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Why Supply Chain Transparency Means the End of Greenwashing

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Every day, there are thousands of published articles, web presentations, news feeds and thought leadership discussions about the industry’s hottest topic—sustainability and the environmental impact of the supply chain. Most corporate websites state concern for the planet and many have set carbon neutral goals anywhere from five to 30 years into the future. Quite a few industry leaders are achieving incremental goals, but many are using the consumers’ heightened environmental awareness to generate brand publicity and sell more products.

The green supply chain—and the elimination of greenwashing, or dishonestly claiming environmental responsibility, will differentiate the contenders from the pretenders. Contenders have a chance of winning. Pretenders do not. Supply chains are becoming more transparent, exposing existing greenwashing claims and discouraging new ones.

Green sells

In every industry, there is more urgency and desire for information and transparency—from sourcing information, farm to fork, and shorter and more sustainable supply chains. For example, a Nielsen poll found that 66 percent of consumers are willing to pay more for eco-friendly products and 50 percent of purchasing decisions are influenced by sustainability claims.

Moreover, the interest in green is strongest amongst younger generations.

Unfortunately, greenwashing in the fashion industry is still widespread around the globe. The European Commission just recently analyzed online green claims from garment and fashion companies and found nearly half (42 percent) of the claims were “exaggerated, false or deceptive and could potentially qualify as unfair commercial practices under EU rules.”

Global regulations

In addition to the greening of consumer sentiment, the global regulatory environment is forcing supply chain professionals across the entire value chain to reckon with new requirements for fairness and transparency.

Arguably the most noteworthy example of this is the Withhold Release Order (WRO) issued by the U.S. Customs and Border Protection. All shipments containing cotton and cotton products originating from the Xinjiang Uyghur Autonomous Region (XUAR) are to be detained. This potentially affects cotton products from countries other than China that use Chinese cotton inputs such as cotton fabric. Britain also announced it will tighten laws on imports linked to XUAR human rights abuses.

These announcements from both sides of the Atlantic highlight the urgency with which companies must act to ensure their products are not stopped at the border. According to U.S. Customs and Border Protection, the importer of record is responsible for proving its products do not contain any material, in whole or part, sourced from XUAR.

Technology’s role in transparency transformation

According to GEODIS research, 62 percent of companies have limited visibility of their supply chain, and 17 percent only have visibility on production beyond Tier 1. A mere 6 percent of organizations report “full visibility.” This lack of clarity exposes companies to numerous risks, including false labeling.

If companies cannot track the complete history of a product, including material and labor inputs, they cannot make ironclad claims that their products are credibly sustainable or ethical. Advanced supply chain traceability solutions can identify the digital thread for every product and create a compliance certificate that summarizes each exchange of products and materials from fiber origin to final destination. This type of transparency gives apparel companies the ability to make better decisions that align with their sustainability promises.

The long road ahead

At this point, there are indications that the green supply chain is maturing quickly, and greenwashing will be identified for what it truly is—a marketing ploy. There are encouraging developments in many sectors, but we are still in the stage of caveat emptor, where task forces are created rather than hard decisions taken, standards are emerging but in some cases are overlapping and muddled, and the regulatory environment can be as bewildering as it is well-meaning.

A force for good

Transparency is the key to eliminating greenwashing but be prepared to be challenged. Companies that embrace green supply chain and strive for full transparency, even and especially when it is difficult, will enjoy a sustainable competitive advantage in the market.

 

Mark Burstein, EVP, Industry Principal, Logility, is a seasoned expert in fashion and retail working with the world’s most renowned brands. He is active in industry organizations including the National Retail Federation (NRF) and sits on the board of the American Apparel & Footwear Association (AAFA), the California Fashion Association and Goodwill Industries. He earned an MBA from Emory University and a bachelor’s degree in Finance from the University of Florida.

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