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The Next Generation of Eco-Labels: Finally Influencing the Purchasing Decision

3p is proud to partner with the Presidio Graduate School’s Managerial Marketing course on a blogging series about “sustainable marketing.” This post is part of that series. To follow along, please click here.

by David Groves

If you’re car shopping next month, you may come across the most user-friendly and informative eco-label ever designed. For 2012 model year cars, carmakers will have the option to place the EPA’s new Fuel Economy and Environment labels in car windows. Then starting next year, labels will be required on all 2013 model year vehicles.

As pictured, these labels have several pieces of information important to car buyers:

  • A single, independently verified number that is the combined city/highway miles-per-gallon for that vehicle;

  • The range of miles-per-gallon for all new vehicles in that class;

  • The expected annual fuel costs;

  • Ratings on a scale of 1 to 10 of both fuel economy and smog;

  • A QR Code that can be scanned by a smart phone to give customizable information;

And most importantly:

  • How much money the buyer will either pay or save in fuel costs over 5 years, compared to a hypothetical “average new vehicle.”

While many eco-labels—from USDA Organic to the Marine Stewardship Council—have rigorous standards and third party auditing, the labels themselves are only emblems of the certification scheme, providing consumers little information and requiring that everyone conduct their own research. With so many labels out there, even the environmentally conscious shopper can become easily confused. When buying a ream of paper, for example, how many of us can remember that the Forest Stewardship Council demands that every log be tracked and every firm in the supply chain be independently audited while the Sustainable Forestry Initiative is a rubberstamp handed out by the forest products industry?

The EPA’s new fuel economy label puts all relevant information right on the product. Even better, it makes the inherent “greenness” of the product secondary to what buying a greener product means to your wallet—a characteristic that is essential when marketing to a consumer base that has remained largely apathetic to sustainability. Car buyers can directly compare the long-term fuel cost expense or savings of each car they’re looking at. The only information missing is “What this Vehicle Will Really Cost You Over Five Years” that subtracts five years worth of estimated fuel costs from the sticker price.

Of course, nothing’s perfect. A potential problem with an EPA label is that it is vulnerable to Congress, and anytime the U.S. Congress can influence something, consumers should be concerned. In this case, lobbyists of the oil and car manufacturing industries will undoubtedly ask lawmakers to redefine “average new vehicle” to lower this hypothetical car’s miles per gallon. This will have the effect of increasing the amount of money that consumers will “save,” even when buying a gas-guzzler.

Unfortunately, there are few alternative sources of certification providers. The options for eco-label sponsors are government agencies—such as the EPA—which administer standards that can be influenced by Congress, or corporations, whose attempts to greenwash their products instigate the very need for government-sponsored labels. In other words, if consumers must choose between Conflict-of-Interest-Stickers—as corporate sponsored eco-labels should be called—and government sponsored labels, they should go with Uncle Sam every time.

Such an easy-to-understand and useful label needs to be replicated. Not all products would work, but there are plenty with the right criteria to allow for a similar labeling system to be successful. The system would have to be based on a metric that is easily measurable and readily comparable, like fuel consumption. It would need to be a product that carries a cost associated with its use, e.g. something that consumes energy. And different choices would need to have meaningful cost differences over a relatively short timeframe. For example, the EPA’s new labels would be less consequential if gas was still under $1 per gallon, since saving $500 on fuel over five years isn’t going to have much impact on the purchase of even a $10,000 car.

It seems that this kind of label could be immediately expanded to electronics, particularly refrigerators, clothes dryers and other high-energy use appliances. There is already an entire industry conducting Energy Star evaluations; all they need to do is start putting their collected information directly onto the products, calculate the energy use of “average new appliances,” and report on the 5-year cost differences between the two.

If an energy efficient washing machine costing an extra $100 had a label that told you the machine will actually save you $300 over 5 years, would that affect your purchasing decision?

Want to learn more about Presidio and this project? Click here.

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