The Real Cost of Greenwashing in Procurement

Greenwashing is a top challenge for procurement professionals. Learn what to look for when creating a more sustainable supply chain.

Greenwashing. The word sounds clean and sustainable, but in reality, it’s a dirty way to make an organization seem more environmentally responsible than it is. A portmanteau of ‘green’ and ‘brainwashing’, greenwashing is the presentation of an eco-friendly product or business hiding a less-than-sustainable truth. The marketing advantage is clear: green sells. But does this risk pay off?

As a procurement professional looking to make your supply chain more sustainable, you may already be aware of the greenwashing tactics suppliers use to make their products seem greener. It takes an informed and assertive procurement professional to combat greenwashing, says Sarah Scudder, President and Chief Revenue Officer at Real Sourcing Network.

“Educate yourself and your procurement team. Ask questions until you are satisfied that you have solid evidence that what the company or supplier is ‘selling’ is the eco-friendly and sustainable solution to fit your procurement needs,” she says.

Common greenwashing scams

Here’s Sarah Scudder’s list of top greenwashing red flags.

Sneaky trade-offs

Where a company tries to distract you from how their product or service is causing environmental damage. They craftily shift your focus to other features about their products or services that are eco-friendly. The objective is to focus the buyer’s attention away from the red flag environment issues.  

Zero-proof procurement claims

Where a company throws around buzz words describing their products or services as ‘green’ or ‘eco-friendly’. 

Misleading labels

Where a company slaps a label on something and calls it ‘eco-friendly’. These claims are not supported by any solid evidence. 

Evasive advertising

Where businesses will use grandiose or broad terms that sound wonderful. For example: “100% of the scientists surveyed say our product is environmentally safe.” If a company compensates for a positive recommendation, you can see the problem. 

Stating the obvious

Where a company makes a moot claim to impress procurement buyers and customers. For example, in Canada, a company could claim a product is CFC-free, which sounds so impressive, until you realize that every other product out there has to be CFC-free because the nation has banned the use of CFCs across the board. It sounds good but means very little.

Should you pay the green premium?

While greenwashing tactics are designed to win business based on fibs, it’s also true that being green often costs more – financially, that is. But perhaps not long term.

Bill Gates described the green premium as “the difference in cost between a product that involves emitting carbon and an alternative that doesn’t,” though it can be applied to the price gap between any legacy product and its eco-friendlier option.

The cost squeeze on supply chains is often in conflict with the green premium, but if an organization is serious about sustainability, it needs to involve procurement in its sustainable practices. Of course, if an organization can verify the green credentials of the inputs to its products through a sustainable supply chain, it can also charge the green premium.

The verification process is a key step to another factor: transparency is also emerging as a significant marketing tactic. The more sustainable your supply chain, the more transparent you can be about your sourcing and the more you can leverage that for consumer clout. Committing to transparency in sustainability also helps your organization avoid one of the most popular greenwashing tactics: selectively disclosing green suppliers while concealing ‘brown’ suppliers.

For his part, Gates believes the green premium is imperfect but necessary to measure the different factors at play in the supply chain. This could include a holistic understanding of the lifecycle of a product, including waste and emissions – for example, where polluting industries measure only the cost of the product, not the cost of its effect on the environment. It can also include supply chain obstacles that prevent greener products that are cheaper than legacy products from hitting the market.

You can leapfrog greenwashing by focusing keenly on sustainable procurement practices and a transparent supply chain.

Procurement professionals need to take a holistic view of sustainability and see their management of the supply chain as a way to influence up, by “convincing your bosses that spending more money for eco-friendly products and services is worth the investment,” says Scudder. 

You can also influence out, by offering suppliers a financial incentive to be both transparent and sustainable. 

The result is a winning formula. “When I know a business considers the health of our planet in all areas of operation, it is worth it to spend a bit more for that peace of mind. I’m not only supporting the eco-friendly company, I am supporting my belief that taking proper care of the earth matters,” says Scudder. 

“The issue is helping suppliers and consumers see that delivering on the environment justifies a higher premium.”

And the higher premium upfront may have long-term benefits for your organization. Recent Ivalua research found that organizations with advanced sustainability programs are over two times more likely to report improved ROI.

3 steps to make your supply chain sustainable

Scudder uses a three-step process to ensure the supply chain is as sustainable as possible: investigate, research, verify.

1. Keep everyone informed

Run monthly workshops or provide employees with data “to keep them up-to-date on new regulations that are constantly coming down from the federal level,” she advises. For example, the Green Guides from the Federal Trade Commission.  

Thorough research will give you the leverage when it comes to decision-making, Scudder adds. 

“Use the hard data and bring it to the table when it is time to present your case. Be confident in your evidence-based choice of suppliers and products or services. The details matter.”

2. Practice verification so it becomes second nature. 

“I used to keep a list of the propaganda techniques close at hand. When considering a supplier, I used my list to help me with any red flags that may pop up. Now, I can smell a phony a mile away,” she says.

3. Stay committed

This is the biggest thing procurement professionals can do. Your continued influence on your organization’s sustainable practices is important. 

“Most of the people in our supply chain world truly care about sustaining the earth. Most are receptive to positive changes that reduce our carbon footprint. Use that positive energy to make changes in your supply chain endeavors. Convince whoever needs to be convinced,” says Scudder. 

We know sustainable procurement has big pay-offs.

That’s why this year’s Big Ideas Summit Chicago will focus on sustainability. We’re ready to empower businesses to lead the charge to establish greener supply chains and procurement processes.

Our Big Ideas will be delivered by internationally renowned speakers to our fully digital event. And did we mention that this is a FREE event?

So what are you waiting for? Register today to secure your place!