What if you could instantly see the true environmental impact of products, rather than relying on ambiguous eco-labels? This future is already emerging. New regulations are setting higher standards for environmental claims, while AI technologies are making sustainability information more reliable and easier to access.
In this article, I’ll explore how AI is making complex supply chains more transparent, and how new rules are pushing companies to be more open about their environmental impact. Leading organisations find a competitive edge beyond compliance by empowering consumers with reliable data while converting environmental challenges to positive outcomes.
The information gap in sustainable consumption
Consumers increasingly want to make sustainable choices, with McKinsey research showing a shift in spending toward products with environmental and social claims. However, many barriers prevent these good intentions from becoming purchases.
While price and convenience remain important factors for most shoppers, confusing and unreliable sustainability information is a major obstacle. Nearly one-third of consumers state unclear labelling as their main barrier to sustainable shopping. The market is cluttered with misleading claims and eco-labels, as seen in Zalando‘s recent EU-mandated removal of questionable sustainability flags.
This transparency gap is a challenge, especially for younger consumers, who care deeply about the planet but struggle to make confident buying decisions. About 60 % of Gen Z and millennials feel anxious about climate change, yet they lack the clarity to shop in line with their values.
Fortunately, this landscape is changing. New regulations are raising standards for environmental claims, while AI technologies are making sustainability information more reliable and accessible.
Technology is enabling transparency
Understanding a product’s environmental impact is complex. Take a simple cotton T-shirt—it travels across continents, passing through farmers, factories, and shippers before reaching the store. AI is helping make sense of this complexity in many ways:
Making sustainable shopping easier
AI can help verify claims and translate complex environmental metrics into accessible information consumers can easily understand.
For example, Compare Ethics is an AI-powered platform that analyses green claims against regulatory standards, potentially cutting compliance costs by up to 80%. This approach is gaining real-world traction, with fashion retailer Reiss recently partnering with them to strengthen their sustainability verification.
Meanwhile, Dayrize, a product sustainability platform, enables consumers to compare products based on verified environmental impact. Their AI-based solution assesses three impacts consumers care about: carbon footprint, water usage, and land use.
What makes this possible is Dayrize’s innovative approach to data challenges. Their AI analyses products even when complete information isn’t available—drawing from millions of previously assessed products to fill gaps intelligently. This solves a critical problem, as most companies don’t have complete environmental data for their products.
Revealing your personal impact
AI can help make our individual environmental footprint visible in everyday activities, transforming complex data into clear insights. Banking apps, for instance, are integrating AI-driven sustainability dashboards to show users how their spending affects the planet.
For example, Connect Earth uses machine learning to analyse banking transactions and estimate their environmental impact. Their AI distinguishes between different types of purchases – such as a flight booking and a grocery purchase – and assigns accurate carbon values to each transaction. They also provide tailored reduction recommendations and tips to put carbon data into real life.
The early results are encouraging. KBC Bank reported that within just two months of implementing such features, customer engagement increased by 2% and environmental awareness rose by 20%.
While carbon tracking isn’t mainstream, demand could be growing. The European open banking platform Tink found that 40% of consumers would like their bank to help them track the environmental impact of their purchases.
These tools still face limitations. Accuracy varies by purchase category – flight emissions can be calculated with reasonable precision, but estimating the carbon footprint of a restaurant meal involves many assumptions.
Though still evolving, personal impact tracking could encourage consumers to act more sustainably – whether that means picking lower-impact products or simply buying less. This could accelerate the transition toward circular business models, where companies focus on longevity, repairability, and reuse rather than selling more products.
Example from Connect Earth, that uses AI to analyse banking transactions and calculate their environmental impact. They also provide tailored reduction recommendations and tips to put carbon data into real life.
Behind the scenes: Powering environmental analysis
While consumers see simplified sustainability insights, AI is changing how businesses assess their environmental impact. It can reduce the time and cost of Life Cycle Assessment (LCA), making comprehensive environmental analysis accessible to more companies.
For example, CarbonBright helps companies understand their products’ environmental impact from start to finish. Their AI technology fills in missing information and adjusts calculations for different regions, making it easier and more affordable for companies to prove their sustainability claims with real data.
Meanwhile, HowGood transforms environmental assessment for food products with its AI-powered system built on the world’s largest food product sustainability database. It quickly analyses thousands of data points, making it easy for companies like Danone to understand, improve, and share their environmental impact.
HowGood translates complex sustainability metrics into clear labels like “Best,” “Great,” or “Climate-Friendly,” making it easier for shoppers to trust what they buy.
Example showing how HowGood transforms complex sustainability data into simple consumer ratings that communicate a product’s environmental impact
However, these tools face an important challenge: they can only be as good as the data they use. Take scope 3 emissions—all the indirect emissions in a company’s value chain. While AI can help track and estimate these emissions, getting accurate data remains difficult. Many suppliers don’t yet measure their emissions, and international supply chains use different reporting standards.
This is where new regulations and industry collaboration are making a difference.
Regulations pushing toward transparency
Sustainability transparency is becoming a necessity, not a choice, as regulators worldwide demand increased environmental disclosure. The EU remains at the forefront, refining its policies to balance ambition with practicality.
Although corporate-level sustainability reporting faces potential loosening through the Omnibus proposal, companies are facing new regulatory pressures from initiatives like the EU’s Digital Product Passport and Green Claims Directive. These regulations are pushing brands to back up environmental claims with real, verifiable data.
The Digital Product Passport (DPP) will function as an environmental ID, enabling consumers to authenticate sustainability credentials throughout a product’s lifecycle. Meanwhile, the Green Claims Directive tackles greenwashing by requiring claims to be supported by reliable, scientifically sound evidence.
Also, The Product Environmental Footprint (PEF) establishes standardised methodologies for calculating and communicating life cycle environmental impacts. This equips both producers and consumers with consistent frameworks for making informed, sustainable choices.
Beyond regulation, businesses are collaborating to improve transparency. Initiatives like the Carbon Disclosure Project (CDP) and Partnership for Carbon Transparency (PACT) are setting global reporting standards, helping companies share verified carbon data and build trust with stakeholders.
What this means for businesses
Transparency isn’t just about compliance—it’s a competitive advantage. Companies that provide clear sustainability information can build stronger trust with consumers, leading to real business benefits. For example, Unilever has reported that its Sustainable Living Brands grew 69% faster than the rest of the business.
But the benefits go beyond profits. Transparency helps companies reduce risks, optimise resources, and cut costs in their supply chains. For example, knowing the carbon footprint of different materials can help businesses choose lower-impact, cost-effective alternatives. Greater visibility into suppliers’ practices can prevent disruptions and ensure compliance before issues arise.
Of course, consumer choices alone won’t solve the climate crisis. But given that household consumption drives over 60% of global GHG emissions, collective consumer demand can push companies toward meaningful change.
The shift is already happening. Regulations are tightening, investors expect more disclosure, and consumers want reliable sustainability information. Companies that embrace transparency proactively will gain a competitive edge, while those who wait may struggle to catch up.
The question isn’t whether to embrace transparency, but how quickly you can turn it into an opportunity. Where is your organisation in this journey?
