As consumers become more aware of the impact of the goods they buy, the demand for eco-friendly or "green" products has surged. In response, companies have rolled out these items and advertising campaigns highlighting their environmental benefits. However, there is often a disconnect between what companies think their eco-friendly claims mean and how consumers perceive them. This often leads to sustainability claims that can seem misleading, and potentially damage a company’s public image and sales.

Brands want to supply the sustainable products that consumers demand, yet they must walk a fine line when it comes to promoting those products to avoid accusations of greenwashing. They need to back up their claims with data that can be verified — a labor- and time-intensive process. Nevertheless, brands must solve this problem, in collaboration with dedicated data partners that can help them avoid greenwashing and the complications that come with making exact claims about sustainability.

The Importance of Verified Data

Many companies are increasing their eco-friendly product offerings in response to market demand, but some are moving too fast without thoroughly verifying the “green” claims made to customers. 

According to a report by the National Advertising Division (NAD), a whopping 53% of green claims contain misleading or unfounded information, and 40% lack supporting evidence. Additionally, half of all green labels offer weak or non-existent verification, indicating a lack of transparency and accountability in the industry.

The impact of greenwashing on companies has been significant, with lawsuits filed against companies such as H&M, Walmart, and Kohl's, alleging the false marketing of products labeled as eco-friendly.

There are no standards for what “sustainable” mean for any given company or product. Different areas have different challenges — for instance, paper and plastic are both used in packaging, but what determines if they’re the “most sustainable”? Fossil carbon, water consumption, raw resource use, land use change, or some other variable? If companies claim to be green by touting the best performance in one category, without mentioning downfalls in another, they could be charged with greenwashing — whether in the courtroom or the court of public opinion.

European countries are moving to combat untrue environmental claims through new laws, such as the France’s climate and resilience measure and the European Union’s proposed new greenwashing regulations. The French law requires companies to prove their carbon neutrality claims through annual reports, covering the entire lifecycle of a product from production to disposal. The EU’s rules will require brands to back up any eco-marketing with verified evidence, or risk fines of at least 4% of revenue.

Meanwhile, in the U.S., the Federal Trade Commission’s Green Guides haven’t been updated in over a decade, with executives pointing out inconsistencies between how courts interpret greenwashing claims for different companies in different regions.

There are several compounding reasons that make it difficult to issue exact (and verified) statements about sustainability: scattered and incomplete data, lack of sustainability experts on staff, outdated systems and the general complexities of the supply chain. To create bulletproof sustainability claims, corporations need to have full access to every tier of their products’ supply chains. However, obtaining this level of granular data insights can be difficult to do quickly.

The Benefits of Data Partners

That’s where a dedicated data partner comes in. It can provide verified and sustainable data, from design and production through transportation and sales. In the process, corporations can back up their sustainability claims, avoid greenwashing and earn the trust of their customers. Imagine a scenario where you can have a unified, granular view into the supply chain and quickly identify compliance risks without having to wait for sustainability, cost and risk experts to weigh in.

A data partner can also help a company improve its sustainability goals and strategies. It can analyze the smallest part of a company's supply chain and identify areas where sustainability can be improved, reducing carbon emissions and waste.

Finally, a data partner can provide transparency and accountability in the corporation’s sustainability reporting. Verified data ensures that claims are true and can be backed up with evidence, avoiding misleading messages that can damage the company's reputation.

By prioritizing sustainability and committing to deep measurement and analysis, companies can attract a wider pool of investors, reduce their cost of capital and improve their access to funding. Those that invest in sustainability can tap into a range of sustainable investment options. In fact, asset managers globally are expected to increase their ESG-related assets under management to $33.9 trillion by 2026, from $18.4 trillion in 2021.

With the help from right partner and supply chain technology, companies can meet or exceed regulatory requirements and customer expectations. If you can show your work, you can move campaigns forward confidently while new regulations are finalized.