The business of transparency: what is it and why does it matter

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We all want to know the truth about the products and services we spend our money on. As calls for transparency rise up the agenda, here is why it matters – and how to spot it.

calender 05 Jan 2024
clock 5 min
user Gijs Voskuilen

In the last 50 years, the way we shop has become unrecognisable. Where we go, what we buy and how we buy it has changed – but so too has our relationships with the businesses selling to us. 

Big companies are getting bigger, and our supermarkets and high streets are packed with brands run by global corporations. This means we have less opportunity to get to know the people and stories behind the products we buy – many of which have travelled through a complex supply chain that spans the globe. 

We are left to trust that what’s written on a packet, or on a company’s website, is the whole truth. This is a tall order, given that people tend not to trust businesses because they perceive them as unethical.

The rise of transparency

It’s no wonder, then, that the idea of ‘transparency’ has risen up the agenda. Consumers want, more than ever, to know the full story about the product they’re buying – and to know what they’re hearing is true. 

Increased interest in transparency may also be driven by consumers’ growing appetite for ‘sustainable’ or ‘ethical’ products. The background of a product – such as its airmiles, the working conditions of those making it, the trees cut down to produce it, the gender pay gap at the company’s head office – isn’t self-evident. Consumers are dependent on brands disclosing this information in a way that’s clear, complete and honest. That means avoiding misleading terms, sharing the bad news as well as the good, and making sure claims aren’t overblown.

When it comes to sustainable and ethical practices in business, transparency isn’t an end in itself. Rather, it’s an important tool for boosting accountability among big brands. With fewer places to hide, they can be challenged on – and, ultimately, change – any bad practices. 

A matter of degree

Given that transparency covers a range of topics, and can be actioned in different ways, it is best considered as a spectrum. A brand might share full information on its diversity and inclusion, staff pay, and the price breakdown of its products, but conceal data on its recycling rates and carbon footprint. To assess how transparent a company really is you have to analyse several factors. The fashion and retail sector use the Fashion Revolution Transparency Index to do this, with brands being measured across five areas including traceability, governance and policy. Every area in which there is information publicly available, the company receives a positive score. The goal for any organisation should be to continue increasing the information they make publicly available.

The fashion and retail sector use the Fashion Revolution Transparency Index, can other industries adopt a harmonized measurement tool?

The problem of greenwashing  

Claims – and more specifically, overclaims – are also an important consideration when looking at the scale of transparency. An organisation might have good intentions, and make bold statements to that effect; but if the claims aren’t backed up, or imply a positive impact that is more significant than the reality, then this can be considered ‘greenwashing’ or ‘purpose-washing’. (Purpose-washing specifically is when a brain claims to serve a broader social or environmental purpose, when in reality it only operates to serve itself). BMW, for example, launched an electric car with lower emissions than a standard petrol car – but had an advertisement banned in 2017 for greenwashing. The company claimed their electric model had ‘zero emissions’ and could ‘give back to the environment’, when the car in fact came with the option of a small petrol engine.

The goal for any organisation should be to continue increasing the information they make publicly available.

Our tips for identifying transparency

Transparency isn’t a black and white issue. A business can be transparent to varying degrees, and in different ways. Here are some of the things to look for that can help distinguish the businesses making grand statements from those offering real transparency.  

Specific and accessible information. Look for detailed, publicly available information on the ‘behind the scenes’ of a product and the organisation producing it. This could include traceability information (materials, ingredients, working conditions), as well as a company’s policies, commitments, and performance. Independent certifications – like Fairtrade, FSC and NORDIC SWAN – are a helpful shortcut for certain types of information. 

Clear language and definitions. Some buzzwords have no universally agreed definition, so can mean little while sounding impressive. To avoid being misled by this kind of greenwashing, look for a brand’s explanation of the terms they use – like ‘environmentally friendly’, ‘ethical’, or ‘sustainably sourced’. 

Actions, not just intentions. A grand vision for reducing impact is one thing – doing something about it is another. Some brands may talk about why social and environmental sustainability matters without committing to anything concrete. Look for the measurable goals they are aiming for, and their reports on progress towards these goals. 

Full disclosure of biases. Some brands have investors, brand partners or other affiliations that mean they are obliged to promote certain ideas or types of products. This could influence the range of products offered, the ingredients used, or the suppliers worked with. 

The bad news, not just the good. Most brands aren’t perfect and have work to do towards better social and environmental sustainability. If their transparency practices only apply to their progress and achievements, this could be hiding the sides of their business and impact that are falling behind. Look for brands who are unafraid to share their failings and admit where they have room for improvement. This gives a more honest and accurate picture of their impact than just the highlights reel.

Verive’s journey towards transparency

Transparency is at the heart of Verive’s business and informs how and what we do every day. 

Discover more about our approach to transparency, and get in touch with your questions and comments – because real transparency also means having conversations, not just one-way communication. We’d love to hear from you.

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