Everyone wants to live greener, right? The same now goes for companies. Firms are being increasingly judged on their sustainability credentials, with ever more searching questions and scrutiny from customers, shareholders and partners on their approach to sustainability.
For many firms, this means having to make sure their upstream suppliers are as green as possible. For most companies, their largest source of carbon emissions will be classified as Scope 3, meaning supply chain emissions, and the main way organisations are seeking to reduce this is by opting for suppliers that are verifiably lower carbon than the others.
But how can ICT and tech buyers ensure the green claims made by their suppliers can be trusted, and that they do not fall victim to “greenwashing”, which is where a company overstates how sustainable they are to either secure contracts or influence public perceptions?
What are the risks?
Greenwashing is bad for multiple reasons. Firms believed to be doing this (fairly or unfairly) will be called out and even risk regulatory enforcement. The Advertising Standards Authority (ASA), which regulates advertising content, can require adverts to be pulled, and the Competition and Markets Authority (CMA) is seeking powers to fine companies found to be making misleading green claims.
In Europe, we’ve seen dawn raids for green claims, and the reputational damage associated with regulatory action can exceed the actual punishments. A company that has fallen for a green claim could also need to re-do their emissions reduction or circular economy targets to factor in under-reported sustainability targets.
Verifying a claim
The best way is to question potential suppliers in a way that is comparable. Have IT buyers checked their claims against the UK government Green Claims Code? Is their data published alongside their claims? What voluntary standards do they adhere to?
Exact questions will vary depending on the type of tech being procured, but some things to find out are:
- What share of the energy they use is renewable?
- What are their lifecycle emissions figures?
- How much of the kit is refurbished or recycled?
- How do they ensure human rights in their supply chains?
- How energy efficient is the software development process?
- What disclosures do they make?
Sustainability disclosures – ranging from the Task Force on Climate Related Financial Disclosures to modern slavery statements – are on the rise, and there is only going to be more as different countries (most recently Europe) mandate due diligence and sustainability disclosures.
The best way a supplier can demonstrate green claims is through third-party verification. For carbon, there are several routes to verification (with more on the way as standards bodies and protocol writers join the bandwagon), but key ones to look out for include whether a supplier’s carbon targets have been verified by the Science Based Targets initiative (SBTi), whether suppliers signed up to the UN-backed Race to Zero, and if they have adopted internationally recognised agreements such as the UN Guiding Principles on Business and Human Rights or Greenhouse Gas Protocol.
These can be framed as qualitative questions in supplier questionnaires (e.g. what frameworks do you adhere to and how do you verify your performance against them?) or can be found in annual sustainability reports – and any suppliers without these should face extra scrutiny.
Another way is to see what initiatives they belong to or support. Hardware manufacturers would do well to be members of the Responsible Business Alliance, which is about preventing human rights in the supply chain, but other bodies such as the UN Global Compact and the Aldersgate Group show commitment to good environmental outcomes, and purchasers could even ask if they belong to sustainability workstreams in relevant trade associations.
It is also worth asking if their organisations are accredited. ISO standards require auditing – 14001 is the main environmental one to look out for, but there are others for quality assurance and management processes that indicate a proactive organisation.
The B-Corp logo is becoming more recognised as a symbol for sustainable business. Uptake has been slow, but getting that recognition requires firms to undergo tough assessments.
All in all, greenwashing is something all buyers need to look out for and will only grow as firms need to demonstrate good environmental and social performance. But through asking the right questions and seeing how they show their workings, purchasers should feel confident that they can make the right and sustainable choices.