May 17th, 2012
by Phillip Ward
In the early 1990s a successful campaign against damaging detergents gave new vitality to the idea that consumer power could force companies into better environmental behaviours. Businesses responded in two main ways, one more helpful than the other.
I was reminded of the less helpful reaction by one of those annoying web pop-ups, which on this occasion was advertising the EU Ecolabel. I hadn’t seen much of this life cycle analysis (LCA) based kite mark since I was instrumental in abolishing the UK Eco-Labeling Board on the grounds that no-one was applying for labels. But it is still around and, surprisingly, more than 17,000 products carry it. Any EU member state can award the label, and the UK ranks third in the league table having awarded some 1,500. But Italy is an easy winner having issued nearly 10,000 – well over half the total. Even Cyprus has managed 83.
The total may seem impressive but represents a tiny proportion of the hundreds of thousands of SKUs (Stock Keeping Units) held by a typical supermarket or DIY store. Closer inspection of the catalogue reveals that few of the Ecolabeled products are produced by household names with the lion’s share of the market.
Do we always read the label?
Worse, research by Brook Lyndhurst for Defra in 2011 revealed that only 8% of consumers surveyed claimed to be “very or fairly familiar” with the Ecolabel. Sadly, this was actually lower than the proportion that claimed to be familiar with an invented label inserted into the study as a control. With such low levels of recognition, there is no evidence that the Ecolabel influences consumer choices.
I don’t want to be unduly hard on the Ecolabel. Most of the other labels tested in the research were pretty unfamiliar to the public and understanding of them was hit and miss.
It is not surprising, therefore, that Tesco has rowed back from its commitment to carbon label their products. It would have been very expensive, the results would have been contentious and perhaps most importantly there is little evidence that people’s choice of shampoo would be affected by marginal variations in their carbon content.
So is consumer power a busted flush? While coalition Ministers in their initial deregulating zeal may have pushed the message that “consumers want to do the right thing if they know what that is” I don’t think their own research supports this view. But this is where the second strand of the business response to consumer power is important.
Taking corporate responsibility
Major companies know from experience that consumers can be mobilised on specific issues, whether it’s detergents, deforestation, over fishing or ethical sourcing. Those companies know how damaging it can be to be caught on the wrong side of those campaigns – many people are still boycotting Nestlé over their promotion of baby milk formula, in a protest that started in the 1970s. Concern about potential impacts like this is one of the things driving the Corporate Social Responsibility (CSR) movement. Initially that was largely defensive, but increasingly companies recognise that sustainable development matters for them and their businesses long term and are applying significant effort (including high quality brain power) to look for new, lower impact business models.
Tesco’s customers may not be grateful if they are expected to review individual products for their carbon content and factor this into their choices. They might be rather more impressed if Tesco decides to manage and reduce the total carbon passing through the business, and use its market power to encourage its supply chain to do the same. The effects of corporate action of this kind would also be far greater.
My guess is that, if the LCA-based Ecolabel is to survive, it will need to refocus away from the individual consumer audience. Its real advantage is as an efficient solution for corporate or public sector procurement teams faced with directives from their boards to “buy green” in support of their CSR strategy. A credible label is a big benefit to those without the wherewithal or the will to make their own assessments, but represents a saving to any business aiming to procure sustainably. If that is how the Ecolabel develops it might actually become quite useful.
 The standout exception was the EU ‘A-G’ energy label, which had almost universal recognition and a good level of understanding among consumers. Interestingly this was the only mandatory label tested. It doesn’t offer an absolute standard but comparative information. It has worked well in the UK in conjunction with the EST “Energy Efficiency Recommended” sticker to encourage consumers to use more efficient appliances.