Helping eco-labels to fulfil their promises

Abstract

"Gilles Grolleau and Naoufel Mzoughi thank the research programme ‘GESSOL’, sponsored by the French Ministry of Ecology, Sustainable Development and Energy"The economic literature has devoted relatively strong attention to eco-labelling schemes. Nevertheless, while succeeding in some markets, they often fall short of their promises. We analyse the gap between the academic design of eco-labelling schemes and their real implementation. We contend that providing information is not enough. We then use recent advances in behavioural economics to inform policy makers on the potential of behavioural interventions in order to design better eco-labelling schemes. Policy relevance Many public policies, including eco-labelling schemes, are still based on an inaccurate description of human decision making, mainly borrowed from standard economics. However, numerous psychological and behavioural studies show that people reg-ularly behave in ways that contradict some standard assumptions of economic analysis. Departing from the conventional view that information-based policies such as eco-labelling schemes will quasi-automatically help mitigate issues such as climate change by guiding consumers' and firms decisions, we argue that information provision is necessary but not sufficient. Admitting that consumers' decisions are guided by factors other than price and information, and, taking systematically into account be-havioural biases can offer to policy makers low-cost levers with first-order effects in order to increase the environmental per-formance of eco-labels, or at least decrease the likelihood of counterproductive effects

Stock Market Reactions to Auto Manufacturers’ Environmental Failures

“…Consumer awareness through more information and education about eco-labels has been cited as a way to improve adoption (Harbaugh, Maxwell, and Roussillon 2011; Madurah, Reiners, and Wood 2016). Behavioural approaches should be used, such as making sustainability issues feel important to consumers (Grolleau et al 2016). Horne (2009) criticises label simplicity as a solution and found it does not ease inter-product comparisons and undermines label efficacy.…”

Measuring the Choice of Environmental Sustainability Strategies in Creating a Competitive Advantage

“…Ecolabels are intended to allow consumers to make informed choices that reduce environmental impact and influence how products are made (Rex and Baumann, ). A great deal of effort has been put into ecolabels; however, research has shown that companies fulfilling all ecolabel criteria do not always lead the consumer to sustainability purchasing decisions (Thøgersen, ; Leire and Thidell, ; Rex and Baumann, ; Grolleau et al , ). The effectiveness of ISO 14001 in reducing environmental impacts also remains mixed (Arimura et al , ).…”

Does advertising the green benefits of products contribute to sustainable development goals? A quasi‐experimental test of the dilution effect

“…Schubert () argues that although it is generally conceived that providing consumers with additional information necessarily improves their choices, things are different in the real world. Findings in behavioral sciences suggest that well‐crafted eco‐labels do much more, such as reducing individuals' cognitive dissonance, overcoming loss aversion issues, and conveying social norms (Beretti, Grolleau, & Mzoughi, ; Grolleau et al, ; Schubert, ). In the same vein, we argue that eco‐labels are sometimes perceived as harming the product rather than improving it.…”

“…Promoting the green benefits of products can be considered as a simple and direct way to harness the power of green consumption in order to contribute to sustainable development goals (Grolleau, Ibanez, Mzoughi, & Teisl, ). Nevertheless, how do consumers judge products usual functions or instrumentality when they are informed that the considered products also deliver green benefits?…”