Business Assurance - ViewPoint

What matters to consumers in the circular transition?

Transparency and trust in communication of circularity

In the modern consumer society, some brands achieve a high level of brand loyalty but in general, trust in brands is declining. Consumers tend to have a cautious approach to company claims on product sustainability. It may be that the old adage of taking things with a pinch of salt is as true today as ever, but highly publicized cases of manufacturers being fined millions of dollars for false claims and devious practices mean that consumers generally are more skeptical.

In a hyperconnected world the consumer is used to gaining information instantly, with only a few clicks or taps on a smartphone. Of the consumers questioned in the DNV survey, 60.9% said they gained information on circularity through media (social media, TV, radio, etc.). By contrast, only 20.9% of consumer respondents indicated corporate communication as a source of information.

Consumers are demanding more transparency from brands on their sustainability and circularity efforts. The main expectation is that companies use recycled, recyclable or reduce product packaging (67.3%). A total of 54.1% say brands should take responsibility for the product end-of-life and 51.1% say brands should launch circular and sustainable products. The challenge for brands is to engage consumers and share corporate efforts and specific circular characteristic of products that are trusted.

The term “greenwashing” describes unmerited information by an organization allowing it to present an environmentally responsible public image it has been in the dictionary since 1999. It has since become an area of differentiation.

Building trustworthy communication on circularity and sustainability is fundamental for brands to avoid being perceived as misleading or in the worst case as an attempt at greenwashing. To that end it is necessary to adopt a scientific approach to circularity, based on measurable metrics in accordance with recognized reporting models and international standards specific to a certain industry, product or more general in nature. Organizations can increase the level of assurance in their strategy, data and communication if their management, production processes or products are assured or verified by an independent third-party. The use of digital technologies and blockchain-based solutions can also help increase reach and transparency through the value chain, making information available directly on products for example.

The DNV survey shows that engagement and knowledge fosters consumer action. The challenge for companies is that transparency can be both an opportunity and a risk.  With only 20.9% indicating corporate communication from brands as a source of information, there is untapped potential to further engage. At the same time, 20.7% believe boycotts and advocacy can work, which represents a threat to companies that do not improve or communicate their circular contribution. However, without consumers fully involved a true circular transition cannot be reached. To succeed, this is an area that companies cannot risk to leave unexplored.