8 Green Marketing and Greenwashing: Understanding Types of Greenwashing

8 Green Marketing and Greenwashing
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Learning Objectives
After reading this chapter, you should be able to:
1. Explain the concept and different types of greenwashing.
2. Discuss how greenwashing creates barriers to CSR and
sustainability.
3. Summarize the ways that companies, industries, and
stakeholders can prevent greenwashing.
© 2016 Bridgepoint Education, Inc. All rights reserved. Not for
resale or redistribution.
Section 8.1Greenwashing: An Overview
Pretest Questions
1. Greenwashing refers to sustainability and CSR efforts in the
household consumer
products category. T/F
2. The Green Guide helps consumers identify the best places to
buy environmentally
friendly products. T/F

3. Eco-labeling is a voluntary environmental performance
certification. T/F
Answers can be found at the end of the chapter.
Introduction
Chapter 7 discussed how governments enact laws to help
eliminate bias and discrimination—
CSR, sustainability, and organizations thrive when employees
can safely exercise their talent
and creativity. One way to improve CSR and sustainability is to
comply with all laws; another
way is to enact policies that go beyond compliance. As more
firms see the value of CSR (espe-
cially beyond mere compliance), and as more stakeholders
reward firms with strong CSR pro-
files, many firm leaders work to get consumers to pay attention
to their organization’s CSR
efforts. Stakeholders typically rely on advertisements and
company claims to decide whether
a firm or product embodies CSR and sustainability principles.
This chapter addresses green-
washing, or cases in which firms overreach, overstate, or even
outright mislead stakeholders
about their sustainability and CSR efforts. Greenwashing
represents a major threat to the suc-
cess of CSR and sustainability, as fraudulent and misleading
CSR claims often receive negative
publicity. Currently, there is no legislation or single
enforcement body to protect stakeholders
from greenwashing; the only protection is awareness and
stakeholder activism. This chapter
introduces multiple types of greenwashing, in part so that future
leaders can identify these
inside and outside of firms. The chapter also discusses how

associations, eco-labeling, and
stakeholder activism help protect everyone from greenwashing’s
negative effects.
8.1 Greenwashing: An Overview
The term greenwashing is a play on whitewashing, which refers
to using bright white paint to
gloss over or cover something up—usually something bad such
as a vice, crime, or scandal.
Whitewashing can also refer to when a person or entity is
exonerated after a superficial inves-
tigation or by using biased data. The relationship between
whitewashing and greenwash-
ing significantly overlaps and is largely a play on words; the
only difference is the fact that
green refers to claims regarding the environment. Thus,
greenwashing refers to covering
up environmentally problematic practices or making
unsubstantiated claims about positive
impacts—or some mixture of the two. Note that the term is also
used when critics feel that a
superficial investigation led to an environmental (or other kind
of ) claim. The Swiffer contro-
versy, discussed in detail below, more closely relates to this
second definition.
Many people are familiar with the household cleaning product
Swiffer, which is manufactured
and sold by P&G. Created as an alternative to the standard mop,
the Swiffer is shaped like a

mop but uses disposable pads that attach to the head of the
device. In 2007 Gianfranco Zaccai,
president and CEO of the design firm that created Swiffer,
wrote a column in BusinessWeek in
which he claimed the device was environmentally friendly
because it could prevent millions
of homes from wasting hot water and dumping detergent down
drains, as they would other-
wise do with a traditional mop (Fehrenbacher, 2007). Almost
immediately after the article
was published, however, there was an intense outcry against
Zaccai’s claims. Opponents said
that the Swiffer was not an example of sustainable design and
that such a claim was based on
faulty information and erroneous thinking.
Those who called greenwashing on Swiffer attacked the
“disposable, plastic-wrapped, chem-
ical-soaked pieces of paper that go straight from your floor to
landfill, where the chemicals
leach into the ground” and argued that “the Swiffer requires
continual purchase of toxic
chemical sheets that wind up in a landfill” (Fehrenbacher, 2007,
para 3). Critics also sug-
gested that not all people heat mop water, and thus the Swiffer
did not necessarily replace
or prevent heated water from being used. Furthermore, critics
claimed that extracting petro-
leum products to create plastic Swiffers, the plastic sprayers
that accompany some models,
and the boxes for the disposable pads has a more negative
impact on the environment than
heating or using water for standard mopping (Van der Meer,
2007).

The ongoing debate about Swiffer illustrates the concept of
greenwashing. The next section
covers green marketing and the main types of greenwashing.
Green Marketing
As discussed, greenwashing refers to false environmental
advertising, and the practice has
garnered significant attention from the media and legal and
regulatory entities. Greenwash-
ing remains difficult and somewhat subjective to prove. In part
this is because it is difficult
to ascertain a company’s motives or pinpoint exactly when a
company changed behaviors;
it is also difficult to evaluate proprietary data. In many cases
time and the consistency with
which the accused firm maintains or increases environmentally
friendly practices can indi-
cate whether a decision or behavior was greenwashing. That
said, leaders and consumers
should avoid greenwashing and would benefit from asking some
basic questions to detect its
presence.
However, greenwashing should not discourage manufacturers
and marketers from pursuing
the commercial opportunities inherent in green marketing.
Green marketing is the act of
describing and publicizing an organization’s environmental and
social activities, efforts, and
results. When green marketing is steeped in truth, it strengthens
the case for CSR and sustain-
ability and can encourage new types of consumers to adopt a
product. Greenwashing should
not discourage accurate green marketing; rather, it should
enable marketers and consumers

to be more discerning and honest about their environmental
activities. In fact, knowing how
the public is primed and ready to protect consumers should
encourage marketers to improve
their claims so that (a) truly greener products succeed, (b)
competitive pressure from ille-
gitimate green claims is diminished, (c) consumers do not
become jaded and cynical about
all claims, and (d) marketers engender an honest and open
dialogue with consumers (Terra-
Choice, 2010). Later in this chapter, we discuss strategies that
companies and industries can
use to pursue green marketing but avoid greenwashing.
Types of Greenwashing
TerraChoice Environmental Marketing Incorporated, now
known as Underwriters Labora-
tories, was the first independent organization to investigate how
green marketing gave rise
to greenwashing. In 2007 TerraChoice surveyed six major
retailers and identified 1,108 con-
sumer products bearing 1,753 environmental claims. The
company found that all but one
retailer made claims that were demonstrably false or risked
misleading audiences. Instead
of simply listing the problems it found, however, the
organization identified patterns in the
marketing claims. TerraChoice called these the Six Sins of
Greenwashing (TerraChoice, 2010).

Since the organization’s first report on the issue, the list has
been republished (in 2010 and
2012) and now includes seven types of greenwashing. Other
researchers have added three
more. All types are described in the following sections.
Hidden Tradeoffs
TerraChoice calls the first type of greenwashing the hidden
tradeoff. This occurs when an
organization uses narrow attributes to suggest a product is green
without considering or
mentioning other environmental concerns related to the
product’s other attributes (Terra-
Choice, 2010). Such claims are not usually false, but they can
make an item seem greener
than a complete analysis would actually support. An example
would be a paper product that
features recycled content, when in reality the recycled material
is present only in small quan-
tities or is advertised without equal attention paid to
manufacturing or harvesting impacts
such as air emissions, water emissions, or transport and global
warming impacts. Another
example of a hidden tradeoff would be office technology such
as a printer. A marketer might
promote a printer’s energy efficiency without considering or
mentioning related hazardous
material content, degradation of indoor air quality, or
compatibility with recycled or reman-
ufactured cartridges. In TerraChoice’s original study, this
hidden tradeoff problem was the
most common sin and was present in 57% of all environmental
claims (TerraChoice, 2010). If
consumers trust the claims of marketers who commit this sin,
they might purchase a product
believing it benefits the environment more than it actually does.

No Proof
Having no proof occurs when an environmental claim is not
supported by available infor-
mation or when it comes from biased sources. Shampoos and
conditioners are examples of
products that often fall victim to this sin. Marketers of these
common personal products may
claim the manufacturer does not participate in animal testing,
but marketers either do not or
cannot provide evidence to support such claims. Additionally,
when this type of greenwashing
occurs, marketers do not provide information about where
interested parties might obtain
such information.
Vagueness
Vagueness occurs when a claim is described so obscurely it
becomes difficult or impossible
for consumers to understand. The original TerraChoice report
found recurring incidences of
products and services that were marketed with vague claims,
such as “chemical free,” “non-
toxic,” “all natural,” “recyclable,” “eco-friendly,” “earth
friendly,” “green,” “low energy,” and
“recycled content.”
The problem with these phrases is that they
are not specific; thus, they can mislead or

inappropriately entice consumers. Consider
that nothing is totally free of chemicals—
even water is a chemical! Moreover, every-
thing is toxic in sufficient doses. In addition,
harmful substances such as arsenic, ura-
nium, mercury, and formaldehyde are all
naturally occurring—these could therefore
be called “natural,” though none would fit
the definition of natural that most consum-
ers expect. Thus, products must clarify their
green claims with detail. For example, con-
sider how the phrase sulfate free is more
detailed and specific than nontoxic. Such
detail allows consumers to make informed
choices and avoid being misled. Consider when a product such
as wax paper for a household
kitchen claims to have “recycled content”—but no quantity of
such content is mentioned.
Consumers should ask: “How much of the content is recycled?”
“Does something as small as
0.1% deserve to count?” “Does such a number justify making
this claim?” Finally, this problem
occurs when companies make claims about being green but
provide no supporting data or act
in ways that contradict each other.
False Labels
False labeling occurs when a claim, communicated through
words or images, gives the
impression that a third party has endorsed or verified the
product, when in actuality no
such endorsement exists. The most common case of this occurs
when marketers put graph-
ics on packaging that look like a special label, endorsement, or
approval but are actually
meaningless. False labels can often be found on shelf-stable

foods and cosmetics; they may
make it appear as though an outside agency has rated the
product as “all natural” or “chemi-
cal free,” but no follow-up information or data on the rating
agency or award is included on
the package.
Irrelevance
Irrelevance occurs when a company makes an environmental
claim that may be truthful but is
not important or relevant to consumers. The claim may be
interesting and compelling, but its
irrelevance can distract consumers from selecting a product that
might be a greener choice.
A common example is found in products such as insecticides,
shaving gels, window cleaners,
and oven cleaners that are labeled as free of CFCs, which
contribute to ozone depletion. This
claim is duplicitous because CFCs have been banned for more
than 35 years, so products are
no longer allowed to be manufactured with this compound.
Thus, when companies tout the
fact that their products are free of CFCs, they are essentially
emphasizing that they are follow-
ing the law; such claims are an attempt by these companies to
make themselves seem virtu-
ous for doing what they are legally required to do. Claims like
these are true but irrelevant and
are designed to impress a relatively uninformed consumer.
Rich Pedroncelli/AP
A vague label that does not provide the amount
of recycled content in the product can confuse
and mislead consumers.

The Lesser of Two Evils
This marketing tactic is when firms make claims that may be
true within the product category,
but such claims distract consumers from the greater
environmental impact of the category as
a whole. Examples of this behavior include touting the virtue of
having an “organic” ciga-
rette, or selling a “green” insecticide or herbicide for purposes
other than growing food. These
products might be “greener” alternatives, but they are still
harmful to humans and animals.
Fibbing
Fibbing or outright lying represents the least prevalent type of
greenwashing. It occurs when
firms make overtly false environmental claims. Most cases of
this behavior relate to misuse
or misrepresentation of certification by an independent
authority, such as when a shampoo
claims to be “certified organic” but researchers can find no
evidence of such certification. This
problem represents a combination of greenwashing types, as it
represents both vagueness
and false labels.
Additional Types of Greenwashing
As a follow-up to the original greenwashing classifications,
author Ed Gillespie identified 10
signs of greenwashing that are similar to the types TerraChoice
identified but include three

additional indicators. These involve marketers using images in a
misleading way (which is
different from using labels in a misleading way); making
outrageous claims (related to the
lesser of two evils problem described earlier); and using jargon
to confuse stakeholders. Gil-
lespie (2008) describes the three additional problems like so:
1. Suggestive pictures: when marketers use images that suggest
a baseless green
impact, such as flowers coming from a car’s exhaust pipe or
flowers coming from the
spray of a toxic household cleaner
2. Low credibility: when marketers make unsupported claims
that dangerous products
such as cigarettes or some cleaning products have green
qualities
3. Gobbledygook: when marketers use words or phrases that are
difficult for people to
understand
Examples of Greenwashing
In an article titled “Little Green Lies—How Companies Erect an
Eco-Facade,” author Eric
Hagerman describes companies that have committed one or
more acts of greenwashing. He
discusses how the cable operator Comcast launched its push for
paperless billing with the
slogan “PaperLESSisMORE.” However, the company failed to
follow its own policy by continu-
ing to send prospective customers paper brochures and fliers—
which undermined its claim
that the company cared about not wasting paper (Hagerman,
2008). This problem relates to

vagueness and offering no proof.
Hagerman (2008) also noted that Poland Spring’s slogan
suggests that drinking bottled water
is natural and beneficial. However, it distracts from the fact that
8 out of 10 empty water
bottles end up in landfill, and producing and shipping the 32
billion liters of water sold every
year in the United States requires 17 million barrels of oil. The
Poland Spring case is an exam-
ple of failing to emphasize the hidden tradeoff and the lesser of
two (or more) evils.
Another group frequently accused of green-
washing is diaper manufacturers. For exam-
ple, Kimberly–Clark sells what it claims are
“pure and natural” diapers in green packag-
ing. The product uses organic cotton on the
outside but retains the same petrochemical
gel on the inside as regular diapers (Hager-
man, 2008). The most environmentally
problematic part of any diaper comes from
that gel, as it is a petroleum product that
does not biodegrade (or naturally break
down) in landfills.
Similarly, Pampers, owned by P&G, claimed
that its Dry Max diapers reduce landfill

waste because of the reduced amount of
paper fluff in the diaper. However, the dia-
per still used a plastic shell, which does not biodegrade.
Furthermore, the company tried to
market the diaper as beneficial to consumers because it reduces
landfill space, but in reality
the product benefited the company, which saved money on
materials, shipping, and manufac-
turing the revamped diaper (Hagerman, 2008). Here the
greenwashing technique the com-
pany employed relates to fibbing and irrelevance.
Food products also tend to feature greenwashing. Many food
companies market their prod-
ucts as “natural,” “wholesome,” or “all natural.” Tyson Foods
was accused of greenwashing
when it labeled its chicken “all natural” and “raised without
antibiotics,” despite the fact that
its chickens were treated with antibiotics and fed genetically
modified corn. Reports indicate
that Tyson injected the chickens with antibiotics before they
hatched, in order to claim that
they were “raised without antibiotics” (Gutierrez, 2008). This
example reflects fibbing, irrel-
evance, hidden tradeoffs, and vagueness.
CSR and sustainability advocates often discuss various issues
related to food manufactur-
ers, in that food security, food availability, and nutrition relate
to resource use (water, seeds,
clear-cutting forests for farms and cattle, and so on).
Furthermore, some people feel that food
corporations that use fillers, artificial sweeteners, and other
controversial ingredients have
the opportunity to improve CSR by increasing or decreasing the
health of their products.

Relatedly, the soft drink industry has a long history of clashing
with environmental activists.
In 2014 PepsiCo introduced a new mid-calorie soda called Pepsi
True. Coca-Cola launched a
similar product called Coca-Cola Life. Both products come in a
green can to help promote the
image that the product is a healthy alternative to full-calorie
sodas. Both have about 60 calo-
ries and are sweetened with a mixture of sugar and stevia.
Critics suggest that reducing to 10
teaspoons of sugar in a 600-milliliter bottle makes little
difference in terms of health impacts
(Han, 2015). Furthermore, the main environmental issue with
producing soda drinks is the
amount of water used in the manufacturing process, as the water
used along with flavoring
is not the only water involved in the process. Factory floors are
washed down, all products
AP Photo/David Goldman
The claim that certain diapers are “pure and
natural” can be deceiving if they use a manu-
factured petrochemical gel.
Section 8.2Remedies to Greenwashing
are washed and rinsed, and water is used to cool factory
machines and grow ingredients such
as sugar and corn (for syrup). As much as 132 gallons of water
can go into making a 2-liter

bottle of soda (Alter, 2009). Thus, the related greenwashing
concerns include irrelevance,
false claims, and hidden tradeoffs.
In sum, the fact that beverage companies attempt to market soda
drinks and other beverages
as good for health or the environment has caused a large number
of organizations to call out
these firms for greenwashing.
8.2 Remedies to Greenwashing
The argument against greenwashing suggests it is bad for the
environment because false and
unsubstantiated claims (when acted upon) can encourage
consumers to do the opposite of
what is good for the environment. When people purchase a
product or develop a habit based
on unsupported or false claims, they could end up hurting the
environment. At the very least,
this practice leads to corporate sales that stem from duping and
fooling consumers. At its
worst, it degrades the planet, as harmful products disguised as
“good” get used and discarded.
According to a report published by TerraChoice (2010), there
are at least three problems with
greenwashing. First, well-intentioned consumers, misled into
making purchases that do not
deliver on claims, squander the potential to protect or benefit
the environment. Second, com-
petition from loud, convincing, but illegitimate environmental
claims steal market share from
legitimate products that offer viable benefits, thus slowing the
growth of real environmental
innovation in the marketplace. Third, greenwashing may create
confusion and cynicism about

claims from all vendors (even ones not engaged in
greenwashing). This can lower consumer-
driven progress to improve the environment and rob vendors of
the financial incentive to
create truly green products. According to TerraChoice, such an
outcome causes committed
environmental advocates to think that government regulation is
the most likely way to create
change (TerraChoice, 2010). The next sections expand on this
and other remedies to green-
washing, including how consumers can avoid products that have
been greenwashed.
Consumer Activism
Consumers ultimately drive the behavior of firms and
marketers, because firms react to how
consumers spend money. Consumer choice—demonstrated
through spending—essentially
rewards certain companies while denying competitors the
profits from a purchase. Consumer
purchasing behavior sends a strong message; when consumers
show an interest in increased
health, safety, and community engagement from the companies
and brands they patronize,
sustainability goals become corporate goals. Through their
purchases (or lack thereof ), con-
sumers can incentivize businesses to stop greenwashing. When
consumers punish offenders
by choosing a different product and leaving the offending one
on the shelf, manufacturers
may improve their products or change untrustworthy behaviors.
Until companies automatically and consistently make
sustainable and socially responsible
choices, consumers have a responsibility to protect themselves;
they also have an oppor-

tunity to impact corporate behavior. To proactively protect
themselves from greenwashed
claims, consumers can become aware of the most frequently
used greenwashing tactics and
ask certain questions about the products and claims that
surround them. These include:
• Is the green claim focused on one or a small set of
environmental concerns?
• Does the claim help consumers find more information or
evidence?
• Is the environmental and scientific meaning of the claim
specific and self-evident?
• Could the same claim be made by all of the other products in
this category?
• Is the claim or outside support or award verifiable, or is it
implied in the imagery?
• Does the product category have questionable environmental
benefits? (Bloch, 2012).
Not all consumers will take the time to ask each of these
questions about every purchase, but
consumers who make themselves aware of the issues and protect
their interests will be in
a position of greater power. Informed consumers are less likely
to be duped by attempts to
greenwash products and services.

Underwriters Laboratories continues to investigate the state of
greenwashing. Its most recent
report suggests that consumers are helping improve the green
product industry. There is an
increase in the number of green products, less greenwashing
than in the past, and evidence
that companies and retailers are changing (TerraChoice, 2010).
These findings suggest that
consumer-driven efforts and demands are beginning to make a
difference in corporations’
environmental sustainability and responsibility practices. But
aside from the powerful force
of market behaviors—such as buying or not buying products—
what other options do con-
sumers and corporate activists have?
Antigreenwashing Activism
One way stakeholders can stimulate corporations to change their
behavior is to collaborate
with other stakeholders. Some watchdog groups and activists
want to see legal action taken
against companies that engage in misleading advertising.
Indeed, the Federal Trade Commis-
sion (FTC) has the ability to prosecute false and misleading
advertising claims, and with this
in mind it created the Green Guide.
Green Guide
In 1992 the FTC issued its first Green Guide aimed at fighting
greenwashing in public adver-
tising and other areas (O’Connor, 2014). This guide was
overhauled and relaunched in 2012
(Neff, 2012) and continues to serve as a viable tool for
marketers, activists, and consumers.
The updated guide regards use of the words green and eco-
friendly in advertising as overly

broad and general unless they are qualified with specific and
verifiable claims. Thus, advertis-
ers must be aware of the rules and be specific with their
advertising as they seek to comply
with such standards.
The Green Guide also states the following:
1. Marketers must verify claims before claiming an item to be
“recyclable” if recycling
facilities are not available to at least 60% of the U.S.
population.
2. Products should not claim “made with renewable energy”
unless all or the majority
of the manufacturing processes were powered with renewable
energy. The claim can
also be made if the company purchased renewable energy
certificates.
3. Companies should not make environmental claims that do not
make a significant
impact.
4. Substantiated claims (such as “uses less plastic than before”)
should be verified by at
least completing a partial life cycle assessment to prove the
claim (Neff, 2012).

Despite these standards, corporate compliance with FTC
guidelines remains voluntary and
cannot be enforced in courts. However, due to the rise of
Internet communication and consum-
ers’ use of social media, upset stakeholders can call out
advertisers for greenwashing without
taking them to court. One example of how consumer
communities have come together for this
purpose is the creation of the Greenwashing Index.
The Greenwashing Index
The Greenwashing Index is a list compiled by a watchdog group
that works to publicly iden-
tify and encourage organizations to alter misleading claims and
practices. The creators and
managers of the Greenwashing Index belong to the University
of Oregon School of Journal-
ism and Communication and/or work for the EnviroMedia
Social Marketing group. The index
attempts to educate and aggregate readers in rating and
commenting on ads that may mislead
consumers (Greenwashing Index, 2016). It encourages
consumers to investigate and report
ads with misleading words and visuals, claims that are vague or
unprovable, or exaggerations
about the extent of a product or company’s green attribute.
These criteria are based on the
list of greenwashing types discussed earlier; respondents rate
advertisers on whether they
use one or more of the techniques. Users give each
advertisement an overall score and can
add comments. A high score represents a very misleading
company and is highly undesirable
from an advertiser’s point of view (Greenwashing Index, 2016).
Tools like the Greenwashing Index have allowed stakeholders to

become increasingly active
and effective. Many attempts to impact advertisers and
corporate leaders are direct and pub-
lic. For example, consumers complain or applaud company
behavior by leaving comments on
company Facebook pages. They also tweet and retweet company
actions. In this way, consum-
ers engage in a direct relationship with companies and others
via their online social network.
The Greenwash Academy Awards and Climate Greenwash
In addition to using social media, consumers also occasionally
employ marketing techniques
to raise awareness of CSR and sustainability. For example, in
2002, during the World Sum-
mit on Sustainable Development in Johannesburg, South Africa,
the Greenwashing Academy
hosted the tongue-in-cheek Greenwash Academy Awards. The
ceremony awarded extractive
companies such as BP and ExxonMobil, as well as the U.S.
government, for elaborate green-
washed advertisements. Also in 2009, prior to the World
Business Summit on Climate Change,
the organization known as Climate Greenwash attempted to
have consumers rate which com-
pany in the extractive (oil and gas) industry made the most
inaccurate green claim. (Climate
Greenwash Awards 2009, n.d.). These events are examples of
stakeholders collaborating and
using marketing tactics to pressure firms to change their
behavior. As social media continues
to evolve, companies may find additional ways to greenwash
their products and messaging,

Section 8.3Company and Industry Responses to Greenwashed
Claims
but stakeholders will also find new ways to use media and
activism to challenge firms that do
so, or encourage and reward those that don’t.
8.3 Company and Industry Responses
to Greenwashed Claims
Greenwashing can be detrimental to firms if and when
consumers learn they have been
duped—the ensuing outrage, loss of trust, and tarnished
reputation can result in bad press,
lowered stock prices, declines in sales, and the lost opportunity
to innovate toward true sus-
tainability. One way firm leaders can respond to consumer
activism (or avoid it in the first
place) is to join industry associations. Self-regulation at the
firm or industry-association level
also has the potential to mitigate greenwashing.
Industry Associations
Industry associations are usually voluntary groupings of
companies that have one or more
products in the same consumer or manufacturing sector.
Association members meet to uphold
standards or advance an agenda for that specific industry. Good
reasons to join industry asso-
ciations include the desire to help shape policy, build awareness
of what consumers and activ-
ists want, efficiently exchange information between
organizations, share expenses and risk

related to innovation, and construct a more unified and
significant force for change. However,
some organizations may join for less noble reasons, such as to
gain competitive information,
create the appearance of caring, or benefit from the work of
others without doing an equal
share of work in return.
When voluntary associations require transparency, financial
dues, and other investments
from constituent firms, they actually build in practices that
prevent greenwashing. In particu-
lar, when industry organizations organize audits and verify
member claims, member organi-
zations gain credibility from belonging to such associations.
Industry associations also promote self-regulation. This occurs
when companies decide to
monitor themselves and engage in corrective actions before
issues become public or stake-
holders make specific demands that they change. In particular,
several industry associations
attempt to improve the image and practices of their member
firms by actively promoting
membership and meaningful change—essentially, the industry
associations try to convince
firms to change before consumers do. The Sustainability
Consortium and the Sustainable
Apparel Coalition (SAC) are examples of industry-wide
voluntary membership organizations
that specifically promote sustainability and CSR.
The Sustainability Consortium
Some voluntary associations focus on topics that affect multiple
industries. For example, the
Sustainability Consortium is a global nonprofit organization

with an ever-changing mem-
bership base. It offers members access to industry-wide contacts
and updates on scientific
and technological advances that are industry relevant
(Sustainability Consortium, 2015). It
Claims
collects and disseminates CSR and sustainability-related
information to a wide range of con-
stituents—its goals relate to sustainability in general rather than
one industry in particular.
Association members and partners include retailers,
manufacturers, suppliers, service pro-
viders, nongovernment organizations, civil society
organizations, governmental agencies,
and academics. When firms band together in an association,
they are often more effective
because their diversity of members can circulate different ideas,
information, and incentives.
In addition, managers from member companies may find it
easier to take advice from asso-
ciation members than from other stakeholders—because
association members are united in
their knowledge of some aspect of the industry. Also, when
associations seem to promote a
CSR and sustainability agenda, outside stakeholders may leave
individual companies alone

and focus instead on the association. For example, people
against the inhumane treatment
of animals and workers in animal processing plants can focus on
changing pork or chicken
industry associations rather than isolating individual firms for
corrective action.
The Sustainable Apparel Coalition
The SAC is another voluntary organization, but it is more
focused on a particular industry
(apparel) than on a cause (general sustainability). Apparel firms
have a long history of prob-
lems related to labor issues, sourcing, and materials. Clothing
manufacturing is typically
outsourced to contract manufacturers in developing countries,
which gives the retailer less
control over the manufacturing process, treatment of employees,
and management of raw
materials and waste. To address these and other issues, the SAC
appeals to apparel, footwear,
and home textile producers.
The story of the SAC’s formation reveals how individuals,
albeit very powerful ones, can move
from suggesting change at a company level to instituting it at an
industry level. The SAC was
founded in 2010 after John Fleming, then chief merchandising
officer at Walmart Corpora-
tion, sent a letter to Yvon Chouinard, the founder of Patagonia.
The letter suggested that they
invite the chief executives of some of the world’s biggest
clothing companies—people who
were typically competitors—to join forces
to create an index to measure products’
environmental impact. Chouinard agreed to

the idea, and the organization was created;
its membership now accounts for more than
one third of the global apparel and footwear
industry (Gunther, n.d.). In addition to Pata-
gonia and Walmart, founding members
include Nike, Target, Gap, H&M, Hanes, Tim-
berland, Marks & Spencer, Levi Strauss,
JCPenney, Esquel, Li & Fung, Otto Group,
Kohl’s, the EPA, the EDF, and the nonprofit
labor-rights group Verité (Gunther, n.d.).
The SAC’s success suggests that when par-
ticipating organizations agree to measure
sustainability performance and widely
Ton Koene/picture-alliance/dpa/AP Images
The Sustainable Apparel Coalition is an orga-
nization that aims to make clothing producers
adopt sustainable practices and improve cor-
porate social responsibility.
Claims
share such data, the entire industry can address inefficiencies,
resolve damaging practices,
and achieve environmental and social transparency. One
specific way the SAC accomplished
these goals was by promoting the Higg Index, which it created
to provide consumers with
comparable, reliable, and detailed data on material usage and

labor practices (Gunther, n.d.).
The Higg Index is still being altered and perfected so that firms
and consumers will find it
useful. Comparable and accurate data on labor practices,
material costs, and environmental
impacts is hard to gather and compare, both across and between
products and companies.
Thus, member firms are using versions of the Higg Index in
private and only sharing the find-
ings within the SAC. Companies use the Higg Index internally
to do self-assessments and to
refine the index before it is unveiled to consumers. The SAC
leadership hopes that working
this way will encourage firms to attempt new behaviors without
waiting for all efforts to be
perfect and to participate without fear that consumers will use
early data to punish them for
mistakes (Gunther, n.d.).
Eco-labeling
Eco-labeling represents another way firm managers can signal
sustainability and CSR efforts
to stakeholders. It also offers a way to respond to claims that
firms are greenwashing. Recall
that one type of greenwashing relates to mislabeling or
misleading claims. Thus, the easiest
response (or defense) is for firms to use certified labels to earn
and keep consumer trust.
According to the Global Ecolabelling Network (Global
Ecolabelling Network, 2016b), an
eco-label is a mark or insignia that identifies a product or
service as having a proven positive
environmental impact.
Eco-labeling relates more closely to a firm’s environmental

performance. It helps consumers
take into account environmental concerns when comparing
products or services. Some labels
quantify pollution or consumption factors, while others convey
compliance with third-party
standards such as ISO 14024.
ISO 14024
Different classes of labels correspond to specific labeling
standards described and endorsed
by the ISO. In contrast to vague green symbols or claim
statements touted by advertisers,
credible labels are based on life cycle considerations. They are
awarded by an impartial
third party and meet transparent environmental leadership
criteria (Global Ecolabelling
Network, 2016a).
In terms of eco-labels, ISO 14024 standards apply worldwide.
They describe three types of
labels (I, II, and III), each of which has increasing levels of
specificity and difficulty to obtain.
The three types differ in strength and authority, yet the ISO
identifies each as sharing a com-
mon goal:
To communicate verifiable and accurate information that is not
misleading
on environmental aspects of products and services, to encourage
the demand
for and supply of those products and services that cause less
stress on the

Claims
environment, thereby stimulating the potential for market-
driven continuous
environmental improvement. (Global Ecolabelling Network,
2016b)
The value of certain labels tends to vary by industry or
stakeholder group. A food manufac-
turer may value one type, whereas a fabric manufacturer may
value another—this is because
one sells a product people ingest, while the other sells a product
people only put against their
skin. Yet another firm may not value any label unless
consumers signal that they want such
certifications. Thus, firm leaders may want to explore the
options, which vary by cost, diffi-
culty, and viability. Labels that exist in addition to the ISO
labels are outlined in the following
sections.
Certified Natural
In the cosmetics and beauty product category, one of the more
common certifications is the
certified natural seal. This label signifies that products use
natural raw materials—which
include plant oils, fats and waxes, herbal extracts, essential oils,
and aromatic materials—
from controlled sources. Appropriately verified by a third party,
such a label assures consum-
ers that they are not ingesting or applying artificial
(nonbiologic) ingredients.

Energy Star
In the U.S. consumer goods and electronics category, the
Energy Star label reflects a
government-backed voluntary program to help individuals
protect the environment by using
energy efficiently. The EPA and the DOE created the label
to indicate whether devices such as computers, kitchen
appliances, buildings, and other products generally use
20% to 30% less energy than legally required by federal
standards. The label indicates that a third party has veri-
fied the item in question (which can range from a single
electronic product to an entire building) actually con-
sumes significantly less electricity than its non–Energy
Star competitors. The label can also indicate whether the
item was designed so its lifetime operating costs will be
lower than its non–Energy Star competitors. The Energy
Star label is the symbol for energy efficiency; it allows
people to easily identify high-quality, energy-efficient
products, homes, and commercial and industrial
buildings.
Fair Trade
For some consumer goods (typically fabrics and handi-
crafts) and some food items (typically chocolate, coffee,
tea, and sugar), stakeholders value a different label. A
fair trade certification signifies that a product is verifi-
ably associated with fair trade practices, which involve
a specific, market-based approach to addressing poverty
Paul Sakuma/AP Images
Energy Star labels can help con-
sumers make informed decisions
when they purchase energy-
efficient products.

Claims
by improving lives and reducing environmental impact. It also
involves paying higher and fair
wages and to utilizing farming and harvesting practices that are
safe for farmers and nurtur-
ing to the environment. The fair trade label lets consumers
know that a product was grown
with the environment, farmers, and workers in mind. Trade
standards and fair trade certifica-
tion insist on safe working conditions, protecting the
environment, and providing opportuni-
ties to empower and improve worker communities.
Consumers often pay a premium for fair trade products, but the
fair trade certification label
lets consumers trust that the extra money they pay benefits
farmer communities directly
through higher and more fair wages. As with the other such
labels, third parties perform
audits and offer consulting services to any organization
interested in obtaining the fair trade
certification.
Chain of Custody Certification
The Forest Stewardship Council (FSC) promotes the sustainable
management of forests in
ways that are environmentally appropriate, benefit society, and
are economically feasible.
Regarding paper products or products with significant paper

material content, the most
applicable label certifies that the FSC verifies that the paper
came from sustainably managed
forests. More specifically, the FSC chain of custody
certification signifies that the wood or
paper used in the product or service has been tracked
throughout its production and distri-
bution process. Tracking verifies that raw materials are either
recycled or come from forests
where trees are actively managed for sustainable outcomes. The
label verifies that the trees
came from sustainably managed forests where companies
monitor resource use, maintain
native species, and avoid clear-cutting and other
environmentally damaging harvesting prac-
tices. Only FSC-certified operations are allowed to label
products with the FSC trademarks
(Ecolabel Index, 2016b).
Verifying Claims
Previous sections explored how labels and certifications are one
way to convey firms’ values
and sustainable behaviors. Such labels vary in terms of related
expense, relative ease of acqui-
sition, and whether they actually apply to a particular product or
service. It is important to
mention that we have described just a few of the many possible
eco-labels that exist to help
firms and consumers signal CSR and sustainability goals.
According to the Ecolabel Index
organization, there are more than 400 eco-labels in more than
100 countries and 25 industry
sectors (Ecolabel Index, 2016a). Interestingly, despite the
variety in the number and type of
label, one feature of eco-labeling unites all of them: the need
for third-party verification.

To thwart or mitigate greenwashing—or accusations of it—
firms can hire third-party organi-
zations to verify claims or validate the use of certifications and
labels that indicate credibility.
Alternately, some labels cannot be earned or utilized without
third-party verification.
A robust and sizable industry exists to perform such validations,
for a fee. For example,
Underwriters Laboratories charges firms to use their particular
methods to validate environ-
mental claims such as “recycled content,” “regional materials,”
“rapidly renewable content,”
“recyclability,” “volatile organic compound content,” and
“energy-efficiency” (Underwriters
Laboratories, 2016). In addition, most of the major consulting
firms, which have historically
Chapter Summary
focused on verifying corporate accounting reports, now offer
third-party verification of envi-
ronmental and sustainability-related reports. Chapter 9 focuses
more specifically on sustain-
ability reporting, what such reports entail, and what they look
like once complete. Chapter 9
also addresses the practice of obtaining third-party verification
in more detail.
Apply Your Knowledge: Analyze a Company’s Green

Marketing Program
Select a company that participates in green marketing. Then
complete the following:
1. Describe any areas in which the company might be vulnerable
to greenwashing
claims based on its current behaviors. Provide suggestions to
address these claims.
2. Discuss any green opportunities the company is currently
missing; describe how
and why the company might engage in more green marketing .
3. Take one or more of your ideas and describe how a watchdog
group might fairly
or unfairly accuse the company of greenwashing if it enacted
your marketing
suggestions. How can the accusations be avoided or defended
against?
4. What are the current and long-term benefits the company
could receive from green
marketing?
Chapter Summary
Proponents of CSR and corporate sustainability are in a position
to advertise positive firm
behaviors or publicly criticize problematic ones. Some
criticisms specifically relate to firms
that make false or misleading claims about environmental
benefits.
This chapter illustrated the concept of greenwashing and
described different types. The
point of discussing greenwashing in such detail is to help firm

leaders realize its dangers and
identify cases of greenwashing so they can guide firms toward
actual sustainable behaviors.
Discussing greenwashing to this extent also helps consumers
guard against being misled.
Finally, the social and political climate created by active
watchdog groups and some govern-
ment agencies incentivizes firm leaders to avoid greenwashing
and take steps toward true
sustainability.
Given how difficult it can be to determine when publicized
efforts are genuine or greenwash-
ing, leaders with honest intentions may be unfairly accused of
greenwashing. This chapter dis-
cussed some ways to protect against such accusations—namely,
to use product-appropriate
labels, obtain third-party verification, and/or work with industry
associations to stay abreast
of issues and options. Such methods also help companies and
consumers take a more proac-
tive and positive approach to monitoring both green marketing
claims and greenwashing.
The positive press generated by viable and legitimate advances
in sustainability may continue
to create an environment in which firms are tempted to join the
playing field. Thus, stakehold-
ers may need to simultaneously scan for greenwashing while
carefully elevating and high-
lighting the positive and credible developments in sustainability
that have been achieved.

Chapter Summary
Posttest
1. The FTC’s Green Guide says marketers can use the term
recyclable about a particular
product only if .
a. it cannot be put in a landfill
b. it is made of certain materials
c. less than a certain amount of energy is required to
manufacture it
d. facilities for recycling it are available to at least 60% of the
population
2. Methods used to falsely claim environmental benefit include
all of the following
EXCEPT .
a. hidden tradeoffs
b. no proof
c. vagueness
d. transparency
3. Suppose a company advertises its new product as “energy
efficient” but hides the fact
that it emits toxic chemicals into the air. What form of
greenwashing is this?
a. vagueness
b. hidden tradeoff
c. false labeling
d. irrelevance
4. According to Underwriters Laboratories, the modest
reduction in greenwashed claims
is a result of .

a. consumers demanding better information
b. government mandates
c. court orders and legal action
d. a more professional group of advertisers
5. Which of the following is a trustworthy certification for
environmental impact with
high standards?
a. the Energy Star label
b. being recommended by Better Homes and Gardens
c. being labeled as a “green product”
d. being described as “organic”
6. Which of the following is the LEAST effective way for
industry associations to prevent
greenwashing by their members?
a. conducting regular audits to verify member companies’
claims
b. promoting self-regulation
c. sharing information and industry updates
d. requiring transparency
Answers: 1(d); 2(d); 3(b); 4(a); 5(a); 6(c)
Chapter Summary
Critical-Thinking Questions
1. Identify a company that is moving toward CSR and
sustainability. How is the company
marketing its efforts? What suggestions would you make to help

the company avoid
being accused of greenwashing?
2. Do you think certain industries are unfairly targeted for
greenwashing? Why or
why not?
3. What are other remedies to greenwashing? How would you
inform others about
green washing and its impact on stakeholders?
4. Investigate what it takes to receive fair trade certification
(http://fairtradeusa.org).
What do you think are some challenges to obtaining such
certification? What chal-
lenges might be faced by, say, a company that seeks
certification for new noncoffee
products?
5. Do you think consumers are ready to support fair trade
products? Why or why not?
6. Fair trade products mostly include coffee, chocolate, sugar,
and some textiles/fabric
goods. Do you think there is something different about these
products that makes fair
trade successful for them? What are some ways other products
could benefit from fair
trade methods?
7. Do you consider one greenwashing resource to be more or
less impartial than
another? Do you feel that the topic of greenwashing offers value
to the CSR and sus-
tainability debate? Why or why not?

8. Suppose a friend would like learn how to buy products (such
as shampoo, food, and
appliances) that have a positive impact on the environment.
What suggestions would
you offer to help her make informed decisions as she shops?
Additional Resources
For greenwashing updates, visit:
http://greenwashingindex.com
http://sinsofgreenwashing.com
http://www.stopgreenwash.org
Learn more about companies that support fair trade policies and
use fair trade certifica-
tion here:
http://fairtradeusa.org
Answers and Rejoinders to Chapter Pretest
1. False. Greenwashing refers to efforts (or claims about
efforts) in essentially every
product and service category.
2. False. The Green Guide is not for consumers; it tells
manufacturers what to do (or
not do) to create more environmentally sustainable and
responsible products and
services.
3. True. Labels, when they are endorsements from actual firms
that use public criteria
and are conferred by third parties, can be powerful evidence
that CSR and sustainabil-
ity behaviors are in place for a particular product or service.

Chapter Summary
Rejoinders to Posttest
1. At least 60% of the U.S. population has to have access to the
relevant recycling facility
for a product to be labeled and marketed as “recyclable.”
2. Transparency is not a method of greenwashing; it is a
strategy companies can and
should use to be more open and honest with their consumers.
3. This is an example of a hidden tradeoff, because the company
is advertising its prod-
uct as good for the environment because it uses less energy but
hides the negative
environmental effects of chemicals being released into the air.
4. Consumers are becoming increasingly aware of
environmental issues and scrutinizing
claims of benefit instead of accepting advertising at face value.
5. Energy Star is a program that provides information on the
energy consumption of a
product over its lifetime. An Energy Star label means that the
product uses 20% to
30% less energy than required by federal standards.
6. Although industry association members share information and
industry updates, this
is not a method for preventing greenwashing.

Key Terms
certified natural A label that signifies a
product uses natural raw materials.
eco-label An international certification
identifying products or services as compli-
ant with environmental standards.
Energy Star A standard for energy-efficient
consumer products.
fair trade certification Certification that
verifies a product is manufactured using
transparent processes, fair wages, and envi-
ronmental preservation.
green marketing Publicizing environmen-
tal and social activities, efforts, and results.
greenwashing Deceptive marketing that
presents confusing, misleading, or incorrect
information to present it or its products as
environmentally responsible.
industry associations Organizations that
offer opportunities for companies to join
together to enjoy more influence than any
single company.

5 Environmental and Corporate Challenges
Medioimages/Photodisc/Thinkstock
Learning Objectives
After reading this chapter, you should be able to:
1. Describe global warming, suspected causes of global
warming, and the environmental challenges of air
and water pollution and ozone depletion.
2. Compare and contrast environmental management systems
and the ISO 14001 standards and describe
how both foster organizational efficiency, reduce waste, and
reduce environmental impact.
3. Explain how processes such as cradle-to-cradle design,
biomimicry, and net zero construction provide
tools to innovate, mitigate risk, gain organizational efficiency,
reduce waste, and reduce environmental
impact.
Section 5.1Environmental Issues
Pretest Questions

1. The major energy companies such as ExxonMobil and Shell
claim that global warming is
not a concern. T/F
2. An environmental management system is part of every
company’s strategic plan. T/F
3. Cradle-to-cradle is a process mapping tool that helps identify
waste. T/F
Answers can be found at the end of the chapter.
Introduction
In 2006, environmentalist and author Bill McKibben published a
book titled The End of
Nature, which received significant attention from management
scholars. McKibben does not
argue that the end of nature equals the end of the world; rather,
he argues that the ecosystem
may be experiencing the end of the “self-healing” period.
McKibben argues that as humans
have developed products like the pesticide DDT—which killed
40% of the birds in the United
States—their footprint has been so large and so ominous that
the only way for the natural
world to persist is for humans to manage it. He says people can
no longer wait for nature to
heal itself; nor can we ignore the significant environmental
problems we collectively face.
McKibben’s book was another urgent warning about the impact
humans have on the ecosys-
tem and the precarious future we face if we do not change.
This chapter clarifies that no employee, corporation, citizen, or
government stands outside
of nature, the ecosystem, and the environment. It argues that the

impact of human activity
on water, air, the protective ozone layer, and global warming
are not reversible. It then exam-
ines new conceptualizations that allow corporations to see the
environmental impact of their
operations, and work to mitigate damage. It introduces new
conceptual tools such as environ-
mental management systems (EMSs), ISO 14001, cradle-to-
cradle, and the ideal of net zero
construction as ways corporations can turn the tide of
environmental degradation. Essen-
tially, it discusses the need for humans to manage the earth’s
ecosystems, with the corpora-
tion playing a significant role.
This chapter fits neatly with Chapter 6, which discusses the
emerging efforts of governments
and other advocacy groups to regulate and reduce environmental
impact. In this discussion
we begin to see that government and self-regulation can have a
positive impact on the envi-
ronment—a key goal of social responsibility.
5.1 Environmental Issues
This chapter uses the term environment to refer to the natural
ecosystems that include air,
water, land, and the life forms in, on, around, and dependent on
them. One problem with
environmental issues is that they manifest themselves on
varying scales for different living
organisms. For example, suppose Jim fails to maintain his car’s
engine. It will become less

efficient, use more gas, emit more pollution, and cost more to
run each month. Perhaps the
global impact from Jim’s car is negligible. However, if Jim’s
car is one of 100,000 cars in the
community that have similar problems, then air pollution in his
area might worsen. Over
time, residents’ health might be affected, and there may be
impacts on wildlife, water quality,
and tourism. Less efficient engines mean more fuel will be
consumed, which in turn means
that fewer fossil fuels are available in aggregate. More pollution
impacts the neighborhood’s
plant growth. If these behaviors are practiced by communities
around the world, the ozone
layer will be depleted and there will be an increase in global
temperatures due to the green-
house effect. Thus, one individual’s behavior, negligible on a
personal level, has a potential
cumulative effect when multiplied by the rest of the planet’s
population.
The same issues apply to corporations, which have both the
disadvantage and advantage of
size. The disadvantage relates to how negative corporate actions
are more likely to have a
larger, more measurable, and more significant impact on the
environment. On the other hand,
responsible corporate behavior can also make a significant
difference in the community and
the larger ecosystem. This section covers the primary
environmental issues, which include
global warming, climate change, water pollution, and air

pollution.
Global Warming and Climate Change
One view of environmental health suggests that the world’s
climate is changing, and even
major oil companies agree that carbon dioxide emission is the
primary cause. The Royal Dutch
Shell (2016) website says: “Our lives depend on energy
wherever we live. But in order to pros-
per while tackling climate change, society needs to provide
much more energy for a growing
global population while finding ways to emit much less CO2
[carbon dioxide]” (para. 1).
Carbon dioxide released by burning fossil fuels is one of the
major likely causes of the buildup
of gases that caused the greenhouse effect and led to global
warming. The greenhouse effect
occurs when carbon dioxide and other gases trap the earth’s
heat and keep it from dissipating.
While politicians and others argue about the cause of the
change, there is less debate that
the planet is heating up—a phenomenon known as global
warming. Global warming refers
to the fact that the earth has warmed between 0.6 and 0.9°C
over the last century, or about
1.8°F. The Intergovernmental Panel on Climate Change claims
the increase is most likely due
to human-generated greenhouse gases (Intergovernmental Panel
on Climate Change, 2016).
One of the deadliest types of pollution, and the other major
source of greenhouse gases con-
tributing to global warming, is black carbon. Black carbon is
partially combusted black smoke

created by diesel engine and wildfires, and it is full of
particulate matter (pollution). The
majority of people in developing nations create black carbon
because they, for a variety of
reasons, rely on inefficient fuel sources to heat their living
spaces and cook their food (Dons
et al., 2011). For example, in China the vast majority of low-
income workers use large char-
coal bricks to provide heat and as a cooking source. In much of
India and Africa, people burn
charcoal or use dangerous kerosene stoves. As a result, many of
the cities in these places are
too smoggy to see the sky (in fact, some athletes refused to
participate in the 2008 Beijing
Olympics due to pollution concerns). The smoke, and the effect
of the smoke on health, is
overwhelmingly negative for humans and the planet (Dons et
al., 2011).
Another possible cause of global warming comes from
deforestation. Half of all the original
forests on earth have been cut, burned, and turned into farmland
(Malhi et al., 2008). Burning
forests releases carbon into the atmosphere in the form of
smoke. It also eliminates the forest
as one of the atmosphere’s natural air filters. Deforestation
efforts have multiple short-term
economic benefits that can be difficult for developing nations to
resist. Trees are cut to burn

as fuel (sometimes to make the charcoal that creates black
carbon) or lumber. But instead of
adopting a reforestation program, land is cleared as pasture for
livestock or for plantations
and farms. Cutting trees without growing them back causes
erosion, a loss of biodiversity,
and increased atmospheric carbon dioxide (Angelsen &
Kaimowitz, 1999; Malhi et al., 2008).
Sometimes deforested areas are cleared to raise cattle and
produce beef. This is another prob-
able source of increased atmospheric carbon dioxide and global
warming. Methane, which is
a by-product of digestion from animals such as cows, is a
significant greenhouse gas. The
average cow produces from 100 to 250 pounds (70 to 120 kg) of
methane gas every year.
According to the Food and Agriculture Organization of the
United Nations, methane produced
by cows contributes to almost 18% of all greenhouse gases
(Time for Change, n.d.).
With these and other sources of carbon continuing unchecked in
parts of the world, some
predict the earth will warm by as much as 6.4°C, or 11.5°F, by
the year 2100. The World Bank
(2016) says developing nations will be hardest hit because
populations in those countries
have less resiliency to cope with the multitude of changes that
such an increase will herald.
Some political organizations that oppose environmental
regulations concede that the climate
is changing, but they argue it is not necessarily because of
human activity. Despite this, U.S.
government agencies, governments of many coastal cities, the

United Nations, the World
Bank, and the vast majority of scientists, including those from
energy companies, believe that
the major cause of climate change is human activity. This
relates to CSR because more execu-
tives now consider climate change to be a corporate risk and use
CSR budgets and initiatives
to measure and address climate-related activities. Some climate-
related risks relate to pollu-
tion, waste, and water supplies and use.
Water Pollution and the Scarcity of Clean Water
In the late 1990s, just prior to the terrorist attacks of
September, 11, 2001, the National Secu-
rity Study Group made two dire predictions. The first was that
the United States was vulner-
able to a large-scale terrorist attack. The second prediction,
which went largely unnoticed,
stated that future geopolitical conflicts would not be fought
over land, riches, or oil, but rather
fresh water supplies and rights (U.S. Commission on National
Security, 1999).
While water covers the vast majority of the world, fresh water
that can be used for drinking
and to irrigate crops is becoming increasingly scarce. Only
about 1.5% of the water on earth
is fresh, and much of that is locked in icy glaciers in the North
and South Poles (U.S. Environ-
mental Protection Agency [EPA], 2016d). In other regions of
the world, fresh drinkable (pota-
ble) water is becoming increasingly difficult to find because of
both organic and chemical
pollution. It is estimated that over 500 people die every day in
India from water pollution–
related illnesses (United Nations Children’s Emergency Fund,

2013). China reports that 90%
of the water in its cities is polluted, leaving half a billion
Chinese with no access to safe drink-
ing water (“China Announces,” 2015). However, the problem of
safe drinking water and
polluted water supplies is not limited to just
developing countries. In the United States
about 45% of all streams and lakes are pol-
luted. Consider the 2016 crisis in the city of
Flint, Michigan, where numerous citizens
became sick due to the local municipality’s
failure to ensure safe drinking water sup-
plies for the city (CNN Library, 2016).
The Organisation for Economic Co-operation
and Development (OECD) predicts that by
2030, 780 million people will lack access
to safe drinking water (OECD, 2012). Such
numbers represent almost half of the world’s
population. The same report says that cor-
porations and factories now use three times
more water than they did 50 years ago. Certainly, human and
economic development remain
curtailed when clean water is scarce or unavailable, as mortality
rates, illness, and disease
(as well as malnutrition and death) result. Also, many industrial
processes and agricultural
activities rely on water for viability; less water means less

viable crops and a more fragile
food supply.
Pollution affects more than just municipal and freshwater
sources; oceans are also affected
by pollution. The UN estimates that 87% of all marine fisheries
in the world are overfished.
The Nature Conservancy estimates that at the current rate, 70%
of all coral reefs in the world
will be gone in the next 50 years. The effect of global warming
is also being felt in the delicate
ocean ecosystem. Seawater is absorbing carbon dioxide, which
then becomes acid, and acid-
sensitive species are dying out (Food and Agriculture
Organization, 2012). It is not just the
water’s pollution that causes concern. As polar ice caps melt,
there is an increase in sea levels,
too. Oceans are rising, making life difficult in coastal areas
such as New Orleans and the Neth-
erlands, where people live at or below the current sea level.
Rising oceans also threaten entire
countries, such as the island nation of Kiribati (McGrath, 2015).
Water pollution poses threats to individual countries and
communities, but it also threatens
global safety, health, and business (some businesses use water
as an input, such as beverage
industries, while others use water to clean facilities or cool
equipment, such as electronic
component manufacturers). Thus, water pollution and continued
access to clean water and
sanitation are CSR issues that overlap with strategy and public
health. Whether firms are
motivated to focus on water use and pollution out of concerns
for safety, CSR, community
engagement, or sustainability (or another reason), the topic

overlaps with CSR and sustain-
ability at many levels.
Air Pollution
Like other sources of pollution, air pollution stems from both
natural and human-made
activities. Exposure to polluted air indoors or outdoors can
cause serious health problems.
All populations, but particularly children, pregnant women, and
the elderly, can develop dis-
eases from being exposed to air pollution. Daily and prolonged
exposure to air pollution also
Toa55/iStock/Thinkstock
Pollution is compromising clean water sources
throughout the world.
reduces people’s ability to be active and exercise, and it
increases their susceptibility to infec-
tion (National Institute of Environment Health Sciences, n.d.).
All nations deal with air pollution, though some cities have
geographic features to help—for
example, some nations have mountains that trap bad air, while
others may be on the coast
where prevailing winds push polluted air away. In the United
States, the Centers for Disease
Control and Prevention (CDC) claims that air pollution has
generally been declining since

about 1990. This is largely due to pollution controls on cars and
stricter regulations for fac-
tories. Still, the CDC (2016) cautions that air pollution can
account for increased cancer rates,
birth defects, and even heart disease. This data relates to CSR in
two ways: It reinforces the
value of past CSR efforts (and past legislation regarding factory
emissions) and also suggests
that firm managers need to continue to monitor emissions and
other possible contributions
to pollution.
Ozone Depletion
The ozone is a thin layer of gas that floats in the stratosphere
between 9 and 28 miles above
the planet. Although mildly poisonous to humans, it is critical
to life on earth because it
absorbs ultraviolet light from the sun. Excessive ultraviolet
light causes skin cancer, dam-
ages the eyes, and reduces our ability to resist disease.
Historically, chlorofluorocarbons,
or CFCs, formerly used in refrigerants, solvents, and
propellants, were impacting the upper
atmosphere and depleting the ozone layer over the earth. In
1987 world leaders negotiated
the Montreal Protocol, a multinational treaty that banned CFCs
and other ozone-depleting
chemicals from being manufactured and sold. Countries have
until 2030 to phase out all CFCs.
Still, the existing and prior damage to the ozone remains.
Scientists believe it will take until
the middle of the 22nd century for the ozone layer to completely
recover (United Nations
Environment Programme [UNEP], 2014).
Regarding air pollution, data indicates that worldwide, the

combination of government regu-
lation and corporate care (self-regulation) helps reduce
pollution. For example, in 2014 the
UN under-secretary-general and United Nations Environment
Programme (UNEP) execu-
tive director Achim Steiner announced progress had been made
in terms of the ozone layer’s
recovery. (UNEP, 2014). The Montreal Protocol is the world’s
most successful environmental
treaty. It provided significant protections for the stratospheric
ozone layer that kept unhealthy
levels of ultraviolet radiation from reaching the earth’s surface.
But Steiner also says, “The
challenges we face are still huge. The success of the Montreal
Protocol should encourage fur-
ther action not only on the protection and recovery of the ozone
layer but also on climate” (as
cited in UNEP, 2014, p. 1).
The topics of air pollution, ozone layer damage, and water
pollution (including a discussion
of carbon dioxide and methane) relate to CSR because
businesses and communities rely on
access to water for basic operations. Ensuring the viability of
people and communities, as well
as ensuring continued access to basic services, is thus both a
CSR and a strategic issue.
Section 5.2Finding

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