# Green Marketing Explained: Definition, Examples, and Functionality

![Green Marketing](https://www.investopedia.com/thmb/9MIgQs0ddPb9n8PFXgx47S1wrB0=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/green-marketing.asp-FINAL-1-651c8428368c4e839d2af276f35e3314.png)

*— Investopedia / Joules Garcia*

> **Definition**
>
> Green marketing is the promotion of products as environmentally sustainable alternatives to its peers.

## What Is Green Marketing?

Green marketing promotes products for their environmental benefits. whether real or perceived. It has a growing importance in an eco-conscious consumer market. Examples of effective green marketing strategies include energy reduction through the manufacturing process or as a result of packaging changes. Companies can also deploy philanthropic initiatives that position them as environmentally concerned. Criticisms of green marketing include greenwashing, which refers to false claims of enviro-friendly efforts, and the economic burdens associated with the practice.  

### Key Takeaways

*   Green marketing involves promoting products based on their environmental sustainability.
*   The rise in consumer concern for environmental issues has made green marketing crucial for corporate public relations.
*   Greenwashing occurs when companies falsely claim to be environmentally responsible, leading to potential legal and reputational consequences.
*   Some companies, like Starbucks, engage in green marketing by investing in renewable energy and social initiatives.
*   Green marketing can benefit large corporations more, as smaller companies may struggle with associated costs.

## Understanding the Mechanics of Green Marketing

Green marketing is one component of a broader movement toward socially and environmentally conscious business practices. Increasingly, consumers have come to expect companies to demonstrate their commitment to improving their operations alongside various [environmental, social, and governance (ESG)](https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp) criteria. To that end, many companies will distribute [social impact statements](https://www.investopedia.com/terms/s/social-impact-statement.asp) on an ongoing basis, in which they periodically self-report their progress toward these goals.

Typical examples of ESG-related improvements include the reduction of carbon emissions involved in a company’s operations, the maintenance of high labor standards both domestically and throughout international [supply chains](https://www.investopedia.com/terms/s/supplychain.asp), and philanthropic programs designed to support the communities in which the company operates. While green marketing focuses on environmental efforts, it often pairs with social and corporate governance policies.  

When a company’s green marketing activities are not substantiated by significant investments or operational changes, it may be criticized for false or misleading advertising. This practice is also sometimes referred to as [greenwashing](https://www.investopedia.com/terms/g/greenwashing.asp), and the fines and negative press can be tremendous. For example, on April 8, 2022, the Federal Trade Commission (FTC) made a public announcement that it was issuing a $5.5 million penalty via its Penalty Offense Authority to Kohl's Inc. ($2.5 million) and Walmart, Inc. ($3 million) due to their deceptive environmental claims about rayon products. This is the largest civil penalty in FTC history.

> **Important**
>
> Engaging in green marketing offers many incentives for companies. To begin with, a company's perceived commitment to environmental causes is an increasingly important factor influencing many consumers' spending habits.

## Real-World Example: Green Marketing in Action

Starbucks is often cited as a leader in green marketing practices. The company has invested heavily in various social and environmental initiatives in recent years. For example, in a 2018 report, Starbucks reported that it had committed over $140 million to the development of [renewable energy sources](https://www.investopedia.com/terms/r/renewable_resource.asp). The company purchases enough renewable energy to power all of its company-operated stores throughout North America and the United Kingdom.

Similarly, the company has made investments in social impact projects through initiatives such as the Starbucks College Achievement Plan. Through this project, many U.S.-based Starbucks employees who work more than 20 hours a week on average are eligible to receive fully-paid [tuition](https://www.investopedia.com/articles/personal-finance/062515/college-tuition-vs-investing-it-worth-it.asp) to the online undergraduate degree program offered by Arizona State University. This project, as well as similar commitments in areas related to the employment of veterans, have formed an important part of Starbucks’ green marketing initiatives.

For investors, these green marketing initiatives can be crucial for building and maintaining a valuable brand, especially for consumer-focused companies like Starbucks. However, some critics argue that green marketing can exacerbate the existing advantages of larger companies at the expense of their small or mid-sized competitors.

After all, implementing robust social or environmental programs often involves additional [overhead costs](https://www.investopedia.com/ask/answers/101314/what-are-differences-between-operating-expenses-and-overhead-expenses.asp). Large companies can easily cover these costs, possibly incorporating them into their marketing budget. For smaller companies, however, the addition of these costs may significantly impair the profitability or viability of the business.

## What Is Greenwashing?

Greenwashing is when a company makes claims about its positive environmental endeavors but is misleading the public about them, or outright lying. If a company's green marketing activities are found to be false, the company may be hit with heavy penalties and bad press.

## What Are Some Green Companies?

Starbucks, Patagonia, and Burts Bees are all active in green marketing due to the high level of positive ecological and social programs that these companies support.

## What Is an Example of Green Marketing?

Green marketing focuses on myriad environmentally friendly policies and initiatives that illuminate products and services that are more beneficial (or at least less harmful) to the environment than other products.

  

## The Bottom Line

Green marketing is the practice of promoting products based on their environmental sustainability.  
It's becoming increasingly important due to growing consumer interest in the need for environmental and social responsibility. Due to greenwashing by entities trying to capture the benefits of green marketing with false claims, companies need to substantiate their environmental efforts to avoid penalties and negative media attention. Starbucks offers a successful green marketing example with its investments in renewable energy and social initiatives. While green marketing offers potential competitive advantages to businesses that champion it, corporations can more easily absorb its associated costs compared to smaller businesses.

> **Article Sources**
>
> 1.  Federal Trade Commission. "[FTC Uses Penalty Offense Authority to Seek Largest-Ever Civil Penalty for Bogus Bamboo Marketing from Kohl’s and Walmart](https://www.ftc.gov/news-events/news/press-releases/2022/04/ftc-uses-penalty-offense-authority-seek-largest-ever-civil-penalty-bogus-bamboo-marketing-kohls)."
>     
> 2.  Starbucks. "[This Store Is Powered by Sunshine’: Solar and Wind Power Fuel Starbucks Stores](https://stories.starbucks.com/stories/2018/solar-and-wind-power-fuel-starbucks-store/)."
>     
> 3.  Starbucks. "[Starbucks 2019: Global Social Impact Report](https://stories.starbucks.com/uploads/2020/06/2019-Starbucks-Global-Social-Impact-Report.pdf)," Page 7.
>     
> 4.  Starbucks. "[Education: Careers, Future Leaders Start Here](https://www.starbucks.com/careers/working-at-starbucks/education/)."