10 things 'green' companies won't tell you

By SmartMoney

1. 'Sure, we'll go green -- as long as we make money at it'

Al Gore's "An Inconvenient Truth" brought environmental concerns to the masses in 2006. But many companies were already "going green," working to create eco-friendly systems and products. The motivator? The market, says Steve Schueth, the president of First Affirmative Financial Network, a Colorado network of advisers.

The fact is, green initiatives such as energy efficiency can save companies a lot of money, Schueth says, and the good PR doesn't hurt business either. What makes a company green, according to Jack Robinson, the manager of the $186 million Winslow Green Growth fund and a pioneer in environmental investing, is being involved in bona fide solutions to global warming or other environmental ills.

However you define it, green business is growing: Five years ago, 200 publicly traded companies worldwide met Robinson's definition; today more than 1,000 do. But it's not simply corporate altruism.

"At the end of the day, (companies) make a business decision that benefits their bottom line," says Andrew Brengle, a senior research analyst for KLD Research & Analytics, an investment research firm.

2. 'There's lax enforcement of our claims'

The Federal Trade Commission puts out guides to help marketers avoid deceptive eco-friendly claims. Most important, "claims must be specific to the product and shouldn't overstate environmental benefits," says Laura DeMartino, the assistant director of the FTC's enforcement division.

Yet enforcement has been "meek and passive," says Mindy Lubber, the president of Ceres, a Boston environmental coalition. In the past 15 years, the FTC has brought roughly a dozen actions against companies, one of which yielded a $4.2 million settlement in 2006 with a Nevada company claiming its device would increase cars' gas mileage by 27%. (Environmental claims are "an area the commission has focused on and will continue to focus on," DeMartino says.)

To be fair, the FTC has a broad mandate and must allocate resources to cases that have inflicted the most harm. "I don't think enforcement is the main issue," says Joel Makower, the executive editor of GreenBiz.com, an environmental-resources site. Most of the blame for this falls on consumers, he says. Many want to shop green, but few are willing to pay more or otherwise go out of their way to do so.

3. 'Looks can be deceiving'

When you think green business, you probably think of niche companies such as Seventh Generation, with its line of eco-friendly cleaning products that are marketed to conscientious consumers. Though small companies certainly contribute to the greater good with their green products and practices, their biggest impact often lies in their ability to force the big guns to "green up" their acts by eating into market share, says Bob Lilienfeld, the editor of The ULS Report, a green-living newsletter.

If you really want to see green businesses making an impact, be prepared to adjust your expectations. Take Wal-Mart Stores. The world's largest retailer has been making serious efforts to improve its environmental record. "It's the elimination of waste that's driving it," says former Wal-Mart CEO H. Lee Scott Jr. For example, the company is working with its more than 61,000 suppliers to reduce energy costs and waste, and it has even taken its efforts overseas, in 2008 outlining new environmental goals for its suppliers in China.

"The world has changed dramatically in the last few years because of Wal-Mart," says Nancy Hirshberg, the vice president of natural resources at Stonyfield Farm, an organic-yogurt company.

4. 'If we're not seeing the big picture, we're not so green'

Sure, laundry detergent made from essential geranium oils sounds lovely, but what you might not know is that the real eco-benefits in household cleaning products come from concentrating ingredients. Natural ingredients or not, smaller packaging reduces plastic and other materials and allows more goods to be shipped at once, saving fuel. Wal-Mart sells only concentrated liquid laundry detergent, for example, an effort the megaretailer says will save more than 400 million gallons of water, 95 million pounds of plastic resin and 125 million pounds of cardboard over three years. Naturally, this also benefits retailers, because they can fit more units of a concentrated product on shelves.

But consumers need to be better educated to do their part. For example, while locally grown food has gained traction in recent years among environmentally conscious shoppers, all things considered, it's not always the greenest way to go. Fact is, 18-wheelers can move far more produce in one trip than a local farmer. And that's only part of the pollution equation: "It's the 10,000 cars bringing one (head of lettuce) home that's the problem," The ULS Report's Lilienfeld says.

Continued: Companies are listening to customers, investors

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