Rosalyn Gladwin from Gladwin Legal explains why ‘sustainability’ is more than just a buzz word and why a head-in-the-sand approach could cost you and your business, big time.
There is no doubt that sustainability is an important issue in this day and age. Recognising this, many businesses latch on to it as a buzz word. But what does ‘sustainability’ actually mean? Is your business really sustainable, or is your use of the term misleading or deceptive?
The word sustainability is thrown around by many retailers and can mean a number of different things. It can mean anything from sourcing goods in a sustainable way, to paying labourers appropriate rates of pay, or developing and growing materials in a manner that does not impact negatively on the future of the environment.
From a plain English perspective, a sustainable business should be able to meet its current needs whilst taking steps to decrease (or ideally minimise) its impact on the environment. As a retail law firm, we see many levels of ‘sustainability’ in the retail space. Some businesses simply ask their suppliers a question: ‘Are you sustainable?’ while other businesses delve deep into their supply chain to understand the origins of the materials used for manufacture. Others may even take steps to grow or harvest materials in a sustainable way. A business that advertises as sustainable but fails to engage in such practices, could be found guilty of misleading or deceptive conduct under Australian Consumer Law, and face hefty penalties.
Sustainability planning involves detailed consideration of business structure, what sustainability goals you are hoping the achieve and the costs involved in executing the sustainability plan. There is no point having a sustainability plan if it would be cripplingly expensive to execute.
Did you know that your legal documents can be drafted to encourage and provide greater sustainability in your business? For example, you could include provisions in your manufacturing agreements regarding the sourcing of materials used in the manufacturing process. You could also include obligations on your manufacturers to make certain enquiries of its suppliers, and require reporting back to ensure compliance. You could require physical site visits to keep sustainability practices in check, and engage representatives to undertake factory audits on your behalf. If these steps are not documented in your legal agreements, you may have difficulty verifying whether sustainability practices are being carried out and substantiating your marketing claims about being ‘sustainable’.
It is imperative to build-in measures of accountability when engaging other businesses, up or down stream. Measurable targets or Key Performance Indicators are a great way of defining whether the requirements of an agreement are being met. It can also be useful to keep up to date with current market practice regarding sustainability – can you meet or exceed what your competitors are doing?
If you are intending on making sustainability claims, we suggest following this handy checklist:
- What are my competitors doing to be sustainable?
- Can I meet or exceed their sustainability measures?
- What sustainability steps can I implement in my organisation?
- Have I included sustainability obligations in my supply chain (via the contracts with manufacturers or suppliers)?
- Have I taken steps to ensure that my supply chain is complying with my sustainability requirements?
By taking the time to have proper documents in place and outlining your sustainability practices, you will be protecting your business as well as having a positive impact on society well into the future.
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