What is Transparency? And Why Should Businesses be Transparent?

Updated: May 29, 2020

Transparency has been at the forefront of many sustainability discussions recently, but what is transparency and why should a business be transparent? How is transparency different from greenwashing?

Global NGO, Fashion Revolution's definition of transparency [1]

Transparency enables accountability

Although fashion specific, this definition remains true for almost all businesses. Companies for too long have been hiding their practices and allowing exploitation, of people and our planet, to thrive.

However, transparency acts as a viewing window for others to scrutinise what companies say they are doing to address human rights and protect the environment. It means that there is information available so stakeholders (consumers, investors, lawmakers, journalists, NGOs, trade unions, workers themselves) can hold companies to account for their policies and practices, especially when things go wrong.

However, this is dependent on the information that companies publish to be accessible and detailed enough to take action upon. Whilst policies and codes of conducts are essential tools to work with supply chain partners, transparency requires meaningful information and goals, and the data to back it up. Without this, the sustainability communication is no more than greenwashing.

For example, a company may say they are aiming to pay a living wage to all workers in their supply chain by 2025. But if they do not back this up with the data to support this, then how can anyone hold them to account to what they are saying? And how can a customer trust what the company is saying is true if they do not provide the evidence?

Just because a company is transparent, it does not mean they are sustainable.

H&M recently came under fire after they topped the Fashion Transparency Index 2020, which confused many people who thought transparency was synonymous with sustainability. A brand may publish a considerable amount of information about its policies, practices and impacts and still be contributing to poor working conditions and environmental degradation.

On the other hand, brands may be doing excellent work behind the scenes to make improvements, but if they don’t share this information publicly then no one may know about it and this may prevent good practices from being shared within the industry.

Transparency is a tool that can be used to drive positive change and is the crucial first step towards sustainability.

The business case for transparency

You can't measure what you can't see

Visibility equals control. You can only monitor what you can measure. Supply chain visibility is essential for a company’s risk-management and crucial for protecting their reputation, yet so many companies are failing to take even basic steps towards transparency. From worker wages to carbon emissions and water usage, companies need to measure their impacts in order for them to identify where they need to improve and to track the changes that are being made. Communicating this openly to your customers enables accountability and will build trust with your customer.

Building trust between your business and your customers

In January 2019, The Business of Fashion and McKinsey wrote:

“Fashion companies must come to terms with the fact that a more distrusting consumer expects full transparency across the value chain. Given the need to regain that trust, fashion players cannot afford not to examine long-standing practices across their businesses… consumers have become more active in scrutinising the brands they do business with.”

Consumer awareness has reached a crucial tipping point. People want to know that their purchases and actions are not contributing to environmental degradation or human rights abuses. Transparency and open communications on your sustainability and supply chain practices will help build trust between you and your customer.

In 2018, Consumer Goods Forum and Futerra surveyed more than 3,600 adults across Europe and found that 78% of people trust transparent brands more and that 90% of business leaders have noticed a rise in public interest in transparency since 2017, predicting this interest will likely increase in the next five years. Interestingly, 70% of consumers are more interested in transparency about products rather than the companies who made them [2]. Driving the case for product-level transparency.

Consumers are now demanding companies to be transparent. Research from Accenture, published in September 2019, found that two-thirds of UK consumers want greater transparency in how companies source their materials. [3]

Transparency is essential for driving change. Companies need to embrace transparency and make it a core aspect of their operations and decision making. In return, this will build trust between a company and its consumer.

[1] Fashion Revolution. Fashion Transparency Index 2020. 2020

[2] Consumer Goods Forum and Futerra. The Honest Product. 2018.

[3] Accenture. From Me to We: The Rise of the Purpose-Led Brand. 2019.

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