Evaluating the Effects of Eco-labels in Europe

Date

2000-12

Authors

Sealey, Margaret A.

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Abstract

<p>Environmental seals of approval or “eco-labels” inform consumers which products are less harmful to the environment because of how they were made, what they are made of, or how they are used. Eco-labeling programs are typically sponsored by governments who oversee the development of label standards for individual product groups by expert industry and environmental working groups. Eco-labeling programs are more popular in Western Europe and Japan than in the U.S. In fact, the U.S. is one of the few developed countries without a government-sponsored eco-label.</p> <p>Eco-labels can help implement environmental policies,.; reward manufacturers in the marketplace for improved environmental performance,.; and allow environmentally-oriented consumers to align their purchases with their values. Eco-labels can help move economies toward sustainability using the power and creativity of the marketplace rather than government regulation.</p> <p>One of the promises of eco-labels is increased market share for labeled products—but do eco-labels deliver? Surveys indicate there are many consumers who will choose eco-labeled products, but there are few studies of actual buying behavior. My research uses market data for shipments of one type of eco-labeled product, desktop computers, to see if eco-labels confer a marketplace advantage.</p> <p>Data were obtained for shipments of desktop computers in Europe by brand and country for a period of three years (1995 through 1997). Desktop computer brands were coded as eco-labeled or not. Countries were divided into two groups: those which sponsor eco-labels for desktop computers ( “eco-label” countries) and those which do not ( “control” countries). For each group, two-sample t-tests were used to compare mean shipments of labeled computer brands with shipments of unlabeled brands to see if labeled brands in the eco-label countries have a greater market share than in the control countries.</p> <p>This research found mean shipments of labeled desktop computers is significantly greater than shipments of unlabeled desktop computers in both groups of European countries, with almost one third of the European desktop computer market belonging to eco-labeled brands.</p> <p>These results can be interpreted in several ways. Perhaps manufacturers are obtaining labels for their best selling desktop computers. These manufacturers may have the resources to obtain labels, while other manufacturers may consider eco-labels a luxury. The results could also mean that the eco-labels do provide increased market share. Eco-labels may be effective across country borders, with consumers purchasing a computer in France because it has an eco-label in Germany. Countries that are part of the European Union may have a higher awareness of all eco-label programs because of the European Union eco-label program.</p> <p>Although the statistical analysis used in this research cannot be used to conclude cause and effect, market share and eco-labels appear to be positively related. Eco-labels may truly provide governments with another tool for implementing environmental policies while rewarding environmentally responsible manufacturers. With increased growth in consumer activity and associated environmental problems, governments should investigate and use all possible tools to implement policies for protecting the environment. These tools should include not only traditional command-and-control style regulations, but also non-regulatory, market-based tools such as eco-labels.</p>

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Keywords

Eco-labeling, Environmental policy, Market share, Consumer behavior

Citation

Sealey, M. A. (2000). <i>Evaluating the effects of eco-labels in Europe</i> (Unpublished thesis). Southwest Texas State University, San Marcos, Texas.

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