Green or Greenwashed: How Retail Can Combat Misleading Claims

Greenwashing, where companies make false or misleading claims about a product’s environmental benefits in a bid to appeal to eco-conscious consumers, is plaguing the retail industry. This problem not only leads to a breakdown of consumer trust, but it also threatens the future potential for legitimate retail circularity and diminishes the value of brands with products that are truly sustainable.

Across the board, consumers are gravitating toward sustainability. The sustainable fashion industry, for example, is valued at $6.5 billion and is expected to hit $15 billion by 2030 – indicating how hungry consumers are for eco-conscious brands. Still, a recent KPMG survey found that while 75 percent of millennials are ready to change their buying habits in favor of environmentally-friendly products, only 26 percent actually trust brands’ environmental and sustainable claims. This is a direct consequence of brands using misleading labels, hiding the truth about production processes, or misrepresenting environmental standards and certifications. 

Just a few recent cases of greenwashing that have made headlines include claiming products are 100 percent recycled when only pieces of the product are, marketing undergarments as safer alternatives to menstrual cycle products even though they contain harmful chemicals, and appointing a big-name celebrity “sustainability ambassador” with a well-documented, outsized carbon footprint. 

Unearthing the root causes of greenwashing

In a rush to capitalize on sustainable trends, many retailers have been more focused on marketing the “right” message than actually walking the talk. No longer willing to take brand statements at face value, consumers and investigative journalists are now taking a more active role in uncovering greenwashing, but the process is harder than it sounds. 

Validating marketing claims requires a level of contextually relevant and accurate product information, traceability, and supplier data-sharing that is largely unseen in retail supply chains today. Supply chains are complex, involving multiple suppliers, manufacturers and intermediaries, making it all the more difficult to trace products from origin to final destination. As a result, unscrupulous suppliers, who may not be transparent about their sustainability practices, sometimes slip through the cracks.

Finding that half of the environmental claims used to advertise products in the European Union are misleading or unfounded, the European Commission is preparing to introduce rules to prevent greenwashing. One method involves the use of digital product passports or profiles that contain pertinent information on the product’s material extraction, production and recycling processes, which can then be shared with the entire value chain. Other regulations center around extended producer responsibility, placing the onus on producers for their product’s end-of-life impact on the environment.

As ESG regulations continue to ramp up, companies will need to prioritize product traceability and consumer transparency or face significant reputational, financial, and potentially regulatory damages.

How technology can help consumer transparency flourish

With EPR (extended producer responsibility) and DPP (digital product passport) regulations in the pipeline, in addition to growing regulatory pressure to disclose or ban products that cause deforestation, building a product “profile” early in its lifecycle sets a critical foundation for persistent identification.

Once that digital passport has been established to underpin transparency and traceability, data carrier technologies such as radio frequency identification (RFID) and 2D barcodes, like a QR code, can be used in accordance with industry standards to take these regulatory initiatives a step further.

With their ability to convey and link to a broad range of data, RFID tags and 2D barcodes can be scanned at various points in the supply chain to provide real-time information to trading partners about a product’s origin, conditions during transport and supplier sustainability practices, including produced waste and the overall environmental impact of a product. This information can even be shared with consumers through mobile phone scans. 

With an initiative called Sunrise 2027, facilitated by standards body GS1 US, the retail industry is aiming to achieve widespread acceptance of 2D barcodes at point of sale within the next four years. Some of world’s most iconic fashion brands including Burberry, Mulberry, Giorgio Armani and Stella McCartney have already begun adding QR codes to labels for better shopper engagement. By scanning the codes with their smartphones, consumers can learn how the product was made, where the materials came from, and whether or not it was sustainably created. They can also receive important care and repair information to extend the item’s life.  

Patagonia is another one of the many forward-thinking brands already using this type of 2D barcode. Ninety-four percent of Patagonia’s product line is made from recycled materials. In lieu of sharing product information, care directions and community initiatives on hang tags, the company has added QR codes to its packaging that web-enables access to all of this rich data. This gives Patagonia customers a more personalized and localized experience, while reducing the amount of single-use tags. The change has enhanced the company's consumer engagement and allowed it to collect more data across all points of sale, better identify instances of counterfeiting, and reduce environmental impact. 

Paving the road to circularity

Improved data quality, product traceability, and supply chain transparency are critical stepping stones on the path to circularity. In a truly circular economy, retailers will be able to redesign, reuse, repair, and recycle products instead of relying on virgin materials, thereby reducing waste and ensuring the continuity of finite resources.

If we can more accurately validate the claims made by retailers, we’ll have a better understanding of how far the industry has come with circularity and how much further we have to go. Businesses are taking critical steps, exploring ways to make recycling easier for consumers and reducing the amount of products that end up in our landfills. However, truly advancing sustainability depends on upholding the standards for data quality, traceability, and transparency that enable us to hold every supplier and retailer accountable for greenwashing.

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