Tuesday, May 24, 2011

Accessories in greenwash?

I've argued previously about the increasing importance of transparency in marketing. So what if a whole industry is being less than transparent? The electricity industry is awash with green claims – and the big companies are establishing and reinforcing their links with a range of green brands. Does it matter if there's a gap between claims and reality?

The UK government sets legal targets for renewable energy supply (called ROCs). The required % increases each year. Companies that fail it pay a financial penalty, which is redistributed in proportion to the total renewable energy produced. Poor performance is penalised, and good performance is rewarded, but – crucially – there’s a simple “cost” of missing the targets. Of the big 6, only Scottish&Southern met the ROC target for 2009/10 (which was 9.7%). The others paid penalties. ScottishPower (8.4%) were closest. EDF (7.0%), Centrica (6.8%) and Npower (6.0%) were all substantially below target, with E.on (1.4%) trailing in last (all figures from electricityinfo.org).

As a commercial decision that’s fair enough – E.on simply pays the financial penalty for their fuel mix. But despite having the lowest proportion of renewable in its fuel mix, E.on still manages to offer a “GoGreen” product, promising that: “by signing up to E.ON GoGreen, you can rest assured that the energy you’re taking from us is really making a difference to the environment. We will offset 1.8 tonnes of carbon dioxide emissions from your electricity usage". One wonders what GoGreen customers would make of E.on’s actual performance? E.on seems to be relying on the fact that they won’t find out – the company’s website has a nice description of how the ROCs system works, including the target %, but conveniently omits any reference to its own actual performance.

Npower is a bit more gutsy. Its “Juice” tariff promises: "electricity that is 100% matched with renewable sources at no additional cost to you". It also has a product branded “National Trust Green Energy”, making the same claim. Presumably it can make this claim if no more than 6.0% of its total supply is sold via these tariffs. But it doesn’t mean the “green” energy is any greener than the other products. Or that it is a “green” supplier.

EDF (better than average – but still more than a quarter below the ROC target), has run TV ads promoting its association with the Olympics and claiming: "we produce around half of Britain’s low carbon electricity". One imagines the claim is based on EDF’s market share and its significant move from gas-sourced to nuclear-sourced power. EDF also runs “Team Green Britain” activity in conjunction with the Eden Project. As a consequence, its website quotes Eden Project CEO Tim Smit:
The Eden Project shares EDF Energy’s vision... Tackling climate change is about more than individual action; it’s about people working together ... The Eden Project is proud to be a founder member of Team Green Britain and is looking forward to working with EDF Energy...
Similarly, the National Trust Green Energy website claims:
National Trust Green Energy is electricity that is matched from 100% renewable sources and as it costs the same as our standard electricity, there’s no extra cost to you! Join the thousands of National Trust Green Energy customers already choosing to make a difference.
A lot of green talk from companies that miss their legal obligations. And this entails significant risk. These companies’ reputations could unravel very rapidly if the mood changed – which in a socially networked world it can do very fast. Of course the electricity suppliers could withstand some reputation damage – they dominate the market, and we all need electricity. Maybe they figure they have nothing to lose?

The same is clearly not true for their “partners”. The National Trust, the Eden Project and LOCOG have presumably evaluated their reputation risk, and weighed it up against the shorter term financial incentives. But have they got their sums right? They risk being unmasked as the smily green faces fronting some very dirty business.