Why sustainability ratings are hard to standardise

For consumers who are actively trying to be more environmentally conscious, websites and organisations that rate and verify how sustainable a business is are incredibly valuable resources. 

 

They also show just how hard it is to standardise sustainability ratings.

 

Image credit: Jack Stratten/Insider Trends

A snapshot rather than an endorsement

One of the biggest sustainability ratings websites that consumers look to for guidance is Good On You.  It’s also used by the retail industry and investors when searching for partners.

 

This is a hugely influential platform that is built on well-intentioned, solid ideas. It serves a valuable and much needed purpose in helping buyers make sense of sustainability. This isn’t in question.

 

But the vast, complex and messy nature of sustainability that makes such a platform so needed, is also the same nature that makes it incredibly hard to standardise ratings processes.

 

For example, Good On You calculates sustainability scores based on three main areas: Planet, People, and Animals. A poor score in one area can drag down the overall rating for a brand but context matters.

 

An overall ethical brand that has excellent sourcing and worker policies will have a lower rating if it uses leather or wool as materials. But are these materials less sustainable overall than a faux leather that is ultimately made of plastic, has a short lifespan and can’t be recycled? 

 

Perhaps. But it’s hard to be binary about these concepts when you need to consider the whole life impact, animal quality of life, or whether the raw material is a byproduct from another industry. And clearly, Good On You is doing its best to balance these things by providing a breakdown of the factors that go into each score on each brand’s page.

 

Consumers who simply glance at the numbers though may not get the full picture.

 

Another challenge is that Good On You can only use publicly available information to calculate its scores. This comes from brands themselves, key third parties, such as CDP Climate Change and Water Security disclosures, and certifications and accreditations. 

 

Depending on how often a brand publicly releases sustainability information, there can be a lag before a brand’s score is updated. A company that releases information regularly could find its score dropping as rating criterias change compared to a brand that infrequently discloses.

 

Essentially, sustainability ratings can really only ever be a snapshot of a moment in time, rather than an ongoing endorsement.

 

Image credit: Jack Stratten/Insider Trends

Size has to be a factor

The biggest problem with sustainability ratings platforms though is that they don’t take into account the size of the business and the volume it produces. 

 

Consider, for example, Swedish clothing retailer Gudren Sjoden, which has 23 stores, releases 10 new design collections each year, and has estimated annual sales of around £20 million.

 

Its rating on Good On You is lower than H&M’s. That’s fashion giant H&M, which produces over 3 billion garments a year, has 4000 stores and annual sales revenue of £15 billion.

 

And this disparity can be seen again and again on Good On You between smaller fashion brands and big names like Primark, Zara and M&S.

 

If you look at the official scoring, a lot of it comes down to the fact that small fashion companies don't provide enough evidence of their sustainability targets and achievements. And it makes sense that huge companies have big enough teams and finances to fund the level of sustainability reporting that Good On You bases its ratings on.

 

But, as we already noted, it means that sustainability ratings on the likes of Good On You are about the level of reporting rather than the actual sustainability practices of a business. Particularly, when production volumes aren’t factored in. Because we already know that the most sustainable thing a business can do is not produce anything.

 

So, it’s impossible to make the case that a business producing billions of items a year is more sustainable than one making ten or fifty or one hundred times fewer. And that taints every aspect of the sustainability ratings process.

 

Image credit: Dr Bronner’s

Standards have to keep evolving

Last year Dr Bronner’s, the US natural soap company, left the B Corp scheme - which  assesses and verifies a company's social, environmental, and governance impact - after 10 years. It was the highest rated company on the platform with a score of 206.7, which hasn’t been matched since.

 

The reason for the company’s departure? Dr Bronner’s said that “the integrity of the B Corp Certification has become compromised and remaining certified now contradicts our mission.”

 

The biggest sticking point for Dr Bronner’s was the increasing certification of multinationals, such as Unilever Australia and Nespresso. The company felt it was “unacceptable” to be listed alongside companies with “a history of serious ecological and labour issues, and no comprehensive or credible eco-social certification of supply chains.”

 

Top of Dr Bronner’s complaints are that B Corp doesn’t require “credible third party eco-social certification of all major multinational supply chains” which would stop companies “from pursuing B Corp Certification for marketing purposes.”

 

Interestingly, B Corp did update its standards for certification last year, which sees the previous points system ending in 2026 and the introduction of minimum requirements across seven areas: purpose and shareholder governance; fair work; justice, equity, diversity and inclusion; human rights; climate action; environmental stewardship; and government affairs and collective action.

 

Although Dr Bronner’s welcomed many of the changes, it still withdrew from the scheme as it felt that some key issues were not addressed.

 

The problem is not sustainability ratings platforms in general. They’re trying to measure and standardise something that is incredibly difficult to quantify and do it in a way that is accessible for the average consumer. It’s clear that they also continue to update and refine those systems to make them better over time, which is exactly the path most businesses take when trying to be more sustainable.

 

But sustainability ratings and certifications need to do more to acknowledge the size and scale of a business and the impact this will have on how sustainable they can actually be. Transparency and reporting should be encouraged in every size of business but we shouldn’t be pretending that producing billions of items a year is a sustainable option.