Trends in Transparency

Bill Walsh - July 14, 2010

Think "transparency" is an established, maturing theme? You ain’t seen nothing yet.
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The news this summer provides more insight into why the assortment of eco-labels and certifications that define green products today is a transitional stage, soon to be eclipsed by an unprecedented convergence of better information and better information technology known as radical transparency.

A new report by the World Resources Institute finds that after more than a decade of refinement, eco-labeling and third party product certifications are not working well. They have become “fragmented and often confusing to institutional buyers as well as individual consumers . . . due to competing claims on what makes a product ‘green,’ especially when there are two or more competing schemes for the same sector or product.”[1] The WRI report, The Global Ecolabel Monitor 2010, analyzes more than 300 eco-labels and third party eco-certifications, including virtually all of the iconic labels of the green building industry. The report identifies stubborn barriers to effective eco-labeling that are also likely to handicap ambitious new corporate sustainability and transparency standards announced this summer.[2] Among the barriers noted by WRI:

  • It is difficult to define best practices for ecolabels or standards. (Value judgments are inherent in such standards.)
  • Competing standards are inevitable. (Well-funded industry labels routinely compete with independent third party standards, confusing consumers.)
  • Sustainability standards are rarely static. (Our Pharos Team recently found that most paints beat eco-label requirements by 50% or more.)

“What if finding out where and how our stuff was made was as easy as finding the lowest price or peer opinions?” asks The New York Times contributing writer Rob Walker in the June 27 installment of his weekly column, Consumed. Walker, an astute observer of consumer trends in the digital age, addresses the gap between the “transparency triumph” that has changed the paradigm of retail marketing completely (think NextTag, Tripadvisor, or Amazon Reviews), and the relative lack of transparency in the “brand/production relationship” which still more often than not “remains murky until bad news pushes it into the open.”

What’s changing, writes Walker, is that “knowing something” about a particular product “resonates with consumers more than an aggregate score or a big-picture summary.” His measured reaction to a lengthy sustainability report published by the Gap mirrors the reaction of many green building professionals to the proliferation of corporate sustainability reports in the building products industry: “On one level, it’s admirable that the company discloses, for instance, that as of 2008, 11.8 percent of its Southeast Asia factories received a “needs improvement” rating. But as a practical matter, how does that relate to your specific T-shirt or the khakis you’re considering?” Or the carpet you are specifying?

The overwhelming volume and complexity of supply chain information makes it unlikely that commercial buyers will base a multimillion dollar contract decision on a Yelp review of a vendor, or a YouTube video documenting chemical hazards of PVC. Walker sees a future, however, where the mere availability of such information is itself the catalyst for positive change. He concludes with a vision that describes the future of radical transparency in the green building industry: “Imagine an open-source effort emerging to make that brand/production relationship much less opaque than it is.” He writes, “I don’t expect that most consumers would actually turn every impulse buy into a research project, but I bet it would change the way brands scrutinize their supply chains if they knew that every thing we buy was really, truly transparent.” We’re betting on it too.


Footnotes

[2] Just before Memorial Day, Greenbiz and Underwriters Laboratories announced the creation of a LEED-like global sustainability standard for companies. In late June, Interface, the maker of modular carpet, expanded its program for providing Environmental Product Declarations (EPDs) for its products.


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