Episode Transcript
Music. So I am super ignorant about this, but I keep reading articles about green washing. What the heck is that? Well, green washing is the act of companies that make environmental claims that aren't supported in a bid to convince consumers to buy their products. That's a very simple way of doing it. Is it? Because there's no legal ramifications to lying about it? Basically, yeah. I mean, it's a real test to the regulator. It could be fraud, though. Could be fraud. I'm just saying what happens in marketing is a thing called puffery. Yes, and puffery is fascinating because in the US, the FTC came out with new green marketing guidelines about ten years ago. So, for example, if you put a green leaf on the side of a package well, actually, I'll start again. You can't put those kinds of imagery on a package because it gives the normal consumer, the regular consumer, the impression that that product is beneficial for the planet. Now, that was the rule. It's not being enforced if you go down the aisles. It's fascinating. And one of the great examples is a brand called 7th Generation. Their logo is a green leaf. Well, in the case of that company, they make diapers. And what they do is, even though they're plastic, they dye them brown back in the day. Now, if you're buying a brown diaper, you're giving the impression to consumers that it must be natural or not plastic. But it's recycled plastic. Yeah, exactly. That was about ten years ago. So the consumer has no chance in the face of green washing. So in our category, Major, the biggest brand, they spent $8 billion a year on marketing, just in the diaper category loan. And the consumer has no chance. Like you are just it's awash with messages saying we're better for the planet. And it was just a small thing, but now it's gone industrial scale and some of it investments in companies that were going through their screen and saying they're better for the planet. And they absolutely weren't. Wow. And so I always think of greenwashing in the consumer facing space, but now you've got this thing in the financial thing, it's like, oh, it's just everywhere. And if we've got time in this episode, I want to segue from greenwashing to sports watching, because it's quite a funny, interesting thing around live golf in this whole business with blah, blah Washington. Is this analogical to what I saw several years ago with organic, right? Everybody suddenly was organic, and then there would be these reports, which is like, okay, we took a look at this farm and it's pretty damn farganic. It's organic with pesticides monsanto. It's monsanto organic. But Tom might correct me. I think even with organic products, you only have to be 90% organic. Like, it's kind of interesting. Over time, there's been changes in the technical regulatory definition of organic, and it's gotten to a level of complexity. If you pull out the regulations around definitions and all that kind of stuff, unless you're getting paid a lot, you're not going to pay attention to that. And I think one of the reasons why it's so pernicious, I think, is it is the ability to hide behind mountains of technical language. So dancing on the head of a pin distinction that most people not only wouldn't know how to evaluate, they actively don't want to evaluate. And I think that's one of the underlying problems with everything being done on the back of the consumer, making a decision, and then if we don't make a decision, clearly demand doesn't justify it. Right. Is in this cognitive research and understanding that even though our brain has a lot of capacity for processing information, we only have so much attention, and our attention is a lot less than we as sentient beings want to admit. Our choices that we make every day, 80% of those choices are not real choices. We're just reacting to systemic behavior patterns that we're part of. We're not actually processing and making cognitive choices. We're just going along with things. And so when we're at the grocery store buying something, our ability to pay attention is largely not there. And so we don't it's so fascinating. I'm looking for my copy around. I'm looking for thinking fast and slow there's this book that I just think it's Daniel Cobb. Yeah, that is such a great example of how that works. But as you're describing this, the thing that I'm reminded of in my work, we're talking to focus group participants and mock jurors and some of the things that we'll hear out of people. Let's just say we're working on a case that involves a regulatory agency like the FDA, and people will learn for the first time that the way the FDA manages things is they don't necessarily independently go look at all of these things. They don't run their own studies. They make the company get a study done through a university and then submit that to the FDA. And when people learn that for the first time, a lot of times they're like, well, what? The FDA doesn't actually do the investigation. They just expect that the companies are going to grade their own papers. And when they learn, okay, Duke doesn't have a motivation if they're going to do it, or Stanford they don't have a motivation to go screw up the study, right, just for the money. But it's tough for people to think, not, these guys are going to get greedy at some point, and these things might not be real, and it makes the scale of their skepticism go up. So what's to be done about that? It didn't always used to be that way. Industry funded research as the dominant source of knowledge in the public debate wasn't the norm. And in fact, in the 70s in the United States, there was a research advisory council that basically advised Congress around basic research and setting priorities about what should be researched and why. And they created not only the ability to have standards around what kind of research was going on, but they created a culture of research that was important and that's been lost in the industry funded research sort of paradigm. I would say that it's something the EU does get some credit for, is they still fund a ton of research at universities, almost to the degree you're like, Are you kidding me? You're funding, right? But at least they're doing it. And it's not all just pushing it on an industry who's self interested. But it's okay if it's biodegradable. is the ability for the regulators to keep up. Now, particularly now, the FTC in the US is very weak. But in the UK, there's been some fascinating news the last couple of weeks. Like, Boohoo is a big fashion brand. They got nailed. I think Zara got nailed, h and M got nailed. These are these fashion brands. So there's activity, which is interesting. But then the really interesting thing is over in the financial world, deutsche bank has a subsidiary, DWS, I think, that does ESG. And so they had been claiming to their investors that they were making
kidding, I'm kidding. Koalas are kind of a big symbolic thing. But it was just funny watching them turn themselves into a pretzel. But what's really interesting that came out of all of that was the indigenous Australians, okay, the Australian indigenous population. They are the longest surviving group of people in the world and they have an entire technology about how to manage forests, which does include burning back, which does include sometimes you just let Depends who you ask. It's biodegradable. Biodegradable where I might tell you nothing degrades in a landfill. Thank you. My Ford Broncos biodegradable after about 30 years. Like, it's the most useless term. I was just in an industry meeting about the Australian Organics Council, and it was hilarious because we had, like, composters. We had composters and landlords, and one of these guys is classic, like, form, like fourth generation commercial composting guy. We've got to ban the word biodegradable. It's bullshit. Sorry. Beat that out, Maria. But it's interesting, the power of language and all of this. So you think about greenwashing as a concept, you think about power of language, and you think about Tom's Point. You walk into a supermarket, you've got Buckley's, as we say in Australia, meaning you've got no chance as a consumer. You've got 30 seconds. It's all automated in the back of your brain, and you just pick up the thing and think you're doing the right thing. But the cognitive dissonance is amazing. You ask a hundred people, will you make the green choice? 95% say yes, but only 5% actually do when they get to the checkout. And that's a huge, huge problem. Yeah, it's massive. So my plastic isn't biodegradable. Come on. Okay, Chris, I'm going to take you out the backstead here in a minute, okay? All right, we're going to have a conversation. So, listeners, I'm clearly just poking the bear. It's obvious, right, that you know that I'm doing that. Okay, but hold on, though. I mean, there's still renewable things, right? Where's the line on this? Because I find it really interesting how, like, I'll give you an example, something that I think is really interesting, fascinating locally is that the nature of people to want to protect forest land is wonderful. But one of the things you see in the Pacific Northwest all the time, hey, you lived here for a while, Tom, you must remember this, is that people will be like, well, don't touch that forest at all. And then the forest will overgrow and get hit by lightning, or somebody will start to throw a cigarette into it and it will completely burn down. And then people will act like it's a real horrible shame. And when somebody says, well, if you really want to prevent that from happening, you're going to have to manage the forest, and people are like, no, no, that wouldn't be right because it's a natural forest and you wouldn't want to manage it. And it's like, oh, my God, I don't know if I can handle this. That is not a logical way of seeing this. But it's a value thing that people have, right. The value is getting in the way. It doesn't feel right to them, even though practically they're not making good choices about this. What do you have to say about that? Well, it's a case of, I think, two problems. One is over time, we normalize. We normalize things to a point in which we no longer remember common sense in some ways. Let's take your example of the forest. For a lot of people in the Pacific Northwest, it's an entitlement for recreation. True. And I don't mean that to demonize people for going out and walking in nature. It's an awesome thing to do. But that desire to have that resource, to go in and not be worried about natural fires, frankly, predators, other things, leads people to basically support doing nothing when that's not actually the thing to do. So I think the way we normalize things is just quite problem. I think the other and this circles back to some of the question around regulation and policy and so on. We have the ability to create, and I'll just use the United States because I know it a little better than Europe and, you know, Chris, better than all of us. People in the United States love to use the legal system to enforce policy rather than, let's say, regulation. If you wrote a set of laws that basically made it effectively fraudulent for any action of green washing with real teeth, you'd see that it would be worth it for people to check the excesses and the abuses of claims that can't be backed up. Right. Similarly, with ESG reporting at the corporate level, if there were real teeth that gave people, like shareholder activists and whatnot gave them real ability to introduce penalties, you would see a real change. And it nurtures a culture that changes over time and becomes sort of self fulfilling, if you will. And it's too bad that we don't have those conversations. We just get outraged and then we move on. Yeah, no, it's interesting backing up to the forest fire thing. So Australia had the biggest historic massive fires last summer because we had always fuel, right? We had fuel in the forest and we had a liberal government. So we had a Republican federal government. And when you mean fuel, you don't mean like barrels of fuel flying around, you mean like lots of underground and so the liberal government's there. Anyway, the country burns to the ground and you had the hold on liberal government, you got to feel sorry for the Americans, the Republican government, and again, the greatest curse we've put on the world and we're really sorry about this, is Rupert Murdoch. So we've got Fox News in Australia, then after the disasters saying really struggling with, you know, we've burnt the country to the ground. And that was terrible forest management by the Murdoch media. Like it got really confusing because the Murdoch folks and the we've got to do a better job of managing forest. I think we lost a million koalas, which is a big problem for us. Koalas are kind of important. I mean, they are good eating, just a little bit of I'm it rip because when you do let something burn, the growth afterwards is accelerated. So it's just really interesting. I felt like there was this sort of white man arrogance around, we know what we're doing, and then you watch the whole country burn in the ground and our indigenous folks are like, you're all idiots, like you have no idea how to manage land in the United States. We learned that lesson in Yellowstone. Oh, really? Did that thing burn to the ground? This is going to be like a dating adventure. You were talking about no huge forest fire in Yellowstone. And it was at that time, in the late 80s, where things like that were starting to play out in real time on television. So everybody was via media in a way that previously maybe they had not. And so we all went through the cycle of why was this fire so bad? And actually there was real dialogue around forest management and the fact that in nature, unfettered forests are going to burn and they knew themselves and all that kind of stuff. And we went through all that. But did we sufficiently change? I remember some of the 90s getting into some conversations about changing policy around resource management, but it largely fizzled out and people haven't paid attention. And we still now we just get outraged. Same thing. It happened again. Can we hang on that for a second, though? Because there was some effect to the Smokey the Bear campaign. I don't know if they're really rocking that anymore. But I remember somebody actually talking about the before and after of that particular campaign. I remember that. The Native American crying with the trash. Beautiful. That sucker worked like the amount of people that stopped littering after they saw the Native American guy crying. But this is something Tom right. This has nothing to do with policy wonk. This has to do with an emotional appeal that pokes its finger at values and makes you say, do you really want to be a part of that or not? I just wonder if we've lost some of those beautiful learnings. Jason, did you ever see the Native American guy crying because they didn't do anything? Chris, that was part of my literature review for my PhD. And I'm now going to blow your mind. I hope there's a back shape behind you because you're going to be like, I'm buckling in right now. The Cape America Beautiful campaign was started by the biggest polluters in America, in the crying Indian thing. Obviously lots of problems there. The Indian was in fact Mexican. And the whole core of that campaign, I'm sorry, but it's true. And this is where we've got intelligent people who are just taking it. And the whole thing was the polluters are literally saying, hey, user who just bought our product, can you clean up our shit? And that's the whole campaign. And what's insidious is you've got the Keep Britain campaign. Keep Britain beautiful campaign. Keep Australia beautiful. Same method. And to Thomas point, this is a fascinating example where big companies in the 50s starting but really peaking in the there was no coincidence, right? 971, a first Earth Day in Santa Barbara, and 972, you could see the big polluters, the big producers are like, oh, shit. And so that campaign was so effective. And on reflection, it's an amazing thing to think that the user, the consumer, is somehow responsible for cleaning up all this crap. And we see it today. Marine plastic waste. Around the world in oceans, there's a two $5 billion fund called the alliance to End Plastic Waste, which is funded by all the polluters coke denon. Everyone and their focus on that funding is we are only investing in things that can recycle our mess. They're not interested in any other solutions. So the campaign worked at convincing people to not throw stuff on the street. But to say that it's bigger than that would be too much. Yes, it's extraordinary. Well, I was just listening to a podcast and another podcast. I'm not cheating on you. What? No, we've got exclusive with you
never let me speak. But it reminded me that the fossil fuel industry created the concept of a carbon footprint. Really interesting. So just Jason's point as an analogy, and, you know, it's one of those things. And it was all over social media today. Maybe not all over. Maybe our outrage is exhausted by it. But the President of the United States, Joe Biden, basically today, he decided to declare covet over. All right. Today. Yeah. Muzzle toff. Okay. All right. Which is. As somebody who is reluctantly forced to travel for work right now. Just doesn't make me feel very good. Because it's basically saying. We actually don't care about the very small percentage of people who are going to have long term health effects because of something we could have prevented and we still could limit if we were willing to do something. But we can't be bothered anymore because we've moved on. Yeah. Well, isn't it more likely that really what he's doing is saying, look, most people are going to accept this message right now, so I'm going to say it. That way I can get on this plane and people six weeks until the election. Yeah, well, can I go back to one thing? It's interesting, the whole role of regulation. That Deutsche Bank green washing scandal was interesting. And then BlackRock, the former head of sustainability for BlackRock, has come out and they're both screaming for more regulation, which is such a weird feeling because I grew up in the studying Economics 101, and it's like small government, no regulation, unfettered markets. The markets have a solution. Market, market, market. And now, in the belly of the beast, they're like, oh, shit, we need guardrails up. And this isn't anticapitalism. I just think it's capitalism in more of its original form. Just remember the Cadbury chocolate factory in the UK. This is an important story. Cadbury started by Quakers. The Cadbury Village was a company, but it was a village, it was schools, it was housing. It was beautiful. I had a cricket green. Chris won the episode. Tom and I got to talk about cricket, and the company activity was that it was community, and now it's just been denoted into this sort of dystopian it's been the episode. Thanks so much. Bye. Connected to capitalism. Henry Ford. Same thing. Yeah, right. And dearborn, he was famous for saying, the role of the corporation isn't to maximize profit. The role of the corporation is to serve social good. You have to make enough money to stay in business, but your job isn't to maximize profit. So we've got more than a century now of people who have largely wandered off from that way of thinking about economics. So, Tom, Utah Business School I'm going to throw this back at you, because this is when we do any sort of work that involves the concept of fiduciary duty. One of the things that you'll hear people struggle with is, does fiduciary duty is a legal concept, mean you've got to do what's best for the company over anything for yourself. Now, is it short term? Is it long term? Because you can talk about a businesses like, I want to help the brand of the company and if I want to help the brand of the company, I actually wouldn't necessarily do things that are short term profit oriented. But I'm saying this right now because Jason, I think the theory behind this is if you're calling for change and regulations, it's because it might be because you're sitting on a board and you're realizing that the way a lot of these debates end is because somebody says, hey guys, the standards fiduciary duty, I don't care what you think about how we're supposed to do this. Plan A brings more bottom line cash to this company. That's what we're doing. And it puts you in this awkward position on the board of being the guy who's like, yeah, okay, fine, but I think our cue score is going to go down, which is right, like our people like this and I think our brand is going to take a hit and brand value long term is way more important. But some people are just going to shake their heads and go, yeah, sure, tell that to the shareholders who want a quarterly dividend. So I don't know, I'm not a lawyer. Right, but still, yeah, I think there's a couple of things. There's the legal parsing of that. But I think also you think about it from a corporate perspective, the institutionalization of the MBA class of decision makers and managers, that by itself isn't a terrible thing. I mean, you could have a debate about that. That by itself is not a terrible thing. But when you combine that with compensation structures that are based almost exclusively on short performance over long term value creation, right. As a board member who's a champion of fiduciary responsibility with a long term lens and a focus on long term value, it's a losing battle. Right. And as a board member, how many board meetings are you going to sit through before you throw up your hands and go, you know what? I can't do this anymore, I'm going to walk away. And then all of a sudden you've got this sort of echo chamber of we've got to maximize everything right now, and so on. There is a movement for people who are interested. You could just type it into your search engine, but there's a movement called long termism that's really seeking to rewire that kind of thinking from the basic education all the way through the legal system to say we need to rewire because otherwise behavior is not going to change. Right. It's a bit like that Simon Senex retake on that 1980s, the infinite game, right? You've got finite games and infinite games. And related to that, the notion that in the finite game the rules are you've got to win and the rules are known. You know exactly what a goal is worth. You know who the players are, it ends and there's a winner and a loser in the Infinite game. The goal of the Infinite game is to keep the game going. So the rules change, but you've got to keep going. You've got to keep going. And it's funny when you think about Chinese and Japanese cultures, these are two countries that have the biggest number of multigenerational businesses. Like chicken and soy sauce is an 800 year old business. It's unreal. I mean, the way they think about legacy and the passing on, and the guy that runs kick on and that was tied to the original family.
It's fascinating. Some of the structures, the B Corporation is a structure where people can get certified as a B corporation. You change your articles of incorporation so that you're acting in the best interest of all stakeholders, not just shareholders. Interesting. But then you just see the other week, Nespresso becomes a B Corp. So Nespresso Thomas heard about what's wrong with that? Why can't they do that? Because they are standard coffee company. But somehow, sometime in the 80s, they invented the coffee pod, aluminum pods, and it is terrifying the exponential amount of waste they're creating. And so there's a big outcry that B Corp sold itself down the river. Tom, I'm going to open the floor to you. You've got 3 hours and your time starts now. Go. I think the most telling thing about Nespresso is that I could name, but I won't because I still want my friends to come visit me in Europe once in a while. But I could name dozens of people who would abhor everything that Nespresso does in terms of its impact. But they have an espresso machine on the car. Seriously? Oh man. That's a pretty good coffee. Well, it's so similar. It's just golf. It's convenient. It's convenient. You know, I gotta tell you, Kurig is going to send me a nasty Graham as a result of this. But I tried one of those things and I'm just like, this is gross, man. I think the problem is if you're a coffee nerd, you're not going to do that. You're only going to do that because it's oh, anyway, can I just say what you got? I was just going to say very quickly, I'm hardly a coffee nerd. I like what I like. But the one thing about making coffee is I actually enjoy making the coffee. The coffee, French press, whatever it is, the process is worth it. I don't want to just push a button and then I get something off the bottom. Clearly a lot of people do. Yeah, it's just not in charge of literally anything. Well, except for a bunch of states trying to be environmentally sustainable over the next several years. Have fun with that, Tom. Sounds really, sounds like a really easy job. Especially these days. You wake up, plug into the matrix, make that coffee and just sit for hours. Tom sisyphus ozdba. Exactly. Yeah. Can I ask Tom the question that we should be asking all our guests around. Myths. Young Chris, we got to ask him. It's time. Is that okay? So, Tom, what's one myth about green washing that you can share with our listeners? A myth about green washing. A myth that sounds kind of a green washing sounds like green washing. It's a myth. There you go. Thanks very much. I just answered for Tom. That's not right. Green washing is a myth. No, sadly, I think we don't use it as much anymore, but we still use it recycled content paper. It's largely industrial process stuff. And where paper that we throw out goes now, it's downcycled quite dramatically compared to 30 years ago when paper recycling was actually back into paper. What does it turn into? Well, when you finish this call and you talk to Maria about the editing process, and you walk over to the toilet and you have a seat,
all right, that's not necessarily a bad thing, but people still think that closed loop recycling is a thing, and it's hardly a thing anymore from a consumer side. Okay, well, there's more room for landfill. Everyone likes to talk. Yeah. Well, you know, the fires are creating new space for us, so we just dig a hold hands on that note, thank you. It was really good to hang with you, man. Thank you for doing all the great work you're doing. And I know that you've given some people some inspiration and some food for thought, so thank you so much. Thank you. And I'm looking forward to listening to you guys when you talk to the fun guests. Oh, yeah. Not the depressing despairing guest. Next time, you just got to bring more wine with you, and maybe we can liven it up. Okay? Have a truck. Talk about good officiating of rugby. Jason thank you. I will make sure I miss that one girl. Okay. Bye, guys. See you. Bye. Ready? Thank you for joining us at the recombobulator lab with Chris Dominic and Jason Graham Nye.
