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Eco-Labeling

Eco-labeling is a voluntary strategy that involves placing identifiers on goods and services to represent ecological and/or social criteria. It is a market-based approach to achieve sustainability goals by providing consumers with information that would otherwise be difficult to ascertain. This allows interested consumers to support the practices embodied in these criteria through their purchases. It also assists producers to support their sustainability efforts, if providing such information leads to increased sales and/or the ability to charge higher prices. Information on eco-labels is typically represented in the form of a symbol, but may include descriptions of the criteria, or even specific figures. An eco-label for greenhouse gas reduction, for example, might include a symbol that represents reduced emissions, a brief definition of carbon footprints, or the number of grams of carbon dioxide reduced.

Growth of Organic Foods and Eco-Labels

Eco-labels have been developed for goods and services in industries including forestry, energy, tourism, fisheries, and agriculture. The food and agriculture sector has initiated some of the most successful eco-labels, such as organic and fair trade. Organic standards prohibit the use of synthetic pesticides and fertilizers, as well as antibiotics and synthetic growth hormones for animals. Organic sales in the United States have increased at rates approaching 20 percent annually in the last two decades, and currently comprise more than 3.5 percent of all food sales. Fair trade standards apply to products from the global south, and include higher levels of compensation for farmers and farmworkers, as well as other social and environmental criteria. Fair trade was introduced later in the United States, and until recently was only available for coffee, tea, and chocolate. It currently comprises less than 1 percent of total food sales, but has experienced annual growth rates as high as 100 percent. Products with organic and fair trade eco-labels can now be found in retail outlets as mainstream as Wal-Mart, McDonald's, and Dunkin’ Donuts.

There are currently several dozen food eco-labels available on a global basis. They address a number of political and ethical issues, including synthetic pesticide use; use of genetically engineered organisms; farmer and farmworker compensation and working conditions; animal welfare; reduction of greenhouse gases; soil and water conservation; and wildlife or habitat protection. Most eco-labels have standards that focus on just one of these major areas, although a few have been developed that incorporate multiple issues. The nonprofit Food Alliance eco-label is one example; it represents standards for protecting wildlife, soil, and water quality; prohibiting certain materials (but not synthetic pesticides); animal welfare; and working conditions.

Eco-Label Credibility

To be successful in the marketplace, eco-label claims must be trusted by consumers. Organic and fair trade are examples of labels that rely on third-party certification systems to verify compliance with specific criteria. This involves hiring an independent auditor, with no direct financial stake in the outcome, to certify that a standard is achieved. Some eco-labels rely on first-party certification, without independent auditing of the claims made by the firm selling a product or service. Second-party certification refers to verification of guidelines by an organization with a direct financial stake in the outcome, such as retailer verification of producer standards. A less common second-party model is employed by the Certified Naturally Grown eco-label—a peer review process that engages the farmers participating in the program in the certification of other farms. This strategy reduces costs and paperwork requirements in comparison to organic certification, even though Certified Naturally Grown adopts organic standards as a baseline.

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