The Problem with Labelling

With the increase of green marketing there has been many new eco-friendly products and services on offer. Green products can include products which are; produced using sustainable materials, save energy and water, are less toxic and more natural, ethically produced and/or utilise eco-friendly packaging.

Consumers are gradually becoming more environmentally aware and most approve of companies engaging in Corporate Social Responsibility (CSR) activities. A poll of six hundred and forty-five Australian female consumers, conducted by Heat Group, found individual CSR activities affected the purchasing decisions of 70%, but a company-wide commitment to CSR influenced the purchasing decisions of 90%.

The problem with green products is that the attributes which make them ‘green’ are often unable to be observed by the consumer. Because the producer knows the value of the product but consumers are unable to easily access product quality, companies often undertake extensive informational marketing campaigns, partner with well established environmental groups and use labeling and packaging to give credibility to their products.

A European Commission survey showed that in the European Union (EU), eco-labelling affects 47% of purchasing decisions. Eco-labelling is voluntary in the EU and there are several different types of labels used to certify brands complying with strict ethical and environmental criteria including the ‘EU Ecolabel’, the ‘Oeko-tex’, ‘Bluesign’ and ‘Nordic Swan’ labels.

In Australia there are over 50 eco-labeling programs. A survey of 2,000 Australian customers by Macquarie University showed that 75% of respondents considered the environmental credentials of products before purchasing, however only 20% actually purchased products with environmental features. This may be due to confusion or an inability to weigh up the differences about ethical claims made by producers. It was also shown that most Australians also have limited understanding of what each label stands for and they want better information about environmentally sustainable products.

Eco-labels cover everything from the procurement of raw materials to composition and the actual production phase. Although most eco-labels are voluntary, companies wishing to display the labels must abide by the standards set for each label. If the company does not abide by the standards they can be permanently banned from displaying it in the future. One problem with eco-labeling is that the label shows that an individual product is considered to be green, however this does not reflect the practices of the company on a whole, which can be confusing to consumers. An example of this confusion is the Body Shop whose core values include ‘against animal testing’, was bought by L’Oreal who test ingredients and finished products on animals.

In the past there have been very few ways in which a consumer can educate themselves on product labeling and green claims made by various organisations. However, now with websites such as greenerchoices.org aimed at informing consumer choices and the prevalence of smartphones, consumers can research what they are buying while they are at the shops. There are also new smartphone applications being developed to make this process easier, one example is the Australian Marine Conservation Society’s sustainable iphone application which allows consumers to make a more informed choice about buying seafood.

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Image: green 12 by Susan Serra

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