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Motorola now sells five phones made with the new material. Each is certified “CarbonFree” by the nonprofit Carbonfund.org, which reviews life-cycle assessments and then offers companies carbon offsets to achieve the status. Motorola would not comment on how many carbon offsets are purchased per phone, nor what percentage of its product line the “CarbonFree” phones make up. Only one model of CarbonFree phone is currently sold in the United States.

For all this activity, it’s not clear whether labels tabulating carbon dioxide emissions really motivate consumers to spend more money.

Kevin Dooley, codirector of the Sustainability Consortium and professor of supply chain management at Arizona State University, says that consumers claim they are interested in sustainability, and that the number of people saying so in surveys rises “literally every month.” But while research has shown that companies in some eco-friendly niches—such as food—can get away with charging a premium, others cannot. Similarly, market research in the U.K. has shown that customers would be willing to spend a little more for a variety of eco-friendly products, but results have been mixed in other regions, says ter Kuile at PepsiCo.

The office supply store Staples has developed two eco-friendly labels of its own: the Eco-Easy brand and Sustainable Earth by Staples, which has stricter requirements. Sustainable Earth products must be made of 100 percent recycled material, certified by the Forest Stewardship Council, and processed without chlorine. However, the company says it won’t offer an environmentally sustainable product that costs significantly more than an alternative.

“In general we have found that mainstream customers are not willing to pay more for a product that doesn’t deliver additional benefits beyond sustainability,” says Andrew Schneider, vice president of global product management marketing at Staples. “If it’s beyond a nickel or quarter or 3 percent of the cost, it’s a wash.”

That’s not to say companies are unlikely to benefit from redesigning their supply chains to achieve more favorable environmental scores. When PepsiCo put Walkers, its U.K. brand of potato chips, through a life-cycle assessment, the insights prompted changes to the supply chain that the company claims reduced the carbon emissions linked to a bag of chips by 7 percent and reduced costs by $630,000 over a two-year span. Among the changes: the company cut down on gas use by 11 percent and electricity by 22 percent by making its production lines more efficient.

In other words, even if carbon labels don’t lead to substantially higher revenue, they still might increase profit.

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Credit: Levi Strauss

Tagged: Business, energy, Business Impact, carbon emissions, Corporate Energy Strategy

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