27 May 2021

Why greenwash won't wash...

The term 'greenwash' can be traced back to the 1980s, but the practice of it - companies conveying a false impression of their environmental efforts - existed long before.

More recently it has come to have a broader definition to incorporate any element of sustainability. Businesses who claim to protect and support workers within their organisation or supply chain, for example, have also been accused of greenwash if the PR fails to match reality.

Unfortunately, some companies have become rather skilled at it. Others, however, have been caught out for misleading stakeholders.

Sooner or later, any organisation that is inauthentic about its behaviour is likely to get discovered. NGOs, the public, employees and the media all act as a check and balance. Some companies have already learned to their cost that the commercial advantage gained by promoting unsubstantiated claims, can be lost in the blink of an eye if reputational damage occurs.

Mining companies, for instance, that publicise that they have provided sports facilities for local youths while simultaneously displacing an entire community; workers in fast-fashion chains that have not been properly paid or protected. Energy, beauty, food, electronics - there are numerous examples to be found across industry sectors where companies have been accused of implying they are more sustainable than they are.

One area that’s been increasingly in the spotlight is modern slavery. The Global Slavery Index reports that collectively the G20 countries are importing US$354 billion of at-risk products annually. Legislation introduced in the UK, Australia, France, Singapore and part of the US now requires companies to increase transparency in their supply chains to discover if previously unseen and unexplored abuses exist within them.

Researchers from the University of Liverpool, Dr Jo Meehan and Dr Bruce Pinnington, are leading a programme working with government agencies, organisations and NGOs, to explore how supply chains are responding to 'transparency in the supply chain' legislation in the UK.

They use the term 'strategic ambiguity' to characterise what they see as firms putting actions in place to be seen to be driving change when really they are simply protecting status quo.

With mounting pressure from investors, customers and employees, a growing number of companies are driving strategies to become more sustainable. They are seeking to lessen or improve their impact on the environment and communities and understand that to be a 'sustainable organisation' they cannot only examine their internal operations. They must also look at third party spend and the origins of the products used in their goods and services.

Technology is becoming critical for companies to quickly assess and monitor their supply base. The State of Flux’s SupplierBase platform helps businesses manage third-party risk through automated workflows; track risks against defined metrics; and implement action plans. It increases a company’s ability to oversee a large number of suppliers within a complex chain and integrates with third-party information providers to monitor suppliers, as well as regulatory changes and cyber threats.  

Companies that act with integrity and pay heed to sustainability in all its forms, will attract the leaders of the future and the consumers of tomorrow - turning investment in doing the right thing to their commercial advantage.

Regulation; customer preference; community expectations; cost; brand and reputation are all drivers for change. It is up to organisations to leverage their buying power to help suppliers make the change that’s needed that will benefit us all.


This year’s State of Flux research focuses on delivering commercial value from supplier management. Click here to take the 2021 survey now.


Contact State of Flux at enquiries@stateofflux.co.uk to find out how we can help you identify and manage sustainability risks in global supply chains