UK: A green piece of the action.

UK: A green piece of the action. - The withdrawal of niche green products from supermarkets shows how far the mainstream has adopted environmental thinking.

by Malcolm Brown.
Last Updated: 31 Aug 2010

The withdrawal of niche green products from supermarkets shows how far the mainstream has adopted environmental thinking.

A decade ago, The Green Consumer Guide, a book by the environmentalists John Elkington and Julia Hailes, shot to the top of the bestseller list.

Within a year Bob Worcester, chairman of opinion pollsters MORI, was declaring in The Times: 'The green consumer is here, in seven-league boots.' Soon supermarket shelves were groaning with products, most notably detergents, sold on their greenness. Today finding such items has become like a game of hunt the thimble. A few months ago even J Sainsbury, probably the most self-consciously green of all the supermarkets, withdrew a number of key products from its own-brand Greencare range of household cleaners.

The obvious conclusion to draw is that green consumerism has run out of steam. It is obvious but wrong. Products sold primarily on the back of their greenness are certainly less popular than they were, but not because consumers have turned their backs on the environment. The real explanation, at least as far as detergents are concerned (and detergents have always had an iconic status in the green consumer movement), is that the makers of the main brands, groups like Procter & Gamble and Unilever, have successfully donned the niche players' clothes. They have made their own standard brands so environmentally sound that concerned consumers now feel that they can get the best of both worlds.

Previously green shoppers often had to pay a premium for green products which, not infrequently, performed less well than the main brands - they washed greyer not whiter. Now consumers can buy the traditional brands - Persil, Ariel, Dreft - at competitive prices, safe in the knowledge that they are both effective and environmentally sound.

Sainsbury's environment manager, Alison Austin, confirms the trend. The justification for the Greencare range, she says, was that its products should give the customer benefits that the standard brands did not. If the major brands improved their environmental performance so that there was no environmental advantage in Sainsbury's own-brand lines then the products lost their raison d'etre. The same trend was playing out elsewhere too. 'The mainline market was prodded into action. It took on board a lot of the issues and the difference between the standard products and the green niche products has eroded over time,' she claims.

One way of thinking about it, suggests Austin, is that a successful green product is one that arrives on the shelf, excites interest, performs well, then disappears 'because the rest of the market takes on the attributes of that product'. If this version of events is correct then green consumerism isn't dead or dying, it has simply matured and been transformed. Instead of being an issue, it has been incorporated into the way we (and the makers of consumer products) think.

The transformation of green consumerism from something revolutionary to something evolutionary is almost complete, but other changes in environmentalism, which in the long run may be even more important, appear only just to be beginning. There are signs of a very significant shift in the attitude of UK business and industry generally towards environmental matters. The indications are that business, shaken by recent environmental confrontations like the Brent Spar affair, in which Shell was forced by the environmental pressure group Greenpeace to withdraw its plans for disposing of an oil storage platform, is reassessing the way it deals with environmental questions.

Observers say it needs to.

On the face of it, the top slice of business has been getting greener with each year that passes. A survey to be published by management consultants KPMG, for instance, is expected to say that 78 of the FT-SE 100 companies reported on the environment in their annual reports in 1996 and that nearly one-third of them produced separate environmental reports. Another survey, by Business in the Environment, shows that nine out of 10 of 73 FT-SE 100 companies which responded to a questionnaire had written environmental policies and eight out of 10 had board members specifically designated as responsible for environmental matters. The environmental reports from the big corporations show that they are using energy more efficiently, cutting down on packaging, recycling much more and producing smaller quantities of noxious substances.

All of this sounds encouraging, but look behind these indicators of corporate engagement to the actual mindset of those in the boardroom and the picture is rather different. Until very recently, says John Elkington, now chairman of environmental strategy consultants SustainAbility, UK companies, unlike their Continental counterparts which increasingly treat the environment as a strategic issue, have tended to look on environmentalism as an imposition.They would deal with environmental issues as and when they had to, but not necessarily with good grace, and they preferred to leave it all to operational management rather than grappling with it at board level. In short, corporate environmentalism has been happening, sometimes quite successfully, as company environmental reports show. But for too many companies, it has been an add-on rather than an integral part of mainstream business thinking. It has been peripheral rather than central.

That is changing, says Elkington, as the boards of some of our major companies realise that events such as Brent Spar and the recent roads protests have the very real potential to dent a company's reputation and market position. Confirmation that boardroom attitudes are changing comes from Shell itself. In the wake of the Brent Spar affair, the Anglo-Dutch oil giant engaged in a soul-searching exercise and then came to some rather startling conclusions. Having been humiliated by Greenpeace, one might have expected the company to withdraw, lick its wounds and determine how, if such a thing ever happened again, it could either take evasive action or, alternatively, go in with all guns blazing. Greenpeace, after all, had played very rough indeed. But, in fact, the primary lesson Shell has drawn from Brent Spar is not that it must become better at outmanoeuvring environmental pressure groups but that its senior people must learn to listen much more carefully to what company stakeholders, including the pressure groups, are saying - that, far from shunning such bodies, managers must talk to them.

In a speech given last October which could prove, in retrospect, to have been a turning point for environmentalism, Cornelius Herkstroter, senior group managing director of Royal Dutch/Shell, said that in the past Shell had listened very closely to its customers, to the Government and to its staff. It had also dealt with environmental groups, consumer groups and so on, but had tended to let the public affairs department handle them. 'They were important - but they were not as important as government, industry organisations and so on. We were somewhat slow in understanding that these groups were tending to acquire authority. Meanwhile those institutions we were used to dealing with were tending to lose authority.' Shell had simply underestimated the extent of these changes, said Herkstroter. 'We failed to engage in a serious dialogue with these new groups.'

Then in March, moving things one step further, John Jennings, chairman of Shell Transport & Trading, the group's UK arm, disclosed that Shell was inviting environmental groups and other non-governmental organisations (NGOs) to participate in and monitor some of its more sensitive projects. 'We should use the increased scrutiny of NGOs as a tool to strengthen our performance,' said Jennings.

The significance of the Herkstroter speech and the Jennings announcement is that both men recognise, perhaps for the first time, that groups like the environmental campaigners are stakeholders, or at least that they are stakeholders by proxy, precisely because they now have such an enormous influence on public opinion.

Shell may well have been influenced in its thinking by the changed approach of some of the most prominent environmentalists. A number of environmental campaigners like Jonathon Porritt, former director of Friends of the Earth, have begun to express weariness with the stand-off approach to environmental campaigning in which companies are demonised. Porritt and other campaigners last year set up Forum for the Future, a partnership of independent experts committed to building a sustainable way of life. The forum is encouraging a spirit of rapprochement with business, rather than antagonism towards it, and large corporations as diverse as EMI, the Post Office and Tesco are giving it both moral and financial backing.

Mike Sutton, director of the World Wide Fund for Nature's Endangered Seas Campaign, calls the Porritt approach 'third wave environmentalism', the first wave being concern for species and animal welfare, the second a more confrontational approach. The environmental community around the world has matured, he says. 'We've begun to move away from the old-style confrontation, advocacy and litigation into a mode of co-operation, partnerships, consensus-building and working out solutions that are acceptable to both environment and business.'

Sutton's direct involvement is through the newly-formed Marine Stewardship Council (MSC) which the WWF is co-sponsoring with Unilever. The council, which will be up and running by next year, backed by several hundred thousand pounds from both the WWF and Unilever, will seek to influence fishing policy and stimulate necessary reforms in fishing practices around the world. When sold, fish caught in accordance with the MSC's criteria will carry an on-pack logo saying, in effect, that they are MSC-approved, thus helping consumers make choices about what they are purchasing.

'The same thing is in it for both of us,' says Sutton, 'and that is creating powerful economic incentives for sustainable fishing. It is certainly in the best interests of seafood producers who depend on a steady supply of product, but it is also in the best interests of the marine environment.

You can build a win-win situation here for both the seafood industry and for the environmental community.'

The stewardship model of co-operation is probably relevant in this precise form only to renewable resources, but the broader message, that co-operation is better than confrontation, is one that Sutton believes is getting home.

'The message is that business practices are being reformed and shareholders and customers are expecting more of businesses in terms of their environmental performance, so the boardroom has to take, and in fact is taking, greater notice of this. It's becoming a fiduciary duty on the part of corporate directors to take into account the environmental performance of their businesses. If they don't they can be held liable by shareholders and certainly will be held liable by consumers. The smart, progressive corporations instead of fighting that, as has been the case in the past, are accepting it, embracing it, and figuring out how to use environmental performance as a competitive edge.'

What would really make companies jump, of course, would be if environmental issues began to affect their bottom line. Until now that hasn't happened but in the wake of Brent Spar, people in boardrooms and the City are beginning to suggest that it might well do so in the near future. Financial institutions are definitely becoming more environmentally conscious. Banks, for instance, are factoring environmental risk into their lending criteria.

A report, Banking on the Future, published a few weeks ago by the environmentalist group, the Green Alliance, should certainly give those in the boardroom pause for thought. The report analysed how 26 banks worldwide, including the major British clearers, approached environmentalism.

Most of them thought credit risk assessment was the mechanism through which they could most readily influence clients' environmental performance. There was a growing awareness, said the alliance, of the different ways in which environmental factors could affect a borrower's ability to repay a loan. Some far-sighted banks were even beginning to extend their interpretation of environmental credit risk to encompass more strategic issues, such as the risk that a company's product would no longer be wanted by society in future decades because of its environmental impact.

If bankers and other analysts start to think about the environment strategically, the corporations which rely on their backing will not be far behind. Elkington believes the message may already be getting through. A financial analyst preparing a portfolio of the best corporate environmental performers was asked recently by one of the construction companies involved in the roads protests if one of its people could come along to talk the issues through.

Then the analyst had a telephone call asking if a second company representative could come along. At the end of the meeting, says Elkington, the second visitor was revealed to be the construction company's chief executive.

WHO'S GREENEST?

Energy, chemicals and minerals show the greatest sensitivity

Business in the Environment's Index of Corporate Environmental Engagement, published in November 1996, shows enormous differences in the way business sectors approach the environment. The index, which measures FT-SE 100 companies against 10 parameters - from the existence of a corporate environmental policy to environmental communication with stakeholders - rates the energy, chemicals and minerals businesses most highly and suggests that the financial sector is furthest behind. Utility firms also score very highly. Part of the explanation for the success of the energy, chemicals and minerals companies, says BiE, is that they are highly regulated and that the sectors are 'environmentally sensitive'. The problem with the financial sector - ironic in view of the banks' new-found interest in the environmental performance of clients - is a reluctance to acknowledge that it itself has an impact on the environment that needs managing.

1st quintile

British Airways

British Telecom

Enterprise Oil

ICI

Marks & Spencer

National Power

National Westminster

RTZ Safeway

Scottish Power

Shell Transport & Trading

SmithKline Beecham

Thames Water

Unilever

2nd quintile

Allied Domecq

Asda

BAA

BAT Industries

British Petroleum

British Steel

GEC

Grand Metropolitan

Hanson

J Sainsbury

Lasmo

PowerGen

Severn Trent

Smith & Nephew

Thorn EMI

3rd quintile

Argos

Bank of Scotland

Blue Circle Industries

Boots

British Gas

Courtaulds

Glaxo Wellcome

Guinness

National Grid P&O Pilkington Redland

Southern Electric

Tate & Lyle

4th quintile

Abbey National Barclays

British Aerospace

Cable & Wireless

Cadbury Schweppes

Carlton Communications

Dixons Kingfisher

Ladbroke Legal & General

Reckitt & Colman

RMC

Rolls-Royce

United Utilities

3i Group

5th quintile

Bass

Burmah Castrol

Burton Commercial Union

General Accident

Granada Great Universal Stores Land Securities

Rank Organisation

Reuters

Royal Bank of Scotland

Royal Sun Alliance

Scottish & Newcastle

Tesco

TI Group

MEASURE FOR MEASURE

New approaches to highlight impact of company performance

Many company environmental reports do little more than compare the company's present performance against its own historic record. They seldom do so in a way that allows comparison between companies. This is, however, starting to change. Shell, for example, now relates its key emissions and waste products to a barrel of oil. If other energy companies adopted the same approach, environmentalists would get a more realistic picture of just how hard companies are trying.

Another major shortcoming of most environmental statistics is that they give only a sketchy indication of the real impact of pollutants. In an effort to improve its environmental monitoring, ICI has introduced the idea of 'environmental burden'. Instead of merely stating the quantities of wastes and emissions, ICI uses a weighting system to estimate the potential impact of the wastes and emissions on the environment. Dr Mike Wright, ICI's group environmental adviser, says the 'burden' approach is a useful way to focus improvement in the right areas. He thinks the idea might well be adopted by others. 'All the chemical companies are interested in kicking it around. Downstream companies are interested as well.'

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