Every day, each and every one of us is faced with an overwhelming number of choices. From when we wake up in the morning until we go to bed, we make hundreds of decisions among the thousands of choices we have. Grocery stores now carry over 30,000 unique products and many big box retailers carry over 100,000. And as a society, we love choices. In fact, the United States was founded on individuals' autonomy to choose, dating back to the Declaration of Independence.
But having so many choices isn't always good for us. Thomas Jefferson's declaration of our inalienable right to liberty has gotten a bit out of control. We spend a large amount of our time making irrelevant and unimportant decisions. Such complex decision making causes stress, anxiety and self-doubt.
When faced with the choice of 300 different types of cookies in the store aisle, whether I choose to buy Chips Ahoy or Oreos will have no impact on my well-being, but yet I still spend three minutes agonizing over each package.
Likewise, we face a similar conundrum with ecolabels. With over 300 ecolabels and many more being added each year, consumers and businesses have to make increasingly complex and convoluted decisions. Manufacturers must weigh many different factors when making their choice of what ecolabels to get for their products, including cost, ROI, and credibility of the label.
Businesses of all types must decide what, if any, ecolabels they trust for purchasing. In the business world, especially at product companies, managing sustainability certifications, standards and labels requires at least a full-time position.
But businesses have an easier decision-making process than consumers. Businesses make a significant financial investment in choosing the "correct" ecolabel(s) and therefore spend time evaluating their myriad of options, weighing the pros and cons, and meeting with the various certification organizations to hear why their program is better than the others.
Consumers only have the luxury of a few seconds to make their choice while in a store aisle. Although mobile technology now makes it easier to access information anywhere, an ordinary consumer in the store aisle isn't going to spend thirty minutes evaluating cleaning products with three different certification labels to learn which one is best.
A small percentage of consumers are willing to dig into the details and do their research to decide which one is better for them, but most consumers that are willing to make a purchasing decision based on sustainability just want one recommendation on what they should buy. That is why Energy Star has been so successful in the consumer market; one authoritative body provides a simple way to make a choice.
By no means am I advocating for the elimination of all ecolabels and development a system with one choice. That would be even more disastrous. A competitive market is necessary in order to keep raising the bar on all ecolabels in the market. Having various programs compete on transparency, rigor, credibility, service and price, ensure all stakeholders receive maximum value from the market.
What we need is an oligopoly with larger barriers to entry. A handful of credible certification programs, labels and rating systems to dominate the market. This will minimize consumer confusion while working to ensure labels and ratings are held to high standards. Despite the hundreds of ecolabels that exist, this scenario isn't actually too far from where we are now.
While there may be hundreds of labels, any given decision requires no more than a few choices. Ecolabels are segmented by product category, industry or geography. When I go to buy paper, or glass cleaner, or seafood in the supermarket, I'm not choosing among hundreds of ecolabels, I'm choosing among a small subset for each of my decisions.
And while there are more and more ecolabels being introduced by many different organizations, from nonprofits to retailers, there is also consolidation starting to happen. UL recently acquired the Canadian certification program TerraChoice. In the past year we have also seen considerable consolidation in the SRI industry, with MSCI ultimately swooping up RiskMetrics, KLD, and Innovest.
There is little doubt that the sustainability labeling and ratings space may now be heading down a path of further collaboration and consolidation. Consumers will continue to become more concerned with the products they buy, businesses will invest more in green marketing to communicate with their customers, and credible labeling and ratings schemes will continue to grow as a key aspect in all product purchasing decisions.
Joshua Saunders is the senior director of business development for GoodGuide.
Consolidation is not necessarily a good thing
Consolidation is not necessarily a good trend. In the case of for-profit certifiers buying other certifiers, for example, that ultimately means less transparency, profit driving decisions over values and the potential to be left with standards that have been driven to a low bar through industry lobbying, as we've seen in the legislative arena for issues like climate change.
If there is to be an 'oligarchy' of a smaller field of labels, multiple stakeholders from consumers and company buyers to nonprofit, government, field experts and producers/suppliers need to weigh in. USDA Organic is a great model as noted - a standard developed by multiple stakeholders with a standards board that updates the standard through public input, and multiple certifiers independent of the standard setting body.
The ecolabel data base that Mr. North references is a good basic start but short on details such as whether standard setting bodies use external certifiers or undertake that themselves, and whether such bodies charge for label use on top of justifyable admin fees, areas which represent real conflicts of interest.
Consumer Fatigue
Thanks for bringing attention to this topic! There are many socially-responsible labels now, in addition to eco labels, and I am concerned about "consumer fatigue," (a term I first heard from Michael Hiscox's research, Harvard University). Will consumers give up on ethical labels if they hear about green-washing and fair-washing?
It seems the article touches on this when it says, "Such complex decision making causes stress, anxiety and self-doubt."
With the increasing popularity, (profitability), found in marketing ethical labels, how can we move things toward competition for higher standards rather than marketing competition for popularity in labels- BEFORE consumer fatigue hits? I ask this question as a consumer, and as a small business employee.
There is also the real risk of newer labels w/lower standards
At Equal Exchange we've been working with, and selling, eco-labeled products for about 20 years (mostly organic, Fair Trade coffee & other foods), and in that time we've seen the proliferation of new eco-labels for use in our categories that often represent lower environmental and social requirements, yet succeed in the market place because they seem 'good enough' for the harried store manager (who's deciding what gets stocked on to the shelves) and for the equally harried shopper.
But the clincher is that by applying less stringent requirements these competing eco-labels are attractive to many of our competitors (especially the very large ones) and enable them to put out "green" or "fair" products that actually represent much less positive change within their supply chains and are therefore relatively inexpensive to source.
Consequently one positive response we welcome has been the Consumers Union Eco-Label Center that helps to sort the wheat from the chaff.
http://www.eco-labels.org
Will EPA's efforts help in eco-labeling?
Thanks, Joshua - some great points.
I agree some keys are eco-labels relevant to specific categories of products where it makes more sense (and that there are generally not more than a relative few in each category now). I also think useful, credible labels must take life-cycle and multiple critical factors into consideration rather than just one or two elements.
What do you think of the EPA becoming more involved in this area, given that it's looking at getting more involved in "sustainable products?" http://bit.ly/d6CjRY
re: Will EPA's efforts help in eco-labeling?
Perry,
Thanks for the comments. I completely agree - credible labels generally must be multi-attribute these days, rather than single-attribute. I think the explosion of single-attribute labels is what causes much of the confusion in the labeling marketplace. Multi-attribute labels that take into consideration the entire product lifecycle are becoming more important.
The EPA has always been involved in this area and has been a significant contributor. Members of the EPA's informal Sustainable Products Network have been involved in most, if not all, collaborative standards development efforts over the last decade, from LEED building rating systems to ASTM Sustainability Committees to NSF and ULE product rating standards. Not to mention their own systems with Energy Star, Water Sense, and the many others that they manage.
It will be interesting to see where the EPA gets more involved moving forward. There are many wonderful folks at the EPA who bring incredible knowledge and expertise to the table, so it will be great to increase their participation in advancing eco-labeling. However, the biggest challenge will be where their resources can be best utilized and not duplicating efforts.
- Josh