Eco labelling: How can we make better purchasing decisions?

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New York-based Stephanie Johnston discusses eco labelling, and takes a look at some of the initiatives across the pond which are helping people make better purchasing decisions.

As environmental and food activist Alice Waters once said: “The decisions you make are a choice of values that reflect your life in every way.” And when it comes to what we buy, we demonstrate our values through our purchasing decisions.

But we all know that feeling: setting out with better intentions doesn’t always mean we translate them into better actions, whether that’s because we can’t follow through with them, or simply don’t know how.

Buying is a complex decision- making process. But global information company Nielsen found that 55 per cent of respondents from 60 countries were motivated to buy products and services from companies committed to positive social and environmental impact, to the extent that they were willing to pay more for them.

Despite the supposed willingness of many of us to vote with our wallets in support of better business practices, we still often struggle with making more sustainable buying choices. As Lucy Atkinson, assistant professor at the Stan Richards School of Advertising and PR at the University of Texas notes: “Part of the problem lies in the volume of sustainability-related information we’re presented with.”

LABEL LINGO

While it may be true that consumers are overwhelmed with information about sustainability, the nature of the information could also be at fault. One key source of sustainability information available for consumers is eco labelling. Since it emerged in the 1970s, driven primarily by concerns over energy and food consumption, the industry for certification, standards, ratings and labelling of goods based on their eco credentials has seen prolific growth.

At Ecolabel Index’s last count, there were 459 eco labels in use across 197 countries and 25 industry sectors. That excludes other, self-declared environmental information sometimes included on product labelling. However, as the latest State of Sustainability Initiatives Report notes, many of these are business-to-business initiatives with a single-sector or single-attribute focus, and are designed to affect trade flows rather than influence consumer behaviour. The information is more focused on influencing the way companies operate, rather than purchasing decisions. As recent research published in Food Policy shows, although consumers typically have concerns about sustainability, and although their understanding of the meaning of single-attribute labels like Fairtrade and Rainforest Alliance on food products is quite good, the labels typically don’t help to translate their concerns into specific product purchases.

While some might argue that business-to-business initiatives are more likely to make an impact simply because they don’t rely on unpredictable consumer choice, aren’t we still missing a trick in enabling consumers to influence better business practices?

A MATTER OF TRUST

Eco labels are not the only source of sustainability information available. Many companies also choose to promote their products and services to consumers on the basis of environmental and ethical claims, sometimes spending millions of dollars to differentiate themselves and their brands. But with the Edelman Trust Barometer showing a general decline of trust in business in 2015, and specific eco scandals such as Volkswagen’s manipulation of emissions data in the face of regulation, what hope can there really be for consumer trust in voluntarily provided eco information?

As Atkinson explains: “Consumers simply don’t know who or what to trust any longer because companies appear to have the freedom to say whatever they like when it comes to eco claims. Although there are guidelines, such as those from the US Federal Trade Commission, on what companies can and cannot say to promote ‘green’ products, there is still considerable room for companies to play in the grey area of sustainability marketing.”

In the absence of much sought-after government intervention in this arena, and against a backdrop of confused messages and declining trust, how can we move forward to empower consumers to do ‘the right thing’?

INFORMATION IS POWER

Some organisations have emerged that are busy constructing information around the way in which consumers actually make purchasing decisions. They seek to provide clear, accessible and independent evidence in innovative ways, to inform better choices.

One such organisation, Greenopia, based in California, is thinking outside of the product box by providing an eco rating system at a business level. Founder Gay Browne believes that when consumers have the mindset to want to make better choices, they need simple and contextual information to inform their decision- making process. And it needs to be accessible in a way that allows them to make considered, rather than necessarily ‘on the spot’ decisions.

“Where you live can have a critical influence on the decisions you make about what to purchase, which is why we came up with the idea of providing location-based guides for consumers to think in advance about where they want to shop and eat”, explains Browne.

“We have worked with researchers to develop methodologies based on life cycle analysis principles for more than 30 categories of businesses, from hotels to furnishings to food shops, and we apply a Green-Leaf rating which determines the level of eco-commitment based on our criteria.”

By conducting surveys, using independent data sources and maintaining a distance from companies by only monetising its information via data licensing, Greenopia strikes an important balance.

It provides thorough, independent but accessible guidance to consumers as they seek to align themselves with sustainable businesses near them.

GETTING DOWN TO THE DETAILS

While Greenopia’s ratings are limited to businesses, NewYork-based startup HowGood provides sustainability information at a more granular product level. Its independent, multi-attribute product ratings factor in everything, from the way in which food is grown right through to labour practices and energy sourcing.

HowGood sells its data to retailers via a subscription model, providing a point of sale package, the rollout of product labelling across their stores and access to corresponding sales data.

Generating revenue via retailers in this way allows HowGood to remain one step removed from the companies and brands they are rating, while still proving the value of producers’ sustainability credentials by tracking sales uplift for top rated produce.

Having taken on the task of developing research that maps the food system thoroughly, the real challenge was finding a way to implement the findings of the research in a way that actually had an impact.

“At first we thought it would just be an app or a website where people could engage with the information and scan the products”, explains HowGood CEO, Alexander Gillett.

“But in reality the average consumer has around 15 seconds to choose between multiple brands and asking them to scan each one is just not realistic for an entire shopping trip.”

Mindful of the limited time available at the point of purchase, the team constructed a simple product rating system built around three tags which now exists for nearly 140,000 products across the US.

They are: ‘Best for the world’ – the best five per cent of all food produced in the US, ‘Great for the world’ – better than 85 per cent of all food produced in the US, and ‘Good for the world’ – better than 75 per cent of all food produced in the U.S. Products which do not meet the standards do not carry a tag.

Despite being a for-profit organisation, HowGood is determined to remain independent; a claim that supermarkets such as Walmart and Whole Foods, who run similar labelling systems of their own, might struggle to match in needing to sustain direct supplier relationships.

BUT DOES IT WORK?

While Greenopia and HowGood have limits to their reach and are not alone in being defined by their independence from the brands they are rating, their existence highlights an opportunity in meeting consumers halfway as they attempt to turn intentions into actions.

There is always, of course, the question of whether people actually do what they say they will.

Contextual evidence from 2014 Nielsen survey data illustrates the limits of sustainability information in influencing actual behaviour as opposed to simply attitudes.

But the likes of HowGood are proving that more consideration of the consumer mindset can go a long way: “When we launched, we thought the system might achieve a change of about three to six per cent in sales” admits Alexander Gillett.

“But in fact, we average a 31 per cent increase in like-for-like sales of ‘best’ rated products once our rating system is rolled out in stores.”

We may have a long way to go in encouraging people to make better purchasing decisions, but I share Alice Waters’ attitude when she also said: “I am an optimist of the first order.”

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