The game is over for greenwashing. Paying lip service to sustainability no longer suffices. Brands can no longer make vague, unsupported claims to be green, however well-intended they might be. Consumer scepticism and forthcoming regulatory changes mean retailers and manufacturers will have to validate their green credentials and now is the time to prepare says Keith Watt, KPMG Ireland’s Head of Retail.
Bridging the Trust Gap with Consumers
KPMG’s most recent Next Gen Retail study clearly showed the most sincere and diligent brands have work to do when it comes to convincing consumers they are walking the walk on sustainability.
Only a quarter (26%) of people say they generally trust the environmental and sustainability claims made by brands, according to our nationally representative study of adults in Ireland.
Moreover, close to two thirds (63%) say brands must do more to inform them of their sustainability credentials. The same proportion agree that brands talk about doing positive things for the environment, but this does not always reflect the reality of their products.
Brands have most work to do in getting younger consumers on side. The research found those aged under 34 are the most likely to be sceptical, with about 70% believing greenwashing is rife.
The Crackdown is Coming
As the Irish government’s Climate Action Plan stipulates, we must halve our national emissions by 2030 and achieve net zero emissions by 2050. That means every business must play its part and be seen to do so.
Furthermore, international consumer authorities and regulators are getting tough on greenwashing. Other EU states such as the Netherlands have compelled a number of high-street retail brands to stop using potentially misleading terms such as ‘ecodesign’ and ‘conscious’.
Soon, every product and service in the EU will be subject to strict greenwashing rules under a coming crackdown. As reported widely in January 2023, companies will soon be forced to back up their green claims with hard evidence under a draft European Union law.
These draft rules come after the European Commission found in 2020 that 53 per cent of sustainability claims on products they reviewed provided “vague, misleading or unfounded information”.
EU Set to Demand Thorough Compliance
Under the new rules, any company making a green claim about a product or service will have to be able to prove it under a science-based methodology that covers 16 categories, including clean air and climate change, and across the entire lifecycle of the product.
Not only that, but the EU is also acting to weed out sneaky tactics. Any company that claims its product is sustainable in one way will have to reveal if it has a negative environmental impact in another way.
Understand What Matters to Consumers
Half of the consumers KPMG polled in late 2022 said sustainability was important to them when they buy cleaning products, with 48% saying the same of food and grocery shopping and 45% for clothing.
About a third (36%) said it’s important for DIY and home improvement products to be sustainable. The story was similar for electronics (35%), furniture (35%), motor fuel (33%) and toys (30%).
While retailers and manufacturers might hypothesise that higher earners would be more likely to cite sustainability as important when they shop, the research found people in the C2DE bracket were more likely to prioritise sustainability than those in the ABC1 group – for every product category in the research.
Build Trust Through Commitment and Verification
Consumers are understandably wary of brands’ generic claims to be green. Furthermore, today’s consumer wants to be confident they can believe more specific claims on packaging, such as ‘biodegradable’, ‘compostable’ or ‘carbon neutral’.
Whether a brand is making claims about its carbon emissions, its water use, how it enables the circular economy or anything else, it must be able to point to verifiable credentials.
Transparency and accountability are vital tools when it comes to combatting fears of greenwashing. KPMG’s Next Gen Retail research at the end of 2022 found 58% of people say there is not enough information available about brands’ environmental and sustainability credentials.
How to Win Verification in Practice
To secure consumer confidence, it’s vital to be able to show trustworthy verification. In Ireland, for example, businesses can seek to achieve the Business Working Responsibly Mark, which is verified by the National Standards Authority of Ireland.
It involves an audit-based assessment every three years. It incorporates best practices from international standards such as the Sustainable Development Goals and ISO standards.
Businesses can also sign up to the Champion Green initiative or seek to secure labelling such as the EU Ecolabel or the Fairtrade mark.
Getting this type of certification is not easy or straightforward. Along with a hyper-focus on energy efficiency, your business may have to overhaul:
- Supply chains
- Component or ingredient choices
- Processes across the entire business, from corporate travel to waste reduction.
You may also need to understand how your products can fit in the circular economy, by assessing what can be reused, repurposed or upcycled.
Make Use of Funding, Training and Other Support
While the journey to sustainability can sometimes seem like an overwhelming challenge, particularly for businesses in the early stages of this work, the good news is you can avail of extensive support and funding.
Retailers can find much to encourage and guide them in the Sustainability in Retail Handbook from Sustainable Irish Retail Action, for example. It covers everything from retrofitting premises and production processes to supply chain improvements and revising your communications. Even your website can be made more sustainable by requiring less energy to load.
Multiple funding sources and allowances are available to retailers, manufacturers and other businesses to promote the circular economy, to support the purchase of energy-efficient equipment, to adopt renewable heat and more.
If your business needs to become more energy efficient, for example, it may qualify for up to €1m per project from the Sustainable Energy Authority of Ireland’s Excellence in Energy Efficiency Design (EXEED) programme. Meanwhile, companies that export can avail of extensive green transition funding from Enterprise Ireland for both consultancy and capital projects.
The Climate Ready initiative from Skillnet Ireland offers fully-funded and subsidised training for businesses in climate action, sustainability and corporate social responsibility.
Source: KPMG Ireland