When Green Efforts by Firms Work – and When They Backfire

WANG, Wenbo | KRISHNA, Aradhna | MCFERRAN, Brent

Firms are under growing expectation by consumers to adopt sustainable practices, but when that expectation is not followed up with action and collides with price issues, it can lower the brand in consumers’ eyes and have knock-on effects on consumers’ own green behaviour.

This was the finding of a study by Wenbo Wang, Aradhna Krishna and Brent McFerran that focused on hotel requests to guests to consider turning off lights, reusing towels and other green efforts, and the response to those requests.

The authors chose to study hotels because green efforts entail a visible cost to both the consumer and the hotel. Moreover, these efforts can also benefit the hotel’s bottom line by lowering electricity and housekeeping costs.

“Knowing firms are highly motivated by the bottom line, some consumers may have an especially keen cynicism towards firms that profess to ‘do good’ or ‘be environmentally friendly’,” they said. “As such, when a firm introduces a new green programme that also saves the firm money, consumers may be sceptical and question the extent to which the programme is truly for the benefit of the environment versus increasing the firm’s profits.”

Two experiments were set up in real hotels to test if and when green efforts were perceived in a negative light by consumers and how to address and mitigate that perception.

The first experiment involved 281 employees of a Chinese e-commerce corporation who were attending a training workshop. They were assigned either to a high-price room (US$125 per night) or a low-price one ($37 per night).

The conditions in the rooms were manipulated so that some included notes in prominent locations suggesting people turn off lights and appliances when they were not in the room and set temperatures above 25 degrees Celsius for cooling and below 20 degrees Celsius for heating. The other rooms had no note. In addition, in order to signal visible effort by the hotels, some rooms were provided with more expensive environmentally-friendly bamboo toothbrushes and others with plastic toothbrushes.

At the end of their stay, participants completed a questionnaire about their views on the hotel. The authors also collected electricity usage in their room before, during and after their stay to see the impact on behaviour. Taken together, the results confirmed the hunch that a backlash could result from green efforts under certain conditions.

First, in terms of perceptions, while the more expensive hotel was generally considered greener than the low-price one – a finding that aligns with the general perception that environmental efforts are costly – this changed when the high-price hotel left a note in the room, especially if this was not accompanied by a visible effort by the hotel (bamboo toothbrush).

“Firms with high- and low-price images are viewed differently when they ask consumers to conserve resources that save the hotel money: high-price firms are seen as less green for doing so whereas there is no significant change in the perception of low-price firms,” they said.

Importantly, this perception was found to affect consumers’ behaviour. In the high-price hotel, when there was a note and a plastic toothbrush, the participants’ electricity consumption actually increased compared to previous and subsequent guests who stayed in the same room.

In contrast, the bamboo toothbrush in both the high- and low-price hotels led to reduced consumption. The economic implications of this translated into a 0.9 per cent increase in profits for high-price hotels that provided bamboo toothbrushes and 0.3 per cent in low-price hotels that did so – significant results in an industry where profit margins are tight.

The second experiment employed similar measures but also included an explicit measure of consumer resistance to persuasion. It found those with a higher level of resistance viewed the high-price hotel more negatively when requests for green behaviour were not backed up by a visible effort on the part of the hotel (in this case, using bamboo toothbrushes as well as china plates and cups rather than disposable ones). The liking of the hotel and willingness to return were also negatively affected.

“This finding further underscores the importance to the firm of managing consumer perceptions, and of how conservation programmes may sabotage consumer green behaviour, hurt a firm’s reputation, and undermine profits. But when these programmes are executed correctly, they can strengthen a firm’s green reputation and effectively encourage consumers to conserve resources,” the authors said.

By spending a little money to signal environmental commitments, firms can save even more money through the knock-on effect on consumers, resulting in wins for the firm, the consumer and the environment, they added.

WANG, Wenbo

Associate Professor