Companies and brands are struggling with the question of how to mobilise consumers to give preference to products and brands that have the potential to deliver positive social and environmental outcomes. The tools available seem to be labels and brands, and I think there is room in the market for both. This research that SustainAbility is going to undertake will no doubt help us understand better how we can empower consumers. – Jan Kees Vis, Global Director Sustainable Sourcing, Unilever
More than ever before, customers have demonstrated that they are more likely to buy products and services from companies they trust. In response, a wide array of certification programs has been developed, creating confusion among customers and undue burden on farmers. We agree the industry needs to better understand what is meaningful to customers and works best for producers. SustainAbility is uniquely positioned to raise our collective thinking on this topic and the promise of certification. – Cliff Burrows, President, Starbucks Coffee Company
Starbucks and Unilever are two of the organizations SustainAbility has engaged as we develop our thinking on the efficacy of eco-labels and the certification schemes supporting them. Their experience illustrates that while improving value chain performance is laudable and building trust with consumers essential to finding commercial as well as reputational value in implementing sustainable practices, it is unclear how best to do this.
Harder Than You’d Think
If this surprises, consider the complexity and scale of the global commerce system within which eco-labels offer assurance. A couple of years ago, a shipping container followed by the BBC went twice round the world in a year, hitting Scotland, Shanghai, Brazil and Los Angeles en route. Historically we might have known exactly where, how and who produced the goods we purchase; today all we know is what we’re told. Such geographic and mental distance between where things are produced and consumed creates benefits, but also significant problems.
To The Rescue
Enter the eco-label or certification. These independently verified, on-pack labels tell consumers credible stories about how products are produced (think Fairtrade or organic) or provide guidance on how products should be used (think nutritional labels or Energy Star). Eco-labels promote value chain sustainability; their goal is to improve production standards and create greater trust while influencing behaviour – especially consumer choice.
Thirty-three years after the first eco-label (Germany’s Blue Angel) was launched, the market is flooded with seals covering everything from electricity to wool. The Ecolabel Index now lists 377 schemes in 211 countries and 25 industry sectors, and they keep coming. In January 2011, Vestas announced the development of a WindMade label backed by WWF and the UN Global Compact; a group of U.S. food manufacturers signalled their intent to develop Nutrition Keys and the Enough Project proposed a process to certify conflict minerals sourced from Congo and nearby. Simultaneously, a new crop of industry sustainability standards is in development, including as of last week the Apparel Index backed by thirty brands including Walmart, Gap, Nike and Levi’s.
Fit For Purpose?
With this growth trend seemingly set to accelerate as more businesses commit significant value chain performance improvements on which they need to deliver – and to prove delivery – it’s time to ask: Is this proliferation of eco-labels a good thing? Is the eco-label model working?
We think the moment is right to take a step back and consider what the eco-label model was designed to achieve in the first place, to ask whether it is realistic to expect these labels to achieve so many and such diverse aims, and to explore emerging – and potentially more effective – alternatives.
Certainly, eco-labels have done a great deal to raise awareness, to change what we expect of certain product categories, and to build capacity and create a common language and framework around sustainability. And at a time when both the US and UK governments have determined it appropriate to release new (anti-) greenwashing guidelines, we must remember that eco-labels are more trusted than the direct claims of business (for example, the 2010 ImagePower Green Brands study found that around the world, advertisements and company websites lag well behind certifications in influencing green purchasing decisions).
Tough to Measure
But the direct impact of eco-labels is difficult – exceedingly so – to demonstrate. Is social and environmental performance improving? Are consumers purchasing more certified products? Has trust between suppliers, companies and consumers increased? Are commercial returns adequate? And can this activity – literally the branding of sustainability – lead to undesirable consequences for both sustainability and brands?
Better Eco-labels – and Alternatives
Beginning with a white paper, SustainAbility, under the direction of Patrin Watanatada, is launching a research project, Signed, Sealed… Delivered?, that will answer some of these questions. We’ll explore eco-labels, their impacts on supply chain performance and emerging alternatives – including the role brands themselves can play in raising standards, building trust and changing consumer behaviour. When complete, we believe it will be possible to articulate the drivers of success and failure as well as which sustainability issues are better suited to eco-labels and why – lighting the path from laudable to commercially successful activity that improves performance while increasing trust and influencing behaviour change across the value chain.