From charitable donations and energy-efficient operations to engagement with employees and suppliers, most multinational companies understand the benefits of being more sustainable and have been making efforts to improve their impact for years. Multi-stakeholder partnerships and industry organizations have also facilitated further improvement, disclosure, and pressure on governments to act on climate change. Companies have come a long way, but individuals are increasingly realizing the impacts of global supply chains on people and on the planet and are looking towards business to do more.
Today more than ever, individuals who want progress on environmental and social issues are looking past governments and turning to business to make it happen. Individual consumers, especially millennials, are willing to “vote with their dollars,” supporting companies that are answering the call to take on society’s problems. There is extensive evidence that consumers care, and when the information is there, will act to support meaningful change. Some examples include the success of sustainability certifications such as Fair Trade and Certified Organic, as well as consumer research such as the 2014 Nielsen study where 55% of online consumers across 60 countries said they would pay more for products and services provided by companies that are committed to positive social and environmental impact.
However, individuals are not seeing the meaningful change they are trying to support by “voting with their dollars,” which is discouraging and creating a sense that it’s useless. As companies’ sustainability efforts have increased over the years, so has consumers’ ability to spot greenwashing. Many people are tired of hearing about companies’ efforts in a selective and self-promotional manner and want to know what companies are really doing about the causes companies directly impact and consumers are passionate about. This translates to the need for more transparency and accountability.
Transparency and accountability have become key words in corporate social responsibility (CSR) and inclusive markets. But how can companies actually become more transparent and accountable to consumers? First, companies can (and should) ensure the data they collect to understand their impact is reliable, comparable, and provides the insight needed to improve that impact and help consumers make purchasing choices that support their causes; this means providing consumers with both the qualitative and quantitative data as well as the good and bad news. Uncovering the obstacles to progress and lessons learned also helps other companies (e.g., small and medium-sized enterprises) improve their impact and emphasizes the collective responsibility of business for societal advancement. As of late, more companies and stakeholders are coming together and taking a public stand against the prominent sustainability issues that affect their industry. We need more of these pooled efforts, including efforts that define the steps that will be taken to combat these issues.
Second, companies can further utilize existing certifications and platforms to communicate the information consumers are looking for. CSR reports, and the process of creating them, can be great for capturing and thinking through impact, but very rarely will the average consumer read such a report. Sustainability certifications, product labels and packaging, and social media campaigns are valuable and underutilized ways that companies can demonstrate to consumers and the world that they are serious about taking on these issues. These mechanisms help companies back up their claims by showing what they are doing and engage with consumers and other stakeholders on societal issues.
One issue that desperately needs more transparency and accountability is palm oil and its associated deforestation, a cause consumers are becoming increasingly aware of and concerned about. Palm oil is in a wide range of products from food to personal care and causes deforestation in Southeast Asia as forests are cut down at alarming rates to provide land for palm oil plantations. It’s nearly impossible for consumers to know if products have palm oil in it, let alone if it was sourced sustainably. Most companies don’t have a perfect record, sourcing only sustainable palm oil. However, if companies are making efforts to better understand and clean up their supply chain, consumers want to know. Transparency and accountability on palm oil can include publicly committing to taking on deforestation, using certifications such as the Roundtable on Sustainable Palm Oil/Rainforest Alliance, clarifying product labels, and providing consumers and others with tangible insight into the efforts being made.
Consumers know that business holds the key to progress on societal issues, helping them minimize their own individual footprint. People purchase Rainforest Alliance ice cream because they want to know that it isn’t leading to deforestation and Fair Trade bananas to ensure farmers receive a fair wage. People want to be able to see on Twitter that their favorite company just dropped a supplier that was not improving poor working conditions or that the company achieved their renewable energy goal. Companies should demonstrate their commitments, achievements, and setbacks and can use existing certifications and platforms to do so. Through more transparency and accountability, companies can make it a norm and catalyze societal change.