Green consumers - they want to, but...

Interesting study from the marketing agency EcoAlign on consumer perceptions of clean technology (1,000 online survey respondents):

A new report on consumer perceptions of clean technologies in residential areas finds that 54 percent of the respondents surveyed have not adopted some form of cleantech largely because they don't understand it…

…Asked to rate cleantech products, most non-adopters considered the products expensive (53 percent), difficult to understand (72 percent), and difficult to maintain (76 percent). Cleantech adopters surveyed agreed with these assessments, though their negative scores were 10 percentage points lower. 60 percent of adopters also said they found the technology reliable, but only 44 percent considered the products beautiful.

The survey itself (the second one conducted by the company) makes for a good read (a quick sign-up is required to download).

The second EcoPinion Survey provides further evidence of a green gap between willingness to adopt or purchase green products, services and technologies, and consumer value perceptions around those offerings. While concern for the environment is at an all time high, consumers think that many forms of green technology (renewable, energy efficient or recycled materials) are cost prohibitive, difficult to understand and maintain, and aesthetically unappealing…

…This green gap in consumer perceptions offers insight into the dichotomy of customers’ stated intentions, e.g., their desire to be more green or frugal with energy consumption, and their actual behavior….The second EcoPinion survey results point to the clear need for companies to work harder to connect their products and services with the customer’s value chain around convenience, comfort, cost and design.

This has long been a point of concern among the environmental community, and those selling “green” products or services. While polls tend to show consumer interest in environmentally conscious and/or energy saving products is rising, specific action has been muted at best (albeit with some successes also, such as Prius sales topping the Ford Explorer).

Joel Makower has long hammered this point home, with a great post last week:

This just in: pretty much every consumer is concerned about the environment and is thinking conscientiously about what they buy — how it's made, under what conditions, and by whom….sound too good to be true? It is, of course. But you wouldn't know it from the marketing studies I've been seeing — and the breathless headlines that result.

Other great posts from Joel on the same topic are here and here.

As I wrote in a post a couple weeks ago:

Perhaps the single most important aspect of marketing is "authenticity". Be it tweens, 18-34 men, housewives or NASCAR fans - know your audience and be real to them. The same of course applies for companies trying to reach consumers interested in the environmental practices, perhaps some of the toughest critics around.

No post on marketing to green consumers would be complete without the requisite “next steps”. And while that sounds snarky, I think EcoAlign does a good job with theirs, offering simple, concrete steps that may be marketing 101, but tend to be forgotten by people who should know better:

1. Invest the necessary money in market research. Market research is the skeleton of any successful marketing effort, and creating memorable, measurable campaigns that are grounded in core business, and customer expectations around the company’s brand and the value created.

2. Go deeper and articulate more compellingly the reasons why people should care and act in regard to the green tech offering. Energy tech companies are dominated by an engineering-centric, product-oriented view of the world, yet customers are more attuned to emotional appeals. This approach must be achieved through careful messaging segmentation and utilizing the full range of delivery channels, including new media.

3. Align design with functionality. While customers are satisfied that most green technologies are “reliable,” meaning that they will work as advertised, more attention needs to be paid to how these technologies look and feel to the customer. Sustainability can be beautiful, and command a premium for that value.

Morning links - wind, PEVs, green business, transportation and smart-grids

Various items I've come across this morning that I thought I'd share.

Size Matters: Good round-up on wind development and investment in the U.S. from the WSJ's free blog "Energy Roundup". Several new developments are noted in this post, including the first-time use of 3MW turbines in the U.S., competitor collaboration among Enel and GE, and increasing industry consolidation.

Race to Make Electric Cars Stalled by Battery Problems: Long front-page story on the challenges plug-in hybrid and electric vehicle makers face in sourcing batteries that are safe and reliable. Very good overview, and adds some necessary context to my post yesterday on PEVs.

Wal-Mart faces hurdles in green electronics: Wal-Mart's sustainability push, and the sizable impact of that decision on manufacturers, other retailers, supply chains, and ultimately consumers, has been reported and debated ad naseum. This article discusses some of the challenges electronics manufacturers (and Wal-Mart) are facing in meeting Wal-Mart's objectives. Depending on the outcome of next year's elections, we may finally see some kind of federal legislation that consolidates the wide-ranging standards for energy efficiency, sustainability and recycling.

27 electric cars companies ready to take over the road (h/t Earth2Tech): An interesting list of electric car manufacturers. There are enough cars here for every taste and desire imaginable.

Moving Billions of People on a Still-Green Planet?: Rather fascinating piece from the NYT's blog on environment, focusing on broad trends and scenarios in transportation. A lot of links and research here to digest.

News Flash: 110% of Consumers Shop Green!: Joel Makower is one of my favorite thought-leaders in this space, and his new post on the environmental consumer and greenwashing has far-reaching implications. I covered a similar topic (sparked by an earlier Makower post) here.

What's so smart about smart metering?: Its a couple weeks old, but an informative interview with the CEO of smart-grid-focused company. I thought it wrapped up a lot of what I've been discussing recently here, here and here.

Other links from today - market transformation, cleantech investing, and global risk

A few other items of note today:

Utilities amp up push to slash energy use: Great article in the Journal today (subs. required) about the California "carrot/stick" approach to incentivize utilities to push energy efficiency, mandating a reduction of equivalent to three power plants...or else:

The state has designated $2 billion in utility customers' payments to be spent over three years on conservation programs. The utilities need to spend that money to find ways to avoid another $2.7 billion in energy costs, by reducing demand enough that they can buy less power or build fewer plants. If they come close enough to the target, regulators award them a cut of the savings; if not, they pay a penalty...

As one would expect, PG&E (California's biggest utility) is emphasizing the easiest and cheapest method to reduce energy consumption: compact fluorescent lightbulbs. So far the utility has spent $116 million on rebates and subsidies, which has helped contribute to CFLs selling for $0.25 to $0.50 (10 to 20 times less than in 1999). All told PG&E subsidized the sale of 7.6 million CFLs last year, and up to 20 million this year.

No doubt the outcome of this experiment in market transformation will be extensively studied. If it proves successful in generating long-term, sustainable energy reductions, while allowing CFLs to finally supplant incandescents, this is a good example for other market-based renewable efforts to follow.

F.T.C. Asks if Carbon-Offset Money Is Well Spent: following up on Monday's post about the FTC hearings on green marketing, the carbon-offset portion received a good deal of press. Some good examples of green business within the article.

Cleantech funding rising, may overvalue sector: I always enjoy the articles that rely exclusively on anecdotal evidence to prove a headline. I definitely believe certain sectors are over-valued, but I'm not ready to call it a "bubble" just yet.

WEF warns 2008 uncertainties may hurt climate fight: I mentioned this here, and its something I'm looking at closely. What happens to the momentum around climate change, renewable energy development, green business, if a particularly nasty recession hits? The report itself has a scary list of risks for 2008 focused on four areas: financial security, food security, supply chains and energy.

News and notes - electric cars, solar, CCS, ethanol, marketing and more

Charged up by electric cars: Tyler Hamilton's interesting new column on electrification of cars covers what large automakers and small entrepreneurs are doing in this space, and also speculates on the accompanying importance of load management software. More here on his blog. (he's a one person media conglomerate)

SunPower’s solar power plant building boom: details on SunPower's multiple new solar installation deals in Europe (especially Spain). Given that Spanish PV sector grew 500% in the last year, perhaps this is not surprising.

Solar-energy sector seems primed to grow. Nothing new, but some good P/E numbers on some very highly valued solar stocks - First Solar is at 130 time earnings, SunPower 60x, while others are lower (e.g. Trina at 18x).

Archer Daniels Midland to Bury Carbon From Ethanol Plant: ADM is working with a number of state and national government agencies to inject 1 million tons of carbon underground. Project is expected to cost $84 million, with almost $67 million coming from the Department of Energy.

Canon Unveils "Generation Green" Brand: at first, I was writing a snarky little post about this, until I remembered that Canon ranked number one on the Climate Counts scorecard, put together by Clean Air. Perhaps it was the company's environmental bona fides, that explained why a rather plain announcement got quite a bit of media attention.

Open Source Free Energy Tech: given my interest in leveraging successes from the Information Age, I thought this a wonderful example of energy technology development using the open-source method.

Deeya Energy Raises $15 Million Series B Financing for Energy Storage: yesterday, I linked to a great interview with two DFJ VC's. Deeya is one of their cleantech investments.

Switchgrass shows promise for ethanol production study: finally, some good news for pro-ethanol folks on the cellulosic ethanol front. Apparently, native North American prairie grass produces 540% more energy than energy consumed, compared to previous estimates 343% net. According to the article, this is due to higher yields from new breeds of switchgrass.

News and notes - Cleantech VC conversation, wind M&A, marketing

Few things I came across this weekend.

Earth2Tech Video: Cleantech Investing With Draper Fisher Jurvetson: Informative and insightful interview with two prominent cleantech VCs. Their thoughts on the cleantech "bubble" (about the 9 minute mark) are especially interesting, and they spend a good deal of time in the latter half of the interview talking about specific companies.

Scottish and Southern Energy to Acquire Airtricity for EUR 1 Billion: a couple weeks ago, I wrote the following in this post:

We should see continued consolidation in the wind power industry over the next few years, and those companies with the capacity to go public or raise private capital will do so soon....Those companies with available capital and market leadership should be best positioned to take advantage of this maturing sector.

I will be keeping track of this deals for future reference, as I expect we'll be seeing many more, especially if several planned wind IPOs come to fruition.

Truth in Advertising: more "something to watch" at this stage, but the FTC's decision to move up the review of its Green Guide (last updated in 1998) doesn't come a moment too soon. Many of the year-end posts that I linked to here focused on the trend of corporate environmental initiatives, and greenwashing. Perhaps the single most important aspect of marketing is "authenticity". Be it tweens, 18-34 men, housewives or NASCAR fans - know your audience and be real to them. The same of course applies for companies trying to reach consumers interested in the environmental practices, perhaps some of the toughest critics around.

Taking the green out of Christmas

The Journal was feeling eco-frisky today. The title says it all: "All I Want for Christmas Is a Compost Bin".

Are soy candles and spinning composters on your holiday list this year? A bevy of so-called green retailers are hoping so. With so much public attention on climate change and sky-high oil prices, these retailers are pitching energy-saving or recycled items that haven't traditionally been on most people's wish lists -- a low-energy desk lamp, for example. And while many retailers have boasted luxury wrapping in past years, companies are this year proffering natural and biodegradable packaging -- or none at all.

Once you get passed the attention-getting (and cringe-inducing) headline and lead, it's actually an insightful article.

There's a disconnect in my mind in using a season of decadence and consumption (which I freely and unabashedly revel in) and the concept of "going green". Austere living and eco-consciousness does seem a bit out of place.

And in one of the ongoing themes I continue to focus on at this blog, there's a great deal of confusion among consumers, which marketers are eagerly capitalizing on:

The word "green" is being used in marketing very broadly -- to define a water filter for example, because it cuts purchases of individual bottles of water. So some consumers may wonder which products make a real difference for the environment. The word "natural" can also fluster consumers. Textiles made from 100% natural cotton often mean that no dyes or chemicals were added to the cotton, but it doesn't guarantee the cotton was grown without the use of pesticides or other chemicals.

"Green still kind of means a bunch of things," says Adrien-Alice Hansel, a literary manager at a theater in Louisville, Ky., who is looking for eco-friendly gifts this year. "It can mean less energy than an alternative, but more energy than something else." Indeed, not buying an item can be the best bet for consuming less energy.

You've come a long way...environment

A new survey of top executives and managers from McKinsey ("Assessing the Impact of Societal Issues") appears to demonstrate that environmental concerns, including climate change, are increasingly important in decision-making.

In the past there’s been a split between C-level executives and “senior managers” (i.e. below C-level) in terms of how seriously each group takes climate change, and their willingness to push corporate action. If I remember correctly (never a guarantee), C-level execs in the past were less inclined to be concerned about global warming, and thus less inclined to lead their companies to change policies. Senior managers were more concerned and interested in pushing change forward. 36% of the McKinsey survey's 2,687 respondents were C-level, which could either represent a good blend of opinions, or mean that the managers and C-level conflict is still hidden.

Among the results:

• 87% of executives say they personally are somewhat or very worried about global warming and climate change. Only 3% do not believe it is happening.

Not sure if this represents personal opinion, which doesn't always follow through into strategy and corporate decision-making.

• 51% of survey respondents pick the environment, including climate change, as being one of three issues that will attract the most public and political attention during the next five years, compared to 31% in 2005.
  

While this is positive trend, I'm disappointed it only cracked half of the executives' top three.

• 48% felt the environment, including cc, was one of the three issues that would have the most impact on shareholder value in the next five years.
  

This is acutally higher than I would've thought, given that most of the significant damage from climate change occurs decades from now. Which again, causes concern, as what happens to this opinion 5 years from now, when shareholder value hasn't materialized?

However, my biggest concern with this survey, which I noticed the last time, is the relative absence of effective and impactful strategy in dealing with these issues.

• In asking what are the top three most effective tactics in managing social and environmental issues, "Media, public relations" is still tied as the most effective tactic (35%), as with actually "developing and implementing policies" designed to address these issues (35%).
  
  
• Similarly "improving compliance with law" (29%) ties with "lobbying regulators, government" (28%) and "changing product lines, processes" (16%) ties with "advertising, marketing" (15%).

To be fair, it's not as though the environmental community or other relevant interest groups have given the corporate community much to work with. While we see a thawing in the relations, for decades, an aggressive relationship of "us" vs. "them" on both sides has limited knowledge transfer, stakeholder engagement efforts, and broad-based coalitions among the various parties. The group I worked with this summer (NRDC) is certainly taking the lead in this effort (e.g. establishing a Center for Market Innovation) and I'm recruiting with a number of consulting groups (Booz, McKinsey, Deloitte, etc) which are now launching various sustainability or climate change focus areas.

Ultimately, the next generation of business leaders are focusing on these efforts far more so than in the past, and being educated (yours truly is quoted) in ways of blending the economic with the social and environmental. So this may not be a quick fix, but there's still some hope for more intelligent and strategic options in the future.