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From greenwashing to true sustainability (II/II): addressing retail sustainability issues head-on

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By Jef Teugels, Matthias Braun

· 10 min read

This is part two of a two-part series on greenwashing in retail businesses. You can read part two here.

Avoiding greenwashing: the importance of transparency and accountability

What is greenwashing, and why is it harmful

If a business or organization makes misleading or exaggerated claims about its commitment to the environment or improving society, they engage in greenwashing. It's the practice of making a firm or its products sound more eco-friendly than they are, whether by open deception or by employing imprecise or irrelevant wording.

Greenwashing is harmful for several reasons:

  1. Greenwashing is deceptive marketing that causes customers to believe they are helping the environment or society when they may be contributing to activities that aren't sustainable or ethical. This can lead to skepticism and a lack of faith in sustainability claims, hurting the cause.
  2. Because companies that participate in greenwashing may gain more attention and favorable publicity than companies that are genuinely devoted to sustainability, greenwashing may obstruct genuine sustainability initiatives by diverting attention and resources away from such efforts. This may slow the company's more environmentally and socially responsible actions.
  3. To put it another way, businesses that participate in greenwashing may obtain an unfair edge over their competitors that are truly devoted to sustainability. This can slow the development of new, environmentally friendly technologies and practices.
  4. Because of greenwashing, customers may be less likely to trust sustainability certifications from businesses that exploit them for marketing purposes without genuinely committing to sustainability.
  5. Greenwashing can add to public cynicism about sustainability claims by making it more challenging for consumers, legislators, and other stakeholders to take sustainability seriously. This may slow the company's more environmentally and socially responsible efforts.
  6. Greenwashing, in a nutshell, is when a business or product makes misleading or exaggerated claims about its commitment to environmental or social responsibility. In addition to contributing to public cynicism about sustainability, it also misleads consumers, hinders genuine sustainability efforts, levels the playing field, and undermines the legitimacy of sustainability certification systems. Building trust and confidence with stakeholders and promoting sincere sustainability efforts requires retailers to be upfront and accurate in their sustainability reporting and to avoid making false or exaggerated claims.

Four actions retailers can take to avoid greenwashing

Many methods, including providing accurate and extensive sustainability reporting, utilizing third-party certifications, and interacting with stakeholders, can help retailers prevent greenwashing. Critical strategies for preventing greenwashing in retail

  1. Retail sustainability reporting should be thorough and accurate, covering all the bases regarding important metrics, statistics, and company sustainability performance information. The company's sustainability aims, achievements, and difficulties should all be detailed in a publicly available report. To guarantee that their sustainability reports are thorough and uniform, stores can look to existing sustainability reporting frameworks like the Global Reporting Initiative (GRI) or the Sustainability Accounting Standards Board (SASB). Yet, see our remark on being skeptical about the framework.
  2. Retailers can prove their dedication to sustainability and provide independent verification of their sustainability claims by obtaining third-party certifications. Retailers can show that their items are environmentally friendly by obtaining third-party certificates like the Forest Stewardship Council (FSC) accreditation or the Cradle to Cradle certification. The certifications retailers use should be appropriate for their operations, and retailers should follow all certification guidelines.
  3. To further strengthen their sustainability reporting and strategies, retailers should also listen to and address the concerns of their stakeholders. 3. Customers, investors, and non-governmental organizations (NGOs) are examples of stakeholders that stores could communicate with to gain insight into their sustainability concerns and establish credibility. By talking to those who matter to them, stores may better address their customers' concerns about the environment and other issues.
  4. Retailers should avoid using ambiguous or deceptive language in their sustainability reports or promotional materials. Businesses in the retail sector should describe their efforts and results in the area of sustainability using language that is both clear and precise. For instance, stores shouldn't use phrases like "100% natural" or "eco-friendly" without explaining what they imply and offering proof.

In conclusion, stores can prevent greenwashing by providing thorough reports on their sustainable practices, relying on independent certifications, actively engaging with stakeholders, and avoiding ambiguous or deceptive wording. By doing so, retailers may earn the respect of their stakeholders, attract new customers, and positively impact the world by fostering genuine sustainability initiatives.

Five reasons to become sustainable even if a retailer’s current customer base does not demand it

Sustainability is becoming an increasingly essential aspect of consumer decision-making and critical for long-term business success; thus, retailers must become sustainable whether or not their current customer base demands sustainable products or services. Even if their present clientele doesn't care, here are a few good reasons for merchants to embrace sustainability:

  1. Consumers' priorities are shifting, and they now consider issues of environmental responsibility when making purchases. An increasing number of shoppers are looking for sustainable and ethical options as they seek to reduce their impact on the planet. Sustainable retailing is becoming increasingly important, and non-sustainable businesses risk losing clients to those who do.
  2. Retailers who place a premium on environmental friendliness are likelier to see increased foot traffic, especially among younger consumers who value ethical practices more when purchasing. By committing to sustainability, businesses may reach a wider audience and win over buyers who might have yet to give them much thought.
  3. Sustainability issues, such as climate change, resource depletion, and social injustice, offer substantial long-term hazards for retailers and must be mitigated if the industry is to thrive. By adopting sustainable practices, stores can lessen their vulnerability to these threats and strengthen their long-term viability. Some examples of this are lowering emissions of greenhouse gases, increasing supply chain transparency, raising labor standards, and decreasing waste production.
  4. Preparing for future legislative changes, fluctuating consumer tastes, and changing market conditions, merchants can future-proof their business by adopting a sustainable business model. Investors, regulators, and other stakeholder groups increasingly seek companies to demonstrate a commitment to sustainability as part of their due diligence.
  5. Increasing the company's positive impact on society and the environment, retailers can promote their corporate social responsibility by adopting a more sustainable business model. The confidence and respect of those who matter most in the success of a brand can grow in this way, as can consumer loyalty, competitive advantage, and longevity.

Because sustainability is becoming increasingly important in consumer decision-making, it can attract new customers, reduce business risks, future-proof the business, and promote corporate social responsibility; retailers should become sustainable even if their current customer base does not demand it. By putting environmental and social responsibility first, merchants can create a lasting and successful enterprise that benefits communities and the planet.


A recap of the significant points in this post

The main points of the above are:

Even if most of a store's existing clientele don't, the retailer must adopt sustainable practices to survive.

Retailers who don't prioritize sustainability risk losing customers to those who do, as shifting consumer expectations have made sustainability a more significant element in consumer decision-making.

New customers, especially those from younger generations who are more prone to consider environmental impacts when purchasing, can be attracted to stores that emphasize sustainability.

Retailers may reduce their exposure to long-term risks, better anticipate future legislative shifts and market situations, and boost their CSR efforts by adopting a more sustainable business model.

Retailers may move toward a more sustainable future by setting concrete sustainability targets, investing in certifications, reporting on sustainability transparently, and incorporating sustainability into corporate strategy.

By employing third-party certifications, communicating with stakeholders, and publishing transparent sustainability reports, stores can avoid being accused of greenwashing.

Calling on all retailers to act now

Retailers must prioritize sustainability while avoiding greenwashing to foster stakeholder confidence and credibility, support genuine sustainability efforts, and contribute to a more sustainable and socially responsible business. Here's an urgent plea for stores to put environmental responsibility first and stop greenwashing:

It's time for retailers to put social and environmental responsibility at the forefront of their operations. Consumers expect more sustainable and ethical products and services as their concern for environmental and social issues grows. If retailers don't prioritize sustainability, they could lose customers, pass up on new markets, and expose themselves to financial hazards in the long run.

Retailers can avoid being accused of greenwashing if they follow simple guidelines, like providing thorough sustainability reports, relying on third-party certifications, and maintaining open communication with relevant stakeholders. They must be forthright and honest in their sustainability claims while taking fundamental steps to lessen their adverse environmental and societal effects. This allows stores to stand out while gaining important constituencies' trust and credibility.

As merchants, we are obligated to advance sustainability and help build a sustainable and socially responsible economy. We must prioritize sustainability, establish concrete goals, allocate resources toward obtaining relevant certifications, and embed sustainability into our business plan. Doing so will help us create a company that can weather economic and social storms more easily.

Let's start making sustainability a top priority right now in our company. Let's support actual sustainability initiatives rather than those that merely give the impression of being so. Our world and our societies will benefit significantly from our combined efforts.

The way forward for environmentally responsible retailing

More and more merchants see the value in sustainability for their long-term profitability and for doing the right thing for their communities. Retailers who place a premium on sustainability stand to benefit from the growing demand for environmentally and ethically responsible goods and services among consumers. Much effort remains, however, to ensure that sustainability is fully integrated into all levels of business strategy.

The retail industry is responsible for maintaining its commitment to sustainability by focusing on sustainability goals, investing in certifications, reporting on sustainability transparently, and actively interacting with stakeholders. Reducing greenhouse gas emissions, increasing supply chain transparency and labor standards, and decreasing trash output are all examples of fundamental activities that retailers may do to lessen their environmental and social impact. Retailers may strengthen their businesses and have a beneficial effect on the world if they follow these guidelines.

The retail industry is well positioned to become more sustainable, but this can only happen if stores keep working toward a more ethical model. As the retail landscape evolves in response to new regulations, altering consumer tastes, and fluctuating market conditions, merchants must prioritize sustainability even more. Long-term success and a beneficial influence on the environment and society are more likely for retailers who put sustainability first and take meaningful steps to lessen their environmental and social footprint.

Finally, retail in the face of the degrowth movement

The degrowth movement is a political and social movement that proposes reducing economic activity to solve global warming and other social and environmental problems. Proponents of this movement say that unchecked economic expansion is bad for the planet, draining resources and widening income disparities.

Retailers may feel the effects of the degrowth movement if it becomes popular. Some possible outcomes of the degrowth movement in the retail sector are listed below.

  1. The degrowth movement promotes slowing economic growth, which could lead to less spending on consumer goods. Since retail establishments rely heavily on customer spending, this would devastate their bottom line. Retailers would have to adjust to lower consumer spending by creating more sustainable business models, such as circular business models emphasizing repairing and refurbishing things rather than selling new ones.
  2. The degrowth movement places a premium on sustainability, which could enhance consumer interest in eco-friendly goods. Sustainable retailers that stock sustainable goods will fare better in a degrowth economy. Stores may need to modify their advertising approaches to reach customers who place a premium on environmentally friendly products.
  3. The degrowth movement promotes relocating manufacturing and consumption closer to home, which could mean less international trade and a move toward more locally based supply chains. The success of retailers in a degrowth economy would be aided by their ability to source products locally and assist domestic manufacturers. Retailers may need to revise their approaches to supply chain management to increase their focus on local sourcing and promote sustainability throughout their supply chains.
  4. Degrowth may call for novel approaches to business that put environmental and social considerations ahead of profit maximization. For retailers to make a positive social and ecological effect, they may need to adopt cooperative or social enterprise models.
  5. To achieve its goals, the degrowth movement may necessitate the adoption of novel forms of enterprise that put sustainability and social responsibility ahead of profit maximization. Retailers may adopt cooperative or social enterprise models that put mission before profit to address these issues.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

Cover Photo by Viktor Bystrov on Unsplash
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About the authors

Jef Teugels designs planet- and people-first solutions and is a post-graduate researcher. He explores the energy created by the friction between customer behavior, organizational readiness, and exponential technologies. Born at 319.62 ppm, he’s a father and a grandfather trying to develop some intergenerational value.

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Matthias Braun is Principal at rpc - The Retail Performance Company GmbH. He is a pioneer in the investigation, development and implementation of digital and sustainable strategies and innovations in retail. In doing so, he places a particular focus on the customer experience, as he believes that only the most customer-centric organizations will survive in the fierce competition for customers.

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