Asking Questions About the Eco-Labeling Trend

The Harvard Business Review recently published a short article summarizing some recent developments in the area of eco-labeling. Andrew Winston’s story emphasizes that we may be at a crossroads in the practice of putting labels on products to indicate how sustainable they are. First off, he notes that GM recently announced a program to provide eco-labels on some Chevrolet models while UK retail giant Tesco reversed its four-year program of putting carbon labels on its products.

The opposite actions of these two companies highlights the fact that eco-labeling, as a practice that has been exploding in the past few years, may be reaching a cooling or maturation stage as companies learn more about the investment and purpose behind such labels. Winston pinpoints a few important questions that should be asked when developing eco-labels, and companies are beginning to realize the answers to these questions means that not everything needs a label, nor should every label provide the same data to customers.

The five questions Winston lists (paraphrased here) are:

  1. Does this product even need an eco-label?
  2. What should the eco-label communicate?
  3. Is a label capable of communicating the relevant information about a product’s sustainability?
  4. How much work needs to be done to develop the information in the label?
  5. Will a customer understand or even care about the information?

As it turns out, companies are starting to learn that some low-impact products (like a pack of gum) may not be appropriate for an eco-label, while other products (like a car or television) probably benefit from eco-labels. Even then, figuring out the exact information to put on the label is difficult. Think about the information in a nutrition label, which is standardized and mandatory. Is it easy to read? Is it the right information? Do people even pay attention to them or do they affect consumer choices?

Standards for nutrition and financial accounting have been developing for decades, or even centuries. We are still in the dawn of eco-labeling. The article points out that right now we know a lot more about the stages in products’ life cycles that have a heavy impact on the environment than we do about the size and character of that impact. The tools are likely to keep improving, and more data will certainly become available as companies invest more money in researching the sustainability aspects of their products.

Winston concludes by making the point that business to business sales are driving much of the move to improved eco-labeling. Much of the research and work that takes place is opaque to individual consumers. The outcome is that companies end up making a lot of decisions for consumers before a product even gets to the shelf. Based on our experience as a company helping organizations sustain behavioral changes among employees, I can certainly say that everything companies can do to make the decision simpler for consumers is a good thing. Of course, that is only the case assuming that companies make decisions that are truly good for the environment, because greenwashing is the enemy of

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