Value through Transparency

Eco Labeling

The second category is ‘eco labeling’: the use of environmental labels on a company’s products. Eco labeling also involves certification by external parties, but contrary to ISO certification, eco labels are used for active external communications through the packaging of physical products, and usually occur in a B2C setting rather than in B2B relationships.

When deciding whether to make use of environmental labels, it is important to carefully weigh the expected benefits against the cost of certification and the possible communication risks. Many consumers are utterly confused when it comes to sustainability, and highly skeptical of green claims. In recent years, a plethora of new green labels have emerged, which has only added to the confusion. Eco labeling is still in the early days, and a shake-out will take place in the next few years, after which a few leading labels will remain. In the meantime, companies should stick to the environmental labels that are unambiguous, well-established, and considered credible. These labels provide reassurance and facilitate consumer decision making, while less well-known labels can create uncertainty and doubt regarding the merits of the product.

Leading eco labelsEven the leading labels are not beyond dispute. For example, scientists regularly question whether the well-established and increasingly popular Marine Stewardship Council (MSC) label actually contributes to more sustainable fishing practices. Companies need to actively monitor these discussions, to be able to respond quickly if an eco label gets discredited.

Information Focused Eco Labels
A separate category of eco labels provides information on the magnitude of the environmental impact of a product, rather than compliance with a certain standard. A good example is the product carbon footprint, which quantifies the total greenhouse gas emissions of a particular product throughout the life cycle (see the logo on the far right in the table above). Over the past few years, several standards have been developed, and hundreds of product carbon footprints have been calculated by both manufacturers and retailers, such as Tesco. However, product carbon footprinting is complex, time consuming and expensive, while the outcomes are difficult to communicate to consumers. For these reasons, Tesco and other organizations are evaluating the future course of action regarding these labels.

A second example is the Environmental Product Declaration (EPD). An EPD is similar to a nutrition label, providing detailed information on the environmental impact of a product. While a product carbon footprint is focused on greenhouse gases, an EPD includes a broad range of environmental impacts, including emissions to soil and water, waste generation, energy use, and water consumption.