Procurement 'can end Scope 3 supply chain greenwashing'
Greenwashing is a phrase that was coined by environmentalist Jay Westerveld in the 1980s, when he claimed the hotel industry was falsely promoting the reuse of towels as part of a broader environmental strategy when, in truth, it was a cost-saving measure.
In today’s world, ‘greenwashing’ is used to name and shame companies that talk the talk on sustainability but don't walk it, and it’s something that affects giant corporations just as much as the little guys.
One of the sustainability problem areas for businesses of all sizes is Scope 3 emissions in the supply chain. These are difficult to measure, and to control, and there’s is a lot of talk from businesses about Scope 3 progress being made. But how much of this can we actually believe?
Microsoft was the latest high-profile company to be accused of greenwashing, when it revealed its Scope 3 emissions had risen by 22.7% year-on-year, despite pledging to be carbon neutral by 2030.
While the company had succeeded in reducing its carbon emissions in fuel, energy, and company vehicles, most of these carbon savings were pandemic-driven. In the meantime, Microsoft’s procurement practices - around purchased goods and the use of sold products - are threatening to derail its 2030 carbon neutral pledge. Shortly after the news broke, the majority of Microsoft’s partners made promises to become net zero by 2050.
Ensuring that procurement is sustainable is no easy task, yet when implemented and managed correctly, it can lead to better decision making, significant cost reductions, and a more successful brand.
More importantly, it puts so-called greenwashing practices in their place, replacing them with strategies that actually make a difference.
What is supply chain greenwashing?
Greenwashing has become commonplace in many industries, from fashion to seafood, and has attracted attention from some heavy hitting enforcement organisations, such as the Competition and Markets Authority (CMA), who recently introduced the Green Claims Code – guidelines designed to support industry in ensuring honest marketing campaigns.
As well as the International Consumer Protection Enforcement Network – who in late 2021, in a project led by the CMA and The Netherlands Authority for Consumers and Markets – analysed 500 websites, and discovering around 40% of sustainability claims could be classed as misleading.
And this is the point: with increasing consumer demand for green products and services, the pressure is on organisations to deliver on sustainability, and this is where procurement can lead the way.
Supply chain greenwashing: what shade are you?
Greenwashing is already an issue for the procurement sector. A recent survey from the Chartered Institute of Procurement and Supply (CIPS) found that 19% of the 300 procurement professionals surveyed didn’t know how sustainable their own products were, while almost 50% didn’t believe that their organisation was being sufficiently transparent with consumers, clients and regulators about sustainability.
Those organisations using greenwashing tactics run the risk of reputational damage, with the ripple effects impacting not just their bottom line, but consumer and employee confidence in what they are doing.
However, the ripples reach further, as it may bring into question the entire supply chain, as well as hinder efforts being made to solve environmental challenges within industry.
Can your entire supply chain really go green?
Procurement teams are tasked with identifying the right suppliers, and can harness this unique position to ensure they have solid information and a thorough understanding of their organisation’s supply chain.
Procurement departments should know their suppliers inside out, and have regular conversations with them, to understand the provenance of what they are procuring. Without such knowledge, businesses cannot make meaningful sustainability claims about the products they sell.
Meeting Scope 3 challenges
Sustainability strategies in procurement do create challenges, such as:
Cost: Sustainable products tend to be more costly, which can mean organisations have to choose between raising prices for consumers or taking the hit internally.
The unknown: A move to sustainable products and services is a step into the unknown for many organisations. Governmental regulations and policies can change, as can consumer demand.
Internal policies: Organisations should have robust environmental policies in place, to ensure employees are empowered to implement them.
But if organisations get it right, they can build a sustainable supply chain that they and their suppliers can be proud of.
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