Navigating difficult eco-labeling terrain

As the number of eco-labels in the marketplace continues to grow, exceeding 430 labels, the terrain continues to present many challenges. The consumer response has been less than impressive, though when asked, many consumers state they would likely prefer to buy a product with an eco-label on it. Not only is the sheer number of eco-labels adding to consumer confusion, for many, the message itself is not clear. The fewest of labeling organizations (usually third party entities) are effectively tracking performance of certified enterprises. Finally, early adopters are concerned that in sectors, such as fisheries, where a growing number of suppliers are certified to the Marine Stewardship Council (MSC) the label is no longer distinctive enough. Add to this that the Federal Trade Commission is increasing scrutiny of eco-labeling, and it is tempting to draw the conclusion that there’s little value to be gained from pursuing certification or even putting an eco-label on a certified product.

Signs of positive change

However, Deloitte research finds that many large companies strategically pursue product certification as a way to signal that their product(s) have achieved a certain standard.  Change is being driven by growing B2B demand for sustainable products, in large part by the entrance of federal procurement officers such as the U.S. General Services Administration who need to comply with an executive mandate to buy more green products, meet ambitious corporate sustainability targets, and ultimately the expectation of increased consumer demand. For these companies certification, and to a lesser extent eco-labeling, can in some cases be essential to bringing products to market; particularly in states with mandated green purchasing guidelines (e.g. Pennsylvania, Massachusetts, Vermont, Maine and Connecticut). Longer-term competitive advantage can be gained by using certification and eco-labeling to raise the visibility of sustainability initiative and to achieve ambitious sustainability targets. Finally, some companies view this as a brand play, where the eco-label aligns with the brand strategy, adds a new dimension to the brand value proposition, improves the company’s image and market position.

Credibility moves front and center

Our research found general agreement that credibility should improve in terms of who certifies the product and how the eco-label is designed. Certifying organizations should:

• Be transparent in the development of criteria and decision-making process
• Be staffed with general knowledge and specific scientific know-how
• Provide clarity on how the data is evaluated
• Permit applicants to approach reviewers for clarification
• Protect confidential data
• Refrain from financial conflicts of interest


Preferred eco-labels should be:

• Designed by credible representatives from NGOs, industry and regulatory agencies (e.g. U.S. EPA)
• Objective, with scientific merit and justification, based upon a recognized scientific test that can be easily documented and yields clear results
• Multi-attribute, LCA-based
• Do not overstate or misrepresent benefits on the label
• Dynamic (e.g. not a static a check list) with criteria that allow for improvement in product performance and product innovation, including the possibility to substitute another ingredient in a product formulation.
• Have market recognition – or at least the potential


Eco-labeling and certification are permanent fixtures in this economy. When companies take a strategic approach we can expect higher quality certification, and possibly some convergence around a smaller set of better-known labels. 

 

Chris Park
Principal
Deloitte Consulting LLP

Dinah A. Koehler, ScD
Sr. Research Manager
Deloitte Services LP

 

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