Procurement software firm Ivalua and product ID company Trimco advise that using sustainability-related language is crucial to avoid greenwashing in the supply chain.
Greenwashing is a term that was invented by the environmentalist Jay Westerveld in a 1980s essay that looked into how the hotel industry operates. He claimed that the industry was misleadingly promoting towels in the context of a wider sustainable strategy. In reality, it was an economic measure.
Greenwashing used to be not a popular topic. However, the term has recently become a major topic of discussion since organizations worldwide have set ambitious and publicly-adopted carbon net-zero goals.
Sometimes, either knowingly or unknowingly, companies make statements about their environmental credentials but aren’t able to stand scrutiny. The allegations of greenwashing resulting from this can cause massive brand reputation harm.
Supply chains with large supply chains are the most vulnerable to the risk of greenwashing
Companies with huge supply chains are more likely than other companies to fall foul of this. Value-chain suppliers for large corporations often have thousands of suppliers, and running the ESG rules over each is incredibly complicated.
However, the devil’s often in the small details when it comes to sustainability. This is the reason why transparency from end to end is essential in the supply chain, not only to ensure resilience in operations and resilience but also to allow companies to be in control of ESG compliance, especially in the most tucked-away parts within their supply chain where compliance issues are likely to be discovered.
There’s no evidence that greenwashing has become a serious issue. A recent report by Ivalua, a global expert in spending management Ivalua estimates 90 percent of companies do not implement green initiatives throughout the supply chain. In contrast, only 10% of companies say they include sustainable practices in their contracts and agreements.
Its Ivalua Supplier Relationships Report surveyed suppliers from Germany, France, the UK, France, Germany, and Switzerland to determine how collaboration could help boost green initiatives. Ivalua Chief Marketing Officer Alex Saric said of the report’s findings: “Firms need to ensure that their efforts to reduce carbon emissions go beyond their four walls. Any other approach is greenwashing.”
The relationship with suppliers is essential for sustainability
“For the majority of companies, emission levels from the supply chains are often more than their direct emissions. It is therefore crucial that they collaborate with sub-tier and immediate suppliers to ensure improvements in environmentally friendly practices.”
Saric states that suppliers have an important part to play in reducing environmental impacts, but companies must also provide suppliers with the tools they need to help promote green initiatives.
“This means regularly communicating with suppliers, assessing their efforts, and providing them with flexibility to offer innovative solutions.”
Saric also states that through a more strategic approach to procurement, companies “can facilitate collaboration and access actionable insights to drive continuous improvement and help hit CO2 goals”. It is also imperative for businesses to achieve sustainability goals, Saric points out.
“Environmentally conscious organisations can build their brand reputation, increase sales, and gain the edge over less-green competitors,” the expert says.
The fashion industry historically has a weak ESG track record
One industry that has historically been beset by poor performance on ESG is the fashion industry, and Trimco is among many companies helping to overcome this image.
A top supplier of traceability of supply chain solutions, Trimco helps international fashion and sports brands remain compliant with ESG to avoid greenwashing and keep an environmentally sound sustainability plan. Camilla Mjelde serves as its Compliance and Sustainability Director, and she states that there are certain rules that businesses should adhere to ensure their sustainability credentials are maintained.
The language around sustainability is “crucial”
“How do you pitch your sustainability efforts?” asks Mjelde. “If you’re using phrases such as ‘better to the planet’ or more sustainable,’ you’re very close to appearing to be greenwashing.
“To avoid falling foul of the watchdogs, avoid generic claims about your products and your business that are not supported by any data or proof points.”
Mjelde enjoins fashion labels to collect and keep track of information related to sustainable sourcing and to ensure that this information is current. “Stop using Excel to do this instead, use an online platform that’s been developed specifically for this. Based on the data you collect you’ll be able make claims based on actual data.”
Mjelde says that companies must be wary of vagueness in their business statements.
It is essential to prove claims to avoid charges of greenwashing
“Make sure you can prove all the required information,” she adds. “For instance, the statement “We utilized 30 percent less water to dry our house located in China in Our SportsLine in 2022 as compared to 2021′ is an acceptable claim that could be verified and followed up. “But the claim ‘We used 30% less water in production’ is not specific enough to be measured, so puts you at risk of greenwashing.” However, the claims made about products must be documented, says Mjelde: “Failing to provide information for claims made by-products is the primary reason companies are being accused of greenwashing. “If you are making a specific product claim, then documentation needs to be traced across the supply chain, from raw materials to the actual finished product.”
She says the non-profit organization Textile Exchange is important in this sector and has established “clear and strict rules” concerning what can be used as the product’s claim.
Inter-departmental collaboration is crucial to battling greenwashing. “Correct communication to the public is a PR and marketing job, while communication with customers is down to sales,” Mjelde says. Mjelde. “Everything needs to be done with complete information to hand, because inaccurate communications due to misguided marketing materials and misinformed customers can lead to greenwashing fines.”
She says collaboration between departments has to become “seamless” to ensure that every claim is legitimate and backed by data.
Being up-to-date on current legislation and rules is essential to stay clear of claims of greenwashing. For instance, it is the case that there is a chance that European Union will issue new regulations on environmental claims and updates to the textile industry each year through 2025 and beyond.
“Stay on top of these and other changes, so you continue to comply,” says Mjelde. “This is a big challenge, so make sure you invest in the right team, tools and partners to help you navigate the complexities of the latest regulations.”
Mjelde closes by saying that Trimco is committed to keeping its customers informed of the most recent EU regulations information. “This enables us to advise them and help them make the best decisions for their businesses,” she adds.