Once upon a time a Buyer with sustainability at the heart of its mission went to market for a supplier. Supplier A made broad, sweeping claims about the sustainability of its product; Supplier B was shy and didn’t say anything. Supplier C was just right: they shared their sustainability journey in a clear, quantifiable manner that gave Buyer confidence that the third supplier would walk hand in hand with them towards a low-carbon, sustainable future.

This story is playing out today. More and more buyers, from governments to corporations are looking to their supply chain to help quantify and manage emissions. More and more suppliers, from SMEs to global corporations are telling their sustainability story. Many are doing an excellent job, but some, like Supplier A, are greenwashing and others, like Supplier B, are greenhushing. Goldilocks suppliers, like Supplier C, that strike the right balance in their sustainability communication have a competitive advantage.

Combating Greenwashing

Governments and regulatory bodies across the world are working to combat Greenwashing, to ensure that consumers are getting a good deal when buying goods. Supplier A is at increasing risk of fines and reputational damage.

In September 2021 the UK’s Competition and Markets Authority (CMA) published its ‘Green Claims Code’, to help businesses ensure that they are making truthful claims. In July 2022, the CMA took the next step and announced its investigation into ASOS, Boohoo and Asda over green claims these retailers have made about their products.

The CMA is looking into whether these companies created the impression that their products are ‘sustainable’ or better for the environment with little to no information about the basis of those claims. In other words, whether they ‘Greenwashed’. Specifically, they are looking into whether:

• broad and ambiguous statements have created the impression that clothing collections are more sustainable than they are;
• the criteria used to select products contained within sustainable collections are lower than the crafted customer expectations;
• customer’s lack information about sustainability credentials, such as what the fabric is made from; and
• statements made by the companies about fabric accreditation schemes and standards may be misleading, for example, whether the accreditation applies to certain products or the firms’ wider practices.

The Cost of Greenhushing

Regulatory action and accountability is increasing consumer’s ability to check the veracity of claims. This means green claims and promises are no longer just a matter of ‘good marketing’, they must be backed up. Soon, every company will mandatorily have to take into account ESG considerations and provide appropriate evidence. This can sound more onerous than it is, meaning some businesses are worried that sharing their strong sustainability performance will open them up to criticism.

Businesses, like Supplier B in our story, that shy away from communicating their impact are losing sales to sustainability conscious customers. Globally, sustainability is rated as an important purchase criterion for 60% of consumers. Recent research shows 1/3 of consumers are willing to pay a premium for sustainable products.

The Benefit of Getting it Just Right

Research from Bain showed that consumer goods businesses with strong sustainability scores generated 5 X the revenue growth of those with weak sustainability scores. Telling your businesses sustainability story accurately and clearly is a key pillar in generating the sales that drive revenue growth.

How to Get it Just Right

If your company is making green claims, make sure you can substantiate them. If you can’t, you may be in trouble down the line. The law firm Dentons advises businesses making sustainability claims identify what claims they are making, including those relating to the supply chain, and then commissions an external review on the strength of the evidence to back up such claims.

IEC can help you create an independent and impartial report assessing your green credentials, this will help you devise a strategy to become greener throughout your value chain and provide you with the evidence you need to meet regulatory requirements and communicate progress to stakeholders.

At IEC we help you make sure that substance and style go hand in hand!

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