Are There Too Many Eco-Labels and Green Ratings?
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.