It’s fair to say that global markets are the most environmentally conscious they have ever been, with businesses under increasing pressure to adopt sustainable practices.

This, however, has led to a rise in “greenwashing” – the act of giving a false impression or misleading information about how a company’s products are more environmentally sound than they actually are. In 2023, significant legislative actions were taken to combat greenwashing: the UK’s Competition and Markets Authority (CMA) introduced laws sanctioning greenwashing practices and the EU passed its Green Claims Directive. It is crucial businesses, and particularly Procurement departments, understand what greenwashing is, why it’s harmful, and how to ensure that your sustainability goals are genuine and impactful in light of these new regulations and to prioritise the driving of real change.

What is Greenwashing?

Greenwashing is when companies deceptively market their products or practices as environmentally friendly. This can range from exaggerated claims to outright lies about the environmental benefits of a product or service. Examples include vague terms like “eco-friendly,” misleading packaging and false certifications. Lululemon is the latest company to face Greenwashing claims and is currently under investigation for misleading consumers specifically with their “Be Planet” campaign.

Why is Greenwashing Bad?

  1. Greenwashing Misleads Consumers: Greenwashing confuses and deceives consumers who want to make environmentally responsible choices, leading them to support companies that may actually harm the environment.
  2. The Erosion of Trust: When greenwashing is exposed, it damages consumer trust not only in the offending company but also in genuinely sustainable brands.
  3. Delaying Real Progress: Greenwashing diverts attention and resources from truly sustainable practices and innovations, slowing down the overall progress towards sustainability goals.
  4. Legal and Financial Risks: With the EU’s Green Claims Directive and the UK’s CMA laws now in place, companies caught greenwashing face legal repercussions and potential financial losses from boycotts and loss of reputation.

How can Procurement Drive Real Change?

Set Clear, Measurable Sustainability Goals

SMART Targets: Define specific sustainability goals such as reducing carbon emissions by a certain percentage, minimising waste or using renewable energy sources.

Accurate KPI Tracking and Metrics: Establish key performance indicators (KPIs) and metrics to measure progress towards these goals. This includes the complex task of tracking Scope 1, 2 and 3 emissions, the latter of which covers indirect emissions in the supply chain and is considered a critical element in reducing environmental impact.

Conduct Thorough Supplier Assessments

Due Diligence: Comprehensive assessments of suppliers are essential to verify their sustainability claims. This includes reviewing their environmental practices, certifications, and compliance with regulations.

Third-Party Certifications: Prefer suppliers with credible third-party certifications such as ISO 14001, Fair Trade or B Corp to ensure their sustainability practices are verified.

Get your Data Working for You

Accurate Reporting: Reliable data is the cornerstone of genuine sustainability efforts. Ensure that all sustainability claims are backed by accurate and verifiable data and choose a software partner that empowers tailored reporting – empowering your team to effectively track the metrics important to you and your business. Reliable data helps in cutting out greenwashing by providing a transparent and accurate picture of your environmental impact.

Regular Audits: Conduct regular audits and reviews of your data collection processes to ensure the integrity and reliability of the information being reported.

Data Risk Metrics: Build your risk tolerance levels into your reporting to support tracking and proactively identify and resolve risks before these become issues.

Data Driven Actions: Use your data to push beyond just reporting to drive data driven decisions for proactive monitoring and action by procurement.

Drive Transparent Reporting

Regular Updates: Provide regular and transparent updates on your sustainability progress; achieving your ESG goals means close monitoring of your operations and impact.

Educate and Collaborate

Provide Internal Training: Educate your team about greenwashing and how to identify genuine sustainability practices. Sharing your sustainability goals is a positive way to drive engagement from your wider team.

Implement Sustainable Procurement Policies

Sustainable Criteria: Integrate sustainability criteria into your procurement policies and supplier selection processes. This is a positive way of ensuring your procurement walks the walk when it comes to prioritising sustainability.

Measuring Real Sustainability Impact

To ensure that sustainability efforts are making a genuine difference, it’s essential to measure and analyse their impact effectively:

Scope 3 Emissions Tracking

Comprehensive Assessment: Procurement must have access to carbon footprint assessments of their supply chain. Building as clear a picture as possible of your Scope 3 emissions is pivotal to tracking progress as well as being able to make tweaks to strategy to get back on track if deviations occur. 

Supplier Collaboration: Working effectively with suppliers to collect accurate emissions data and implement reduction strategies is also crucial for real progress to be made. Positive SRM strategies may be the deciding factor in how successful teams can be in achieving their sustainability goals.

Impact Reporting

Quantitative Data: The regular reporting of specific metrics such as energy consumption, waste reduction and water usage is key for building good visibility of a supply chain.

Qualitative Insights: The sharing of case studies and qualitative insights on how sustainability initiatives are benefiting the environment and communities will greatly impact team progress. Equally, innovation is so crucial to driving creative solutions to complex problems, and good news stories or unique approaches may be important for teams looking for out-of-the-box thinking on the challenges of 2024.

Conclusion

Avoiding greenwashing and driving real sustainability in procurement requires a commitment to transparency, rigorous evaluation and continuous improvement. Procurement teams must set clear goals, conduct thorough audits, ensure data reliability and engage in transparent reporting. Crucially, teams must have buy-in from the top table to ensure that their sustainability efforts are genuine and impactful.

With the new EU Green Claims Directive and the UK’s CMA laws, companies must now make real, verifiable changes to their operations to drive sustainability. This new legislation does now mean that, finally, sustainable procurement is the commercially savvy path ahead.