Association for Public Policy Analysis & Management

Ecolabels are information-based policies and programs that provide consumers with information about a product’s environmental impacts and therefore reduce consumer uncertainty about the validity of their green purchases. More than 450 ecolabels exist worldwide.

Despite their increasing market prevalence, only one in five eco-minded consumers report acting on their environmental preferences by purchasing ecolabeled products. One explanation for consumers’ lack of ecolabel use is their skepticism that an ecolabel is a credible signal of a product’s superior environmental characteristics. Credibility, we suggest, hinges on at least two important design dimensions: which entities (government, environmental nongovernment organization, or business association) sponsors the ecolabel, and the manner in which the ecolabel is monitored and confirmed.

We consider how ecolabel sponsors’ use of third party certification is related to consumer’s willingness to purchase ecolabeled products in the presence or absence of trust. Our position is that trust and distrust of ecolabel sponsors act as triggers of consumers’ assessments of ecolabel legitimacy, and third party certification may help untrustworthy sponsors to overcome consumer distrust. Drawing on cognitive theory (and the idea that perceptions and attitudes are critical factors that influence individuals’ behavior), we posit that consumers’ trust activates a passive mode of information assessment that leads to ecolabel purchase, regardless of whether or not the ecolabel is third party certified. By contrast, distrust activates an evaluative assessment mode that leads to an ecolabel purchase if the untrustworthy sponsor partners with an independent third party who certifies that products bearing an ecolabel meet certain environmental standards, thus creating an information cue of the label’s legitimacy. Understanding these relationships can help sponsors develop ecolabels that are more credible in the eyes of consumers, thereby encouraging greater product differentiation and widespread ecolabel use, and potentially improving environmental quality.

We consider both consumers’ reported and intended use of five ecolabels that are sponsored by government, environmental NGOs, and business associations. We draw on survey data for a highly stratified random sample of 1,278 (84.5% response rate) U.K. consumers. We find that consumers who receive environmental information from trustworthy sources (i.e., government, environmental NGOs) are more likely to report purchasing ecolabeled products. Moreover, third party certification has little influence on consumers who trust the ecolabel sponsor. However, when environmental information comes from an untrustworthy source, such as a private business, eco-minded consumers do not purchase ecolabeled products that are not certified by third party, but do purchase certified products. These findings suggest that in the presence of distrust consumers are more likely to pause and assess information from other sources – such as independent third party certifications – to arrive at a conclusion about the credibility of that environmental information. Third party certification therefore appears to serve as an important information cue that enhances the consumers’ perceived legitimacy of an ecolabel. These findings contribute to broader discussions about the virtues and limitations of third party certification in that certification may not increase the legitimacy of certain types of ecolabels.