Ecolabeling

Ecolabeling is a voluntary initiative to enhance environmental performance during the production or consumption of products and services. Ecolabels have emerged as a main tool for green marketing. Ecolabeling is proposed as a market incentive to create incentives and to force compliance for business to operate in an environmentally conscious and ecologically friendly way. An ecolabel is a seal awarded by a third party (ecolabeler) that provides information for consumers regarding environmental commitments of a specific good or service. Through this, ecolabeling is expected to inform consumer choice, stimulate spontaneous environmental improvement, and diminish aggregated pollution, enabling a healthy environmental competition among firms.

Since the 1990s, there has been a proliferation of ecolabels worldwide in the business community and at the policy level. Ecolabels have emerged as a result of consumers' willingness to pay a premium for goods that are environmentally friendly. According to the Organisation for Economic Co-operation and Development (1997), the process of development of different ecolabels is similar. Analyses based on life cycle approaches are usually used to identify the consequences and the complexity of the environmental impacts caused by a product in its life cycle. These analyses allow the ecolabeler to draw the first ecolabel process, which contains two phases: a phase of negotiation and a market phase. The phase of negotiation consists of a negotiation between the ecolabeler and the firm to set up the environmental criteria to be met. In this phase, the firm suggests the modifications to the initial proposal drawn by the ecolabeler. The market phase consists of the labeling of those firms that met the criteria and that therefore can compete in the marketplace.

Ecolabels are designed on the basis of the assumptions that consumers have a choice in the marketplace, that they will prefer products and services that were produced under environmentally friendly conditions, and that they are willing to pay a premium to satisfy this preference. According to Eva Eiderström (1998), there are elements that have been considered successful in ecolabeling: clearly defined objectives, scope, and strategy; independence with respect to funding; schemes that are accessible to all producers, regardless of their size; formulation of criteria taking into account the current market situation; consumers being represented and having a strong influence in ecolabeling schemes; transparent ecolabels, to avoid criticisms; cost-efficiency; and a focus on national, rather than international, action—“think global, act local.”

[Page 112]The main difference between ecofriendly pictograms/green logos and ecolabels attached to certain products and services is that ecofriendly/green logos are environmental statements claimed by producers and do not require auditing, monitoring, or inspections, whereas ecolabels are generally dependent on third-party evaluation. Ecolabelers establish the terms of trade between the seller and the buyer by defining environmental protection standards to be met by the producer or the trader.

According to the International Standards Organization, there are three types of ecolabels—type 1, type 2, and type 3. Type 1 ecolabels are multiattribute labels developed by a third party. It is known as third-party practitioner scheme. Within type 1 ecolabels, the labeling criteria are elaborated under the International Standards Organization system guidelines. Type 2 labels are single-attribute labels developed by a producer. These ecolabels are described as self-declarations, as the producer uses a logo to represent an environmental attribute, such as “recyclable,” without a third-party auditing. Type 3 labels are ecolabels based on life cycle assessment, and they are also evaluated by a third party.

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