Alan Knight, the Founder of Single Planet Living, praises and questions the value of labels in the same breath: “We’ve created a model that has delivered real results in the market and in the field – but the coupling of standards-setting with labelling might not be sustainable in the future.” What are the value and the future of labels? Will demand for labels increase or diminish? Will their role change? Against the background of these questions the think-tank SustainAbility interviewed some 85 experts, including business people, standard-setters, and certifiers. Recently, the results of the study have been published in “Signed, Sealed … Delivered?” written by Patrin Watanatada (Director, SustainAbility) and Heather Mak (Manager, SustainAbility). It is a remarkable report, which looks behind certifications and beyond labels.
The authors conclude that labels have become commonplace in many consumer goods industries since the turn of the century: apparel (organic cotton), carpets (GreenGuard, NSF 140), electronics (Energy Star), food & beverages (Fairtrade, Marine Stewardship Council, Organic, Rainforest Alliance, UTZ Certified), household & personal care (Eco-Cert, Fairtrade, Nordic Swan, Organic), and pulp & paper (Forest Stewardship Council). By the end of the year 2011 the global Eco Label Index lists more than 400 labels in 25 industries and 250 countries.
Labels are usually based on certain standards and certifications. “Standards” are set requirements to be followed by program participants. “Certification” provides third party assurance that a process, product or service is in line with certain standards. “Labels” are on-pack claims, marks or seals that indicate conformance with the standards (The State of the Sustainability Initiatives Review 2010). The following “four Ds” help to understand how the three mechanisms are linked together and how they work to achieve better sustainability outcomes (SustainAbility 2011, p. 12):
To overcome scepticism and reach out to the rest, Watanatada and Mak suggest further developing the model that combines standards and certification and on-pack labelling. They think that the three mechanisms are necessary, but not sufficient to make production and consumption more sustainable, and reach out for the rest. Sustainability innovations play a key role in delivering outcomes rather than standards, complement certifications with strong supplier-buyer-relationships, and use the power of brands to mobilize consumers into adopting more sustainable behaviours. There are some companies like Timberland and Method, for example, that use standards, certifications, and labels increasingly strategically based on what works for them, their supply chain, and their customers. They integrate sustainability into their business models and brands, and communicate it in a holistic and credible way to their customers. This is an emerging model which is based on increasingly demanding and pre-competitive standards, above brands compete, and collaborate with civil society (SustainAbility 2011, p. 27-42).
The new report by Watanatada and Mak is well researched and written. It provides an excellent overview of the state of standards, certifications, and labels. It shares interesting insights, and contributes to the debate over the future role of labels. As usual, there are some shortcomings: By definition, labels are limited to existing products and markets. New forms of consumption such as services instead of products are not considered. In addition to that, the report is focussed on “the perspectives of consumer brands and retailers operating in Europe and North America, where certification and labeling is relatively advanced.” (SustainAbility 2011, p. 10). The state and the future of labels in emerging markets are beyond the scope of the report. Last, but not least the report and the new emerging approach focus on labels and leading consumer brands, which are positioned in (high) quality segments. What about other products, which are not branded and positioned in low price segments? Despite these shortcomings, we highly recommend reading the new SustainAbility report "Signed Sealed ... Deliverered?"
The authors conclude that labels have become commonplace in many consumer goods industries since the turn of the century: apparel (organic cotton), carpets (GreenGuard, NSF 140), electronics (Energy Star), food & beverages (Fairtrade, Marine Stewardship Council, Organic, Rainforest Alliance, UTZ Certified), household & personal care (Eco-Cert, Fairtrade, Nordic Swan, Organic), and pulp & paper (Forest Stewardship Council). By the end of the year 2011 the global Eco Label Index lists more than 400 labels in 25 industries and 250 countries.
Labels are usually based on certain standards and certifications. “Standards” are set requirements to be followed by program participants. “Certification” provides third party assurance that a process, product or service is in line with certain standards. “Labels” are on-pack claims, marks or seals that indicate conformance with the standards (The State of the Sustainability Initiatives Review 2010). The following “four Ds” help to understand how the three mechanisms are linked together and how they work to achieve better sustainability outcomes (SustainAbility 2011, p. 12):
- Define standards for processes, performance or measurements. Codify requirements, which are consensus based.
- Deliver through capacity-building, expertise, relationships, infrastructure and networks.
- Demonstrate delivery through certifications or verification. Provide assurance by third parties that a product, process or service is in conformity with certain standards.
- Demand influence by identifying and appealing to wants and needs among buyers. Provide on-pack claims that indicate conformance with the standard and serve to communicate with the customers.
To overcome scepticism and reach out to the rest, Watanatada and Mak suggest further developing the model that combines standards and certification and on-pack labelling. They think that the three mechanisms are necessary, but not sufficient to make production and consumption more sustainable, and reach out for the rest. Sustainability innovations play a key role in delivering outcomes rather than standards, complement certifications with strong supplier-buyer-relationships, and use the power of brands to mobilize consumers into adopting more sustainable behaviours. There are some companies like Timberland and Method, for example, that use standards, certifications, and labels increasingly strategically based on what works for them, their supply chain, and their customers. They integrate sustainability into their business models and brands, and communicate it in a holistic and credible way to their customers. This is an emerging model which is based on increasingly demanding and pre-competitive standards, above brands compete, and collaborate with civil society (SustainAbility 2011, p. 27-42).
The new report by Watanatada and Mak is well researched and written. It provides an excellent overview of the state of standards, certifications, and labels. It shares interesting insights, and contributes to the debate over the future role of labels. As usual, there are some shortcomings: By definition, labels are limited to existing products and markets. New forms of consumption such as services instead of products are not considered. In addition to that, the report is focussed on “the perspectives of consumer brands and retailers operating in Europe and North America, where certification and labeling is relatively advanced.” (SustainAbility 2011, p. 10). The state and the future of labels in emerging markets are beyond the scope of the report. Last, but not least the report and the new emerging approach focus on labels and leading consumer brands, which are positioned in (high) quality segments. What about other products, which are not branded and positioned in low price segments? Despite these shortcomings, we highly recommend reading the new SustainAbility report "Signed Sealed ... Deliverered?"
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Frank and Ken,
ReplyDeleteThanks so much for covering our report in your blog - this is very much appreciated and we're happy that you found it interesting!
Just to address some of the shortcomings - as you can imagine this topic was so large and some of the people we interviewed brought up things like regionality, services, emerging markets - they are topics that we would love to consider in the scope of a follow-up paper.
I find the point you mentioned about low price segments and unbranded products very interesting and would love to continue that thread of conversation with you - I will send you a note about that.
Best regards,
Heather
Dear Heather,
ReplyDeleteThank you for joining the conversation about sustainability labels! We appreciate your comment. As we point out in the 1st ed our text book "Sustainability Marketing: A Global Perspective" (p. 139) there is the phenomenon of polarization in many consumer goods markets, in which market growth occurs around the budget segment and the high-quality segment of the market (at the expense of the mid-market segment). The "four Ds" of standards, certifications and labels is appropriate for the latter, where high-quality and premium brands rule, but about about the former? Any ideas?
Frank and Ken