Marketing manoeuvre or conscious company?
Is it right to use green movement as a marketing tool?
Recent research from see Potential (social, environmental and ethical transparency) in the UK, confirmed four out of five people think companies pretend to care about the environment to gain more business.
It also confirmed that almost 80% of customers want proof of the company's claims. Here in the Middle East, industry experts think companies who talk the talk and not walk the walk, will get flushed out.
Dr. Philip Kotler, a marketing professor and key speaker at this year's Leaders in Dubai Business Forum, says there are three types of companies in relation to the green concept: companies that are committed to being green, companies that are green in selected areas and companies that don't practice what they preach.
"The last group is exploiting the green movement. The fact is, they will probably be found out. It just takes some bloggers to expose the company and it will be in more trouble than it would have been if it never made a point about being green," he explains.
Mario Seneviratne, director, Green Technologies, agrees with Kotler. "They (the companies) will be flushed out. In the industry, we call them, ÃƒÂ¢Ã¢â€šÂ¬Ã‹Å“green wash'."
With the number of companies in the Middle East expressing an interest in being green expanding, it is vital that people are made aware of these bogus carers.
However, there are many companies that are genuinely dedicated to the green movement.
With LEED (Leadership in Energy and Environmental Design) Emirates (provisional name) now launched in the UAE, regional buildings meeting the proposed criteria can be officially certified as being green.
Currently, there are three US LEED rated buildings in the Middle East, one of which seems to have used its platinum rating to gain coverage. Is it wrong for LEED certified buildings to do this?
According to Dr Sadek Owainati, owners of LEED buildings should use the green stamp to their advantage.
"It is not wrong for people to use LEED or green as a marketing tool. It is only correct that they advertise the fact they are caring about the environment.
"Our intention is to encourage everyone to do so and if is helps to market their product because they are more environmentally conscious, then why not?"
Pacific Controls is a perfect example of using LEED as a marketing tool. Not only was the company the first to attain the platinum rating, it is ranked as the sixteenth most green building in the world.
The chairman and CEO, Dilip Rahulan, openly admits that the building's LEED status has raised the company's profile.
"Of course being green has raised more awareness of the company. With this iconic building, Dubai will soon be seen on the international map of green buildings. Our goal is to see Pacific Controls' green building replicated around the world and advanced upon," he explains.
However, he clearly states that using the green concept as a marketing tool is risky. "Green and sustainability is not business, neither should it be used as propaganda to achieve goals in politics."
Return on investment
With no Middle East research available on the cost of going green, there still seems to be uncertainty about whether it is a pricey process.
Owainati claims the rumours about companies needing to make more funds available for green building are wrong.
"This is misinformation. To go green, it doesn't mean you have to use high-end technology. And who says that you must use sophisticated photovoltaic panels to create energy?"
But Rahulan offers a different perspective. "Even though the costs are more for a green building, considerable savings can be achieved through reduced operation costs over the lifecycle of the building."
Kotler echoes Rahulan's comment about higher costs, but explains why costs might deter people from purchasing green products.
"Some critics have charged that a person who buys a Prius that promises lower fuel consumption, won't break even for six years because of the premium they are paying for the hybrid automobile. This may not dissuade customers who want to be green regardless, but many other customers might see the premium as being a bit too high.
"Companies that go green must price their offerings a little higher, but not too much higher," he says.
Jeff Willis, associate director, ARUP thinks there is a middle ground. "I think what happens is that there is a cost transfer. The envelope of the building may cost more but you can reduce the cost of the systems inside. I think the right attitude to take is, it doesn't cost more, you just transfer cost from one area to another."
Saving costs over the operational lifecycle of a building is not the only to secure a return on investment from going green.
From a commercial view point, Richard Smith, technical director, Atkins Middle East claims a company can benefit from marketing its green building. "There are lots of studies showing that people who are sustainable in their approach, have a higher stock market value."
This is a statement that Owainati agrees with and says there is definitely a commercial value to using green as a marketing tool. But until developers really start embracing the notion of being green, costs will continue to be high, due to the lack of demand for green products.
For example, Rahulan says the Pacific Controls building cost an additional 35% to achieve its platinum rating. "This is purely because we were the first platinum rated green building. We believe that is there are at least 50 to 100 buildings under construction, that 35 % could come down to 15% and that is the challenge the market faces."