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Over 30 years ago, the Blue Angel label came out in Germany. It was significant – a label for consumers to recognize what was the more environmentally sound choice, backed by a standard and certification. Years later, many others followed – including many well-known ones such as Fairtrade, Marine Stewardship Council, Energy Star, Organic – and as of several days ago on the Ecolabel Index, the tally was at 424 labels. But what we needed in the past is not what we need any more. It's time for a change.
In a recent research piece from SustainAbility called Signed, Sealed…Delivered? that I co-authored with my colleague Patrin Watanatada – we looked at the value and challenges that businesses find in using certification and labelling as tools to improve economic, environmental and social outcomes across global value chains.
What we have found is this - certification, labelling and the standards-setting organizations behind them have been pioneers in building a more sustainable economy. For businesses, they provide a credible, consensus-set reference point for collective action, access to expertise and networks, and can spur demand for certified or labelled goods. This is particularly the case in the B2B space, where labels and sustainable attributes are built into institutional purchasing agreements, such as within large companies or municipalities.
However, there are also a number of challenges. The traits that are the strengths of consensus-based standards – governance and inclusiveness — also pose challenges. For one, some businesses are seeking to advance sustainability as quickly as possible – but sometimes the agreement required in a consensus based model can slow things down. In addition, what is best for all stakeholders is not always perfect for sustainability – for example with many of the forestry standards it is a compromise between best available science and what the industry can handle. Also – the issues that are covered by specific standards may not be entirely appropriate for the business, so there are many cases where companies such as Innocent Drinks have developed their own standards for sustainable sourcing. As labels become more known in specific product categories, they also become a mere condition of entry, which has been the case with Energy Star in electronics. This does not suit most marketing departments who seek to differentiate, first and foremost.
Another challenge to labelling is that it has limits – in particular, limits to scale. Labels are mostly recognized and understood by a niche group of consumers – a typical consumer will not buy an ecolabelled product unless it has a clear “what’s in it for me?” for them. For example, organic products have done well because many believe it to offer them a significant health benefit. This is also why we see an increasing number of B2B standards and certifications that have no consumer facing element, including the Better Cotton Initiative and UTZ Certified for coffee and cocoa, which allows companies to focus solely on making the commodity more sustainable.
What then needs to happen? We think that the model of standards + certifications + on-pack ecolabels needs to evolve, where they are separated and each are used and recognized as part of a larger sustainability toolkit. Standards would provide an increasing, pre-competitive baseline, and brands could compete around this, such as what apparel manufacturers are planning with the Sustainable Apparel Coalition’s index. In concert, partnerships and collaboration with civil society would help to transform supply chains and consumer norms and behaviour, for example with Procter & Gamble’s Turn to 30 cold water washing campaign. Certification could take the form of civil society and government evolving to be more effective and efficient in developing ways to hold business accountable. And lastly, brands – which intentionally started off as trustmarks themselves – would be the main focal point with labels becoming a complementary “back of pack” instrument, such as the case with Method using Cradle to Cradle certification as a design tool to reinforce the brand’s design focus, and using the label for the 1% of its customers who are interested in it.
It’s a tall order to be sure, and a lot needs to happen before this vision can be realized. But in a quickly changing space as sustainability – it’s time that ecolabels had their change too.
Photo by fmg2001. Reproduced under Creative Commons Licence
I read the report with come interest, and I do like the idea of encouraging corporations to challenge themselves to more towards sustainable goals without perceived cooercion. However, surely the key factor behind the rise of independent standards organisations and labels in the first place was a lack of will of companies to meet the requirements of consumers in the first place, and a lack of trust on the side of the consumers? How are companies to win back this trust at a time when faith in business practice is at such a low?
ReplyDeleteAlso, where do you see legislation fitting into this? Could this be a way to guarantee at least some sort of minimum standard from which to urge companies forward?
Hi Gareth,
ReplyDeleteGreat questions! The premise of the report was to take a business-focused look at the standards + certifications + ecolabels model. As you say, the key factor behind the rise of independent standards organizations and labels was that people were concerned about a certain issue that was invisible to the eye, mostly in supply chains. However- those consumers are, and continue to be a small niche (depressing - but true - and I know will continue to be the case. People are just too preoccupied with making ends meet and don't have time to think about the supply chains of their products). Businesses are out there to meet the needs of the large majority of the consumers, otherwise I don't think they would be in business!
Ultimately, consumers trust companies if they have had a consistent experience with them. I would say, that most people are skeptical of business, but when it comes to individual products and brands, they probably have a higher level of trust. I mean - look at Apple! They have been uber secretive, criticized repeatedly for their human rights and environmental record - however, because people have consistently had a great experience with them, there has been little to no focus on these issues. So all that to say - never forget your consumer, and that is a way to win back trust. Ecolabels play their part in building trust, particularly in cases where trust was lost - I see them as a risk mitigation technique, and in some cases, a cost of entry (e.g. Energy Star in appliances).
Another thing I think I need to point out is that with large companies, they MUST do the right thing (e.g. address what the ecolabels address) because their business depends on it. Whether or not it is communicated to consumers is another story. An example: while most chocolate companies are not using say, Rainforest Alliance or Fair Trade labels on their products, you can bet your top dollar that they have or are beginning to implement processes in place to address issues in their supply chains - child labour, environmental degradation, etc. affects the sustainability of their cocoa beans and the people who grow them, and without addressing these issues in the short term, in the long term they are going to have huge problems producing their products.
In terms of legislation - I wouldn't count on it. Government has traditionally followed business. However, I do think there has to be a series of reward and penalty mechanisms to move towards the right behaviour change - look at smoking and seatbelts for example. Policies, subsidies, fines, etc. could be reinforcing mechanisms to standards, ecolabels, certifications - at the end of the day it's about affecting the whole system through multiple channels.
Let me know if you'd like to continue the conversation.
Heather
@heatherkmak