Eco-labels play a role in promoting renewable energy developments, like this wind farm in Washington State (CC Jeffrey G Katz, 2010)

I am going to start this post with a story. In 2005, an ex-employee and self-appointed ‘green’ vigilante accused sustainability-minded beer maker, New Belgium Brewery, of ‘greenwashing’. No company wants to hear that, especially a small business with green cred, one that publishes carbon footprints for its six-pack. The accusation – the Colorado-based brewery was misleading its customers with the claim that it is 100% wind-powered. The problem was two-fold. Firstly, the utility that New Belgium purchased its power from, switched buying from wind farms to purchasing carbon offsets. The second blow, and the more grievous of the two, was that producing, bottling and selling its Fat Tire beer was not powered entirely by renewable energy. The bottles, for example, are sourced from suppliers that use fossil fuels and require much more energy to produce than the beer itself. The ex-employee took these issues to the local media and got results. In 2011, New Belgium changed its message to ‘Wind Powered, Employee Owned’. The current message is ‘Alternately Empowered’, reflecting their inclusion of solar and bio-gas into their energy portfolio. Unfortunately for New Belgium, the scandal tarnished their green image for a long time.

This story indicates the challenges of communicating the energy choices of any company. Corporate energy disclosures are an important step in the right direction and could play a crucial role in educating customers about renewable energy. In a report on alternate energy labeling, the National Renewable Energy Laboratory of the U.S. Department of Energy, recognizes the importance of these communication efforts. Nearly 50 companies in the US declare the use of renewable energy in their operations through their products, websites, social media and other marketing material. One of the most recognized and widely used  logos within this group is the Green-e label. Administered by the Center for Resource Solutions, Green-e claims to be the leading independent consumer protection program in the United States for the sale of renewable energy and greenhouse gas reductions (sic). The Green-e marketplace showcases close to 500 products carrying their label, a small but growing number. Another label that will be available to business this year is WindMade™. Backed by heavyweights like WWF, UN Global Compact and the Global Wind Energy Council, WindMade™ hopes to increase corporate investments in wind power by creating a market pull for certified products. These labeling initiatives draw support from customers who indicate that they would choose products made with alternate energy over the competition. All this appears to be  good news for sustainability-driven businesses and the future of renewable energy.

Dig deeper, and the issue is less clear-cut. Labeling and certification in the sustainability field has been an area fraught with difficulties. Early adopters of energy declarations have dropped out citing inability to document return on investment, particularly in difficult economic times. Businesses that would like to publicize their green programs must bear in mind that labels can act as a double-edged sword. Companies, large and small, have been accused of ‘green washing’, using irrelevant and unverified logos (See my earlier post on the seven sins of green washing). Before rushing into to join the ‘Made with renewable energy’ movement, it is worthwhile for companies to consider some unique (and not so unique) challenges.

1. Limited recognition: Broader research on customer awareness of different logos and their meaning is limited. A study by BBMG in 2009 indicates that the Green-e logo is fifth most recognized label, after the recyclable arrows, ENERGY STAR®, USDA Organic and Smart Choice. However, in real numbers, that translates to only 21% of the study participants identifying the Green-e logo accurately. It is important to remember that this is a nascent field and the recognition rates can only go up in the future.

2. Danger of inaccurate perceptions: In a 2010 Federal Trade Commission research study on consumer perception of energy labeling, customers frequently misintrepreted the message to mean something else entirely. Respondents indicated, for example, that a “made with renewable energy” claim suggested that the product was made with renewable materials (28%) or recycled materials (21%). As with “Made in USA” claims, an unqualified claim of “Made with Renewable Energy” can only be made when “all or virtually all” of the product is manufactured with alternative energy. Any less, and the company can risk scrutiny by the FTC for ‘green washing’.

3. Relevance to customers: Unlike organic food or BPA-free containers, energy used at the manufacturing stage of a product is not immediately linked to the customer’s health and well being. For the average buyer with limited time and interest in green issues, renewable energy may not be a priority. Companies have to then consider if such marketing will effect their revenue. Most of the business that use renewable energy have indicated that they do so for reasons other than market pull, such as, long-term cost planning or adherence to internal ideologies.

4. Competition for product ‘real estate’: Renewable energy usage can be communicated across product, website, ads and other marketing collateral. If a company chooses to place a logo on their product, it needs to consider the limited space available on most packaging. A “Made with Renewable Energy” logo will compete with a multitude of images and text, and in some cases, it will have to displace a message that may be relevant to the target market. Also, given the tiny window of time in which consumers make purchasing decisions, a lesser-known logo may not push consumers to choose a certain product.

5. Costs of certification and return on investment: Most marketing strategies suffer from difficulties in linking communication efforts to actual sales. This is particularly true with the ‘Made with Renewable Energy’ promotion. As seen earlier, customer recognition, perception and market relevance may limit the advantage of using a energy choice logo, making it difficult to justify the costs of certification, modifications to packaging and advertising.
Despite the early-stage challenges, third-party verified labeling is a laudable effort to mainstream renewable energy. In an ideal future, such logos would become redundant if all products are made with clean energy. Initiatives such as Green-e and WindMade™ are a significant step towards realizing that future.