Green behavior: A daily phenomenon

With every generation now espousing sustainable values, environmentally considerate behavior is becoming the norm. As detailed in Figure 1.2, in 2009 nearly all (95%) of Americans are involved in various types of, albeit mostly easy, environmental activities they can do at home, from dropping empties in the recycling bin (recycling is now accessible to 87% of Americans), to replacing an incandescent light bulb with a compact fluorescent lamp (CFL), or light-emitting diode (LED). (A scheduled phase-out of incandescent bulbs will begin in the U.S. in 2012.) They turn off the lights, nudge the thermometer down a degree or two, and turn off the tap when brushing their teeth.

Driven by higher gas prices and corporate carpooling programs, as of 2009, 23% of U.S. adults now claim to share rides to work (thanks in part to corporate rideshare programs), nearly one in four consumers takes the bus or subway, and 31% now claim to walk or ride a bike instead of driving a car. Thanks to new awareness of the harm caused by plastic shopping bags that choke marine life or wind up as litter, and incentivized by monetary rewards at the checkout, peer pressure, and even a desire to make a fashion statement), as of 2009, nearly half (48%) of U.S. adults claim to regularly take reusable shopping bags to the grocery store, up 30% from 2006. Importantly, almost half (46%) of consumers maintain that they regularly boycott a brand or company that has environmental or social practices they do not like, up 17% since 2006. Big-name companies have become easy targets for activist groups. Exxon, McDonald’s, Coca-Cola, Wal-Mart, and Kimberly-Clark are just a few of the big brands that have all been castigated by Greenpeace and other activists for deficient environmental or social practices, including excess packaging, high sugar content, unfair labor practices, and unsustainable forestry operations. Once negative perceptions are created, they are almost impossible to reverse. Who still fails to link Nike to unfair labor practices or Exxon to the Alaskan oil spill?

Figure 1.2 Top consumer environmental behaviors

% U.S. adult population indicating they regularly (daily/weekly/monthly) do the following:

* Change versus 2007. Recycling behavior measured in quantity not in frequency

Source: © Natural Marketing Institute (NMI), 2009 LOHAS Consumer Trends Database®
All Rights Reserved

Green voters and citizens

Concern over the state of the environment has swayed an unprecedented number of voters and has prompted citizens to volunteer in their communities. Broad swaths of citizens voted with the environment in mind when they supported Barack Obama in 2008 for taking even greener positions at the heart of his platform than had Al Gore. Support for such issues as mitigating global warming, curbing nuclear power, limiting offshore drilling, reducing ethanol production, and improving food and product safety have helped to propel green Congressional candidates in both the 2006 and 2008 elections. To boot, since 2006, over 80% of candidates endorsed by the League of Conservation Voters have won seats in the House or Senate, while 43 out of 67 candidates identified as anti-environmental were defeated.

Earth-shattering events that have occurred since the start of the new millennium such as the terrorist attack on 9/11, Hurricane Katrina, the wars in Iraq and Afghanistan, and the Indian Ocean tsunami have led to a skyrocketing number of applications to service organizations such as AmeriCorps and the Peace Corps – and the BP oil spill in the Gulf of Mexico now materializing will likely trigger a similar outpouring. Applications to Teach for America, an organization that serves neglected urban and rural areas, reached almost 19,000 in 2006, almost triple the number in 2000; in 2005 the Peace Corps added almost 8,000 volunteers (the largest group in 30 years), from 11,500 applications, up 20% over the year 2000; and AmeriCorps VISTA (Volunteers in Service to America) had a 50% increase in job applicants from 2004 to 2006.

Shopping goes green

The rules are changing – and shopping lists along with them. An overwhelming majority (84%) of shoppers are now buying some green products from time to time, fueling mass markets for clothing made from organically grown fibers; organically produced foods; cold-water and ultra-concentrated detergents; natural cleaning, personal-care, and pet-care products; air- and water-filtration devices; low-VOC (volatile organic compounds) paints; portable bottled water containers; and biological pesticides and fertilizers. Thanks to a massive campaign from Wal-Mart during 2007 and intensive promotion by local utilities, purchases of CFLs top the list, followed by energy-efficient electronics and appliances, and natural/organic foods and cleaning products.

As of 2008, U.S. consumers invested an estimated $290 billion in a wide range of products and services representing such sectors as organic foods, natural personal care, ENERGY STAR-labeled appliances, hybrid cars, eco-tourism, green home furnishings and apparel, and renewable power, up from $219 billion in 2005. This market will only magnify over time, reflecting further advancements in design and technology and an ever-expanding range of high-quality green products with trusted brand names that are readily accessible at mass merchandisers and supermarkets.

Figure 1.3 Green purchasing behavior

% U.S. adult population indicating they have purchased products within the last 3 years,1 12 months,2 6 months,3 3 months,4 and those that own/lease a hybrid vehicle.5

Source: © Natural Marketing Institute (NMI), 2009 LOHAS Consumer Trends Database®
All Rights Reserved

Interest in green shopping holds steady, even in a recession; indeed, some recession-driven behaviors are making green downright fashionable: 67% of Americans agree that “even in tough economic times, it is important to purchase products with social and environmental benefits.” It’s one thing to express interest verbally, and another to demonstrate interest with one’s credit card. While all shopping, including green, has been hit hard by the recession, many classes of green products have fared remarkably well, thanks in part to the health and cost-saving benefits that they bestow. For instance, according to the Organic Trade Association, in 2008 organic food sales grew by 15.8% to reach $22.9 billion (accounting for 3.5% of all food products sales in the U.S., up from 2.8% in 2006). Sales of organic non-foods (organic fibers, personal-care products, and pet foods) grew by 39.4% to $1.6 billion. Burt’s Bees, the line of natural cosmetics now owned by Clorox, continued to rack up annual sales of $200 million despite recessionary times. During its 2008 market debut, Clorox’s Green Works line of natural cleaning products grabbed $123 million in sales, representing a leading share of this burgeoning market, while Seventh Generation’s sales of household products grew by more than 20% in 2009 over the previous year to $150 million – and will only multiply with distribution in Wal-Mart, announced in the summer of 2010. Toyota’s fuel-efficient Prius sold at a brisk 140,000 vehicles in the U.S. in 2009, while Honda, who make a fuel cell vehicle and a natural gas Civic, reintroduced the Insight during fall 2009 with the goal of selling 500,000 units worldwide by early next decade. And in 2008, General Electric saw a 21% gain in revenue for its portfolio of environmentally sustainable consumer and industrial products, to $17 billion.

Sensing the opportunities are now ripe for picking (and likely fearing that greener competitors will steal their lunch), mainstream consumer-products giants are introducing new green brands. They are skewing advertising dollars, beefing up their websites and quickly getting up to speed on the latest social media networks to educate their own eco-aware consumers about the environmental benefits of their products. Some notable examples include: Kimberly-Clark’s Scott Naturals (household paper products made from recycled material), Reynolds Wrap foil made from 100% recycled aluminum, and Church & Dwight’s Arm & Hammer Essentials laundry products. Having spent the past 20 years addressing consumer concerns mostly via reduced packaging, the mighty Procter & Gamble (P&G) have themselves started to play by the new green rules. They have pledged to develop and market by 2012 at least $20 billion in cumulative sales of “sustainable innovation products,” which they define as “products with a significantly reduced environmental footprint versus previous alternative products.” Toward that end, in spring 2010, they inaugurated in the U.S. a multi-brand, multi-platform green campaign dubbed “Future Friendly.” Its goal is to place their greenest offerings in 50 million U.S. homes by year-end. The effort, started in the UK and Canada in 2007, will be bolstered by educational messages conducted with conservation groups and will feature P&G brands such as Dura-cell Rechargeable batteries, Tide HE (high-efficiency) laundry powder and Tide Coldwater, and PUR water filtration products. As the manufacturer of several billion-dollar brands, P&G’s campaign builds on research showing that consumers are looking to understand how the brands they already know and trust can help them reduce their impact on the environment.

Another sign that the rules are rapidly changing: well-established mass marketers are also now acquiring leading sustainable brands with the adjudged potential for mass-market expansion. Just a few examples include The Body Shop (acquired by L’Oréal), Stonyfield Farm (now 40% owned by Danone), Tom’s of Maine natural personal-care products (Colgate-Palmolive), Aveda cosmetics (Estée Lauder), Green & Black’s organic chocolates (Cad-bury, now part of Kraft), Ben & Jerry’s ice cream (Unilever), Cascadian Farm cereals (General Mills) and Burt’s Bees personal-care line and Brita water filters (Clorox).

Expect more supermarket shelves to be lined with green choices in the future. In 2007, the U.S. Patent and Trademark Office saw more than 300,000 applications for green-related brand names, logos, and tag lines. According to Datamonitor, as of April 2009, there were more than 450 sustainable product launches for the year, on track to represent triple the number of launches in 2008, which was in itself more than double those in 2007. Retailers are demanding greener alternatives from their suppliers and are giving greener products preferential shelf treatment. Leading the charge is the Sustainability Consortium Wal-Mart announced during the summer of 2009, and formed in conjunction with the University of Arkansas and Arizona State University. The Consortium is tasked to understand the best way to label products with life-cycle-based data to inform consumer purchase decisions – no doubt raising the green bar for the products they stock in the future.

Finally, over $4 billion in venture capital – more than ever before – is being invested in the cleantech industry to support the development of solar and wind, biofuel, geothermal, and other renewable alternatives to fossil fuels. More money is being invested in renewable energy than for conventional power, and cleantech is now the largest U.S. venture capital category, representing 27% of all venture funds.