Traceability will be key in meeting consumer demands for sustainability.
The short version: if you can’t track the complete history of a product, including material and labor inputs, you can’t make an ironclad claim about its sustainability. There is no credible sustainability without comprehensive traceability. The latest twist: what’s always been an ethical issue is now a legal issue, too.
Happily, this means that greenwashing will soon be circling the drain. Based on the term “whitewashing,” greenwashing means “to make stakeholders believe that your company is doing more to protect the environment than it really is.” Greenwashing came about as unscrupulous businesses grappled with the advent of “conscious consumerism” or “consumers with a conscience.” In other words, greenwashing exists because green sells. A large body of research bears this out. For example, a Nielson poll found that 66% of adult consumers are willing to pay more for eco-friendly products and 50% of purchasing decisions are influenced by sustainability claims.
Faced with this rising demand for eco-friendly products and environmentally ethical business practices, some bad actors decided to greenwash because it’s less expensive than implementing the real thing. Sometimes greenwashing is subtle, sometimes it’s brazen, as we’ll see below.
According to Mark Burstein, executive vice president and industry principal at Logility, decades of conversation on sustainability has been 99 percent greenwashing. Burstein is wary of any claim that isn’t backed by data including visibility of the full chain of custody.
Greenwashing dates back to the ‘60s, when the nuclear power industry was trying to counter the claims made by the anti-nuclear movement. Greenwashing usually takes the form of one of the Seven Sins of Greenwashing, reproduced here:
- Hidden trade-off: Defining something as “green” by a narrow definition that ignores other environmental impacts. For example, a packaging innovation that reduces the use of black plastic at the expense of an increase in the rate of deforestation.
- No proof: Claims are not easily confirmed or are not verified by third-party certifications.
- Vagueness: Broad, insubstantial, or convoluted claims. These include statements like ‘new and improved’, ‘made with recycled materials’, ‘eco-friendly’, and ‘non-toxic’, with no further specificity.
- Irrelevance: Claims may be truthful but unrelated to the product or company.
How have they gotten away with it? Well, in a few of the more egregious cases, they haven’t. But let’s look at Ben & Jerry’s — by the way, a company that has done much admirable work in the areas of fair trade, sustainability and non-GMO standards — to illustrate a couple of points:
- This stuff is complicated; and
- Most consumers care up to the point where — you guessed it — the stuff gets complicated.
On the Ben & Jerry’s public website, we see the company acknowledging that the details surrounding non-GMO supply chain compliance are intricate, replete with arcane language, bewildering regulations, and exceptions that appear to be at cross purposes. Therefore, not everyone will want to forge ahead and truly understand the complexities.
For Ben & Jerry’s, claims related to non-GMO compliance require tracing animal feed sources and ingredients obtained from fermentation and processing aids or enzymes, potential comingling of GMO and non-GMO ingredients at any point in the supply chain, and any variances issued. And that’s a very abridged version of the company’s traceability requirements. Sustainability tracking is equally complex.
In the past, trust — even misplaced trust — was enough, but now we’re entering an era of “don’t trust and do verify.” Which brings us to the reckoning. To explore this, let’s shift our industry focus from dairy to denim.
Changing the Way Materials Are Sourced
On January 13, 2021 the United States Customs and Border Protection expanded the blanket Withhold Release Order (WRO) initially issued on December 2, 2020 and will detain all shipments containing cotton and cotton products originating from the Xinjiang Uyghur Autonomous Region (XUAR) and now includes tomato products. This potentially affects cotton products from countries other than China that use Chinese cotton inputs such as cotton fabric. Britain also announced they 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 the US 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.
“My interpretation of it is any cotton product coming from any country has the potential to be detained unless you can show proof of admissibility that it wasn’t using Chinese cotton or inputs from that region,” Burstein said. As we’ve said before, this is a guilty until proven innocent stance with huge financial implications, a case where one bad apple does indeed spoil the whole bunch.
If suspected and unable to show verifiable proof, the importer has three options:
- Take the products out of the US market and export them somewhere else.
- Destroy the merchandise.
- Abandon the merchandise.
Meeting Consumer Expectations
The latest developments from the United Kingdom and United States show there is strong action being taken to change the way materials are sourced. Now, it is up to supply chain leaders to ensure they can prove through a digital thread they are in compliance across every link in their complex, global supply chain.
In the wake of these growing concerns, Logility launched a digital supplychain traceability solution giving brand owners and retailers the tools to document the chain of custody from component origin to importer of record. With this solution, users can trace the chain of custody through all tiers in the supply chain in one digital thread while storing and managing all supporting documents related to every transaction between supply chain trading partners.
The digital thread compiles and organizes a chronological and verifiable account of importer of record back through every tier of the supply chain to the original raw material source. Transactions are validated at every tier using POs, invoices and packing lists. All these documents are rolled up to a certificate of compliance with complete chain of custody. This comprehensive genealogy is sent electronically for all shipments arriving in the US. This is what United States Customs and Border Protection will examine to determine compliance with relevant rules and regulations.
Outside of the potential legal issues, traceability will be key in meeting consumer demands for sustainability across all industries. Coming full circle, brands now have compliance tools that also help them prove to jaded customers that environmental and social responsibility programs are in place and supported by tangible evidence.
Furthermore, consumers will come to understand that these tools exist. While we’ll always have lazy consumers, and while the Ben & Jerry’s example proves that modern, global supply chains are inherently complex, we won’t always have companies hiding behind the lament that “full supply chain traceability is too hard…there are no technology solutions for it.”
Finally, it’s refreshing to note that some global brands are joining the call for comprehensive traceability solutions to validate their sustainability claims. Rather than bemoan the loss of greenwashing as a tactic (as some surely will), these companies are proactively assessing the market for advanced supply chain traceability solutions that support overarching CSR strategies. They have essentially aligned themselves with consumers and put technology providers on notice.
These solutions must measure and manage the full environmental impact of internal and external facilities, rate material producers and garment manufacturers’ environmental performance, extend the lifespan of products and even provide insights into how to improve recyclability of textile waste and unsold products.
Burstein sums it up nicely: “We’re going to have something good come out of this situation in Xinjiang. The runway where we get to true traceability. Because without traceability at each one of these nodes, no one can accurately tell you the environmental footprint of their supply chain.”