Why Suppliers Should Care About Transparency in 2020

May 7, 2020 10:44:27 AM

Supply Chain, Product Design

As time progresses, people all over the world are increasingly interested in understanding the products that surround them. That might sound completely unrelated to manufacturing products, but it is in fact directly connected. People want to know how products were made, where they were made, and of course what substances they are made of. Customers of large tech companies to consumers shopping at the grocery store are demanding more transparency and companies are being forced to respond and losing out if they do not. Companies big and small are making strides towards product transparency and are noticing marketing, risk mitigation, and other benefits.

 

Why Transparency is Important

Product transparency is meant to provide consumers with the health, safety, and environmental impact information about their products so they can make informed decisions. Until recently, people have been purchasing products with limited information on their properties and subsequent impacts. While the business benefits of product transparency are growing, it is important for companies to understand why product transparency is important at its core.

Some chemicals that are used to make up our homes, schools, clothing, furniture, food packaging, and so much more that trickle into our food, water, and air are commonly found to be harmful. In the United States, the Toxic Substances Control Act (TSCA) of 1976 assumed that all substances were considered safe until proven otherwise. In 2016 this was revised to require a health risk assessment by the Environmental Protection Agency (EPA), however there are upwards of 80,000 existing chemicals in circulation that may need to be retroactively evaluated. Many of us are exposed to unprecedented levels of flame retardants, volatile organic compounds (VOCs), PFCs, pesticides, and more that manifest in our bodies and our environment (some examples of this can be read about here) . To try to keep up, new regulatory and hazard lists are researched and produced constantly, but for a manufacturer, it can be hard to keep up with the changing expectations. New lists emerge all the time with more chemical warnings. These warnings range from proven carcinogenicity, endocrine disruption, aquatic and other environmental toxicities, bioaccumulation, and the list goes on. Product transparency is important to help lower risk for all of your stakeholders, whether customers or your employees or people handling your product at end of life. The more companies opt for safer chemicals, the quicker we can transition to a world where both the built and natural environment is safer for everyone.

 

Transparency Trends

While product transparency is still very much in its early stages, things are trending in the right direction. Typically, consumer-facing companies and manufacturers face the heat first. Consumers pressure household-name brands to be more transparent and in turn, to use safer substances. Suppliers can sometimes fly under the radar, but this has started to change. Regulations like California Proposition 65, EU REACH, and RoHS have provided suppliers with more reason to re-evaluate their products. Other reporting methods (often voluntary) such as HPDs, Declare Labels, and so on have also played a pivotal role in influencing future required regulations and encouraging companies to embrace product transparency. As competitive markets continue to find their balance in this changing dynamic, transparency and sustainability are forces to be reckoned with. From a supplier’s perspective, these impacts begin to make their way down the supply chain. As brands and manufacturers share more about their products, they have and will continue to be encouraged to find safer and sustainable alternatives. Suppliers will need to make transitions in response to this to stay relevant in the competitive global markets.

An example of the shift towards product transparency in the building industry to is the Living Product 50 (LP50) initiative. LP50 is a collaboration of 50 of the world's leading manufacturers that are working to, “ensure that healthy, high performing building materials with full ingredient transparency are the rule, not the exception.” The scale of LP50 leverages their common voice to push for industry-wide change. A large proponent of LP50 is the idea of Closing the Transparency Loop (CTL). Transparency for one manufacturer alone fails to accomplish this, but the unity of these building product manufacturers and their constituents and stakeholders helps to stabilize the business case for sustainability investments. The ability to use Toxnot’s Shared Material platform to share product information is a huge step in the accessibility and efficiency of product transparency.

 

The Importance of Transparency to Your Business

The inherent reasons behind what makes transparency important tends to be easier to identify. Of course, human and environmental health is undoubtedly vital, but it is not always that easy. So why does product transparency make business sense?

One of the first factors to note is the idea of consumer trust. No matter where you are in the supply chain, you have customers who often act in the best interest of their company or themselves. As the transparency trend continues to gain traction, we will start to see more and more individuals seeking suppliers that they can trust to provide high-quality and safe materials. Out of a sample of consumers, 70 percent of them said that they were most interested in transparency and 90 percent of corporations surveyed said that consumers were more interested in transparency than they were 5 years ago (source). Being able to communicate how your company is progressing and what the impact of that is through corporate disclosures is key to building trust.

Honest brand case studies focused on three powerful elements of transparency – corporate practice, product proof, and brand purpose. Suppliers alone do not typically face the heat of consumers, but these impacts can trickle down the supply chain quite quickly. As larger consumer-facing companies begin to map out their value chains to build trust through transparency, it is possible that only the suppliers who provide that same level of product honesty will be left. Transparency provides tangible market value and opens the door to extraordinary innovation.

 

Current methods of product transparency are not perfect, but improvements are always emerging. Technology like Toxnot helps suppliers and manufacturers exchange information easily and effectively to make product transparency possible. The support of suppliers in this endeavor is a necessary piece for a cleaner world.


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