Sustainability Labels

Sustainability labels help consumers find their way and make informed decisions when shopping. They identify products or services that are manufactured or offered according to specific ecological, social or ethical criteria. This labelling makes it easier for consumers to make sustainable choices and consume more consciously. Understanding the complexity and impact of sustainability labels is essential for companies that want to align with consumer preferences and ethical business practices.

There are various types of sustainability labels covering different aspects. Eco-labels usually focus on environmental factors such as energy efficiency, waste reduction or the use of sustainable materials. Fair trade labels, on the other hand, focus on social standards such as fair working conditions and fair pay. There are also broader labels that take both ecological and social criteria into account.

An overview of various labels and their corresponding guidelines can be found on labelinfo.ch (available in German/French only).

Sustainability labels have a significant influence on how consumers perceive products and make purchasing decisions. For example, environmentally motivated consumers show a strong preference for products with sustainability labels (Hahnel et al., 2015), and there is generally a higher willingness to pay for sustainably labelled products (Asioli et al., 2020). However, it is important to note that the effectiveness of such labels is influenced by a range of factors, including individual consumer characteristics, the context of the purchase situation, and the properties of the label itself (Majer et al., 2022).

The effects of sustainability labels can vary considerably depending on the region and customer segment. Asioli et al. (2020), for instance, showed that willingness to pay a premium for food with sustainability labels differs from country to country. While 37% of US consumers, for example, are willing to pay up to 10% more for vegetables carrying an eco-label, only 70% of Dutch consumers would pay up to 5% more. Willingness to pay also varies between different customer segments within a country and is closely linked to attitudes towards sustainability (Kaczorowska et al., 2019) and the need for social desirability (Cho & Berry, 2019).

Another important aspect that influences consumer decisions is the level of recognition of a sustainability label. Labels that are already well established and well known, such as the organic label, enjoy a high level of appreciation. These labels benefit from greater recognition, stronger familiarity and higher consumer trust, all of which can have a positive effect on consumer behaviour (Kaczorowska et al., 2019). The perceived effectiveness of a label can also be relevant to how it is assessed (Cho & Berry, 2019).

Another aspect to consider is that sustainability claims can sometimes raise quality concerns (Doorn et al., 2020). To counteract this, companies need to adopt a holistic sustainability concept. Brands that maintain a high level of corporate social responsibility (CSR) tend to reduce consumer concerns about product quality that eco-labels might raise. CSR should therefore be taken into account when introducing sustainability labels.