Alex Saric at Ivalua explains why procurement needs to do more to be truly sustainable
Weeks on from the COP26 summit in Glasgow, the conversation on sustainability has become even louder. Now, the spotlight is on organisations and their environmental practices in every sector from fashion, beauty and technology, to manufacturing. But in too many cases, green claims don’t match up to reality.
In response, the United Nations is setting up a greenwashing watchdog to name and shame companies that fail to deliver on their net zero commitments. From 2022, firms can no longer make wild claims about hitting over-ambitious sustainability targets without a tangible plan in place – they must be able to back this up.
Procurement needs to be the driving force that stamps out greenwashing from our supply chains, to ensure that organisations’ operations, products, and goals are not just a “green sheen”.
Sustainability: more than a reputational flash in the pan
There’s no denying that green sells. Claims of “organic”, “eco-friendly”, or “carbon neutral” products and services influence customer purchasing decisions, and consumers are often willing to pay more for so-called sustainable goods.
In fact, recent research shows that confidence in consumers’ sustainable purchasing choices is high, with 57 per cent of suppliers believing that buyers would opt for a sustainable option over a cheaper one.
The Royal Society of Arts, Manufactures and Commerce (RSA) recently found that the majority of clothes are made from new plastics that need fossil fuels to produce. For instance, 89 per cent of products sold by a British fast fashion online brand were found to be made with new plastics. While the brand claims to use materials that are “more sustainably sourced” in its clothing, it opts for unsustainable materials and contributes to ‘wear it once’ culture by selling clothing for as little as 8 pence.
The RSA accused fast fashion brands of greenwashing and contributing to a throwaway culture, as they are not backing up their commitments to sustainability with real results.
Another significant part of the greenwashing conversation is carbon emissions. For most organisations, emissions from their supply chain are several times greater than their own direct output.
Yet, many firms still treat sustainability as a ‘tick box exercise’, often pledging to meet net zero targets within their immediate organisation to appeal to consumers. Many do this without extending the pledges to their supply chains, which is where the majority of emissions are produced in most cases.
It has become easy for firms to essentially ‘pass the buck’ down their supply chains, appearing to be environmentally-friendly on the surface – but digging a little deeper shows this is not the case.
Cleaning up greenwashing claims
Very soon, greenwashers will be held to account. The UK’s Competition and Markets Authority (CMA) will conduct a full review of any environmental claims made by businesses at the start of 2022, and will take regulatory action against offending firms. As the public and government apply pressure on companies to reduce their environmental impact, firms must now be prepared to match the claims made at COP26.
The best way to fight greenwashing is with transparency – but procurement must get smarter first. It’s essential that organisations turn their efforts to the supply chain to renew their focus on accountability.
This starts with data. Currently, most industries suffer from inaccurate and unreliable supplier data, but a smart approach to procurement will enable organisations to gain a 360-degree view of their entire supply chain, by bringing together supplier and third-party data on everything from environmental impact and supplier capabilities. This includes data from immediate suppliers, sub-tier suppliers, and subcontractors – which helps to ensure that green promises are not just surface-level.
To deliver on their sustainability promises and meet the CMA’s requirements, organisations must also take a more collaborative approach with their suppliers to identify poor environmental practices more easily, and stamp them out during the sourcing process.
Smart procurement platforms help to open up the conversation with suppliers to ensure that firms only choose providers with the strongest sustainability credentials. This is critical at a time where pressure to achieve climate targets is coming from every angle, including businesses, governments, and consumers.
Poor green practices won’t be tolerated
As public and government pressure mounts, organisations have a responsibility to improve visibility into environmental practices in their supply chain. With the CMA’s review just around the corner, firms must act now to track – or refine their capability to track – the environmental impact of their direct and indirect suppliers. Now, companies don’t just have to be seen to be doing the right thing, they must substantiate it.
This means having the right tools in place to drive this change, and empower suppliers to do the same. If not, the heavy cost of a backlash will far outweigh the investment needed to improve supply chain transparency and control.
Alex Saric, Smart Procurement Expert at Ivalua
Main image courtesy of iStockPhoto.com
