May 9, 2024

In today’s climate, being “eco-friendly” may just be an ethical façade. Greenwashing—a term coined in the 1980’s—is the act of claiming environmental credentials for a product or project that are unjustified or untrue. Its purpose is to create an impression among both existing and potential customers that the business carries out environmentally friendly activities, when in reality, it is just a cover up. This article aims to unearth the hidden truth of greenwashing and explain how its repercussions are headed for the construction industry.

Nearly 500 randomly selected websites make around 40% of green claims online that could be misleading to consumers, according to a coordinated global review from the Competition and Markets Authority. One notable example is the IKEA greenwashing case of June 2020. It was found that the company was linked to illegal logging in Ukraine as its timber consumption doubled in the last decade. An investigation by Earthsight found that IKEA was making beechwood chairs using illegally sourced wood from the forests of Ukraine’s Carpathian region (an area home to endangered bears, lynxes, wolves, and bison).

Why it matters: Lawsuits related to greenwashing have impacted several major industries in recent years. Though the construction industry may not be directly impacted for now, it is a possibility in the future for the industry to be affected.

The building and construction industry makes up nearly 37% of global emissions combined—and the environmental impact resulting from delivering materials and operating buildings is enough reason for construction firms to highlight the sustainability of its structures. Creating sustainable developments through investments in materials, workers and delivery practices, for example, is a great way to do so.

Greenwashing in construction could look like:

• Changing the marketing of a project if it does not qualify as a green energy or greenspace company to get paid.
• Trying to beat a competitor by presenting as a green energy project or company to avoid being outbid by them.

“In some cases, a company may start an entire project, get halfway through and realize it is being built on top of toxic and hazardous waste,” said Chris Ring of NACM’s Secured Transaction Services. “Now you’re in a position where you must delay and possibly cancel the project altogether. The C-Suite should have their finger on the pulse of what kind of projects they decide to work on. It’s not fully the credit manager’s job regarding what they're supplying or the project that they're supplying to.”

Credit managers should always do their due diligence because anything could happen to a project at any time. A customer could be in healthy financial shape until the ramifications of a greenwashed project creates tension.

“While it may not have hit the construction industry yet, it's not a matter of if but rather a matter of when,” said Wendy Mode, CCE, CICP, corporate credit manager at Delta Steel, Inc. (Cedar Hill, TX). “I think it could start with manufacturers and the people who are building equipment. Producers or manufacturers may also try to start saying that they're eco-sustainable or green or those who make AC units, generators and other smaller construction site needs that are on every job site.”

Architects are a piece of the bigger picture of greenwashing as well. For example, if a mall or shopping center is being built, the architect is responsible for mapping out what the foundation and structure will look like. It is important to communicate the type of distributor gear or manufacturer used to maintain eco-friendly requirements.

“It’s more about looking to see if you're working for a company that's selling or manufacturing material while trying to promote something that really is a big stretch,” said Mode. “From a credit perspective, there wouldn’t be as many repercussions on you as there would be toward the operations line, but from a personal standpoint, you've got to sit back to look and see if you are working for an ethical company.”

The bottom line: Greenwashing is a rising concern in various industries, and while it has not directly impacted the construction industry yet, its prevalence could lead to potential legal and financial ramifications for companies that fail to implement sustainable practices.

During this Mental Health Awareness Month, we are exploring how credit managers can feel happy and fulfilled in their careers. Happiness is not merely a byproduct of success but a powerful catalyst for it. Credit managers must cultivate a positive mindset to find the true purpose of their role.

Why it matters: The key is to leverage practical strategies to infuse joy and fulfillment into every aspect of being a credit manager.

By the numbers: According to a Zipdo report, approximately 53% of Americans are currently unhappy at work while 85% of people are dissatisfied with their jobs worldwide.

Aside from decreased work productivity and efficiency, unhappiness can have lasting effects on mental health and overall quality of life. “This striking figure calls for heightened attention, fostering a sense of urgency to develop effective strategies and create healthier, happier workplaces across the board,” the report reads.

Another Zipdo report revealed that:

• Companies with a formal engagement strategy in place report 64% greater annual revenue growth.
• Companies with great workplace culture have 50% less turnover.

Yes, but: Happiness, the state of being happy, is experienced differently by everyone. It can vary depending on industry type, company culture, job position and the individual.

What credit professionals are saying: Kyle French, credit manager at Blue Water Industries LLC (Jacksonville, FL), says happiness at work is created by using the tools around him to accomplish the job. “Nobody wants to be given a task at work and then not be able to use the right tools available,” he said. “I’m happy to work for a company that gives us the tools we need to do our jobs and to do them effectively.”

For some credit professionals, happiness varies day-by-day. “You have to create what you perceive to be your happiness every day,” said Scott Chase, CCE, CICP, global director of credit at Gibson Brands Inc. (Nashville, TN). “What we come across in a single day is completely different than the day before. In the end, if I've made a difference, then I've claimed happiness for myself.”

Although there is no set way to measure or track happiness, we’ve listed some tips for creating a healthier and happier work environment:

Check in with yourself and others

Research shows that helping others can increase happiness and well-being. When we act selflessly, we immerse ourselves in positive emotions like gratitude, compassion and joy. It also helps to make connections better and stronger.

Yazmin Miller, CBF, CCRA, CICP, corporate credit manager at Feralloy Corporation (Chicago, IL), finds happiness in her job by doing something that matters for someone. “Helping someone inside or outside my team makes me feel good in and out of the office,” she said. “Happy employees also make for better results and higher productivity overall.”

Whether it’s a short text message or an in-person meeting, checking in on staff members can significantly raise happiness levels. Showing them that you care, fosters open communication and connectedness.

Miller engages with her team throughout the day, even if they are working from home, to increase their happiness. “I try to do little things for them like buying them lunch or letting them leave earlier on Fridays, which really makes them feel valued,” she said. “Knowing that somebody is looking out for them makes them feel less alone. And at the end of the day, they go above and beyond, surpassing expectations.”

Studies show that employees who regularly communicate with one another are more productive. According to a TeamStage report:

• Nearly 70% of the workforce would be more productive with effective communication in the workplace.
• 69% of employees would work harder if they felt appreciated by their employers.

Show appreciation

Expressing gratitude and praise for an individual’s performance enhances workplace happiness. A study by the American Psychological Association (APA) found that employees who feel valued are more likely to report better physical and mental health.

Appreciation also has a positive impact on teamwork and collaboration. When employees feel valued, their collaboration and idea sharing improve, boosting productivity, decision-making and company outcomes.

Become a mentor

Mentoring colleagues or staff has a mutual effect on overall happiness at work. Simultaneously learning from each other leads to higher job performance and stronger relationships.

“As my team’s chief motivation officer, I want to increase my team’s performance and make sure they're happy in what they do,” Chase said. “I continually demonstrate my understanding of their aspirations and desired growth. If a person has something that they can move towards and they feel comfortable in, that contributes to a positive work environment.”

Maintain serenity

A serene workplace can ease tension and elevate workplace happiness. French makes sure his credit department is serene in the following ways:

• Management instead of micromanaging.
• A bright, clean and an uplifting office atmosphere.

Sometimes happiness can vary generationally. What one generation finds comfortable can differ from another generation such as the preference for hybrid, remote or on-site jobs. “Different generations have accomplished different things in life and are going to have different goals and different things are going to make them happy at work or increase job satisfaction,” French said.

Reestablish purpose

The daily grind can often demotivate employees, making them lose sight of their purpose. Reaffirming their professional value can boost job satisfaction and motivation. Providing growth opportunities like training programs can increase job contentment and fulfillment.

If the employee is still unhappy with their state of affairs, work with the person to find something else they can do within or outside the organization.

The big picture: Promoting happiness in the workplace significantly enhances productivity and job satisfaction among credit professionals, contributing to overall success in B2B credit management.

Are you attending Credit Congress 2024 in Las Vegas? Be sure to stop by the Zen Den in the Calabria Meeting Room during the conference to unwind with peaceful ambiance, soothing music and rejuvenating

The March consumer price index (CPI) showed a 3.5% increase compared to March 2023—while the probability of a June rate cut has quickly plunged from 56% to 17%. Though March’s inflation reading was significantly down from the pandemic-era peak in 2022 (the highest level since 1981), it remains above the Fed’s overall target of 2%.

Why it matters: Credit professionals should closely monitor these inflation trends to anticipate potential impacts on their credit portfolios and adjust risk management strategies accordingly.

A February Consumer Food Insights Report showed U.S. consumers predicted they would see an increase in food prices over the next 12 months. Because of the combination of inflation, supply chain disruptions and tariffs on foreign imports, food prices have steadily risen since 2020.

Food inflation is also associated with several factors including heatwaves, excessive rain or other unpredicted weather, unseasonal or deficient food, pest attacks, illness and the increased cost of fertilizer. A recent report by the U.S. Department of Agriculture (USDA) estimates recent cases of avian influenza or “bird flu” at egg facilities in Texas and Michigan impacted nearly six million egg-laying hens. But two years after battling the epidemic, the national egg supply has been slow to recover—pushing egg prices higher than expected. The outbreak reduced the egg supply while demand remained consistent, ultimately leading to higher prices.

“Any time inflation is high there is an impact on food prices and consumer choice regarding the food they eat,” said Jason Mott, CCE, corporate credit manager at MFA Incorporated (Columbia, MO). “A consumer may decide to switch from a filet mignon steak to a top sirloin steak or even to another protein option such as chicken. Consumer choice affects supply and demand, and this is no different in the agricultural sector.”

By the numbers: The latest CPI shows the price of eggs rose 4.6% from February to March with overall food prices predicted to increase 2.2% this year, according to the USDA.

• Food-at-home prices are predicted to increase 1.2%, with a prediction interval of -1.1 to 3.7%.
• Food-away-from-home prices are predicted to increase 4.2%, with a prediction interval of 3.3 to 5.1%.

From a global standpoint, the nearly two-year ongoing Russian-Ukraine war has added pressure on the economic capabilities of both parties. This has trickled into both global food product supply chains and oil exports. Ukrainian soil is known for its fertile grounds to grow crops and graze livestock—but the damage done by armed conflict has impacted farmland and Ukraine’s ability to trade grain through international agricultural markets. Without access to grain storage facilities and infrastructure to continue the export of wheat, corn and other commodities will pose a long-term threat to Ukraine’s agriculture.

“In terms of world nutrition, Ukraine is a huge deal,” said NACM Economist Amy Crews Cutts, Ph.D., CBE. “The Russia-Ukraine conflict has posed a remarkable change in global dynamics for food and energy. Ukraine is a key player in global markets while Russia is a top exporter of oil. There is a volatile or spurious nature of the energy and oil sector because there will always be huge spikes and any country or group of countries can decide to restrict output or expand output.”

The inconsistent nature of volatility, adjusting to demand, then circling back to a new equilibrium is a key reason as to why the Federal Reserve does not typically include food and energy prices into overall inflation. “Nothing does more damage to the economy more quickly than rising oil and gasoline prices,” Mark Zandi, chief economist at Moody’s Analytics told CNBC. “It’s likely the upward trend will continue in coming months, and the dynamic negatively impacts consumer buying power and sentiment.”

The bottom line: Ongoing inflation exacerbated by global conflicts and supply chain disruptions, is expected to continue driving up food prices, impacting both consumers and businesses worldwide

For much of the last year, advocates in DC have acknowledged that a comprehensive Farm Bill reauthorization, which includes a wide array of programs such as crop insurance, farm subsidies, forestry, rural housing and infrastructure, and nutrition programs like SNAP (formerly known as food stamps), was highly unlikely to pass in this cycle’s deeply divided Congress, especially given the narrow majority held by Republicans in the House. But that hasn’t stopped Democrats in the Senate and Republicans in the House from working on their wish list. Last week, both the House and the Senate released competing outlines for the reauthorization of the Farm Bill, which is currently extended temporarily through September 30th.

There are a number of notable areas of bipartisan agreement. Specialty crops look to be a big winner, with funding increases for specialty crop-related research on both pests and crop diseases. Crop insurance and commodity protection programs like both the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) also see increases in payouts and eligibility. Lastly, in a notable compromise between the two bills, several Inflation Reduction Act conservation programs are folded into the Farm Bill conservation programs, which is a win for Democrats who wanted to see these programs made permanent, and a win for Republicans who can say they successfully clawed back Democratic spending that they opposed in 2022.

There are also some provisions that demonstrate agreement in principle but differ in their approach to solving a particular issue. For example, the House bill increases funding for the Market Access Program (MAP) and Foreign Market Development (FMD) Program, in order to help make U.S. agricultural products more competitive in foreign markets. The Senate bill contains an expansive trade title, including increased funding for international food aid, along with a host of trade promoting accounts, but MAP and FMD are not specifically mentioned in the summary. Both proposals also provide significant increases in funding for biofuels and biobased products, but the specific proposals and funding amounts have yet to be released, and the devil will be in the details for this one.

Forestry is expected to be a somewhat contentious area, although there are a few areas of agreement. The House summary proposes a number of new categorical exclusions for environmental reviews for forestry activity, which is typically a nonstarter for Democrats. It also creates new and enhances existing market opportunities for forest products, including existing and new data sources and tools, investing in innovative wood products, and expanding the use of biochar. The Senate proposal meanwhile designates 100,000 acres of new wilderness land, and builds on existing programs to promote seed development, expand nursery capacity, and prioritize reforestation projects. The Senate summary also recognizes the value of innovative wood products, though it is from a climate change lens, supporting the use of less energy-intensive materials, such as wood, to be used as structural building material.

By far the most controversial and what will likely prevent passage of a comprehensive Farm Bill this year is the nutrition title. House Republicans contend that their proposal will not reduce eligibility for nutrition programs like SNAP and WIC, but their summary includes vague descriptions like “corrects egregious Executive branch overreach and disallows future unelected bureaucrats from arbitrarily increasing or decimating SNAP benefits.” In the Senate Democratic proposal, SNAP and other nutrition programs are expanded in a number of ways, such as allowing college students under 24 to be exempt from work requirements in the program and allowing Puerto Rico to participate in SNAP like a state. Resolving these differences is likely impossible this year, given Speaker Johnson’s razor-thin majority and cantankerous conservative faction already upset with him for caving to Democrats and avoiding a government shutdown.

Most expect the House to act first, with the House Agriculture Committee expected to take up the full legislative text at the end of May. The Senate will likely follow with their own committee consideration. Neither bill is expected to come to their respective chamber floor for a vote prior to the November elections. There is a chance this gets wrapped up in the lame duck session in November/December, but more likely it will be one of the early 2025 legislative efforts, depending on who wins and by what margin in November.