Do consumers care about “green” products anymore? According to a piece in The New York Times last week “the consumer’s love affair with green products, from recycled toilet paper to organic foods to hybrid cars, faded like a bad infatuation” in the grip of the recession.

As evidence the reporters point to the 40% decline in sales (to $60 million/year) of Clorox’s Green Works, one of the most successful and highly promoted household cleaning lines from any of the big consumer products or independent companies. They also point to the number of green cleaners offered dropping by a third to around 100 and the green versions of well known brands like Scrubbing Bubbles and Windex totaling less than a couple million dollars in sales last year.

Is this really news? I don’t think so.  I’ve written before why Green Doesn’t Sell and how major consumer companies have learned to avoid promoting the environmentally sustainable aspects of their products.  The reality is that consumers purchase on price and performance and to a lesser degree, brand.  

Green products have never really been more than an “eco-niche.” Even one of the most successful products marketed on its green benefits – the Toyota Prius – sold 141,000 cars last year, a mere 1.2% of the 11.6 million new vehicles sold in the US in 2010. Depending on the analyst, the Prius began to turn a profit for Toyota after 10 years… or hasn’t yet. And of the other 31 hybrid or electric vehicle models sold last year by other car companies, only 6 models sold more than 10,000 cars and another 15 sold less than 1,000 units during the entire year.  

If green doesn’t matter much to consumers, does it matter to product companies anymore? Actually, more than ever.  Put the marketing aside and you’ll see that the best consumer and commercial product companies across industries are remaking their operations, products, and business models using environmental and social considerations to drive innovation and improve their top and bottom lines. 

Companies are saving millions by reducing their energy and water use and limiting their waste through fundamental process change. The Environmental Defense Fund (EDF) “Climate Corps” - a group of MBA student interns - identified $350 million in potential net operational cost savings last summer from energy reducing projects at 50 major companies. Walmart is turning its global supply chain inside out by demanding its suppliers address a long list of environmental and social criteria. P&G is pursuing its announced goals of using only renewable energy in its factories, only renewable or recycled materials in its products, and sending no waste to landfills.  Unilever has publicly committed to improve the health of 1 billion people and cut the environmental impact of its products in half.  Chemical companies have committed to “green chemistry,” systematically replacing chemicals which produce environmental and health problems with those that don’t. 

Why are these and 70% of Fortune 500 companies publicly engaging in sustainability efforts, especially if consumers don’t seem to care when it comes time to make a purchase decision? Walmart wants to be assured a continuing stream of low cost products to sell. Coca-Cola wants to be able to operate and expand in countries with limited supplies of water. The companies that EDF works with want to be able to reduce their energy consumption, a major and growing portion of their operating costs. 

All of these companies realize that wrecking the environment and human health will also will wreck the economy and their markets.  And all of these companies want to create advantage by becoming sustainable in a smarter way than their competitors.  Green is the catalyst for intensely competitive innovation.

Which takes us back to green products.  Unilever is rolling out sales of its water purifying products to solve the clean drinking water needs of a half billion potential customers. Eastman Chemical is expanding revenues of its copolyester resins to create durable housewares, accomplished in part by looking for a BPA free solution.  Philips, GE, Osram and other LED light bulb makers are growing their business because they provide lower energy and service costs compared to incandescent and fluorescent bulbs.  GE and Siemens have each built over $25 billion of business selling engines, turbines, trains, building products, and power plants that improve energy efficiency, reduce costs and emissions.   

All of these products are green but sell on their performance and cost benefits.  The lesson is clear; innovate green, don’t market it.