Communication and labelling: Understanding green messaging

As awareness around climate and sustainability grows, consumer behaviour is changing. Post-pandemic research from GlobeScan shows that 43% of consumers globally are now more likely to purchase goods and services from businesses they know are making an effort to be environmentally friendly. More than half (57%), say they’re prepared to spend more with companies that are working to improve society and the environment. 

 

This is encouraging news. If we’re to transition to a cleaner, greener economy, then everyone needs to make more sustainable choices in their day-to-day lives. But to enable this, companies need to make it easy for consumers to make these choices.

 

As GlobeScan’s report notes, 34% of consumers say they want more support from businesses to live more sustainably, while 28% say they’re not sure how to begin. This is why we’re seeing a growing focus on transparency and labelling.

Sustainability is no longer a ‘nice to have’

For a long time, sustainability was seen as something of an additional ‘selling point’ for businesses. Now, though, forward-thinking businesses are waking up to the need to integrate sustainability into the very fabric of their operations. Doing so will be vital if they’re to remain competitive, plus environmental, social and governance (ESG) reporting is likely to become compulsory in the coming years, so it will quickly emerge which businesses aren’t pulling their weight. 

 

But this change presents a challenge to companies that don’t know how to properly communicate their sustainability credentials, and this can lead to greenwashing, where companies use language and imagery to make their products or services appear greener and more eco-friendly than they really are.

The greenwash problem

As greener living becomes increasingly mainstream, businesses are – like any consumer trend – looking to capitalise on this shift. For responsible companies, this means moving away from the traditional focus on profit, and instead considering the ‘triple bottom line’ of social, environmental and financial factors in their operations, and making meaningful, tangible changes where they can.

 

Less scrupulous companies, however, try to cash-in on the sustainability agenda using greenwashing. This is a type of PR spin designed to make products, services and businesses seem more environmentally friendly than they really are. Research from the UK government has found that up to 40% of green claims made by companies could be misleading, which only makes it harder for consumers to make genuinely sustainable choices.

 

Consumer power

The issue of greenwashing is gaining international attention. This has been driven largely by increased legislation, greater penalties for misleading behaviour, and the fact that consumers have more power than ever to hold brands and companies to account via social media.

 

The Federal Trade Commission (FTC) in the US, for example, is continually updating its Green Guides for the use of environmental marketing claims, and is cracking down hard on offenders. In April 2022, the Commission levied a $5.5m fine against two major household brands for making misleading green statements.

 

The EU, meanwhile, is working on legislation that prohibits sellers from making generic environmental claims such as ‘eco-friendly’, ‘green’ or ‘eco’ if they cannot demonstrate environmental performance. According to the European Commission, this amendment to the existing Unfair Commercial Practices Directive –  which is going through the EU legislative process – has been designed to ensure “consumers will be able to choose products that are genuinely better for the environment than their competitors. This will encourage competition towards more environmentally sustainable products, thus reducing negative impact on the environment.”

 

Having left the EU, the UK no longer has to abide by EU laws and is able to adopt its own rules on environmental issues, which makes things slightly more confusing. However, the Competition and Markets Authority (CMA) has launched the Green Claims Code, designed to make sure any eco-related statements made by brands are legitimate. The code has six principles:

1. Claims must be truthful and accurate
2. Claims must be clear and unambiguous (not open to misinterpretation)
3. Brands can’t hide important information relating to their claims
4. Brands must make fair comparison between products, services or companies
5. Companies need to consider the whole life of their product – from the materials used to make it to the way it’s disposed of – when they make their claims
6. Any claims made need to be backed up with data and evidence

What about the role of labelling?

Environmental labelling has played an important role in consumer behaviour since the first labelling schemes were introduced back in the 1970s, and particularly since the 1992 United Nations Conference on Environment and Development in Rio de Janeiro.

 

Here, stakeholders agreed to the Johannesburg Plan of Implementation (JPOI) – to “accelerate the shift towards sustainable consumption and production”, which is reflected today in UN Sustainable Development Goal #12. The UN’s One Planet network has since published comprehensive global guidance designed to help businesses provide product sustainability information as clearly and concisely as possible.

 

Six out of ten consumers want to know if their clothes purchases are produced in socially responsible ways

 

Environmental labels are one such way of doing this. These labels enable companies to communicate – at a glance – the sustainability credentials of their products and services in line with approved, officially recognised frameworks. If a company uses these symbols, consumers can generally be assured that they are adhering to best practice, as the penalties for misuse are often high.  

 

There are a vast number of initiatives in place, each giving information on a range of environmental considerations, from recycling to supply chains. Indeed, the Organisation for Economic Co-operation and Development (OECD ) identified more than 500 schemes worldwide between 1970 and 2012.

 

While this rising number certainly points towards a growing awareness of sustainability issues within business, it can also create some challenges as the OECD identifies below, with multiple and often conflicting initiatives across sectors including clothing, coffee and forestry.

What are the main types of environmental labels?

Environmental labelling schemes fall under a variety of categories, and can represent government legislation, industry-specific standards, NGO initiatives, charitable status or voluntary commitments.

 

Guidance labelling

This type of environmental labelling is designed to inform consumers about the physical contents of the item, similar to how allergen labels work. Information and logos relating to a product’s recyclability or recycled content are an example of guidance labelling.

 

Certification labelling

Certification labelling allows consumers to quickly identify what schemes or initiatives the company or product is part of. For example, Fairtrade, Red Tractor, Nordic Swan and Eco-Leaf labels all indicate that the product or company has completed the process of accreditation for these sustainability schemes and are therefore permitted to display their logos.

 

Ratings labelling

Ratings labels typically indicate where a product or company falls on a scale of ‘best to worst’. For example, appliances sold in the EU must bear an EU energy label that rates the product from A to G – those with an A rating are the most energy efficient, whereas those with a G rating are the least.

 

This type of labelling is often the most challenging to develop because it depends on comprehensive auditing – each product needs to go through its own vigorous life cycle assessment. However, OECD research shows that this type of labelling is the most effective in driving smarter consumer choices.

 

As such, there’s a significant amount of work being done with eco-labelling in the food industry, with plans from major food companies to introduce a traffic light-style rating system based on the carbon impact of individual products.  

 

Are environmental labels effective?

Many studies have been conducted into the effectiveness of environmental labelling, with one recent literature review concluding that in general, they are responsible for raising important consumer awareness and impact positively on wider acceptance of sustainability considerations. However, there are some improvements needed.

 

For example, the success of a label depends on it being clear and recognisable, and there’s evidence to suggest that consumers don’t always understand or trust environmental labels. Additionally, some industries by their very nature face challenges in easily communicating their sustainability credentials, such as the fashion and energy sectors.

 

As non-profit organisation HEJSupport says in its report on fashion and sustainability, six in ten consumers globally are interested in knowing if the clothes or home textiles they purchase are produced in environmentally and socially responsible ways. But as the report notes, few brands communicate their efforts on labels, or if logos pertaining to sustainability initiatives are displayed, they’re often meaningless to the consumer.

 

However, as the climate crisis accelerates, sustainability and responsible consumption is only going to become more of a focus, so we can expect to see big developments in this area. As the OECD notes, “As the number of schemes increases and types diversify, there is evidence that the different actors involved in environmental labelling initiatives are increasingly pooling their resources and efforts, in some cases converging towards common commercial and environmental goals.”

 

This, coupled with new commitments to eradicating greenwashing, means communication, transparency and labelling is playing an increasingly important role in business, which in turn is gradually enhancing the consumer’s ability to make more informed buying decisions.

 Different approaches to labelling*

Products	Key findings
Clothing	Lots of competition between labels, little consolidation, no information on labelling   impacts on the environment, prices or markets
Coffee and cocoa	Some mutual recognition between labels (eg organic and fair trade), but consolidation   and differentiation of labels is happening
Wood-based products	Strong consolidation, the dominant labels FSC and PEFC have converged, no   information on labelling impacts on the environment, prices or markets
Seafood	Move from single-issue labels (eg dolphin-safe) to those that capture fishing and   fishery practices, concerns persist over self-made claims and verification
Home appliances	Energy efficiency labels dominate, some growth of broader environmental labelling

Source: Prag et al (2016)/OECD

In the future, Ocki will be reporting on new communication and labelling initiatives.We are also planning a series ‘How to read a label like a pro’, where we’ll be asking the experts how they navigate the minefield of sustainability labelling.