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  May 25th, 2022 | Written by

The Importance of a Transparent Supply Chain to Avoid Reputational Harm, and Prevent ‘Greenwashing’ Claims

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Best Practices to Avoid Reputational Harm due to ‘Greenwashing’ Claims

To minimize reputational harm, Rodriguez recommends companies to take the following steps:

 Prioritize transparency. It is beneficial to get ahead of potential public scrutiny and to be proactive in the information that you disclose about your supply chain. Some items companies could publish publicly include:

  • The geographies your supply chain operates in, and the regional human rights and environmental risks inherent to these geographies
  • Actions on behalf of your business to address the above risks, including steps to address human rights risks, such as child labor and modern slavery
  • A Supplier Code of Conducts or other documentation on supplier expectations with regards to environmental and human rights commitments
  • Memberships and/or partnerships with responsible sourcing groups or coalitions

Disclose metrics. It is important to disclose quantifiable information and metrics to demonstrate commitments to achieving disclosed targets. Examples of items companies could disclose publicly include:

  • General supplier information such as geographic locations, number of suppliers per region, supplier specifications (e.g., what raw materials or processes they provide), third-party verification audits and certifications, and the percentage of the supply chain that has received these verifications
  • Targets and commitments that are measurable, and for which verifiable data is made public (for example, targets verified by the Science Based Targets Initiative)
  • Historical progress on a year-by-year basis on the above actions to demonstrate an improvement strategy

Remain up to date with changes in regulations. It is important to be on top of regulatory changes and requirements in different markets that companies are operating in, as these are rapidly changing

  • Education and training should not be limited only to certain teams, but rather be company-wide to encourage cross functional collaboration and alignment on sustainability goals and initiatives
  • Identify and understand what regulations, requirements, and certifications are most pertinent to your industry

What to do when a Greenwashing claim is shared publicly

  • Nevertheless, despite a company’s best intentions, establishing complete control over what happens in your global supply chains is difficult. In the case of reputational harm or financial damage to a company following a scandal, a company should follow the general rule of transparency and, as much as possible, get ahead with disclosure. It is crucial that a company immediately demonstrates ownership and accountability for accusations, and publish steps of what it will do next:
  • Demonstrate ownership and address the claim publicly immediately
  • Identify and announce what you will do to address and solve the issue addressed