Transparency Key to Overcoming Greenwashing

Gen Z wants brands to prove their claims, while regulators increasingly require it. Only supply chain transparency can help companies meet demands for sustainability.

Sundry Photography Adobe Stock 320444308
Sundry Photography AdobeStock_320444308

Many recent supply chain issues have arisen from a lack of visibility. Supply chains are highly complex and involve involves many stages and stakeholders. As a result, global brands are quickly realizing that visibility to their supply chains reduces said complexities, in addition to offering major business benefits.

Specifically, a visible supply chain appeals to millions of new customers in Generation Z that are actively investing in brands that represent change and support the causes they care about.

Gen Z is actively investing in sustainable brands. According to a November 2021 study by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania, 75% of Gen Z consumers have said that sustainability is more important than brand name when making a purchasing decision, and the vast majority of Gen Z is willing to pay more money for sustainable products. And meeting their demands is important: projections anticipate that Gen Z will support over $3 trillion of spending in 2030 across six focus markets, an approximate six-fold increase on 2019.

That’s why fashion brands have begun to market the sustainability of their products to Gen Z shoppers. However, in 2021, the International Consumer Protection and Enforcement Network (ICPEN) found that 40% of environmental claims made by brands could be misleading – now coined “greenwashing.” The European Commission even commented on the inconsistency, noting that “greenwashing has increased as consumers increasingly seek to buy environmentally sound products.”

As a result, brands need proof of their sustainability to support their claims. The problem has become so widespread that global regulators have begun to act. California recently passed the Transparency in Supply Chains Act, while Germany passed the Supply Chain Due Diligence Act, among others. Essentially, governments have begun requiring that companies make sense of their supply chains and disclose more information than ever before.

The only way in which brands can effectively handle these new global regulations, and Gen Z’s growing demand for sustainable supply chain practices, is to gain more visibility into their supply chains. Put simply, the more transparent supply chains become, the more brands can prove that their practices are sustainable.

Only a transparent supply chain can be truly sustainable and compliant with the growing number of regulations meant to promote sustainability and responsibility. With Gen Z suspicious of labels like “green” and “organic,” it’s no longer possible for brands to tout sustainable practices without true proof – especially when transparent supply chains are becoming more attainable with technological innovations.

Digitization, a vertically integrated stack of technologies that collects and generates data about a brand’s myriad suppliers and presents it in a way that demonstrates briefly whether the brand is truly sustainable, is the key.

It’s no secret that brands are increasingly getting more customer inquiries about their sustainability than they did a year ago. Gen Z wants brands to prove their claims, while regulators increasingly require it. Only supply chain transparency can help companies meet demands for sustainability.