Don't Get Duped by Supplier "Washing"
Tips sourcing professionals can use to identify and avoid certain corporate and supplier washing practices as part of their ESG strategy.
By Hugo Britt | March 19, 2024
You’re a savvy procurement pro working for a global retail company that’s all about building a sustainable supply chain. Your organization is committed to sourcing products from suppliers who walk the talk when it comes to environmental, social, and governance (ESG) practices. But as ESG takes center stage, there’s a lurking danger of falling for supplier “washing.”
Let’s explore how to navigate the potentially treacherous waters of washing practices to make smart choices.
A tale of sustainable sourcing...
You’re on a mission to find a new supplier for sustainable packaging. You stumble upon a company that claims to be the leading light of eco-friendly packaging solutions. Intrigued, you arrange a meeting with their representatives, expecting to witness a sustainability extravaganza.
They roll out the red carpet and showcase their shiny facility, bragging about their commitment to recycling, waste reduction, and renewable energy. They throw impressive figures at you, boasting about water and energy savings that could power a small city. Their catchy slogans about saving the planet make you want to cheer.
But as a sharp procurement pro, you smell something fishy. You know that green washing is a real thing, and you’re not about to fall for it. So, you put on your detective hat and start digging deeper.
You kick off the conversation by asking some hard-hitting questions about their sustainability initiatives. You want the details about their recycling processes, third-party certifications they have, and the percentage of recycled materials they use. But instead of direct answers, you receive a masterclass in dodging questions.
Realizing that you might be dealing with a master washer, you decide to take it up a notch. You ask for concrete evidence, like third-party certifications or independent audits, to back up their environmental claims. You get nothing but flimsy excuses for not having any certifications.
By asking the right questions, demanding solid evidence, conducting surprise site visits, and teaming up with industry peers, procurement pros can outsmart supplier "washing" and make informed decisions.
A rainbow of corporate "washing"
Did you know that greenwashing isn’t the only danger to look out for? Here’s a brief explanation of four types of corporate “washing”, with thanks to ESGAnalytics.io.
Green Washing
Green washing, which originated in the 1980s, happens when companies present themselves as environmentally responsible without substantiating their claims. Industries such as oil, tobacco, and chemicals have been particularly scrutinized for their use of green washing to mask the negative consequences of their operations. Sometimes, green washing is purely about marketing and PR – such as an oil company literally changing its logo to green and spouting clean energy rhetoric while conducting business as usual.
In other instances, a company will manipulate its self-reported figures to improve its ESG rating or pretend to meet regulatory standards. The Volkswagen “emissions-gate” scandal occurred when the company fitted their cars with a emissions-reducing device that activated only when the car’s emissions were being tested. The scandal is estimated to have cost Volkswagen US$35.4 billion.
Social Washing
Social washing focuses on companies projecting a socially conscious image without implementing substantial measures to support their claims. Issues such as labor rights, human rights, gender equality, and discrimination have been subject to scrutiny, with some companies genuinely addressing these concerns while others engage in social washing. Companies celebrating International Women’s Day while doing little to close the gender pay gap is a type of social washing.
Pink Washing
Pink washing involves companies showcasing support for LGBT rights through sponsorships and public events while neglecting the well-being of their LGBT employees, who may face discrimination and marginalization. Companies may use their public displays of support for the LGBTQ+ community (such as participating in a Pride march) as a shield to divert attention from internal practices that perpetuate discrimination and inequality.
Blue Washing
Blue washing pertains to businesses aligning themselves with the United Nations Global Compact to enhance their reputation and deflect attention from contentious practices. By joining the UN Global Compact, companies signal their commitment to ten principles related to sustainable and ethical practices.
Companies may leverage the association with the UN Global Compact to bolster their environmental credentials without genuinely adhering to the principles it espouses.
Procurement's power to spot supplier washing
While the average consumer has limited ability to investigate and confirm a company’s ESG claims, procurement is well-placed for this task. Sourcing professionals have the know-how, the experience, and the toolkit to see through corporate washing practices.
Here are some strategies for getting to the truth in ESG:
- Don’t Fall For Unsubstantiated Claims: Marketing and PR copy on company websites can be very convincing, and even inspirational – but it may just be hot air. Train yourself to identify unsubstantiated claims, and always seek further detail.
- Ask the Right Questions: Don’t shy away from the tough stuff. Get specific about suppliers’ sustainability initiatives, policies, and targets. Seek clear proof, like data, reports, or case studies, to back up their claims.
- Ask for Third-Party Certifications: Be relentless in your pursuit of truth. Ask suppliers for certifications from reputable organizations that validate their environmental and social claims. Certifications like Forest Stewardship Council (FSC) or Fairtrade can be a seal of authenticity.
- Conduct Site Visits and Audits: Put on your detective hat and show up at suppliers’ facilities. Take a closer look at their operations, waste management systems, and employee well-being initiatives. Consider bringing in third-party auditors to get an unbiased assessment.
- Team Up with Industry Peers: Don’t fight the washing battle alone. Collaborate with other procurement folks in your industry. Share insights, swap stories, and build a collective knowledge base about reliable ESG standards.
- Partner With Tech-Savvy Suppliers: Look for suppliers who know how to leverage technology to prove their ESG claims. For example, QR codes on packaging can be used to trace and verify the origin of produces with blockchain-based solutions.
- Invest in your ESG Procurement Skills: ESG Procurement Managers require a unique skillset including a deep understanding of sustainability frameworks, and analytical skills that are crucial for digging into the data and spotting washing efforts.
By asking the right questions, demanding solid evidence, conducting surprise site visits, and teaming up with industry peers, we can outsmart supplier “washing” and make informed decisions.
Staying one step ahead of the washing game will help protect the integrity of our organizations and contribute to a greener, more responsible future.
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