Ecolabeling as a tool for enhancing sustainable practices in consumption patterns has gained widespread recognition globally. After the Rio Earth Summit, the focus was on Agenda 21 that recognized ecolabeling as a means to encourage the public to embrace sustainable consumption practices by buying products, which are more environment-friendly with regard to energy and resource efficiency (Horne, 2009). In addition, consumers also wanted to understand how their purchase decisions influenced the environment. This led to ‘green consumerism’ driven by ecolabeling (Corporate Sustainability Initiative, 2010). Ecolabeling for sustainability aims to inform consumers about consumption and related environmental impacts. At the same time, it offers opportunities for producers to introduce environmentally friendly products into markets.
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The public distrust and misperception over manufacturers’ claims have led to various initiatives to improve ecolabeling practices. Consumer distrust could emanate from the fact that ecolabels could be self-declarations (first-party claims lack independent verification and standardization), second-party claims (e.g. retailer branding vendor products), or third party claims (based on independent testing and verification by a recognized institution). In fact, it is observed that in the UK, for instance, sales of certified organic vegetables, fruits, and meat declined by 12.9% in the year 2009 (Corporate Sustainability Initiative, 2010). This implies that green claims on products have penetrated marketplaces fast, but consumers are concerned about their efficacy in promoting sustainability initiatives and sustainable consumer preferences.
In this paper, a systematic analysis of ecolabeling as a challenge is discussed with the focus on sustainability management and self-declaration claim ecolabeling vs. standardized ecolabeling. The paper looks at how ecolabeling has contributed to sustainability, its challenges, contemporary works, certification, Fair Trade, theoretical concepts, and methods used to derive recommendations. The major objective focuses on how eco-label certifications have influenced sustainability, the most appropriate certification, and recommendations to enhance sustainable consumption behaviors. Certification could be the most important factor for effectiveness or ineffectiveness of ecolabels in sustainability practices. Further, it would show how ecolabeling has influenced consumer preference and increased consumption of green products. The ultimate goal is to show that ecolabeling actually leads to a lower rate of environmental footprint.
The Issue of Ecolabeling
Sustainability Management and Ecolabeling
Ecolabels and other forms of environmental management approaches are numerous as the demand for environmentally friendly products continues to grow. According to information provided by Beveridge & Diamond PC (2010), a significant percentage of consumers purchases ‘green’ products and services. Consequently, many firms have continued to introduce more green products and services to markets with various environmental claim certifications. In efforts to attain credibility and a competitive edge in the market, some firms work with third-party certification bodies.
Although such certification programs have been useful for consumers keen on environmental sustainability, the glut of products and services have only led to greenwashing, confusion, and skepticism among consumers. From a legal perspective, it is claimed that firms using third party ecolabeling certification programs should understand standards associated with such programs and possible legal risks associated with misleading ecolabeling (Beveridge & Diamond PC, 2010). Moreover, it is also observed that some ecolabels do not have environmental impacts at all. In fact, self-claim ecolabels are seen as agents of distorting trade, discriminatory, irrelevant, and environmentally disappointing because of deceptive and unverifiable claims (Darnall & Aragón-Correa, 2014; Segev, Fernandes, & Hong, 2016).
An eco-label product is considered a product with low environmental impacts during production, consumption, and once disposed of. Standardized and certified ecolabels from reputable organizations guarantee that products or services actually have a low toll on the environment. Hence, the environmental management system or control has emerged to guide organizations on structuring, organizing, and administering issues related to the environment. It requires regular reporting and effective strategies to reduce environmental impacts. Ecolabels and related initiatives are some of these systems aimed at minimizing environmental degradation.
It appears not much has changed about ecolabeling for the last decade. The European Union (2016), for instance, observes that the practice is still voluntary and no specific EU regulations for fishery and aquaculture exist, but the provided information should be clear and verifiable (European Union, 2016). The current practice involves identifying products based on multiple environmental factors. That is, eco-label is seen from a wide range of classifications and certifications, including EPA mandatory requirements, Green Tag Certified, Fairtrade, Debio, FSC (Forest Stewardship Council), the Swan Nordic Ecolabelling, the EU Eco-label, Hippo, ISO 14001, Home Depot’s Eco Options, Eco-Lighthouse Program, the FEE Norway (Foundation for Environmental Education), EMAS, and Energy Star among others. Some of these ecolabel claims are only meant for corporate green marketing initiatives, and they are commonly referred to as ecolabels or seals of approval.
Based on the International Organization for Standardization (“ISO”) standard, three broad types of voluntary environmental labels are currently available.
Table 1. Available ISO-defined voluntary label schemes.
|Type I||ISO 14024 -Third Party||Voluntary, multiple-criteria-based, third-party program that awards a license that authorizes |
the use of environmental labels on products indicating overall environmental preference of a product within a particular product category based on life cycle
|Type II||ISO 14021- Self-declared environmental claims||Informative environmental self-declaration claims|
|Type III||ISO 14025- Environmental Product declarations||Voluntary programs that provide quantified environmental data of a product, under pre-set categories of parameters set by a qualified third party and based on lifecycle assessment, and verified by that or another qualified third party|
(Corporate Sustainability Initiative, 2010; Ecospecifier Pty Ltd, 2016)
In these types of ecolabel claims, the ISO standard 14024 is used as the ‘code of good practice’ to assist organizations, designers, and consumers on ecolabeling. Hence, organizations that wish to establish credible environmental ecolabeling programs to create a competitive edge and acquire market shares should concentrate on voluntary, third-party ecolabels, but they must understand that costs are incurred.
Given that the number of products with environmental claims have increased steadily in markets, their environmental performance levels and claims have vital variations (Corporate Sustainability Initiative, 2010). Consequently, the US Federal Trade Commission (FTC) introduced the Guides for the Use of Environmental Marketing (“Green Guides”) in 1992 to assist with standardization (Czarnezki, Homan, & Jeans, 2014). These standards have been introduced because of sustainability consciousness. Today, for instance, seafood sustainability is now a popular concept that has led to a proliferation of both self-claim eco-label and eco-certified products in the marketplace.
For instance, apart from different wild fisheries and aquaculture certification programs certified by independent third parties, other seafood vendors and retailers now seek to create a competitive edge by developing their own brand labels or eco claims, which designate products as sustainable, parked at source, responsibly sourced, and 100% natural among others. These self-claims or first-party ecolabels often lead to issues and create confusion for consumers and businesses, and they could derail sustainability efforts. In fact, self-claim ecolabels are responsible for multiple cases of labeling programs without transparency and traceability based on environmental credibility and rigor.
Transparency and Traceability
Processes of developing ecolabel claims should be transparent to guarantee and ascertain the reliability of the provided information relative to global standards. Thus, standard-setting firms should ensure that their processes are conducted in a transparent way and adhere to set standards. Moreover, traceability guarantees that the movement of products and their inputs can be followed through distinct stages of production, processing, and distribution to consumers.
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Meanwhile, the business landscape continues to change for many organizations. Consequently, they continuously seek for ways to create competitive edge, and branding to offer alternative solutions for environmentally conscious firms, but making green claims may come with rewards, legal implications, or reputational risks for a brand. Porter and Kramer (2006) observe that governments, media, and activists are focused on holding companies responsible for their impacts on their environment and accounts of social consequences. As a response, corporate social responsibility (CSR) has emerged, which many organization use to tackle environmental impacts (Porter & Kramer, 2006).
Further, Porter and Kramer (2006) note that CSR efforts may not attain the intended outcomes because they pit organizations against society and lead firms to adopt CSR from a generic viewpoint instead of using their individual strategies. As with the observed self-declared ecolabels, some current CSR initiatives are more disconnected from right practices, and they consequently undermine efforts to advance sustainability and benefit society. Based on inside-out and outside in linkage theory, strategic CSR activities should help organizations to create competitive advantage and advance innovation (Porter & Kramer, 2006).
It should go beyond costs and charitable initiatives. On this note, it is widely observed that many self-declared ecolabels are disconnected from expected standards. As such, they impact brands negatively. This perhaps could explain why sales dropped in the UK (Corporate Sustainability Initiative, 2010). Notably, definition of these ecolabels varies significantly while accuracy of the declarations are questionable. This increment of ecolabels from sources that are not easy to verify and self-declarations has led to confusion among consumers and ultimately undermines values associated with third party ecolabels, which perhaps genuinely seek to demonstrate actual environmental impacts of products.
At the same time, self-claim and standardized ecolabels are not equally exclusive, and some self-claims may be based on readily confirmable, independent third-party standardization. Further, they may suffer from non-conformance with local and/or globally recognized eco-label standards, such the ISOs, FAO Ecolabelling Guidelines, and ISEAL Codes of Good Practice. In fact, the increment in self-declared ecolabels hinders the adoption of recognized ecolabels from reputable bodies. Therefore, organizations keen on corporate advantages of a sustainable strategy need to streamline and clarify their certifications for ecolabels products based on transparency and traceability principles rather than focusing on additional claims and ecolabeling.
Much of what is acknowledged today regarding standardization and supply chain relations have emanated from research focusing on Fair Trade (Bartley, 2009). Fair Trade promotes fair working conditions along the supply chain. Here, associations between producers (in emerging economies) and buyers (mainly from wealthy nations) are seen as goals because they challenge the notion of buyer power in the supply chain. According to some studies, the relationships between buyers and producers are not always deep as some promotional materials suggest because effective comprehension of Fair Trade practices does not always reach an individual farmer (Bartley, 2009).
Yet earlier practices of Fair Trade did indeed focus on relationship building. Consequently, critics now worry about future relations as Fair Trade becomes dominant or mainstream. In fact, it is observed that large retailers that have entered Fair Trade are responsible for its mainstreaming. Hence, the market-based idea of traceability has now essentially replaced a past logic of partnership. Nevertheless, some relationships continue along the supply chain. For instance, cooperative societies formed by farmers become more stable, which is a crucial benefit where mission-oriented buyers who instinctively focus on equality, transparency and respect in their relationships are involved. Thus, profits tend to be fair. Producers normally confirm that buyers tend to create strong vital partnerships driven by shared interests, values, ties, and organizational commonalities.
In some instances, retailers initiate talk relationships with their supplies as they strive to shift toward standardization and certification. Some critics have however argued that retailers, such as IKEA seek for partnership with major suppliers with the aim of attaining certification (Bartley, 2009). In such strategies, retailers many concentrate on commercial and industrial aspects, specifically huge volumes, product homogeneity, and relatively low prices (Bartley, 2009). Further, some cases appear to have reconfigured relationships. Victoria’s Secret’s agreement, for instance, allows it to purchase cotton from specific groups of producers by eliminating middlemen, an approach that is considered as reconfiguring the supply chain. By eliminating the intermediary, certification aims to empower producer in the supply chain. These practices adopted by Fair Trade and other entities reflect multi-stakeholder involvements, which ultimately lead to better outcomes.
Triple Bottom Line (TBL)
For reporting purposes, modern organizations should perhaps adopt Triple Bottom Line (TBL) (Jackson, Boswell, & Davis, 2011; Alhaddi, 2015). From a sustainability perspective, TBL reflects ecological and societal practices based on a relationship between businesses and communities. When covering information on organizational impacts on matters related to sustainability, there are always both positive and negative outcomes noted. The major strength of TBL is that it captures specific areas in which an organization performs well and other areas that require improvements.
Organizations that opt to report using TBL reporting demonstrate enhanced transparency, which can help to address various issues raised by diverse stakeholders. Further, TBL reporting shows that business takes its accountability on sustainability to higher levels. Hence, organizations that strive to incorporate environmental, economic, and social practices into reports and decision-making should consider third party standardization on ecolabeling rather than relying on self-claims. The reporting ensures that there are specific principles through which firms can use to handle their impacts on the environment.
Discussion and Conclusion
While the ecolabel market has expanded steadily in the past decades, it is not clear how practices would evolve because they are still voluntary. Most firms now concentrate on enhancing their competitive edge in respective industries, as well as exploring new market opportunities. Successful organizations have recognized that profitable practices can only be realized and sustained through continuous of assessment of existing and emerging market practices. Obviously, sustainability has become a central, irreversible issue for contemporary businesses. However, the absence of well-defined regulations to guide environmental effect reporting and footprint reduction requirements indicates that the future is equally unclear (Corporate Sustainability Initiative, 2010).
As many firms strive to demonstrate their environmental responsibility practices, they aim to show their environmental footprint across supply chains to consumers. In fact, firms understand that consumers want to associate with environmental conscious companies. As such, they now seek for ecolabel claims and standardization.
However, for most firms, the challenge is not only which label to adopt, but also what claims to communicate. Moreover, standards and labels are also major issues for firms, but many firms continue to concentrate on potential market advantages they can attain. On this note, standardization is a major challenge. It is imperative to recognize that quality aspects of a given ecolabel are a function of specific standards selected. In most cases, especially in self-claim ecolabels, regulations are lacking to guide sustainability practices. Based on voluntary approaches, in this regard, irrespective of whether government interventions are involved in regulating environmental ecolabels, all stakeholders require significant levels of collaboration across industries to determine best practices, sustainability technologies for transfer, and effective sustainability measure.
Identifying the most reliable or suitable ecolabel for a given product or service could be extremely difficult because distinct product classification and assessment criteria differ significantly. General certification, such as recycled contents, energy efficiency, water conservation, and compliance with industry requirements, are usually found in most ecolabel claims. However, specific attributes related to these common standards and environmental considerations often vary. Most countries may also have different standards for a single product. For instance, the US Green Seal certification is used as the standard for printing and writing papers, but in Canada, EcoLogo certification is applied. This observation shows how ecolabels differ, but they make claims about the same product.
Although most retailers and other manufacturers consider ecolabeling for their own brands, it is vital that they comprehend legal obligations, regulatory challenges, and possible liabilities that could emanate from self-claim ecolabeling, especially if the claims are deceptive. Further, one must observe that existing regulations, guidelines, and other relevant information about ecolabeling issues are wide and may not necessarily apply to a single product, such as seafood. Hence, it is necessary for retailers or manufacturers to identify the best ecolabeling categories for their products for better guidance and insights.
Primarily because of the FTC guidelines and other requirements, deceptive environmental claims have continued to decline, and third party certification and standardization claims have continued to gain recognition and influence (Corporate Sustainability Initiative, 2010). Various ecolabeling bodies globally now evaluate different types of products for standardization. As such, comparing the same products, guidelines, and other voluntary environmental practices could lead to specific performance criteria to inform consumers about ecolabeling claims and purchasing decisions. However, this approach may not be effective because of abundant information for evaluation to gain insights. This implies that ecolabeling requires standard guidelines for products sold globally.
Ecolabels are intended to enhance environmental sustainability. It is however difficult to ascertain actual impacts of ecolabeling on the environment and determine the validity of the claims (Segev et al., 2016). That is, identifying and measuring environmental benefits of ecolabeled products as separate outcomes from other benefits attained through applications of other environmental measures, changes in modes of products and technological interventions could be difficult.
Given the mainstream status that some bodies (Fair Trade) have assumed, it is imperative to understand the nature of relationships with producers. Collaborative, entrenched relationships should be assessed to determine if standardization and certification actually enhance sustainability and fair practices for all stakeholders.
In conclusion, ecolabeling is a noble initiative to demonstrate how products affects environments. Third party standardization and certification programs offer the best guidelines for businesses interested in ecolabeling. Conversely, self-claim ecolabels appear to generate confusion and skepticism among consumers. On this note, it is imperative for such organizations to consider third party standardization and certification, as well as effective TBL reporting to facilitate appropriate responses on areas of strength and weaknesses.
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