Can consumers drive corporate sustainability?

This article, originally published by Yale Environment 360, is reprinted here with permission.

The way Dara O’Rourke tells the story, the idea for GoodGuide came to him when he was slathering some suntan lotion onto his 3-year-old daughter’s face. O’Rourke, an associate professor of environmental and labor policy at University of California at Berkeley, wondered about the ingredients in Coppertone Water Babies. He did some research and learned it contained oxybenzone, a potential skin irritant. Later, O’Rourke found out that Johnson’s Baby Shampoo contained trace amounts of 1,4-dioxane, a probable human carcinogen. “It shocked me,” he says, “that I basically knew nothing about the products I was bringing into my own house.”

O’Rourke started GoodGuide to plug that information gap. A 5-year-old company backed by $10 million in venture capital, GoodGuide employs about 20 people, including environmental scientists, chemists, toxicologists and nutritionists, who rate more than 165,000 products, including personal care items, household cleaners, food, toys, appliances and electronics. Each product gets a numerical rating from 1 to 10 in three categories: health, environment and society. The ratings are then made available on GoodGuide’s website, on Facebook and on smartphones.

O’Rourke describes GoodGuide as a social enterprise, meaning the firm has a purpose that goes beyond making money: It aims to persuade consumers to vote with their wallets for environmentally friendly products and companies, and thereby help tackle big problems, including climate change, biodiversity loss and industrial pollution.

“There definitely is a growing percentage of consumers who are aware and who care and who are seeking out products that have better environmental, social and health attributes,” O’Rourke says. “We view those consumers who care as point of leverage over these big, big systems.” These “conscious consumers,” as they’re sometimes called, are important to the work of activist groups who bring pressure on corporations to reform their environmental or social practices; companies feel compelled to respond because they don’t want to alienate even a small share of their customers or potential customers.

It’s a reasonable theory of change. But does it work? Are there enough conscious consumers to make an impact? Shoppers may tell market researchers that they want to buy “greener” products, but can they be motivated to act?

Questions like those face not just O’Rourke and GoodGuide, but many companies and nonprofits that are betting on the power of green consumers. Greenpeace, for example, rates the world’s largest electronics companies on their sustainability practices with the hope that consumers will reward leaders and punish laggards. (This tactic is known in the NGO world as “rank ‘em and spank ‘em.”) Similarly, nonprofit Climate Counts scores big corporations on their efforts to mitigate climate change and urges consumers “to use their choices and voices” to pressure more companies to act. Taking a slightly different approach, BuyGreen.com is a shopping website that positions itself a “trusted source for green products.”

The most ambitious effort of all, a global initiative known as The Sustainability Consortium -- which has received startup money from Walmart and now includes retailers, consumer products companies and universities -- is building scientific tools to measure and report on the lifecycle impact of thousands of products, but its progress has been painfully slow.

No one doubts that green consumers can make a difference. They can be credited for the success of a slew of small and mid-sized U.S. companies, like Annie’s Homegrown, Seventh Generation, and Stonyfield Farm, that have built brands imbued with environmental goodness. (Annie’s, best known for its organic mac and cheese, had sales of nearly $120 million in 2011 and had a successful IPO last month.)

Jeffrey Hollender, the former CEO of green-cleaning-products company Seventh Generation, says the success of these socially responsible insurgents has changed the practices of big companies. SC Johnson, for instance, listed all of the ingredients in its products only after Seventh Generation had done so. “Successful companies have learned to be incredibly sensitive to consumers,” Hollender says.

Next page: Companies work to improve their product scores

Photo of shopping cart with Earth by Ints Vikmanis via Shutterstock.