Brands must not shift the guilt of unsustainable consumption to consumers!

When you hear the word greenwashing, you probably think of corporate lies and deceitful marketing claims.

But greenwashing does not stop there – another more subtle, but trendy way of greenwashing is to shift the responsibility away.

In 2022, the Leonie and Norman Institute has engaged with a number of companies on their ESG strategies, and most of the time, this strategy is focused on providing “choice and transparency” to the consumer so that they can make “informed decisions”.

But what happens if they do not make the right choices? For example, many transport companies propose to offset CO2 emissions for the journey, typically at a low cost compared to the ticket price. But people mostly do not tick the box and choose the option. We have already written about the dichotomy between intention and action when it comes to sustainable consumption: most people want to behave sustainably, but when the moment of truth comes, when the purchase decision is made, the good intentions are postponed to the next purchase…

Fashion is another good example, because it is a sector with a huge environmental footprint and tremendous amounts of waste. Many items are worn a few times before being thrown in the bin. A pair of jeans consumes c.7,500l of water. And the problem gets worse. After the dominance of fast fashion, we are in the era of ultra-fast fashion. Shein sells summer dresses and T-Shirts for a few pounds, and worryingly, counts mostly young people in its client base.

Some brands want to be best-in-class and sustainability leaders, but they are not. Nike, for example, has ambitious environmental targets which can’t be met merely by putting some solar panels on the roof. Unfortunately, they come up with the same condemnable excuses for not meeting their targets as many others: "Due to the consumer preference for classic Nike leather icons in fiscal year 2021, leather models are outpacing the growth of the rest of Nike footwear, putting us behind our plan to achieve our 2025 goal."

The shift of the blame is here: “due to consumer preference”. Translated in plain English: “Too bad, but not my fault.”

In 2023, we, the Leonie and Norman Institute, will engage with companies with the objective to hold companies accountable for the outcome of their activity, irrespective of what means they have made available to the consumer. We call this the “outcome based ESG strategy”.

To paraphrase Nike, the idea is not to take consumer preferences as an exogenous truth fallen from heaven like the 10 commandments, but as something the brands can influence by many means.

• Pricing: increase the price of unsustainable products and reduce the price of sustainable products. We have asked many companies, but all replied that they do not sacrifice margins – on the contrary: as sustainable products are typically more expensive, the same %-margin on sustainable products translates into a higher absolute margin in dollar terms.
• Supply: introduce supply quotas and actively propose alternatives. This is not necessarily against the company’s interest, as rarity can drive pricing power.
• Visibility: having a label and a sustainable products category is nice, but if consumers do not scroll through all the pages and do not read the fine-prints of the labels, the effort is useless. Let’s put it clearly: a label that does not influence purchasing decisions is useless.

We are aware of the big challenge facing us: sustainability is not always in the best interest of an industry taken as a whole. In the Leonie and Norman Institute’s opinion, sustainability means that our society as a whole should consume less. Currently, companies therefore try to walk the thin line of pretending to be sustainable for the sake of reputation and regulation, but still pushing consumers to consume as much as possible. We fear this will not work in the long term as our planet simply cannot afford it. The current corporate strategies are kicking the can down the road, but sooner or later, taxes, regulatory “greenwashing” penalties, consumer backlashes will correct the imbalance with a severe financial risk for these companies. The viable long-term strategy is to try and a get a bigger share of a smaller cake: be truly sustainable and be rewarded for it.

Our objective for 2023 is to drive this change in corporate ESG strategies, so stay tuned for our 2023 engagements!