Want to avoid greenwashing? Consider ingredient transparency…

What is greenwashing and why is it a problem?

Truth in Advertising defines greenwashing as a marketing tactic that “make[s] something sound better for the environment than it actually is.” The concept of greenwashing spreads beyond ads, though. As the sustainability movement becomes more prominent, brands are eager to show that their products are sustainable by including messaging on packaging, social media, and other communications; however, it is unfortunately not always done in a wholly truthful way.

For instance, some drinking water companies have been including statements on their labels saying that their plastic bottles are “100% recyclable.” Yet, there is a class-action lawsuit against these companies arguing that the plastic used to make the bottle caps and labels is not recyclable.

Similarly, a product from a market-leading laundry detergent brand originally claimed to be 100% plant-based despite actually being only 75% plant-based. After an inquiry from the U.S. National Advertising Division, the brand changed their plant-based claims.

“Everyone is just trusting everyone else’s word,” Kimberly said about greenwashing. Manufacturers are trusting suppliers, brands are trusting manufacturers, and consumers are trusting brands. Whether brands greenwash intentionally or unintentionally due to misinformation from elsewhere in the supply chain, it can be detrimental to their success, costing them customer loyalty.

Honesty is the best policy

Consumers are demanding that brands act ethically, responsibly, and sustainably. According to Mintel, “88% of Chinese consumers say they are prepared to boycott companies that behave unethically,” and “85% of Brazilian consumers say they try to act in a way that is not harmful to the environment.”

Part of that responsibility is being honest with consumers and backing up the claims you make. Brands that make false claims, including greenwashing, will quickly lose customers. As Mintel puts it, “the brands that are truly committed [to sustainability] will gain favour while those accused of greenwashing will be increasingly at odds with consumer expectations.” Consumers are also looking for brands that are “transparent about the process and authentic in their commitment.”

Kimberly has an interesting perspective on this tremendous shift towards honesty and transparency:

“I like to look at how other industries…have been transformed by transparency,” she said. “If we look at things like Zillow*, that was a way for consumers to transparently see houses available on the market in real time and explore all the data about those homes that was never available before.”

She also mentions Amazon presenting pricing information, and TurboTax lifting the veil on how the tax-filing process works. In these examples, consumers no longer need to rely on a real estate agent to give them home details or an accountant to file their taxes – they can do it themselves because they have all the information at their fingertips.

“[This transparency is] the way consumers are used to living day-to-day in their lives,” she said. “I think this is the next phase of that – wanting transparency in the products they’re using.”

Why is ingredient transparency important?

Prioritising ingredient transparency is a key step in avoiding greenwashing. Ingredient transparency can be defined as the timely and honest supply of quality ingredients and process information throughout the supply chain. This practice builds trust with the consumer. When brands accurately and honestly inform consumers which ingredients are in their products and how those products are made, they are providing consumers with the information needed to make an informed decision about using those products.

Achieving ingredient transparency does not only fall on brands, though. It needs to be a common goal throughout the supply chain. Farmers need to honestly communicate to suppliers about the raw materials they are supplying. Suppliers need to honestly communicate to manufacturers about what they are providing. Manufacturers need to honestly communicate to brands about what they are including in their formulations. And finally, brands need to honestly communicate all of this to the consumer. Each section of the supply chain needs to hold the others accountable.

Ingredient transparency also goes hand in hand with navigating the dozens of product certifications circulating in today’s market, such as Clean at Sephora and the Credo Clean Standard™. Kimberly points out that “consumers are starting to use those [standards] to make decisions” when they are shopping. Industry certifications and seals are often seen as a way to verify claims, helping to counteract greenwashing by holding brands that qualify for and use these seals accountable to reaching a high standard of sustainability.

As consumers start to consider these standards, it’s important for brands to keep them in mind when they formulate. Yet, with so many standards to consider, it can be hard to choose which to aim for. A great starting point for brands could therefore be to evaluate the ingredients that they are using in their products to ensure that they align with their own values and messaging. By taking this step, and by clearly communicating this with their consumer, they may well be able to reach conscious consumers without necessarily obtaining certification seals.

Platforms such as Novi make it easier for brands to achieve ingredient transparency. A data-driven marketplace for product development, Novi brings together sustainable formulators, manufacturers, suppliers, and retailers to help brands design and purchase verified formulas, fragrances, and packaging. They aim to provide the data brands need to make the best decisions for their business.

“I want to put better products in the hands of consumers,” said Kimberly. “Historically, we’ve placed the responsibility on the consumer to determine what’s good, what’s clean, what’s sustainable. I feel like it’s not the consumer’s responsibility. It should be the brand’s responsibility. The reason for building Novi was to figure out how we could accelerate the shift [to a more sustainable beauty industry] by being a resource for brands.”

But ingredient transparency is not the only step

While emphasising ingredient transparency is a good way for companies to avoid greenwashing, it is not the only solution. Brands must also ensure that they are consistently communicating with transparency on all levels and topics. Having full disclosure with consumers, suppliers, or even other parts of the supply chain, as well as throughout their advertising, labelling, and social media, is just as important to improving transparency in the beauty industry as ingredients are. For example, the impact of an organisation’s operations and the sustainability of their packaging is equally as important as the individual ingredients.

Ultimately, to avoid greenwashing, there must be long-term invested commitments to being more sustainable, not short-term fixes or marketing campaigns. Consumers want authenticity and honesty from the companies they buy from, and they will not stand for less. So, is your brand ready to make this long-term commitment to operating sustainably and transparently?

Listen to our full conversation with Kimberly on Purposeful Beauty™ – ‘What’s Your Purpose?’ to learn more about transparency and how Novi can help your brand become more sustainable.

*Zillow is an online real estate marketplace like Zoopla in the UK, VivaReal in Brazil, and PropertyGuru in Singapore.