As consumers become increasingly eco-conscious, companies are going to great lengths to present themselves as environmentally friendly. As well-intentioned as the practice of emphasizing sustainability may be, many companies are guilty of “greenwashing” or “green sheen” — marketing themselves as green while merely going through the motions.
The term greenwashing originated in the 1960s when hotels encouraged guests to reuse their towels, presumably to lessen water consumption and chemical use, when the real motivation was to save themselves the cost of laundering the towels.
Greenwashing companies might think they reap the benefits of customer perception and brand loyalty without meaningfully moving the needle on sustainability. However, if and when the truth is discovered, the backlash can be severe, regardless of whether the company is B2B or B2C.
Truly green companies apply sustainable practices at every decision point throughout their operations — especially among their suppliers. Fortunately, implementing green supplier networks and improving the environment aren’t mutually exclusive. Companies don’t have to choose between being fiscally responsible and being eco-conscious.
As procurement practitioner-turned college professor Rich Weissman wrote, “Sustainable efforts often help to simplify and streamline supply-chain operations, providing an economic benefit for customers and suppliers alike through lower prices and improved service levels. In fact, the green alternative is frequently the low-cost alternative. Positive economics around sustainability has taken hold and the supply chain — and society — are better for it.”
The following tips and recommendations illustrate ways for companies to ensure that their “green” practices make a meaningful impact and stand up to scrutiny.
Understand your company's sustainability targets, and convey them to the procurement team. Procurement is constantly looking for opportunities to demonstrate that it’s fully aligned with enterprise-wide objectives. Sustainability provides a natural opportunity to do so. Typically, sustainability goals will be stated publicly because of the consumer-loyalty benefits. Procurement can therefore access this information and associate specific spend management and supply-chain practices with it. In keeping with the desire to avoid even the appearance of greenwashing, procurement teams should put formal policies in place that show how sustainability goals are incorporated into their sourcing and supplier-management processes, and identify and track progress against sustainability-specific metrics. This will ensure that objectives are reached.
Know how your current suppliers meet their own sustainability goals. If the objective is to have a measurable impact on the environment, procurement should dig beyond an assertion by a supplier that its facilities or practices are sustainable. Procurement can ask suppliers for specific sustainability objectives and metrics, and look for evidence that these policies are put into practice. If possible, it’s always a great idea to visit the supplier’s facility and observe sustainability practices firsthand. This is especially critical if procurement intends to take credit for doing business with the supplier on the grounds that it’s more ecologically aware than its competitors. Not validating supplier claims of sustainability increases the risk that a buy-side company becomes a victim of greenwashing itself.
Centralize and consolidate eco-conscious spend data. As any environmentalist will tell you, even incremental changes can make a difference. Since contributions to sustainability may be made in a distributed fashion, by many buyers and through many different enterprise purchases, it’s absolutely critical that the company be able to consolidate the total impact over time. Not only does this demonstrate that the company’s dedication to sustainability is more than a public relations stunt, it starts a virtuous cycle. Buyers who see the impact of the efforts made to date are more likely to apply similar judgment in their own corporate purchasing decisions when aware that they’re part of a larger, more effective effort.
Expand partnerships with green/sustainable suppliers by tracking certifications and relevant experience in the supplier master or supplier network. Greenwashing is enough of a concern that many suppliers decide to pursue cross-industry certifications. These elevate the visibility and accountability of sustainability efforts, and provide further certainty to procurement that the companies in their supplier network are, in fact, eco-friendly. Examples include LEED certifications, the Green Business Bureau, Energy Star ratings, and standards such as ISO 37101 and ISO 26000. While it’s beneficial to require sustainability-based certifications and documentation, procurement bears the responsibility for keeping these records and reports up to date. This way, if a supplier’s status changes or its certifications lapse, the buy-side company won’t inadvertently be taking credit for accomplishments that weren’t realized.
Look at your suppliers' suppliers (also known as tier 2, tier 3, or "n-tier" suppliers). A company’s suppliers may be working with other companies that expand their actual sustainable supplier spend. According to McKinsey’s Anne Titia Bove and Steven Swartz, “The typical consumer company’s supply chain creates far greater social and environmental costs than its own operations, accounting for more than 80% of greenhouse-gas emissions and more than 90% of the impact on air, land, water, biodiversity, and geological resources.” The further into a supply chain a company is willing to look, the more of an impact it can have, and the greater its recorded results will be.
As already mentioned, sustainability can equate to cost effectiveness and generate enormous customer loyalty and goodwill for brands. For sustainability programs to make sense, they have to be about more than doing good; they also have to benefit the company and its shareholders as much as they do communities and the environment. Depending on the industry or sector a company functions in, there may even be additional advantages such as tax benefits or highly publicized award programs.
The goal at the end of the day is for stakeholders, suppliers, and customers to look favorably on corporate efforts to go green and provide a more sustainable world. Companies that put these programs in place bear responsibility for ensuring that they go beyond greenwashing to deliver meaningful impact. Since eco-consciousness is centered around supplier selection and capabilities, procurement has an opportunity to manage these efforts — in alignment with enterprise goals and objectives — through the supplier master and supplier network.
Stephany Lapierre is founder and CEO of Tealbook.
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