Informed consumers can be a powerful force for better environmental governance. According to a 2001 survey, 79 percent of consumers take corporate citizenship into account when making their purchasing decisions, and 36 percent consider it an “important” factor (Hill and Knowlton 2001:3; SRI World Group Inc. 2001a). In 1999, another survey of 25,000 consumers worldwide found that 1 in 5 had either rewarded or punished companies in the past year based on their perceived social performance. That means they avoided a company’s products or actually spoke against the company to others (Environics International Ltd. 1999). (See Figure 6.3 Public perceptions affect the bottom line.)
Even if consumers exaggerate their activism when polled, other analysis suggests that perhaps 10-15 percent of consumers truly integrate environmentalism into their lives and are regularly willing to pay higher prices for green products (Frankel 1998:140). At least for some companies, in some sectors and countries, an environmentally conscious public is driving change in company behavior.
The worldwide surge in organic food sales is a case in point. Consumers are sending a clear signal to food producers that they are willing to pay a premium for foods that are not contaminated with pesticides and are grown in ways that don’t harm ecosystems. In 2000, global organic agriculture sales were worth about $20 billion, and growing 25 percent annually in major markets like the United States, Europe, and Japan (CSD 2000:6). This provides farmers with a real incentive to consider reducing their pesticide use and investing in soil and biodiversity conservation to increase their earnings.
But consumers are only able to use their market power-and, in turn, influence corporate environmental behavior-if they can make an informed choice when they shop. They need to be able to easily identify products that have been produced responsibly-such as organic food or sustainably grown lumber-and to distinguish between valid and spurious claims of producers. To meet this need, some independent organizations and governments have begun to certify and “eco-label” goods produced using sustainable practices (WRI and USEPA 2000:12).
While governments are behind some eco-labeling programs, other well-known programs are privately sponsored. Typically, an independent organization-often a coalition of stakeholders including environmentalists and industry representatives-crafts an environmental standard that becomes the basis for product certification and labeling. One well-known example is the Rainforest Alliance’s SmartWood Program. Using environmental, social, and economic standards established by the Forest Stewardship Council (an NGO), accredited certifiers assess the management of forest lands. This third-party certification helps ensure the SmartWood label’s credibility. Forest products coming from areas managed in accordance with the standards can carry the SmartWood logo. That logo helps consumers, architects, manufacturers, woodworkers, builders, and municipal governments locate sustainably grown wood for everything from furniture to flooring, and musical instruments to picture frames (SmartWood 2003).
Clearly, certification and labeling programs can benefit the environment. The West German government credited the Blue Angel program with reducing the amount of household paint solvents entering the waste stream by 40,000 tons. The program also spurred industrial changes to meet its environmental criteria and capture a larger market share (Salzhauer 1991:11-12). In several developing countries, eco-labeling schemes have reduced the intensity of fertilizer and pesticide use in the production of cut flowers (Grote 2002:289).
But, as a source of information to guide consumer decisions, eco-labels can still improve. Avoiding confusion and broadening consumer confidence in eco-labels are two continuing challenges. For example, there are more than 100 regional or national standards for organic products worldwide, meaning many products labeled as organic will not have met identical standards (CSD 2000:12). Which labels should consumers trust? In this instance, standardization is already beginning to occur among labels. Widely adopted guidelines issued by the International Federation of Organic Agriculture and the 1999 FAO/WHO “Codex Guidelines” for the production, processing, and labeling of organically produced foods have helped reduce the differences between these eco-labels (CSD 2000:14). But bringing clarity and consistency to other product areas will require continued effort.
Assuring equity among producers worldwide is also a significant challenge. Some producers in developing nations complain that labeling and certification programs can be costly, and sometimes require access to technical knowledge and organizational capacity that they lack. That can put them at a disadvantage, and reduce their ability to compete in the burgeoning market for green products. In the case of organic agricultural exports, for example, many developing-country producers lack information about regulatory requirements, prices, quality factors, and logistics (UNCTAD 2001:6, 8). Similarly, small-holder or community-based producers of forest goods find the costs of obtaining certification to be prohibitive, especially in remote areas. Addressing these concerns will help widen the acceptance of and participation in eco-labeling programs.
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