I was in a second-hand bookstore recently and picked up a book that detailed how companies that manufacture hazard-free products for the European Union often produce toxin-filled versions of the same items for America and developing countries. While I understand the concept of 'greenwashing,' I was floored by the allegations that investigative journalist Mark Schapiro made in Exposed. But, after a little investigation of my own, I discovered that his writing rang true. Unfortunately, it meant I needed to take a second look at some companies in my portfolio that had been 'greenwashing' me.

Greenwashing is a word that was coined by New York environmentalist Jay Westerveld in a 1986 essay regarding the hotel industry's practice of placing green placards in each room that promoted reuse of guest-towels, ostensibly to save the environment. Instead, the hotels avoided recycling and used this green marketing to increase profits. Westerveld called this practice “greenwashing,” a word developed by combining the words, “green” and “whitewash.” This term is used to describe the corporate practice of spinning products, services and policies as environmentally friendly when, in reality, that marketing is a veneer designed to fool the public (and, sometimes, its investors).

For instance, Norway has targeted automakers who claim they make 'green' cars that are environmentally friendly. According to Consumer Ombudsman official Bente Øverli, “Cars cannot do anything good for the environment except less damage than others.” So, in Norway, auto manufacturers risk fines if they fail to drop their green marketing plans – and this mandate occurred in 2007, well before the current U.S. push to green vehicles. If you watch television, you know that each car advertisement you see now knocks over every green card possible to present its vehicle as the most environmentally-friendly car around.

But, international automakers aren't the only manufacturers to take greenwashing marketing to the hilt in the U.S. This is where Schapiro's book came in handy, in my opinion. Schapiro is not a fly-by-night journalist, as – according to this Alternet interview with Schapiro, his work has appeared in Harper's, the Nation, Mother Jones and Atlantic Monthly. He also worked as a correspondent on NOW with Bill Moyers, Frontline/World and Marketplace. In the process, he began to watch the European Union's (EU) environmental policy progress and noticed that a double standard existed for EU and U.S. consumers.

If this logic sounds familiar to you, then you've read Rachel Carson's book, Silent Spring, and you may be familiar with the legislation on toxic chemicals that occurred in the U.S. about twenty-five years ago. In that instance, companies were banned from selling certain pesticides and other chemicals in the U.S., but they could sell them in other countries. Schapiro co-authored a book about that same time entitled, Circle of Poison, which called up the double standard that the U.S. took with other countries. Now, that circle has come...well, full circle. In other words, the U.S. may have become the dumping ground for toxins that cannot be sold in the EU.

I found Schapiro's information alarming for several reasons. First, Schapiro stated companies will not remove certain toxic chemicals sold in products marketed and sold within the U.S. because to admit that these chemicals are toxic would place that company in jeopardy. Secondly, I learned that two standards exist not only in marketing – they also exist in attitude toward safety and the environment between the U.S. and the EU. Schapiro wrote (pages 11-12):

“When it comes to chemicals, the Europeans and the Americans disagree fundamentally on what constitutes a risk. The Europeans assess the inherent toxicity of a substance and, based on an accumulation of evidence, determine that its potential to cause harm is enough to remove it from circulation; the Americans have a far higher standard for action, awaiting conclusive scientific evidence of toxic exposure before acting. The frequent result is that the European Union and the United States review the same scientific studies, have access to the same toxicity data, and come to entirely different conclusions. The European approach is called the precautionary principle, and the result is that many substances now banned in Europe are in wide use in the United States.”

While lobbying is illegal in many cases and not warmly received in the EU, that did not stop lobbyists from traveling to Brussels to try to slow down or block the EU's environmental initiatives. According to Schapiro, “...the number of lobbyists since 2001 has tripled, the largest contingent of non-European lobbyists in Brussels are Americans...” (page 13). Instead of fighting the EU over their increasingly green policies, other countries are following in Brussel's footsteps, including China. This means that the U.S. is falling behind on several fronts, all because of current attitudes about toxic environments.

I believe that this information is important to any investor. What the investor does with this information is, accordingly, up to the investor. Although Exposed was published in 2007, and some U.S. environmental policies have changed since then, the changes really have not been substantial. Therefore, as an ethical investor, I need to take a proactive approach to my research for my portfolio.

On the other hand, other investors may deem this information valuable on another front by seeking or avoiding investments that may be operating under double standards.

No matter what you do with your investments, this book might enlighten you on how corporate behavior and politics are bound together, and how that relationship affects environmental policy. I knew this possibility might be true – at least on a subconscious level. Exposed allowed me to validate and define that relationship with words that previously escaped me.

Although initially naïve about foreign and national environmental policies, I no longer feel greenwashed.

Until Later,