Eco-Labeling in Green Product Marketing – Who Do You Trust?

Eco-LabelingWhom Do You Trust?

Jacquelyn OttmanChristopher R. NelsonAmy WolfrumMarilyn S. Black, PhDJill Vohr

Eco-labeling—Whom Do You Trust?

Moderator: Jacquelyn Ottman, J. Ottman Consulting, Inc.

Christopher R. Nelson, UL Environment Amy Wolfrum, ICF International

Marilyn S. Black, PhD, Greenguard, Air Quality Sciences Jill Vohr, Energy Star Program, US EPA

Eco-labeling—Whom Do You Trust?

Introduction

Jacquelyn A. Ottman– J. Ottman Consulting

Chris Nelson – Director, Global Commercial Development UL Environment

Eco-labeling Panel: Trust and the Role of the Private Sector

Consumer Trust in Environmental Claims

•  Consumers are beginning to place more of a focus on environmental attributes for the products and services they buy but primarily in areas they can understand and make value judgments on

•  Environmental claims have a significant brand value attached and companies need to find more effective ways to engage and educate consumers

•  Strong reliance currently on manufacturer self-declarations

•  NGO’s are in much stronger position to clarify and substantiate claims being made by companies

•  All stakeholders would benefit from 3rd party assessments, standards and certifications to help end consumer confusion

Standards and Certification Programs

•  Standards developed through recognized bodies will provide a transparent, common framework by which organizations and companies can validate green claims - leads to engagement of a wide range of stakeholders and quicker market acceptance

•  Establish common benchmarks with known qualifications by which to validate claims being made – encourages innovation and can adapt to new developments in technology

•  Criteria for testing and certification should be transparent so technical expertise and qualification of verification bodies can be validated

•  Education and awareness programs need to be developed to communicate focus and intent of programs – single attribute vs. multi attribute vs. LCA

Example Programs

Why UL Environment?

•  Strong brand recognition and trust through UL’s heritage as the global conformity assessment leader for product safety

•  Well positioned to be environmental standards and conformity assessment leader

•  Global capacity and capability to test a wide range of environmental attributes

•  115-year history of standards development expertise(1,300+ standards)

•  Focus on knowledge and thought leadership through training courses and advisory services

•  Powerful and credible resource against accusations of greenwashing

Standards & Expertise

Trust

Brand

Global Capability

Who is UL Environment?

•  UL Environment helps support the growth and development of sustainable products, services and organizations in the global marketplace through standards development, educational services, and independent third party assessment and certification to foster stewardship and respect of our environment

•  Seeking to provide clarity and transparency to increase credibility and confidence in the marketplace

•  A wholly-owned subsidiary of UL launched in 2009 focused exclusively on environmental services

•  Developing a publicly available database where all validated and certified products will be listed

Products

Company Energy

Testing / Certification Training Advisory

Services

Standards

Contact Information

http://www.ULEnvironment.com

888 - 4 - UL GREEN

ulenvironment@us.ul.com

Chris Nelson Director, Global Commercial Development

T: 847.664.3386 christopher.r.nelson@ulenvironment.com

Amy Wolfrum, ICF International

Eco-labeling Panel: Trust and the Role of the EPA

How well is EPA/ENERGY STAR trusted?

29% consider US EPA “very reliable” as a source of information about protecting the environment (compared to 27% for consumer publications, 29% for electric utilities, 10% for news/media, and 7% for retailers).1

34% respond that the fact that ENERGY STAR is sponsored by the Federal government increases its credibility.2

43% respond that the government backs the ENERGY STAR symbol, so they can trust it.2

1 Source: Schulman, Ronca, and Bucuvalas, Inc., (DRBI) and Research into Action, Inc. 2008 Energy Conservation, Efficiency and Demand Response. 2 Source: EPA Office of Air and Radiation, Climate Protection Partnerships Division, National Awareness of ENERGY STAR® for 2008: Analysis of 2008 CEE Household Survey. U.S. EPA, 2009

ENERGY STAR halo effect?

Who is responsible/best equipped?

50% of TOP (Total U.S. Online Population) say that the Federal Government ranks first or second in terms of who should take the lead in environmental issues (35% for business and industry, and 21% for environmental groups).3

30% of TOP say that the Federal Government would be the most effective in achieving a balance between environmental protection and economic growth (15% for large companies, 8% for environmental groups).3

In sum, most studies support that although the Federal Government may not enjoy a high degree of trust in the area of eco-labeling and/or claims, the public considers them responsible for protecting them against false claims and suggests EPA as a critical player in identifying a solution.

3 Source: GfK Roper Green Gauge Report, 2007

What is the Federal Government/EPA up to?

The Hill/Federal Feinstein Bill, FTC “Green Guides”, USDA Organic

EPA Administer Executive Order (EO) 13423. Potential for revision to further guide/encourage Federal purchasing of environmental preferable products Environmentally Preferable Products (EPP) leading the development of voluntary consensus standards for environmental preferable products and services (via ASTM, IEEE, NSF), particularly related to building products such as carpet, office furniture, resilient flooring, wall coverings, roof membranes, and textiles, as well as standards supporting green chemistry Through Sustainable Products Network (SPN), EPA determining role in reviewing and/or developing standards/labels for environmentally preferable consumer products Variety of eco-labeling programs – single and multi-attribute

Examples of EPA eco-labeling programs

Considerations for what makes a trustworthy eco-label/claim?

Science-based Continuously improved Involves open/balanced process Unbiased Internationally harmonized Transparent Robust Market viable

Consumer-friendly Tested/verified

Marilyn S. Black, PhD, Founder, Greenguard Institute Air Quality Sciences

Eco-labeling Panel: Trust and the Role of Single Attribute Programs

Why UL Environment

•  XXXXXXXXXXXXX

Why Third-Party Certification Matters?

•  Public health concerns

•  Trust and credibility vs. marketing claims

•  No official standards or regulations

•  Almost 40% prefer governmental involvement

•  Approximately 30% prefer independent organizations

•  Consumers do not prefer manufacturers, industry trade associations and retailers handle IAQ certification

Source: Harris Interactive Consumer Study, Dec 2008

Preference for Handling IAQ Certification

“To Improve Public Health and Quality of Life through Programs that Improve Indoor Air”

GREENGUARD Environmental Institute Mission

GREENGUARD - Single Attribute Program

•  Reduce complexity •  Easy to understand

•  Address health directly with sound scientific basis •  Less costly •  Allow consumer choice

•  Provides building block to complex program

Health & Well Being is Key Consideration

Jill Vohr – Energy Star, US EPA

Eco-labeling Panel: Trust and the Role of Retailers

Retailer Perspectives on Trust

We asked the retailers (Amazon, Best Buy, Lowe’s, Menards, Nationwide, Office Depot, The Home Depot, Wal-Mart)

Table 5 Reliability of Information Sources about…

Percent who say a source is “very reliable”

Base: Asked of one-half of the sample. Saving energy Protecting the

environment

2002 2004 2006 2008 2002 2004 2006 2008 Consumer publications 25% 30% 29% 30% 21% 26% 24% 27% U. S. Department of Energy (DOE) 27 28 29 29 22 23 25 27 U. S. Environmental Protection Agency (EPA) 26 27 28 28 25 26 25 29 Electric utility 25 32* 28 27 20 20 24 29 State government 14 16 13 13 12 10 14 16 News/media 9 10 10 9 7 8 9 10 Contractors 8 8 9 8 5 4 6 5 Retailers 6 8 7 7 4 5 6 7 * Statistically significant difference from previous year (at the 95% confidence level)

Schulman, Ronca, and Bucuvalas, Inc., (DRBI) and Research into Action, Inc. 2008 Energy Conservation, Efficiency and Demand Response

Retailer Response to Increased Activity Re: Eco-Labeling/Claims

Retailers are changing their practices due increased consumer concern about the environment – particularly global warming and climate change. In fact, 90% of Americans agree that there are important green issues and problems.

-Environmental house cleaning -Pushing suppliers -Initiating environmental marketing programs -Earnestly seeking out third-party guidance on how to define green and sources for backing-up claims

Retailer Eco-”Messaging”

Retailers are taking different approaches to eco-labeling/claims:

-Creating retailer-specific eco-marketing “platforms” -Developing programs that leverage individual third-party green certifications, such as ENERGY STAR, WaterSense, Forest Stewardship Council -Working to define their own specifications for green – with one or more stakeholder -A mix of the above

What are Retailers Looking for in an Eco-label/Claim?

-Consumer demand -Credible source -Easy to communicate/understand -Supplier buy-in -Cost-effective

What are Retailers Looking for in an Eco-label/Claim? Wal-Mart/Arizona State University