The Value of Product Transparency: Food, Clothing & Shelter
By: Rick Crawford
This is a revised article that was originally published in EDC Magazine in February 2014.
Product transparency is certainly a building product manufacturer industry buzzword and is also a component of LEED v4 and the Living Building Challenge; however, obtaining product declarations and documents such as: environmental product declarations (EPDs), health product declarations (HPDs), life cycle assessments (LCAs), and Declare Labels. However, product transparency isn’t just happening with building materials, it is happening with all goods that help meet our most basic human needs: food, clothing and shelter, and for good reason. There are several business benefits of product transparency, including: brand loyalty, competitive advantage and increased profitability, but before I review the value of transparency I would like to discuss why product transparency is needed and how we got here.
The answer is that product transparency is needed the same way the Food Nutrition Labels are needed…consumers have a right to know what they are consuming, whether it be food ingredients and caloric intake, the toxicity and environmental impact of building products or if the worker who made their clothes was paid a livable wage. Why should consumers have a right to know? There are three basic components to human survival: food, clothing and shelter, and one can reasonably assume that with world population reaching roughly 10 Billion by 2050, supply and demand of food, shelter and clothing has the potential to become problematic. Therefore, consumers have a right to know what ingredients are in food, clothing and the building products they purchase, and whether or not that these goods have a negative impact on environment, because the natural resources on Earth are finite and consumers should choose products that have the least impact on human health and the environment. Let’s take a deeper dive into what’s trending with the transparency of food, clothing and shelter.
The evolution of food nutrition labels goes beyond the Nutrition Labeling and Education Act of 1990, which increased “the amount of nutrition information available at the point of purchase” (Balasubramanian & Cole, 2002), but let’s start there. According to Balasubramanian & Cole, the legislation’s primary goal was to improve consumer welfare by providing nutrition information (2002). The FDA recognized that consumers have a right to know what they are purchasing and how it will impact their health. We all know that food nutrition labels are now a part of everyday life. Fast forward to 2002 when the National Organic Program was enacted, which restricted the use of the term “organic” to organic producers that are certified by state, non-profit and private agencies that have been approved by the US Department of Agriculture.
The organic market has skyrocketed as consumers have become more aware of what they are eating. In fact, a “study conducted by the Organic Trade Association (OTA) surveyed manufacturers, distributors and retailers about the organic industry. The survey indicated that U.S. sales of organic products, both food and non-food, have grown from $1 billion in 1990 to $31.5 billion in 2011, increasing 9.5 percent in the last year. Organic food sales alone rose 9.4 percent, totaling $29.2 billion. Organic non-food sales rose 11 percent, totaling nearly $2.2 billion” (Laux, 2013). The increase in the sale is made apparent by the increase in US Certified Organic farm land by use, which is shown below:
From food nutrition labels to USDA Organic foods, the transparency of food is here to stay, and consumers are clearly voting with their dollars by purchasing USDA Organic foods as is evidenced by the increase in US Certified Organic farm land by use. Another example of the increasing demand for transparency in food is the demand to know if the gfood has been genetically modified. Consumers are now more aware of what they are consuming in regard to food, but also clothing.
Clothing, which is another major factor that is used to meet basic human needs. Clothing is in the early stages of its very own transparency movement. Take for example, Nike’s Sustainable Innovations web page, which states
“IF ALL WE DO IS CREATE A SINGLE LINE OF GREEN PRODUCTS, WE WILL HAVE FAILED. SUSTAINABILITY MUST BE A DESIGN ETHOS ACROSS ALL OUR PRODUCTS.”
– Mark Parker, President and CEO, NIKE, Inc.
Nike looks at the effect their products have on: Waste, Energy, Water, Chemistry and Community. Because Nike chose to take a close look on how their products impact human health and the environment, they now have an understanding of how being transparent has had a positive influence on their economic bottom line. Here is what Nike Business Overview had to say about operating transparently:
Over the past 15 years, we have moved from approaching sustainability as a risk management issue to viewing it as an innovation opportunity and a competitive advantage to be integrated into every aspect of our business.
A more holistic sustainability strategy that is fully integrated into the business enables Nike to create value, not just through risk mitigation, but also through top-line growth, cost avoidance and better access to capital. As an example, our next portfolio of sustainability targets is designed to improve Nike’s environmental and social impacts for us and across our value chain, while also avoiding costs across the value chain by reducing waste, energy and water expenditures. (Nike: Business Overview, 2013)
In fact, Nike embedded sustainability into its innovation process and created the $1 billion-plus Flyknit line, which uses a specialized yarn system, requiring minimal labor and generating large profit margins. Here are som
- Flyknit reduces waste by 80% compared with regular cut and sew footwear.
- Since its launch in 2012, Flyknit has reduced 3.5 million pounds of waste and fully transitioned from yarn to recycled polyester, diverting 182 million bottles from landfills.
There are also many other examples of different clothing companies that are operating sustainably and transparently that have gained competitive advantage, brand loyalty and increased profitability. For example, Patagonia’s Footprint Chronicles, which “examines Patagonia’s life and habits as a company. The goal is to use transparency about our supply chain to help us reduce our adverse social and environmental impacts – and on an industrial scale” (Patagonia, 2013). Patagonia has also be getting their product Fair-Trade Certified. Fair Trade is a 3rd party certification that verifies that your products protect human rights, ensures workers are safe and payed a livable wage and in the end produce a responsible product.
Yet another example of how clothing companies are trending towards more sustainable and transparent brands is the Sustainable Apparel Coalition (SAC), which includes companies like Nike, Levi’s and Target. The SAC created the Higg Index, which is “a tool to help organizations standardize how they measure and evaluate environmental performance of apparel products across the supply chain at the brand, product and facility levels” (Sustainable Apparel Coalition, 2012). Transparency on the environmental and human health impact of clothing is also here to stay because it is not only the right thing to do, but also because consumers are demanding more sustainable products. Below is a quick intro to Sustainable Apparel Coalition and Higg Index:
It is obvious that our food system is trending towards more transparent and sustainable production, as well as the way our clothing is produced. Now, it’s time to look at the third element of our basic human needs: shelter.
The oil crisis of the 70’s taught us a valuable lesson in the conservation of natural resources, and the creation of the USGBC and LEED has evolved from not only looking at a buildings influence on human health and environmental impact to the transparent disclosure of the products that are being used in green building projects by way of Health Product Declaration, Environmental Product Declaration and Lifecycle Assessment, which is a much more granular level evaluation of the effect that building products have on human health, the environment and their contribution to green building goals.
Take for example building product manufacturers like Mohawk Group, who is a leader in the carpet industry, and have committed to product transparency and uses product transparency as a way to not only minimize the environmental impact of its products, but as a competitive advantage because they market transparency effectively. Case in point, here is a marketing video explaining their commitment:
The transparency movement is clearly interrelated by human’s basic needs: food, clothing and shelter. The value of being transparent can be shown by the growth in the organic food farming land use and sales, as well as some of the world’s largest companies, like Nike who are using sustainability to drive innovation and companies like Mohawk Group who are using transparency as a competitive advantage.
So, what is the value of transparency? The value of transparency is the opportunity to meet basic human needs in a sustainable manner and being rewarded by consumers making informed purchasing decisions on products that cause less impact on human health and the environment.
Don’t know the environmental and social impacts of your favorite brands? Contact them and ask them! Companies need to hear from their customers that sustainability and product transparency is important to you. Once the business see’s that their customers want to know if the people who made their products were treated ethically, and what the environmental impacts of their products are, then the company will investigate the business benefits of product transparency. They will likely do a trial run of a product and see if they are able to increase growth as a result of marketing product transparency. If there is a strong response from consumers, then they will increase the amount of information they will disclose across other product lines, which will help to lessen the environmental impact of their products and business.
Nike: Business Overview. (2013). Retrieved November 16, 2013, from Nike, Inc. Web site: http://www.nikeresponsibility.com/report/content/chapter/business-overview
Balasubramanian, S. K., & Cole, C. (2002). Consumers’ Search and Use of Nutrition Information: The Challenge and Promise of the Nutrition Labeling and Education Act. Journal of Marketing, 112-127.
Laux, M. (2013, January). Organic Food Trends Profile. Retrieved November 16, 2013, from Agricultural Marketing Resource Center: http://www.agmrc.org/markets__industries/food/organic-food-trends-profile/
Nike, Inc. (2013). Our Impact. Retrieved November 16, 2013, from Nike, Inc. Web site: http://nikeinc.com/pages/our-impacts
Patagonia. (2013). Footprint Chronicles. Retrieved November 16, 2013, from Patagonia, Inc. Web site: http://www.patagonia.com/us/footprint
Sustainable Apparel Coalition. (2012). The Higg Index. Retrieved November 16, 2013, from Sustainable Apparel Coalition: http://www.apparelcoalition.org/higgindex/