3rd Party Certifications have emerged as an essential way for manufacturers and suppliers to communicate claims related to ESG and sustainability to their end customers. It’s time the process around 3rd Party Certifications came to be treated with a level of rigor reflecting its importance.
Whether it’s a consumer looking for a cleaning product, food item, or cosmetic; or a manufacturer looking to select a sustainable source for a specific raw material, chances are 3rd Party Certifications are part of the decision making process. 3rd Party Certifications have become critical within the go-to-market approach for companies across industries and up and down the supply chain.
Today there are hundreds of 3rd Party Certifications globally related to a wide variety of issues. Some certifications are more consumer-focused, and often come with the right to use an icon on packaging or advertising. Others are more supplier focused, may be handled by auditors, and are sometimes lumped into the category of supplier sustainability applications.
As companies’ reliance on these 3rd Party Certifications has increased, so too has the complexity of managing the mountains of data and documents that go into each certification process. In fact, in many ways it looks similar to a government regulatory submission process. But most companies manage their 3rd Party Certifications in Excel and shared folders, with little of the rigor such business-critical elements deserve.
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In this post we’ll take a look at how 3rd Party Certifications have risen to such prominence in ESG and sustainability claims, where the complexity lies, and how companies can rethink their internal processes and systems to streamline and add more structure to this important process.
3rd Party Certifications related to ESG and sustainability fall into three general categories: environmental, fair trade/ethical labor, and animal welfare. Within these three categories there are quite literally hundreds of certifications to choose from.
Some are globally recognized such as Cruelty Free International’s Leaping Bunny or the Forest Stewardship Council, some are regional or national such as the EU Ecolabel, and many are very specific to an ESG or sustainability issue. If you’re looking for sustainable alpaca clothing for instance, look no further than Responsible Alpaca Standard Certified.
On the consumer side, it’s quite common for a single product to have several 3rd Party Certifications on the package, and perhaps many more on the website.
There are several reasons for this reliance on 3rd Party Certifications to represent ESG and sustainability claims.
First, consumers have been burned in the past by companies making their own sustainability claims and to some extent are justifiably suspicious of claims or certifications made by a manufacturer today. Recall recent examples of Keurig’s recyclability claims on their coffee pods, or Innocent Drinks (a certified B-Corp owned by Coca-Cola) and the hot water they got in with the UK Advertising Standards Authority with ads that seemed to claim their smoothies helped the environment despite being sold in plastic bottles. More generally one can look at the tremendous increase in the number of class action lawsuits related to ESG claims against Food and CPG companies in the United States - increasing by a factor of 10 since 2017 based on Perkins Coie’s Food and Consumer Packaged Goods Litigation - 2021 Year in Review.
Second, and a close corollary to the first, companies and suppliers are deathly afraid of any hint of impropriety around ESG or sustainability claims and the potential for greenwashing accusations that may result. For them, a 3rd Party Certification offers an arm’s length, objective lens that reduces some of this risk.
Finally, although regulation is increasing, there are very few government standards for these sorts of claims - prominent 3rd Party Certification bodies are filling this vacuum and offering standards across industries.
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Given the importance of these 3rd Party Certifications to consumers, manufacturers, and suppliers, as well as the serious consequences related to reputation for errors or omissions related to ESG and sustainability, it’s not surprising that the process for certification tends to be very thorough and complex. The term “standards” is typically used to describe the requirements for certification - many certifying bodies work with iSeal to determine appropriate standards for their specific certification.
The 3rd Party Certification process often requires some or all of the following:
3rd Party Certifications are a critical component of ESG and sustainability communications today. This is true for both finished goods manufacturers as well as suppliers of ingredients and raw materials. These 3rd Party Certifications have proliferated in recent years to the point where a company may be managing as many dossiers and submissions to third party certification bodies as they do to government regulators. It’s time 3rd Party Certifications are treated with an appropriate level of rigor.
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