The Volkswagen scandal has raised numerous questions over the past few weeks about the value of corporate responsibility and the claims companies make. After reading an article that showcased the problem of greenwashing, I’ve been thinking about one particular quandary – what exactly is a sustainable product?
Let’s start with the problem. Companies often make false or misleading claims about the sustainability benefits of their products. This is known as greenwashing. While we rarely see companies going as far as Volkswagen did in making false claims, we often see examples of unsubstantiated or exaggerated environmental benefits linked to specific products. Why do companies do it?
The market for sustainable products continues to grow….
The Conference Board and Investor Responsibility Research Centre Institute’s recent research confirms what we all feel to be true when we shop. Despite a small sample size of 12 companies, the study found empirical evidence that the market for sustainable products and services is growing. Among the companies assessed, sustainable products accounted for 21% of total revenues on average, up from 18% in 2010. In addition, revenues from sustainable products grew at 6 times the rate of overall revenues.
…but the term sustainable product isn’t well-defined.
Because there is no clear understanding of what a sustainable product actually is, companies often create their own conflicting definitions. Walmart and Target serve as a great example. Both companies have websites dedicated to sustainable products, but if you take a close look they have vastly different criteria. Target’s Made to Matter site is a marketplace for specific products that meet certain sustainability criteria such as organic or no animal testing. Walmart’s Sustainable Leaders Shop sells only products from companies that came out on top of its Sustainability Index. Rather than assessing the products, Walmart focuses on the companies making them. These interpretations translate into huge differences in what products are presented to consumers as sustainable options. And it’s just one example.
So, the answer is simple: we need a universal definition for sustainable products. Not so fast! Once you start thinking about the nuances across industries and product lines, creating a global definition for a sustainable product sounds pretty daunting.
Companies need to set their own definitions
Instead, companies who view sustainable products as a business opportunity should take it upon themselves to prove to increasingly skeptical consumers they mean what they say by establishing their own definition of a sustainable product. The best definitions will be specific and set a threshold for certain criteria. Don’t just say you’ve saved water but tell me all your sustainable products have at least 10% less water than the previous version. In doing so, you’ll generate measurable improvements in your product portfolio, avoid the greenwashing trap, and earn the trust of the growing contingency of sustainability consumers.