When you advertise your company's efficient use of energy while not addressing the complaints of the local community. Or you claim that your business is “sustainable” because it donates to charities. But you neglect the employment rights of your staff. These are examples of “greenwashing“. That is, misleading marketing messages that falsely claim to have a positive impact on society or the environment.
The term has become fashionable in recent years as companies seek to strengthen their environmental, social and governance (ESG) credentials. Related terms include “green labeling”. That is, the labelling of a product as “responsibly sourced”. But without demonstrating how its supply chain differs from any other. Even “greenlighting” or “virtue signalling”, in which companies use a single positive element to distract attention from other negative elements.
When ESG improvement targets are continuously shifted, this is called “greenrinsing”. But in January 2021, the European Commission and consumer authorities in the EU completed a scan of websites making green claims. According to the report, half were found to be unfounded, while 42% were exaggerated, false or misleading. They could qualify as unfair commercial practices under EU rules. In 2022, the UK Competition and Markets Authority announced an investigation into three major fashion retailers for greenwashing.
This year, the US Federal Trade Commission (FTC) is reviewing the 2012 Green Guides on the use of environmental claims, which aim to prevent this type of misleading marketing.
The golden rule
The point of transparent marketing is that buyers should be able to make an informed choice. Which means that companies should provide evidence to back up their claims. This is regardless of who they are.
In the jewellery industry, for example, there has been controversy over the last decade about the ESG benefits of “recycled” gold. But proponents claim that reusing gold from discarded products reduces waste.
Net business
You must do
- Report and measure with free tools available to assess ESG impacts.
- Take the time to learn about the problems found in supply chains.
- Take the online green claims quiz to test your knowledge at greenclaims.campaign.gov.uk.
- Let others know. Get involved in initiatives or trade associations or collaborate.
- Plan how to deal with the problems. Create policies, goals and a strategy.
- Commit to improvements. Create processes that everyone can support.
- Take one step at a time. It's about progress, not perfection.
What you should not do
- Count and report only the positive impacts. Commit to identifying and reducing the negative impacts as well.
- Mud-slinging about competitors or other areas of the industry. Focus on your own backyard.
However, others say it is more responsible to source gold from certified and verified sources that support local mining communities. They argue that gold has never been a “waste” product, that people have always recycled it so it is not thrown away. Therefore, recycling it does not actually reduce existing waste.
Both of these positions are potentially valid if the companies that support them can prove that they are true. When you buy a diamond, it makes sense to ask for a laboratory certificate to verify its quality, as this affects its value. There is no reason why the public should not ask for similar proof from companies making ESG claims, as these influence people's purchasing choices.
Taking the road to excellence
Greenwashing can be a deliberate attempt to mislead consumers. Or it may even be a failure to understand the seriousness of certain issues and how to address them. As in any industry, there will be both bona fide and bad faith actors. But sophisticates will see that people are paying enough money for certification and will engage in greenwashing to increase the value of their business. Conversely, jewelers who value their integrity and decent reputation will place more emphasis on ensuring accurate disclosure and fair pricing.
Downplaying the serious issues that exist in the supply chain leaves the entire industry open to negative scrutiny. Also to the public's perception of opaque business practices that undermine consumer confidence. Transparency is therefore essential. It is wrong for a seller to conceal a diamond's flaws from the buyer. It is no less wrong to make misleading ESG statements.
Problems exist in all supply chains. But luxury goods attract a significant amount of media and consumer attention. Sales of precious minerals can have far-reaching effects. Doing what we can to ensure they are positive will benefit both people and the planet.
Author Vivien Johnston Glass is the founder of the consulting firm Johnston Resources and a specialist in the responsible sourcing of precious metals, diamonds and gemstones.
This article is from the March-April 2023 issue of Rapaport magazine.
Source: rapaport.com
