Business Report

Trying to Come Up with Green Labels that Matter

Companies are developing a standard measure for products’ carbon emissions in hopes of simplifying decisions for consumers.

Even conventional grocery stores are full of products that claim to be “green,” “carbon neutral,” “eco-friendly,” or the big one—“natural.” But as environmentally friendly labels have proliferated, the meaning of those claims has become increasingly vague. Now some large companies are trying to better define such terms to create something like the environmental equivalent of standard nutritional information. There’s no evidence, however, that more environmental information will get consumers to change their buying habits.

Jean theory: An analysis of the carbon footprint of 501 jeans inspired Levi Strauss to launch a new line of jeans that use an average of 28 percent less water during production than similar jeans.

Walmart, DuPont, and General Electric, among other companies, have joined international consortiums that aim to develop a single metric for measuring carbon dioxide emissions associated with a product. They hope that if there’s a single up-front method, it will be easier to distinguish companies that make substantial environmental strides from those with merely a green spin. “If we have a competitor out there making claims, and we’re making claims, we really want to make sure that there’s a standard,” says Robert ter Kuile, senior manager of energy and climate change with PepsiCo International.

The Greenhouse Gas Protocol Initiative and the Sustainability Consortium both aim to create international standards to tabulate the carbon footprint of a variety of products. Both projects assert that the best approach is the so-called “cradle-to-grave” life-cycle assessment—a review of greenhouse gases emitted from the first step of producing raw materials to the product’s degradation in a landfill.

Levi Strauss sent its iconic 501 jeans through several life-cycle analyses, including the one developed for the Greenhouse Gas Protocol Initiative. “We were able to see that most of our impact came from consumer use [washing and drying], and from cotton production,” says Barruch Ben-Zekry, an environmental sustainability specialist at the company.

A so-called cradle-to-grave analysis showed that consumer use was the largest contributor to carbon emissions associated with 501 jeans. Credit: Levi Strauss

Levi Strauss couldn’t directly control how consumers washed their jeans and when. But the life-cycle analysis inspired a new brand this January: the Waterless line of Levi’s, which achieve the same “worn” look of other jeans but require 28 percent to 96 percent less water in manufacturing, depending on the style.

A study by Levi Strauss showed that air-drying jeans can cut carbon emissions over their life cycle by 90 percent. Credit: Levi Strauss

Motorola is another company that made changes on the basis of a life-cycle assessment, which revealed that it would take new materials to significantly reduce the carbon emissions associated with its mobile phones. “Eighty-eight percent of the [phone’s] carbon footprint resides in the manufacture of materials,” says Bill Olson, director of the office of sustainability and stewardship at Motorola. So the company spent four years developing a light, tough plastic based on materials recycled from water bottles. Olson says the material’s carbon footprint is 20 percent smaller than that of standard plastic.

Motorola now sells five phones made with the new material. Each is certified “CarbonFree” by the nonprofit, 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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