Sustainability is a broad and oftentimes difficult concept to grasp. Despite the ubiquity of the term, most consumers may not truly know what sustainability means. According to the official definition proposed by the United Nations in 1987, sustainability means meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Sustainability in a business's context is managing the triple bottom line, i.e., considering financial, social, and environmental risks, obligations and opportunities in decision-making.
Coffee, being one of the most traded commodities around the world, plays a significant role in economic, social, and environmental sustainability efforts. At Era of We, our commitment lies in fostering sustainability throughout the coffee value chain, recognizing it as a linchpin for progress. However, the spectre of greenwashing looms large, challenging the transparency of the industry. Let us explore what sustainability truly embodies and unravel the impact of greenwashing on consumer behaviour.
What is Greenwashing?
Greenwashing is a business practice wherein an organisation makes insubstantial or inaccurate claims to present an environmentally conscious image to its customers. This is most commonly a sales and marketing strategy to boost brand image, attract new customers, and influence public opinion. Greenwashing can be found in a range of industries, from fashion to fossil fuels, and the coffee industry is no exception.
According to Environmental Sciences Europe, there are two types of greenwashing: claims greenwashing and executional greenwashing. Claim greenwashing involves using textual statements to implicitly or explicitly convey environmental consciousness. This often involves using vague language, hidden trade-offs, and lack of proof. Executional greenwashing is a more subtle strategy that involves the use of colours and imagery associated with nature and sustainability to imply a more environmentally friendly business model.
Greenwashing is a highly unethical practice and misleads consumers into making purchasing decisions they may not otherwise make. Environmental concerns and climate anxiety are growing among the global population and many consumers wish to make sustainable choices in their lives. This prompts companies to slap on ‘green’ claims to sell more and sell at a premium. Predictably, if caught in the act, companies face public backlash and loss of revenue as well as poorer public perception.
Coffee, Greenwashing, and EU Green Claims Directive
Greenwashing is rampant in the coffee industry, from vague promises to reduce plastic waste to claims surrounding coffee sourcing and carbon footprint. On March 22 2023, the European Union unveiled its proposal for the Green Claims Directive, which aims to combat greenwashing by establishing clear guidelines for companies on promoting environmental claims to consumers.
The directive requires businesses to substantiate their environmental claims with a comprehensive assessment. This means that companies must provide credible evidence to support their assertions, ensuring that consumers are not misled. In addition, companies will have to communicate their sustainability plans and have them regularly verified by an independent third-party expert. The Green Claims directive will hopefully be the beginning of the end for unsubstantiated environmental claims on products in the EU.
More than half of green claims are misleading or unverifiable – the most common among them being climate neutrality claims. This directive puts an end to these claims. However, this requires a higher level of market surveillance and transparency for the directive to achieve its goals.
The coffee industry has long been at the forefront of sustainability innovation. The slew of new legislatures in the EU (Green Claims Directive, Farm to Fork, EU Deforestation Regulation, etc.) that target environmental concerns is an opportunity for those in the coffee business to innovate and take sustainability further.
Fighting Greenwashing Begins with Traceability
The EU Green Claims directive has three major points of action, which are:
- Guidelines: Criteria on how companies should prove their environmental claims and labels.
- Third-party verification: Requirements for claims to be verified by an independent, certified third party.
- Labelling governance: Governance rules for the administration of environmental labelling systems to ensure they are accurate, clear, and trustworthy.
The Green Claims Directive is a significant step forward in addressing greenwashing and promoting transparency in environmental claims. The directive also empowers consumers to make sustainable choices by requiring companies to substantiate their claims and tightening the rules for environmental labels.
Value chain transparency emerged as a method for differentiation and sustainability strategies and transparency fosters accountability by generating public interest and increasing public scrutiny. As we move towards more stringent environmental laws, transparency and traceability will be the core of any company’s environmental communication and marketing. Offering strong and clear evidence of supply chain transparency and product traceability is crucial to combating greenwashing and it allows customers to make conscious purchasing decisions.
To truly capture the depth of a product’s full end-to-end supply chain, we need a traceability solution that is used as part of the operations of any company- building in traceability starting from sourcing to processing to the final product reaching consumers. This is when industries can combat greenwashing, wrong sourcing claims and incorrect claims on any credits- green, carbon, plastic, waste, EPR etc.
Reliable, auditable, and transparent data supporting sustainability claims is the surest way to prevent greenwashing in coffee and other industries. Implementing a traceability system is crucial, enabling stakeholders in the supply chain to share data securely while safeguarding sensitive information.
Moreover, regular audits and evaluations of sustainability practices are essential to ensure ongoing compliance and improvement. Internal and external audits can verify the accuracy and reliability of sustainability claims by accessing data collection processes, measurement methodologies, and adherence to sustainability targets. These audits can help identify areas for improvement, address performance gaps, and strengthen the organization’s overall sustainability strategy.
By implementing these strategies, organizations can enhance the reliability of their sustainability claims, demonstrate their commitment to transparency, and earn the trust and confidence of stakeholders. Reliable sustainability claims not only contribute to a more sustainable future but also differentiate organizations from greenwashing practices and drive positive change across industries.
In conclusion, the coffee industry stands at a crucial juncture, grappling with the pervasive issue of greenwashing. The EU Green Claims Directive marks a significant stride towards accountability, demanding transparency and evidence-based environmental claims.
As sustainability becomes a focal point, traceability emerges as the linchpin to combat greenwashing, allowing consumers to make informed choices. Implementation of robust traceability systems, accompanied by regular audits, is imperative. By embracing these practices, coffee businesses not only safeguard against deceptive greenwashing but also contribute to a genuinely sustainable future.