instead, they quantify its success in trees planted. The year 2007, the firm says, netted donations to plant over 100,000 trees.

Mr. Newton underscores that their collection of donations is governed by standard SEC reporting and that their fulfillment partners are independently vetted, and Dell provides detailed information about its program and partners on its website.

It’s a level of transparency not all companies share. For customers to learn how their funds are being used and if they are going to what are termed “additional” programs – emissions reductions that only occurred because of the presence of incentives – requires research that can confound the average consumer.

The Shelton Group, an ad agency in Knoxville, Tenn. focused exclusively on energy, energy efficiency, and sustainability, recently wrapped up an independent study on consumer attitudes toward green marketing.

“What we see is just the average middle-income, middle-class consumer who is interested in doing the right thing,” says Suzanne Shelton, president and CEO of the company. “They can Google stuff, and they can poke around, but until they have some authoritative voice telling them ‘yes, this is green’ and ‘no, that’s not’ they feel ill equipped to really do it.”

In the absence of hard and fast regulation, many consumers buy with their gut.

“I think it’s about who’s doing the talking,” Ms. Shelton continues. “It works as a great brand enhancer for a company that is already perceived to be green, but I don’t think that it really serves as viable proof in a consumer’s mind for a company that’s not seen to be green as a core brand value.”

Buy for Good

Thomas Lyon, director of the Erb Institute for Global Sustainable Enterprise at the University of Michigan, agrees that consumers need to be wary of taking companies’ claims at face value. “I think companies, if left to their own devices, have incentives to tell you part of the truth, but not the whole truth,” he says.

But Mr. Lyon also contends that skeptics shouldn’t sacrifice doing good in the absence of the best solution.

“There are a lot of good-hearted people out there who want to do the right thing, and they haven’t known how to do it, so companies are making it easier for them,” he says. “I don’t think these sorts of things are going to be ‘the’ solution. We definitely need government action, too. But they help us move down the road.”

How to find a reputable incentive program

• Look for transparency. Is there easily accessible information about the program on the company website? Do they divulge the names of the fulfillment partners?

• Good partners, good program. Bad partners … Most firms use fulfillment partners to administer their environmental programs. Find out who the partner is, and what certifications/accreditations that organization has. Green-E is a widely accepted certification for carbon offsetting. Other nonprofits can be checked out through sites such as charitynavigator.org.

• When in doubt, do it yourself. Instead of going through a marketing program, donate your money directly to an environmental nonprofit.