climate-impact
March 13, 2023
With sustainability becoming an absolute buzzword over the past few years, many companies are jumping on board the green train. However, all is not as positive as it seems, since one issue has arisen in the form of greenwashing. Paying lip service to sustainability has become very common. But beware, if a company is caught engaging in greenwashing, they will lose their customers’ trust and loyalty, which ultimately affects their bottom line.
Admittedly, implementing green policies across large companies and their supply chains is a gargantuan task.
How, then, do companies make sure that they are not accused of merely talking the talk and not walking the walk?
Let’s start with a definition of the term transparency and what makes it “radical”.
Transparency, as you are probably aware, means laying bare important information about one’s company or government. For politicians and CEOs who want to be seen to be doing something proactive, transparency is a helpful tool. (2)
The rather new term Radical Transparency refers to a philosophy of complete openness and honesty in an organisation’s internal and external operations. The goal of Radical Transparency is to build trust with stakeholders by providing them with all the information they need to make informed decisions about the organisation. This may include everything from how products are made to the salaries of top executives.
Being open about a company or institution’s processes is a good way of fighting corruption, building trust, offering insight into corporate social responsibility, and fostering accountability. (2)
In the end, Radical Transparency is an approach that goes beyond traditional transparency. It means sharing the good and the bad to be accountable.
Any relevant information as pertains to the company must be offered up to customers, stakeholders, citizens and other interested parties through the publication of company-related datasets, transcripts or even installing live feeds of meetings. It further includes publicly sharing accounts, policies and decision-making procedures. (2)
Certainly, there are limits to the information companies and governments publish, e.g. if it affects national security or the businesses’ competitiveness. Such state and trade secrets are unsurprisingly off-limits.
The tricky part of radical transparency is that it requires companies to publicly acknowledge issues in need of improvement. When you as a company are used to brushing such topics under the carpet for fear of losing customers, this is a challenging leap of faith and change of strategy. However, it’s a leap companies must take to stay relevant. (1)
In the last couple of years, transparency has considerably impacted global consumption patterns. Less than ten years ago in the US, you could not find affordable non-GMO corn starch due to the supply not being able to meet demand.
As consumers gained a better understanding of the impact of products and chose to purchase Non-GMO corn starch, the demand for this product skyrocketed and in turn, growers moved to this crop and away from less sustainable products. As their supply increased, this resulted in lower costs for customers. It is a long-term loop and a win-win situation for both parties. (1)
Companies taking their First Small Steps in Radical Transparency
Naturally, the need for transparency is something companies have been increasingly faced with in the past couple of years. Two-thirds of Millennials and almost 8 out of 10 Gen Z consumers (the latter being also known as the “honest generation”) think brands are not honest enough about the topic of environmental sustainability. (6)
This could considerably affect the margins of companies that fail to share their data with the public. It, therefore, comes as no surprise that companies big and small are taking their first baby steps into the arena of utter openness. Even the giants in de F&B sector are being forced to abandon an opaque mode of operation and step by step open up to the public about some of their processes.
One company attempting to be more open is Nestle, who had to face the music after their 2018 scandal involving Nestle's Maggi noodles in India. The Indian food safety regulator found that the noodles contained excessive levels of lead and MSG, causing Nestle to recall the product and face a ban on its sale in the country. The incident led to a loss of consumer trust in Nestle's products and a decline in sales. In response, Nestle implemented stricter quality control measures and increased transparency in its supply chain to regain consumer trust and improve its reputation, thereby becoming an involuntary pioneer in the food industry. (3)
Unilever was not far behind. Also in 2018, they released the locations of their 1431 palm oil mills, which provided valuable information for scientists and investors to understand the impact of palm oil production on landscape and biodiversity by comparing mill locations with other data. (4)
That being said, both companies still have a long way to go to be able to claim the accolade of Radical Transparency.
“To build trust between consumers and brands, we need to show our customers everything,” explains Thomas Archer Bata, CEO and Founder at Mont Gelé Gear. “This means telling them how much their product costs to produce, market and how much profit is made. This means telling them how much carbon and waste is generated for each product and what we are doing to improve.” (5)
Does this mean a simple information dump is the right way to do Radical Transparency?
The answer is a clear no.
When communicating sustainability metrics it is important to keep in mind that while there is an expectation on the consumers’ side for companies to be increasingly transparent about their value chain, they are also pressed for time and therefore are not interested in wading through lengthy ESG reports to understand the company’s stance on sustainability.
While these in-depth reports hold value for journalists and NGOs, at the customer level, the company needs to differentiate between greenwashing and genuine sustainability efforts and present this information easily. (1)
To make matters worse, a host of new companies are selling "sustainability" certifications to brands, but it is not clear how reliable these certifications are because they are not regulated. Unsurprisingly, these private certification companies are mainly looking for profit. This then makes consumers skceptical of the companies' claims. (5)
Third-party accreditation from a trusted source is the way to go.
"Third-party platforms that are establishing standards to provide consumers with the 'simple' stories they need to make informative decisions. The average consumer does not understand things like different crop defensce strategies employed by farmers, but if
they meet the standards of an informed organisation like Field to Market then they can be confident in that product's development through the supply chain,“ Thomas Slaugh from analytics company Proagrica told Foodnavigator.
The easiest approach is adding impact labels to your F&B products or white label products, that explain in a simple manner, how serious a product’s impact is along the entire value chain and onwards if they are implementing cradle-to-cradle processes. However, pay attention to the reliability and methodology depth of these third-party platforms.
"We are moving away from the days of badges on products without data or proof. The future of certifications must include transparency of the impact behind the badge," says Slaugh. (1)
If you decide that you do want to charge ahead with absolute transparency, product impact assessments are the steppingstone. What is just as important, however, is communicating the results to your customers to build trust.
We at inoqo have the solution for how to share all your production- and consumption-related data. Our Product Impact Assessment analyses the impact of your product across different dimensions, including climate, animal welfare, regionality and social. You can then easily communicate your products’ impact with our impact labels. This is exactly the kind of transparency today’s young consumers crave.
Would you like to learn more about how we can help you win over customers with radical transparency? Get in touch at hello@inoqo.com. Depending on your suitability, we may even be able to offer an exclusive introductory assessment of your product.
Sources:
1 https://www.foodnavigator.com/Article/2020/08/19/Radical-transparency-is-needed-to-overcome-greenwashing-scepticism
2 https://journals.sagepub.com/doi/10.1177/1532708613517442
3 https://www.foodnavigator-asia.com/Article/2019/04/02/Full-supply-chain-transparency-Nestle-publicly-discloses-lists-of-commodity-suppliers-in-industry-first-move
4 https://www.space-intelligence.com/2022/01/10/unilever-releases-locations-of-palm-oil-mills-in-a-bid-for-supply-chain-transparency-2/
5 https://www.linkedin.com/pulse/why-we-believe-radical-transparency-thomas-archer-bata/
6 https://www.wearefuterra.com/thinks/the-honest-generation
7 https://www.ubs.com/global/en/family-office-institutional-wealth/home/radical-transparency.html
March 13, 2023
by Laura
from inoqo
