Eco-Labeling Impacts

The Eco-labeling trend began in the early 90’s led by the civil society but soon transformed into what has become a benchmark – a certification system, that businesses have voluntarily tried to adhere to make more environmentally benign products vying for the ever-fleeting consumer attention. A vast variety of eco-labeling schemes have been adopted by different countries to inform consumers about products ranging from paper to cars –  providing them with choices that enable smart and green decisions.

Labels like the Forest Stewardship Council (FSC), Marine Stewardship Council (MSC)US Green Seal, Energy Star, Eco Mark in Japan, and Nordic Swan in 5 EU nations, green building standards like LEED in the US and CASBEE in Japan are some of the well known ones among many others.

The purpose of such certification systems is to award products with ‘greenest’ characteristics in comparison to other products giving the same functionality – conformity with it being verified by an independent 3rd party organization in the best cases and self-declaration by companies in the other extreme. The Greenlist process, which first began as an internal filter tool to weed out the restricted ingredients for engineers at SC Johnson has evolved into an industry accepted standard.

Impacts

Impacts of any green label certification scheme, in any country can be two-fold – Consumer facing and Manufacturer complying.

On the consumer front, its sole aim is to provide reliable information and acts as guide for the general public in their buying decisions. On the manufacturer front, such labels forces companies to produce less burdensome products.

Such eco-labels bring a change in the consumption pattern thus giving consumers a convenient tool to verify company’s claims. Many studies have consistently shown that consumers would rather prefer a product with an eco-label on it – everything else being equal.

But a label or a standard must essentially be a non-profit without any hidden bias, with an international perspective and having flexibility built into its certification system to accommodate regional differences.

Downside

The downside of such labeling programs is that its immense proliferation into the market makes consumers wary of the claims made by the companies – what is known as ‘Green-washing’. Many companies in attempt to green-up their image indulge in misleading consumers by providing labels without any trusted verification authority. So, the traditional form of mass advertising fails as people get over-messaged. Only those companies that are open and transparent and talk about their failures will eventually gain consumer loyalty – which Gary Hirshberg of Stonyfield Farm likes to call as ‘the holy grail of advertising.’

The website www.ecolabeling.org tracks about 378 labels in 211 countries in 25 different industry sectors. Terrachoice, a Canada based environmental marketing firm regularly updates its original report that came out in 2007: “Sins of Green-washing” that lists companies making false claims.

Consumer Reports is another website that provides a comprehensive information on eco-labels. It exclaims, for example, ‘Free-Range’ doesn’t necessarily mean that animals went outdoors or meat certified as ‘Natural’ can have artificial ingredients.

Labels have made ‘Sellers Beware’ as such programs have given power in the hands of the consumer. Good Guide is one such example that allows consumers to make decisions at the point of purchase (POP) by scanning the product into their smart phones and getting instant information on the sustainability characteristics and availability in the near vicinity.

Green or eco-labels are certainly a step in the right direction. They turn consumer perception as any label and the accompanied advertising takes time and effort to establish itself to make any positive impact. Essentially, all products on all shelves ought to be inherently green removing any need for these labels. 

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