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Abstract
A partire dalla mia esperienza di stage presso Favini Srl, azienda specializzata nella produzione e
nella trasformazione di carta, ho voluto compiere un’analisi di una particolare categoria di prodotti,
chiamati “green products” o, più semplicemente, prodotti ecologici.
Come suggerisce il nome, questo genere di prodotti si contraddistingue per l’attenzione che
pongono alle tematiche ambientali, nel caso specifico di Favini Srl, si parla di carte che o utilizzano
materiali diversi dalla cellulosa, in modo da limitare il più possibile la pratica della deforestazione,
oppure carte prodotte solamente attraverso l’ausilio di materiale riciclato.
L’attenzione per questo tipo di prodotti nasce dalla consapevolezza, sempre più presente
nell’opinione pubblica, che le azioni dell’uomo hanno conseguenze, non sempre positive,
sull’ambiente e per questo motivo si sente il bisogno di un impegno per migliorare la situazione,
anche attraverso l’acquisto di prodotti che certifichino di non essere dannosi per l’ambiente.
È da questa nuova consapevolezza, nata verso la metà degli anni Settanta, ma che trova un riscontro
globale solamente negli anni Novanta, che trova spazio il concetto di “green marketing”. Questo
viene visto come l’insieme di tutte le attività designate per generare e facilitare tutti gli scambi
intesi a soddisfare i bisogni e i desideri umani, in modo che questi abbiano il minor impatto
possibile sull’ambiente naturale. Si tratta di un processo che coinvolge tutte le variabili del
marketing mix, dal prodotto al prezzo, dalla distribuzione alla promozione. Un altro punto
importante riguarda la segmentazione del mercato, non tutta la popolazione è interessata
all’acquisto di prodotti ecologici, è quindi importante capire quali siano le caratteristiche che
contraddistinguono questo particolare tipo di consumatori, naturalmente l’attenzione è posta
soprattutto sul grado di importanza che i consumatori danno alle questioni ecologiche. Infine è
importante sottolineare anche una questione controversa legata al “green marketing”, vale a dire la
pratica del “greenwashing”, questa può essere descritta come un’ingiustificata appropriazione di
virtù ambientalistiche al fine di creare un’immagine positiva di prodotti o un’immagine
mistificatoria per distogliere l’attenzione da altre caratteristiche di questi prodotti, che potrebbero
essere non del tutto ecologici. Il rischio collegato a questa pratica è quello di generare confusione
nel consumatore, confusione che potrebbe successivamente sfociare in perdita di fiducia su questa
categoria di prodotti.
L’ultima parte dell’analisi consiste invece in uno studio statistico dei dati fornitami dall’azienda,
dati che si riferiscono alle vendite della gamma di carte ecologiche, dal 1998 al 2010. Il fine del mio
studio è quello di fornire un’analisi temporale dell’andamento delle vendite, attraverso l’utilizzo
delle serie storiche, in modo da dimostrare l’esistenza di un trend e di una stagionalità. Inoltre,
attraverso un’analisi di regressione lineare, ho cercato di scoprire se ci fosse una relazione positiva
tra la quantità di carta acquistata dagli stati clienti di Favini Srl e un indice, chiamato Environmental
Perfomance Index (EPI), che misura il grado di attenzione che gli stati in questione pongono sulle
tematiche ambientali.
Going green: from the theory to the data. The Favini case.
Introduction
My work starts from my internship period in Favini Srl, an Italian company which is engaged in the
production and transformation of paper. I would like to point the attention on a peculiar range of
products, the so called “green products”, which in the company are represented by a special type of
paper that distinguish itself for the attention that is paid to the environment. For this reason my
work will consist in a theoretical analysis, in which I will describe the characteristics of the green
products, both in general and by referring to the Favini case, and I will analyze how this kind of
products find a place in the market, in this case I will talk about “green marketing” .
Moreover there will be a statistical side of the analysis, in which, through the data given by the
company, I will discuss the evolution of the product, from the selling point of view, and the
relationship between the amount of paper sold by the company in different countries and an index,
called EPI, which represents the degree of interest that these countries have on environmental
issues.
Green products
What are green products?
There is not an universal definition of the term, when talking about green products the general
consensus is that the term “green” refers to environmentally-preferable attributes of a product,
service or technology, or, more simply, it refers to something that offers an environmental benefit.
For this reason it is important to provide some characteristics that can help understand what makes
a product a “green” one.
In 2010 the National Institute of Building Sciences, Whole Building Design Guide1 provided some
features that can denote a “green” product.
First of all this kind of products should promote good Indoor Environmental Quality (IEQ) and help
improving human health. This goal can be reached through the manufacturing process, it is actually
important not to use toxic compounds or toxic by-products and, moreover, to have a low embodied
energy in every part of the production cycle, from the creation of the product to the transport.
Another important feature regards the specific characteristics of the product. A “green” product
should be durable and have low maintenance requirements, it should be made using natural or
renewable resources and incorporate recycled content.
Certification programs are also very important in the evaluation of the product, meaning that they
validate that the product meets certain industry-independent standards. Usually the parameters
include energy use, recycled content and air and water emission from manufacturing, disposal and
use.
It is now important to understand when this kind of products “came to life”. According to a study
made in 2010 by Air Quality Sciences, Inc.2, it is only in the eighties that the market starts talking
about environmental friendly products. In these years consumers became more and more aware of
the characteristics and of the implication of a “green” choice even though most of them were not
willing to this kind of products. This was mostly due to the fact that the products were too
expensive and that there was not a clear availability of information. It is only during the nineties
that can be found an improvement in this type of market, green brands were growing, even though it
was still referred to “niche” markets, there was an high level of consumer concern, but this was not
1
Amatruda J. 2010. Evaluating and Selecting Green Products. Whole Building Design Guide Website. National Institute
of Building Sciences. July 23, 2010. Washington, DC.
2
An American Firm which provides expertise in evaluating systems, products, and materials for their impacts on the
indoor environment.
reflected in purchasing power. It is only at the beginning of the 21st century that the market began to
really improve. During these years the concerns over global warming and natural resources
depletion was becoming more and more a world issue and, for all these reasons, a lot of big
companies decided to commit themselves to either producing products using more environmental
friendly processes or making more environmental friendly products. An example of this behavior is
given by the Coca-Cola Company, in 2008 the company committed to spending $44 million to
build the world’s largest plastic-bottle-to-bottle recycling plant3 and has also decided to set a goal of
returning to communities and nature an equivalent amount of water as used in its beverages and
their production.4 Also green building rating systems, eco labels and certification programs are
becoming more and more important and help in increasing the number of costumers willing to buy
“green” products. It is actually stated that from 2005 to 2007 the number of “green” products
released in the United States more than doubled.5
The products
As stated in the introduction, Favini Srl is an Italian company which operates in the field of the
production and transformation of paper. The three products object of the analysis belong to a
specific line of products called Shiro, which uses renewable non-tree biomass, recycled waste and
carbon neutral electrical energy.
-
Alga carta. It is the most peculiar product of the line. It has been defined as a “unique
ecological approach” because it refers to a type of paper that utilizes seaweed instead of
cellulose fibres. This product came to life during the nineties when the city of Venice asked
Venetian firms to find a solution to the huge presence of seaweeds in the Venetian lagoon.
The reason behind this request concerned the fact that the seaweeds were absorbing too
much oxygen from the water and, consequently, they were very dangerous for the local
ecosystem. Therefore, through a collaboration among Favini srl, New Venice Consortium6,
ENEA7 and Geopolimeri, they decided to utilize desiccated seaweed in the manufacturing
process. This project had an immediate success both at local and world-wide level by
receiving important recognitions such as the Italian “Premio Speciale Oscar Ecologico” won
3
Marc Gunther, “Coca-Cola’s green crusader”, April 28,2008, Fortune
Rachel Tobin Ramos, “UPS, Coke, home depot push green strategies”, April 23, 2008, ajc.com
5
Todd Wasserman, “Mintel: ‘Green’ products Top 5, 933 in 2007,” Brandweek.com, May 21 2008
6
New Venice Consortium is the Ministry of Infrastructure and Transport- Venice Water Authority concessionary for
work to safeguard Venice and the lagoon delegated to the State. It is made up of major Italian construction companies
and local cooperatives and firms.
7
Italian National agency for new technologies, Energy and sustainable economic development.
4
in 1996 or by being chosen in 1997 by the ONU as one of the best successful stories
concerning the environmental sustainability development.
-
Treefree. This type of paper is produced by utilizing fibers coming from annual plants like
bamboo, cotton or bagasse, made from the sugar cane fermentation. It is important to state
that during the manufacturing process the firm does not employ fibers which come from
trees.
-
Echo. This product is realized almost entirely from post industrial recycled fibers. It is
considered one of the best recycled products mostly thanks to the fact that, during the
manufacturing process, the paper keeps an high brightness level.
Product certifications
Talking about the product object of the analysis, it is important to state the certifications that make
Favini Srl paper a “green” product.
First of all Alga Carta and Recycle are all part of the FSC (Forest Stewardship Council), this is an
international not for-profit, multi-stakeholder organization established in 1993 to promote
responsible management of the world’s forests. Its main tools for achieving this are standard setting,
independent certification and labeling of forest products. This offers customers around the world the
ability to choose products from socially and environmentally responsible forestry in order to
prevent one of the biggest environmental issues which is deforestation.
Other two important certifications come from ISO (International Organization for Standardization),
which is a non-governmental organization and the world’s largest developer and publisher of
international standards. The first one is ISO 14001, made in 2004, which provides a framework for
a holistic, strategic approach to the organization’s environmental policy, plans and actions. In other
words this kind of certification gives the generic requirements for an environmental management
system. The underlying philosophy is that whatever the organization’s activity, the requirements of
an effective EMS are the same. This has the effect of establishing a common reference for
communicating about environmental management issues between organizations and their
customers, regulators, the public and other stakeholders. The second one is ISO 9001, made in
2000, which specifies requirements for a quality management system where an organization needs
to demonstrate its ability to consistently provide products that meet customer and applicable
regulatory requirements, and aims to enhance customer satisfaction through the effective
application of the system, including processes for continual improvement of the system and the
assurance of conformity to customer and applicable regulatory requirements.
The last important certification concerns energy. It is called 100% Green Energy and assures that
the certified electricity comes from renewable sources. This electricity is environmentally friendly
and guarantees the respect of ethical criteria of environmental and social sustainability from all the
companies of the chain.
Green marketing
Green marketing first came to notice in the late 1980s and early 1990s, though the first discussion
regarding it dates back to 1975, when the American Marketing Association (AMA) held its first
workshop on this topic by the name of “ Ecological Marketing”. As a result, in 1976 came out the
first book on this subject titled “Ecological Marketing” (Henion and Kinnear 1976) and then
followed a number of other books on the subject. At the AMA workshop ecological marketing was
defined as: the study of the positive and negative aspects of marketing activities on pollution,
energy depletion and non energy resource depletion.
In 1994, in his work “An introduction to green marketing”, Professor Michael Jay Polonsky from
the University of Newcastle (Australia), stated that: “green or environmental Marketing consists of
all activities designed to generate and facilitate any exchanges intended to satisfy human needs or
wants, such that the satisfaction of these needs and wants occurs, with minimal harmful impact on
the natural environment” . This is still considered the best definition of green marketing.
Nowadays the earth is facing more environmental issues than ever before, including global
warming, pollution, ozone layer depletion, and water contamination. This situation affects a big
part of the global market, with costumers that are becoming more and more aware that their actions,
the products that they are willing to buy, will have an influence on the environment and on the
future societies. Therefore, it is imperative for companies to make and market themselves as
environmentally friendly, in order to reach the costumers needs. It is in fact known that today
consumers are paying more attention to the environmental efforts of businesses and support
companies that excel with their green marketing, an example is given by the United States, where
more than 35 million of consumers claim to buy green products on a regular basis8. For these
reasons it is important to underline that eco-friendly business operations and green marketing are
not only beneficial to the environment, but provide a way for businesses to gain competitive
advantage and a strong consumer base.
What is green marketing? The marketing mix.
At this point it is important to understand what are the features that characterize green marketing.
As stated before, when talking about green products, there is not a simple way to describe this topic.
First of all it has to be underlined that green marketing does not refer only to promotion and
advertising, meaning that is not only a way to communicate with consumers, but, on the other hand,
it is a way of operating businesses by means that are environmentally friendly. In another passage
8
Petrecca, Laura & Howard, Theresa. (2007, Jun. 6) Eco-marketing a hot topic for advertisers in Cannes. USA Today
of his essay, Professor Polonsky asserts that Green marketing incorporates a broad range of
activities, including product modification, changes to the production process, packaging changes, as
well as modifying advertising. Another interesting definition can be find in a study made by
professors Amorro and Tomas in 2006, they actually stated that: green marketing can be defined as
a way of understanding exchange relationships consisting of planning, implementing and
controlling a policy of product, price, promotion and distribution that simultaneously satisfy
customer needs and the objectives of the organization, minimizing any negative effects caused to
the natural environment. By consequence, it can be said that the primary objective of green
marketing is satisfying company objectives and company customers with simultaneous minimizing
negative effects on the environment.
Green marketing is a worldwide phenomenon and an important part of present day company’s
management function. The way a company deals with this issue directly influences its image, social
identity and business activities. Handling this issue well can not only sustain a company’s
competitiveness, but also increase its market share and customer loyalty. For this reasons it is easy
to understand that this process involves a wide range of elements, it includes different people and
different department in the process, from the manufactures to the consumers. It is a long and
complex chain, not one man or one place. Every part is important and necessary, which is one
member of the integrity. Product, price, place, promotion are not only basic but also important
factors in green marketing.
The last point needs a sort of clarification, there is a need to understand how product, price, place
and promotion can work together in order to attract the consumer. From the marketing theory, these
four elements represent the marketing mix, that can be referred to a unique blend of product, which
includes packaging, place (distribution), promotion and pricing strategies designed to produce
mutually satisfying exchanges with a target market.

PRODUCTS. First of all, talking about products, it is important to underline that this topic
includes not only the physical unit, but also the package, company image, value and may
other factors. In the specific case of green marketing, what matters is that products can be
defined as ecologically acceptable, meaning that they do not provide a threat to the
environment. A green product is the one that carries out the needs of the consumer , along
with having no or minimum impact on the environment. And this does not only include the
use or disposal of product but also the company which is involved in producing it. Another
important feature concerns packaging. Green packaging would essentially include practices
of packing the products with ecologically acceptable materials or in a way that allows to
minimize spaces and, by consequence, transportation. An example of this topic can be given
by Apple Inc., the well-known American multinational that designs, develops and sells
electronics, computer software and personal computers. In their web site, the company states
that their products are designed in order to use less material, ship with smaller packaging, be
free of toxic substances, and be as energy efficient and recyclable as possible, with the aim
to have the least amount of impact to the environment.

PRICE. The second important element regards price. Generally speaking, price is what a
buyer must give up to obtain a product, it is considered the most flexible part of the four
marketing mix elements, because it is willing to change due to market conditions.
Considering green products, it is important to understand that although the fact that
customers are sometimes willing to pay more for ecologically sound products, these features
should not be a pretext for increasing the prices of products. Even though bringing in clean
technology, sourcing new renewable sources of material, confirming with new legal laws
and taking other steps in transformation of the company becomes a costly affair which in
turn might increase the cost of the product, the company has to adjust all the expenses with
the new technology they brought in and the expenses of implementation of new ecological
standards.

PLACE. Another topic is represented by place (distribution), this part has the aim to make
products available when and where consumers want them. Specifically distribution includes
transportation which is possible only with the help of vehicles, which have a direct bearing
on the environment. Adopting environmentally friendly vehicles whose modification may
minimize unwanted effect on the environment, can be a major contribution in the way of
perceive a product as green. Another example is given by reverse logistics, it is a system in
which the consumers return the packaging, wrapping and used product to the producing
company. As a consequence, these returned products can be a source of savings for the
producer company as it can use these returned material in the production of new products.

PROMOTION. The last point concerns promotion. This topic includes advertising, public
relations, sales promotion and personal selling. Its role in the marketing mix is to bring
about mutually satisfying exchange with target markets by informing, educating, and
reminding the consumers of the benefits of an organization or a product. . The job of green
promotion would essentially be to introduce green products in the market, create a customer
demand for such products, provide additional information and to promote the company as a
green company and also to create awareness regarding the ecological problems. On the other
hand, this part represents a threat in the field of green marketing, this issue is known as
“green washing” and it comes when the communication is based on non-existent “green”
features. Companies can no longer deceive them with stories about socially responsible
behavior unless they truly implement it. Deceptions and false green products may cause
irreparable harm both for their reputation and image and for the overall turnover caused by
loss of part of customers. However this topic will be deeply discussed afterwards.
Who are green products consumers? Market segmentation
The implementation of green marketing brings about a change in the association that exists
between the customer and the manufacturer. People approach the “green” lifestyle with respect and
awareness of the environment. They not only appreciate the material but the spiritual aspects of life
too. People today are concerned for their surroundings and the situations in which they live. It is
due to this growing need and demand of the customers that the companies are producing newer
products that are “green” and satisfy a customer’s functional and emotional needs regarding the
ecological impact.
In 1998, consultant Jacquelyn A. Ottman, in her essay Green Marketing: Opportunity for
Innovation, summarized the previous concept in a table, in which it can be found a confrontation
between “classical” and “green” marketing.
Table 1 Confrontation between classical and green marketing. Ottman, J. A.: Green Marketing: Opportunity for Innovation.
Classical marketing
Green marketing
Costumers
Costumers with their lifestyle
Human beings with their lives
Products
“From the cradle to the grave”
“From the cradle to the cradle”
One size fits all products
Flexible
Services
Marketing concept
Company
Sales orientation
Educational
Final values
Values
Reactive
Proactive
Independent
Interdependent
Competitive
Cooperative
By department
Holistic
Short-term orientation
Long-term orientation
Profit maximizing
Double final target
First of all it is important to underline the difference between lifestyle and lives. Table 1 shows how
green marketing consumers are more interesting in a product that can improve their lives in a wider
way, referring not only to how they appear to the public eye, but mostly to how a product can be
useful to the society as a whole. It is also curios to point out the difference in the terminology, Mrs.
Ottman refers to green marketing costumers as human beings, meaning that she wants to emphasize
the fact that this kind of costumer are willing to purchase products that are going to make a change,
in a positive way, for the environment.
The second peculiar point regards product. In the table Mrs. Ottman makes a comparison between
two sentences: “from the cradle to the grave” for the classical marketing and “from the cradle to the
cradle” for the green one. These two statements underline the difference of the product perception,
in the first case the product is perceived as something that must come to an end, meaning that once
the product it is used, there will not be another life for it. On the other hand the second sentence
stresses one of the major aim of green marketing, that is the possibility of reutilize the product, for
example through recycling, in order to waste as minimum resources as possible.
Another important concept that table 1 states is the marketing concept. Classical marketing is sales
oriented, meaning that its major aim is to sell as much products as possible, in order to reach higher
revenues. On the other hand, referring to green marketing, this table points the attention on another
aspect, the educational one. This does not mean that companies which produce or delivers green
product or services are not interest in profits, but it states that a part of their marketing strategy is to
give to the consumers the means to understand how their way of purchasing can affect the
environment, either in a positive or in a negative way.
At the end it is important to understand how Mrs. Ottman draws the comparison between companies
that decide to go green and the others. Table one states that the main differences between classical
and green approach have can be found in the proactive behavior of green companies, which is also
one of the sources of their competitive advantage. The essence of this behavior lies in continuous
learning, specialization, research, introduction of new technologies, use of new alternative
materials, discovering and fulfilling still undiscovered desires and needs of customers at the same
time complying with ecological standards. In fact, green companies, as opposed to classical ones,
carefully choose their partners, suppliers, and distributors. Partnerships and collaborations of green
companies are made in order to integrate the ecological values into the whole chain of production.
Green companies give priority to long-term goals. Together with the realization of profit, they also
want to contribute to society and protect the environment.
At this point the attention has to be given on the consumers, meaning that it is important to analysis
the segmentation of this type of market. First of all there is the need to explain the meaning of
market segmentation. This can be considered as the process of dividing a market into meaningful,
relatively similar and identifiable segments of groups, this in order to help marketers define
customer needs and wants more precisely.
A study made by the National Technology Readiness Survey9 and by Rockbridge Associates10 in
2007 divides the market in six segments: the green tech leaders, the green tech followers, the tech
savvy green sympathizers, the enviro-friendly skeptics, the naïve consumers and the anti green.
Now it is important to understand the characteristics of these six categories:

GREEN TECH LEADERS. They represents more or less the 10 % of the market. They are
also known as the early adopters, the ones that believe that technological studies and
improvements can be used to increment the quality of life. Their concern goes to
environmental issues, for them it is important to go green in every aspect of their lives and,
for these reasons, they do private researches and are willing to influence other people. They
are usually young, more likely to have kids and to embrace technological profession, in fact
their sources of information usually come from the web. They are not price concerned and
believe that green products are worth to purchase.

GREEN TECH FOLLOWERS represents the 18 % of the market. They are interested in
green issues, they strongly think that people must reduce their impact on the environment
and for this reason they are also likely to try new green technologies and to research for
them. They are usually older that the green tech leaders, they spend fewer time on the web
and, by consequence, they are prone to find information from other people. They are willing
to spend higher amounts of money in order to purchase green products. For all these reasons
it can be said that they represent the part of the market that can become green tech leaders.

TECH-SAVVY GREEN SYMPATHIZERS represent the bigger part of the market, reaching
the 31 %. They care about the environment, but, unlike the previous categories, they are not
green activists or boosters and they are not as informed as them. They usually are at the
beginning of their knowledge but they are also willing inform themselves of new
technologies and products.

ENVIRO-FRIENDLY SKEPTICS represent the 12 % of the market. They are concerned in
green issues, they care about the environment, but, on the other hand , they do not trust
9
American association that tracks technology and environmentally beliefs and behaviors.
Rockbridge Associates, Inc. is a market research firm located in Great Falls, Virginia that specializes in issues for
technology and services companies and associations
10
technology, they want the proofs that technology can be helpful for the environment and for
this reason are less willing to buy green products. Usually this category is composed by the
older part of the population.

NAÏVE CONSUMERS covers the 22% of the market. They hold “socially acceptable”
opinions, but they do not feel the urge to act, they are more concerned in other topics than in
being green in fact they are not interested in green technology or products. They are not
willing to do researches in order to inform themselves and, as a consequence, they will
avoid using green technologies until they are proven.

ANTI-GREEN. They represent the smaller part of the market, 7%, and they are people who
non commit themselves to environmental issues, they are not interested in purchasing green
products or technologies. They are more likely to think that environmental activists are
irresponsible and that their unique aim is to create confusion in the society.
Problems: confusion and greenwashing
In the final part of the green marketing analysis I would like to point the attention on a problem
directly linked to this topic, confusion. One challenge green marketers are likely to face regards the
need to avoid confusion and misjudgment in the marketplace, in fact consumers do not really
understand a lot about environmental issues. Marketers sometimes take advantage of this confusion
and can, by purpose, make false or exaggerated claims. Critics refer to this practice as
“greenwashing”.
The term green-wash refers to the act of misleading consumers regarding the environmental
practices of a company or the environmental benefits of a product or a service. In 2007
TerraChoice, an Environmental Marketing Inc., made a survey in order to analysis in which way
companies can manage to mislead consumers, the result of the survey consists on an identification
of six patters that are now recognized as the “Six Sins of Greenwashing”.

Sin of the hidden trade-off. This sin is committed by suggesting that a product is green,
based on a single environmental attribute or an unreasonably small set of attributes without
paying attention to other important environmental issues. Such claims are not usually false,
but they are used in order to provide a “greener” picture of the product than reality. An
example of this sin can be given by the paper industry. A company can actually state that
their products contain high amount of recycled content but, at the same time, it can decide to
not tell that these products are obtained without attention to manufacturing impacts, such as
air or water emissions.

Sin of no proof. This sin concerns any environmental claim that cannot be proved by easily
accessible information or by a reliable certification. In this case an example can be given by
personal care products, such as shampoos, that claim not to have been tested on animals, but
do not give any kind of evidence.

Sin of vagueness. In this case the problem lies in the poorly or too wide definition of the
problem, that can result in a message likely to be misunderstood by the consumer. The
example this time concerns the message “non-toxic”, in fact it is true that everything is toxic
in sufficient dosage.

Sin of irrelevance. This sin is committed each time that companies make an environmental
claim which is real but that is unimportant or unhelpful in informing the consumer. The
irrelevance can distract the consumer from finding a truly greener option.

Sin of lesser of two devils. In this case the product can be considered green within the
product category, but in reality it does not take into account the impact that the product can
have on the environment as a whole. An example can be provided by the so called “green”
insecticides and herbicides.

Sin of fibbing. This sin is committed anytime a false environmental claim is stated.
It is now important to understand why greenwashing can become a threat to green marketing. The
main risk lies in the costumer’s satisfaction, greenwashing can in fact create cynicism and doubt
among costumers that may renounce to buy green products because they feel that they are not
bringing benefits to the environment. This would lead to the elimination of a significant marketbased, financial incentive for green product innovation. Another threat affects the market as a
whole, as a matter of fact, competitive pressure from illegitimate environmental claims takes market
share away from products that offer real benefits, thus slowing the penetration of new products and
innovations on the marketplace.
One resource that can help consumers to fight greenwashing is certification. There are a number of
highly reputable programs that certify particular products as beneficial to the environment.
Certification programs can vary in terms of cost as well as the level of assurance they can provide,
by consequence, it is important to know which certification programs are reliable and why. The
most reliable certification programs offer a life-cycle assessment of products and services, meaning
that they evaluate the environmental impact of the entire life-cycle of them. Another important way
to provide meaningful certifications consists in addressing to third parties rather than the companies
that sell the certified products, in order to avoid conflicts of interest. This kind of certification
programs usually conduct on-site inspections and perform their own independent testing on the
products that they certify, they also require annual follow-up assessment as a way to maintain
certification.
Analysis
The second part of my work consists in a statistical analysis of the product line of the company
taken into observation, Favini Srl. The first topic that I’d like to consider is the evolution of the
product, as stated in the theoretical part, green products are becoming more and more important in
the global market, with a higher amount of costumers that are willing to purchase them. For this
reason it will be interesting to discover the evolution of the Shiro line. On the other hand, the
second part of the analysis regards will consist in a confrontation between the countries that
purchase this kind of product and how this nations can be considered “green”, meaning that it will
be taken into consideration the amount of attention that this countries give to environmental issues.
Time series analysis
When considering time series analysis, the first topic that comes to mind regards trend and
seasonality. If a time series has a regular trend, it means that the topic taken into consideration, in
this case the quantity of paper sold during a specific amount of years, changes or develops with a
regular pattern, that can be positive, negative or both. On the other hand seasonality shows if there
is a repetition of pattern in the same period of the years that are analyzed. An example of
seasonality effect can be given by the flight tickets, every year in December the expenditure on this
product is on average higher than the one over the other months, meaning that in the graphic there
would be positive peaks.
My analysis starts considering all the collected data, which means the quantity of paper sold from
January 1998 to December 2010. The data are divided by months, giving a total of twelve
observations per year.
The selling evolution can be seen in the graphic below. First of all it is important to underline the
fact that this analysis is made by using the logarithmic transformation of the data, in this way the
observation is not made with absolute values in order to improve the normality of the data and
decrease the importance of abnormal values. By making this choice it can be easier to see if there
are shocks and if there could be a seasonality effect.
Figure 1 - Amount of paper sold from 1998 to 2010
The second aspect that is important to underline can be easily seen from the graphic. At the
beginning there is quite a regular pattern, then at the end of 2004 there is the first negative shock
due to a problem in the production that forced the firm to cancel part of the orders. Two other
shocks can be seen in 2007 and 2009, in this case they are positive and the cause of that is given by
a costumer, an Austrian firm and an Israel one, that purchased a huge amount of paper.
An appropriate model that can explain the graphic considers a fourth degree polynomial and it can
be stated as follows:
Yt = α0t +α1t2 + α2t3 + α3t4 + ut
Table 2 Results of Model 1 (data from 1998 to 2010)
Model 1
t Pr(>|t|)
t2 Pr(>|t|)
t3
t4 Pr(>|t|)
Pr(>|t|)
p-value
F- Adj R2
stat
0.00256
6.34e-07
0
5.35e-09
0
8.22e-10
0
2.2e-16 = 0
0.4201
Generally speaking, there are three main factors that clarify whether a time series has a trend or not.
The first issue concerns the significance of the t and the F statistic; the first refers to the significance
of the simple parameters, while the latter considers the significance of the model as a whole. If
these two tools reach values close to zero, it means that the model is significant and, consequently
there could be a trend. The other value is the adjusted R2, this adjusts for the number
of explanatory terms in a model. Unlike R2, the adjusted R2increases only if the new term improves
the model more than would be expected by chance. In a method for identifying a statistically
meaningful trend, series with adjusted R2 values exceeding 0.65 are counted as positive test results.
The model taken into consideration shows some interesting results. First of all the p-value
associated to the single parameters are quite significant, with a value really close to zero; moreover
even the F-statistic shows meaningful results, with a p-value really close to zero. The conflict point
can be found in the Adjusted R2., in Model 1 this value is 0.42, which is not enough in order to have
a positive results. All these results meaning that there is a trend, but the variability of the
observation around the trend is too strong.
At this point it could be interesting to separate the time series in order to discover if the results
change by considering a shorter amount of time. By looking at the graph in Figure 1 what captures
the attention are the first years, it seems that from 1998 to 2003, the time series moves with a more
regular pattern, meaning that there could be a trend.
Figure 2 - Amount of paper sold from 1998 to 2003
By isolating this six years the analysis can be easily done. At first it is important to find out which is
the polynomial degree that can better describe the time series. After having proved all the possible
scenario, even this time the fourth degree polynomial seems to be the more appropriate one that can
describe the time series, the reason of that is due to the value reached by the Adjusted R 2.
Consequently a new model can be stated:
Yt = β0t + β1t2 + β2t3 + β3t4 + ut
Table 2 Results of Model 2 (data from 1998 to 2003)
Model 2
t Pr(>|t|)
t2 Pr(>|t|)
t3
0.853
0.717
0.512
Pr(>|t|)
t4 Pr(>|t|)
p-value F-stat
Adj R2
0.422
1.084e-9
0.475
This time the results are quite different from the one of Model 1. First of all the single parameters
are not significant, they do not reach a value close to zero, for this reason they cannot be taken into
consideration. The only value that is close to zero is the p-value associated with the F-statistic, but
this value alone is not enough to state if there is a trend in the time series. Finally, the adjust R 2
increases, even though it does not reach a meaningful level, it actually stops at 0.47.Consequently it
seems that by studying a shorter amount of years the results are not better, on the contrary Model 2
loses significance in the single parameters.
By looking better at the graphic, on the other hand, it can be seen that there is a negative shock that
uses to repeat itself during the month of August. This negative movement is quite certainly caused
by the fact that during the month of August, the firm is closed for at least two weeks, reducing the
quantity of paper sold.
An hypothesis can be tested: if the month of August is introduced in the model, maybe the trend of
the time series would be more evident. A way to prove this is by considering August as a
categorical variable, called dummy. By doing that August is taken into consideration and the results
actually change.
Starting from the regression:
yt = α0t + α1t2 + α2t3 +α3 t4 + α4Augt + ut
The results are:
Table 3 Results of Model 3 (data from 1998 to 2003, with August takes as a dummy)
Model 3
t Pr(>|t|)
0.00936
t2 Pr(>|t|)
0.03548
t3 Pr(>|t|)
0.00953
t4 Pr(>|t|)
0.07803
Aug
p-value
Pr(>|t|)
F-stat
1.86e-13
2.2e-16
Adj R2
0.7695
From Table 3 it can be seen that adding August makes the trend of the time series more evident.
First of all the single parameters become more significant, with results that go very close to zero,
moreover, as stated by the table, even this time is the forth degree polynomial the one which better
describes the trend of the time series. Secondly the p-value associated to the F-statistic of Model 3
is a number very close to zero, meaning that the parameters of the model are jointly significant. The
last point of interest concerns the adjusted R2 that, this time, is over 0.65, meaning that the time
series has become more meaningful than before.
Another interesting aspect regards seasonality. It has already been proven that August is a peculiar
month, in fact every year during this month there is a negative peak in the quantity of paper sold by
the firm. Now it is important to understand if the values associated to the months are relevant. A
way for doing that is by creating twelve dummies (one for each month of the year)and, after that,
state eleven different models in which August will be always present. The results are quite similar
for each model.
Model 4:
y = α0t + α1t2 + α2t3 +α3 t4 + α4Febt + α5Mart + α6Aprt + α7Mayt + α8Junt +α9Jult + α10Augt + α11Sept
+ α12Octt + α13Novt + α14Dect + u
Model 4 represents an example of the analysis which has been made. In this case January does not
appear, while the other dummies should show whether a month is significant or not, meaning that
the p-value associated to the t-statistic of each parameter should be taken into consideration. The
results of the eleven models are quite interesting. First of all it can be confirmed that August is a
peculiar month, in every single model the p-value associated to the t-statistic reaches values very
close to zero, meaning that this term is quite significant. For this reason it can be said that, talking
about seasonality, this month repeats itself in a negative way. Another point of interest is given by
June. By looking at the results, it can be seen that even June shows quite significant values and this
characteristic recurs in every model, even though this month has less significance than August. On
the other hand, all the other dummies do not show proofs of significance, meaning that the p-value
associated with the t-statistic does not come close to zero.
As a conclusion this time series does not show a strong seasonality effect. This means that during
the years the amount of paper sold by the firm does not repeat itself, the only strong exception is
given by August which, as stated before, coincides with the summer closure of the firm and by
June.
Linear regression
Considering that this analysis is made with data that show the quantity of green products sold by
Favini srl, it would be interesting to discover if there is a correlation with the amount of products
purchased by a particular country and the attention that this country pays to the environment.
The EPI (Environmental Performance Index) is a method of quantifying and numerically
benchmarking the environmental performance of a country's policies. It was developed in the early
2000’s by the collaboration between Yale and Columbia Universities. This index takes into
consideration indicators such as: climate change, air pollution, biodiversity and habitat, forestry…
The regression is, by consequence, made between the amount of paper purchased during a year and
the grade given by the EPI index. The most predictable result is that countries that purchase an
higher amount of paper should also be the countries that have the higher grades in the ranking. For
this reason two years are taken into consideration, 2008 and 2010, in order to discover if there is
some sort of correlation and if the results change from one year to the other. Before proceeding with
the regression, it would be interesting to look at the graphic representation of the data for both
years.
Figure 3 Graphic representation of the relation between the EPI and the paper quantity
purchased by single countries during 2008
Figure 3 represents the results of the relation for 2008. First of all it would be interesting to observe
the part of the graphic which shows lower value of product selling, meaning below 100000 kg per
year. What immediately attracts attention is Switzerland; this country has the highest EPI, close to
100, but, on the other hand, during 2008 it purchased a small amount of paper. By consequence it
will be easy to think that there is not a strong relation between the two term of the regression
(quantity and ranking). But, on the other hand, Lebanon and Syria give an opposite results. These
two countries either purchased very small quantities of paper and have the lowest EPI and these
results seem to confirm the hypothesis stated before. In the end most of the countries observed (20
out of 26) have EPI grades which vary from 75 to nearly 90.
Another interesting aspect of the graphic is given by three countries which stand out thanks to the
quantity of paper purchased during 2008, higher than 100000 kg per year. Spain and Italy have a
quite similar EPI, reaching values a bit higher that 80, while they differ in the amount of paper, Italy
in 2008 purchased more than one million kg of paper, Spain, on the contrary, around 200000 kg. In
this case the difference is quite easy to explain, Favini srl is an Italian firm, for this reason it is
likely due that the majority of the customers are Italian. The other country that attracts the attention
is Austria, in this case there is a country with a very high EPI, very close to 90, and it also purchase
a huge amount of paper, more than two million kg.
Figure 4 Graphic representation of the relation between the EPI and the paper quantity
purchased by single countries during 2010
Figure 4 represents the results of the relation for 2010. Generally speaking it is important to
underline than year 2010 shows characteristics that are different from 2008. The first one concerns
the quantitative part, in this year the firm sold a lower amount of paper, nearly half compared to
2008, probably due to the global economic crisis. The second one regards the EPI index, in
comparison to 2008 the grades are lower on average due to a more strict system of evaluation.
Going deeper in the analysis, it will be interesting to observe in what the two graphics differ and
what elements they have in common. First of all Switzerland and Italy have the same characteristics
as in year 2008. The first country shows the highest EPI grade among Favini customers, while it
purchases a small amount of product; Italy, on the other hand, is characterized by a huge amount of
paper and by an EPI grade close to 75. The second element in common is given by Spain, even in
2010 this country distinguish itself for purchasing a high quantity of paper, even though as regard
2008 it has a lower EPI.
Concerning the differences, in 2010 there are four countries with both low EPI grades and small
amount of paper purchased: Lebanon (as in 2008), Cyprus, South Korea and Belgium. Although,
what drives the attention is the situation of United Arab Emirates, this nation has one of the lowest
EPI of the official ranking, however in 2010 it purchased an interesting amount of paper, almost
reaching 50000 kg.
After looking at the graphics it will be interesting to consider a model in which the quantity sold is
directly related to the EPI grade. There would be two different models, ode for 2008 and the other
for 2010.
Model 6:
y2008 = α0 + α1x2008 + u
Model 7:
y2010 = β0 + β1x2010 + u
In which y represents the amount of paper sold by the firm during the year taken into analysis and x
stands for the EPI grades given to each country for a total of twenty-six observations for 2008 and
thirty-one for 2010. The results are reported in the following table.
Table 5 Model 6 and 7 results of linear regression between Quantity of paper and EPI grades for years
2008/2010
Model 6
Intercept
α1x
Model 7
Intercept
β1x
Estimate
t-statistic Pr(>|t|)
-1603319
0.202
21258
0.166
-85543
0.748
2016
0.605
Results of Table 5 show positive values for both the parameters associated with the EPI grades,
meaning that an increase in the EPI ranking can be linked to an increase in the amount of paper
purchased during a year, however the value of the t-statistic are too high to be relevant .
However regressing the quantity only on the EPI grade could not be the suitable solution, given that
there are other factors that can influence the quantity of product sold by the firm to each country.
The first parameters that comes to the mind is population, common sense would suggest that a
country with a bigger population would be more prone in buying more paper compared to a country
with less inhabitants. For this reason it would be interesting to observe if the two models change by
adding another parameter in the regression. The two new model would be:
Model 8:
y2008 = α0 + α1x2008 + α2z + u
y2010 = β0 + β1x2010 + β2z + u
Model 9:
In which z stand for the population of the countries taken into consideration.
Table 6 Model 8 and 9 results of linear regression between Quantity of paper, EPI grades and population for
years 2008/2010
Model 8
Model 9
Estimate
t-statistic
-1.587e+06
0.216
α1x
2.131e+04
0.173
α2z
-4.845e-04
0.739
-9.625e+04
0.721
β1x
1.998e+03
0.613
β2z
3.613e-04
0.571
Intercept
Intercept
Pr(>|t|)
The results of Model 8 and 9 are different than the ones of Model 6 and 7. In the first two models it
is important to say that the analysis is made taking into account the population component, meaning
that if the EPI grade increases of a unit, the consequences on the quantity of paper purchased by the
country would be positive, with a tendency of purchasing a greater amount of this product. This is
valid both for 2008 and for 2010. The same comment can be made for the population, meaning that
if the amount of inhabitants increases of a unit also the quantity will be affected. In this case Table 6
shows two different results, in Model 8 population has a negative effect of quantity, while in Model
9 the effect becomes positive. But, even in this case, the values associated to the t statistic of each
parameters are too high and they cannot be considered.
As a conclusion this analysis does not confirm the original hypothesis. There is not a connection
between the EPI index and the quantity of paper purchased by the firm in 2008 and 2010. There
could be different reasons that can explain these results, for example the fact that Favini is not a
huge firm, meaning that the data analyzed were not enough or the need of other parameters other
than population
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Sitografia
http://epi.yale.edu/
http://www.favini.com/en/
http://ic.fsc.org/