Ecolabels can help consumers make green, eco-friendly and socially sustainable choices.
Global efforts to combat climate change emphasise the individual and collective measures needed for achieving net zero emission goals outlined in the Paris Agreement. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services’ (IPBES) Nexus Assessment underlines the intertwined nature of the drivers and underlying causes of the degradation of biodiversity, water, food, health and climate. This means that addressing one challenge for a specific element cannot be taken in isolation.
This also means that when businesses consider transitioning to sustainability, they have to consider the interconnected effects of these elements. Especially when taking preemptive or reactionary measures to address the effect of their production processes, and ultimate consumption by end consumers, has on the state of these natural elements.
In fact, the Nexus Assessment reported that in 2023, the value of global annual economic activity across different sectors – about 58 trillion USD – was moderately to highly nature-dependent. Thus, it is important for businesses, particularly those operating in consumer goods sectors such as food, to consider that production processes and consumption patterns that govern routine human lives contribute significantly to the state of nature, greenhouse gas emissions and climate change.
Business actions
A brief report by the European Parliamentary Research Services (Kuljanic, 2021) pointed out that agri-food actors need to be more engaged in promoting sustainable food consumption to combat the negative effects of modern food production and agriculture on the environment. Manufacturers, suppliers and retailers are making efforts to decrease their environmental footprint. Multiple consumer goods giants like Nestle and Ferrero also proactively support EU legislation to ensure production and supply chains combat deforestation (Abnett, 2024).
Denmark is making efforts to enact an action plan for plant-based foods through various means, including biosolutions (Ministry of Food, Agriculture and Fisheries of Denmark, 2023), and deliberating investments in testing the ‘nudge theory’ to encourage mass adoption of sustainable food choices (Torella, 2024).
Consumer choices
Multiple reports and academic studies indicate consumers’ growing awareness of climate change and the need to address it by changing consumption choices and patterns. Still, there seems to be an attitude-behaviour gap reflected in the market.
For instance, according to a recent report (Simon-Kucher & Partners, 2022), 71% of surveyed consumers reported making a modest change to their purchasing habits to support sustainable products.
However, the same report also indicated that, on average, for multiple product categories, only 32% were willing to pay premium prices that accompany such products. Another report published by the Boston Consulting Group (Turquier et al., 2023) also discussed a ‘say-do’ gap in consumer behaviour underlying green and sustainable consumption and outlined multiple barriers that underlie this gap, thereby preventing the mainstreaming of green consumerism.
Among these barriers, surprisingly, are the problems of awareness and trust in sustainable and green products amidst a proliferate existence of brands and products in the market, many of which are plagued by greenwashing concerns. Such a lack of consumer awareness and trust is a critical problem that is being addressed by policymakers globally.
At the EU level, a significant endeavour in this regard is the Commission proposal for Green Claims Directive (COM(2023)166), which seeks to ensure credibility and trustworthiness of environmental labels – that is, ecolabels. The proposal is currently in negotiating phase and, once approved, would need EU countries to implement the requirements in national laws. The Green Claims Directive illustrates a market trend, that legislative action is taken against greenwashing and to provide evidence-based proof for consumers to make better-informed purchasing decisions. This action is aligned with prior reports on consumers’ demand for transparent and mandatory provision of sustainability information on food labels (BEUC, 2020).
Nudges and ecolabels
Targeted tools are needed to address consumer skepticism and concerns to guide them toward adopting sustainable consumption choices. One such tool is the use of explicit standards or ecolabeling. Existing research on ecolabels suggests that they can be an effective ‘nudge’ for consumers. But what is a ‘nudge’?
A nudge refers to a behavioural intervention or subtle cue that offers individuals the suggestion of a preferred choice for getting a positive result while maintaining their perceived decisional autonomy (Thaler & Sunstein, 2009).
Ecolabels can be a powerful nudge for guiding consumers’ sustainable consumption behaviour as they provide clear and accessible information regarding a product’s (or a service’s) impact on the environment in the process of its production through easily recognisable symbols or certification logos.
Essentially, these ecolabels can simplify complex sustainability metrics for consumers and act as cognitive shortcuts that allow consumers to make green, eco-friendly and even socially sustainable choices. For instance, certifications like Fair Trade, FSC (Forest Stewardship Council), or Energy Star encourage consumers to prioritise products that support ethical labour practices, conserve natural resources, or reduce energy consumption.
Prior research and practical experiments conducted by industry practitioners suggest that ecolabels can be efficient nudges (Turquier et al., 2023). For instance, a study found that ecolabels, to some extent, could prompt consumers to choose plant-based meal options and suggested their use as a social nudge to counteract climate change through food consumption (De-Loyde et al., 2022). In addition, a recent systematic review has also made a preliminary determination that ecolabels, in a variety of formats, can be an effective and efficient nudge for consumers’ selection and purchase of sustainable products (Potter et al., 2021).
The effectiveness of the ecolabels lies in their ability to tap into consumers’ values and growing environmental awareness. By making sustainability an integral part of purchasing decisions, they can shift market demand, incentivising companies to adopt greener practices. Moreover, ecolabels can foster a sense of collective responsibility, signalling that individual choices contribute to broader environmental goals. The rising popularity of ecolabels as a behavioural nudge can also be understood from the EU’s focus on developing a sustainable labelling framework, as mentioned in the Farm to Fork Strategy (Kuljanic, 2021). It can be said that ecolabels are evidently on the rise as an easy way to communicate the tenets of a product’s sustainability metrics to consumers.
Challenges
There are also several questions being raised about ecolabels application as a social strategy. For example, there are concerns about ecolabels’ long-term and generalisable efficacy as a nudge and open questions about the ethics of using such subtle cues being used to modulate consumer behaviour (Turquier et al., 2023; Schubert, 2017).
Moreover, much of ecolabels’ effectiveness depends on the transparency of the required certification processes and whether consumers trust it. Trust is a key concern as consumer activism has led to the identification and public discussion on greenwashing activities by many businesses, for example, the non-recyclable paper straws that McDonalds claimed were eco-friendly (Arnold, 2019). So, it is important for businesses to carefully consider and obtain ecolabels that consumers are aware of and trustful in fulfilling the foreseen requirements for proof of the claims made.
This is not just important to gain consumers’ attention in the marketplace, but also to convince them to pay premium prices often commanded by ecolabeled and sustainable products. Such prices also place a question mark on ecolabels’ mainstream efficacy, apparent equity and inclusiveness in promoting sustainable consumption. This concern may be valid as products marketed as sustainable and, therefore, priced at a premium may disproportionately limit the accessibility of sustainable products for affluent consumers, excluding those who cannot afford premium pricing. In light of this concern, it is even more important for businesses to ensure that the ecolabels they use are accurate, verifiable, and accompanied by public education to foster genuine awareness.
Conclusion
It seems that the question of whether ecolabels can play as a nudge comes down to the question of responsible and informed use. While they can be a vital tool for nudging consumers into making informed choices, it is critical that businesses and policymakers governing labelling frameworks ensure that ecolabels’ transparency is accompanied by actions taken by businesses (e.g., retailers) to support their sustainable choices. Such actions can go a long way in developing and maintaining the ethical legitimacy of ecolabels as a nudge for supporting positive social change.
References
BEUC. (2020). Consumers and the transition to sustainable food. https://www.beuc.eu/sites/default/files/publications/beuc-x-2020-042_consumers_and_the_transition_to_sustainable_food.pdf
Kuljanic, N. (2021). Towards a sustainable single market for business and consumers (Briefing No. EPRS_ATA(2021)697196_EN). European Parliamentary Research Service. https://www.europarl.europa.eu/RegData/etudes/ATAG/2021/697196/EPRS_ATA(2021)697196_EN.pdf
Ministry of Food, Agriculture and Fisheries of Denmark. (2023). Danish action plan for plant-based foods. https://en.fvm.dk/Media/638484294982868221/Danish-Action-Plan-for-Plant-based-Foods.pdf
Torella, K. (November 21, 2024). Denmark is tiny. Its ambition to make its food system more climate-friendly is huge. Vox. https://www.vox.com/future-perfect/384515/rune-christoffer-dragsdahl-vegetarian-society-denmark-animal-welfare-future-perfect-50
Abnett, K. (July 24, 2024). Nestlé, Mars Wrigley, Ferrero back EU deforestation law, document shows. Reuters. https://www.reuters.com/sustainability/land-use-biodiversity/nestle-mars-wrigley-ferrero-back-eu-deforestation-law-document-shows-2024-07-24/
Thaler, R.H. & Sunstein. C.R. (2009). Nudge: Improving Decisions About Health, Wealth, and Happiness. New York: Penguin
Turquier, L. et al. (2023). Overcoming the Eight Barriers to Making Green Mainstream. Boston Consulting Group. https://www.bcg.com/publications/2023/nudging-customer-behavior-toward-sustainable-choices
Simon-Kucher & Partners. (September 30, 2022). Degree to which consumers’ purchasing behavior and choices shifted towards buying more sustainable products over the past five years worldwide in 2022 [Graph]. In Statista. Retrieved December 11, 2024, from https://www-statista-com.ezproxy.uef.fi:2443/statistics/1377869/global-shift-to-buying-sustainable-products/
De-loyde, K., Pilling, M. A., Thornton, A., Spencer, G., & Maynard, O. M. (2022). Promoting sustainable diets using eco-labelling and social nudges: a randomised online experiment. Behavioural Public Policy, 1–17. doi:10.1017/bpp.2022.27
Potter, C., Bastounis, A., Hartmann-Boyce, J., Stewart, C., Frie, K., Tudor, K., Bianchi, F., Cartwright, E., Cook, B., Rayner, M., & Jebb, S. A. (2021). The Effects of Environmental Sustainability Labels on Selection, Purchase, and Consumption of Food and Drink Products: A Systematic Review. Environment and Behavior, 53(8), 891-925. https://doi.org/10.1177/0013916521995473
Schubert, C. (2017). Green nudges: Do they work? Are they ethical?. Ecological economics, 132, 329-342.
Arnold, S. (August 6, 2019). Of course McDonald’s paper straws can’t be recycled – It’s yet another corporate green wash. The Independent. https://www.independent.co.uk/voices/mcdonalds-plastic-straws-recycling-carbon-footprint-green-washing-waste-starbucks-a9041871.html
Additional reading
The Economics of the Food System Transformation: https://foodsystemeconomics.org/wp-content/uploads/FSEC-Executive_Summary-Global_Policy_Report.pdf#page=14.17
Ölander, F., & Thøgersen, J. (2014). Informing versus nudging in environmental policy. Journal of Consumer Policy, 37, 341-356. Bonini, N., & Dorigoni, A. (2024). Green Nudging: A Behavioral Approach to Environmental Policies. In Nudging Green: Behavioral Economics and Environmental Sustainability (pp. 1-21). Cham: Springer Nature Switzerland.
Did you know?
PRUDENT project wants to change how agriculture and forestry systems operate, accelerating the transition to sustainable agriculture, forestry practices, and smart farming technologies. The project will identify and evaluate the most effective green nudges in the context of appropriate behavioural and experimental settings to enable farmer and forester behavioural change to more sustainable agriculture and forestry.
Featured image: sarayut from Getty Images / edited in Canva
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