Lesson 3: Labels & Certification

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En provenance du cours de University of Colorado System

More on Change and Sustainability

7 notes

University of Colorado System

More on Change and Sustainability

7 notes

Cours 2 sur 4 dans Specialization Become a Sustainable Business Change Agent

This is Class 2 of the MOOC Specialization, Become a Sustainable Business Change Agent. In this class you will learn more change agent skills and hear from people who have made changes in their organizations. You will also learn more about green design and sustainability reporting. The skills from this class will help improve products and services in your company or help the company issue its first, or an improved sustainability report.

À partir de la leçon

Green Design

IntroductionThis module introduces the key ideas of green design or design for the environment (DfE). The design phase of a product or building usually only absorbs a small fraction of the entire budget, but determines the product's or building's impact for years to come. Therefore, getting design right is crucial to achieving sustainability. Once your company has designed and developed a good product you need to convey that to consumers. We talk about labeling as one means of doing this. We also discuss problems with 'greenwashing' or over-stating a product's green attributes. In this module we introduce Life-Cycle Assessment (sometimes Life-Cycle Analysis or LCA). This is a powerful tool for identifying where a product's major impact comes from, which allows the company to redesign targeting those high impact areas. Next week we practice doing an LCA.

Lesson 1: Green Design Principles8:21

Lesson2: Green Design and LCA (Life Cycle Assessment)10:53

Lesson 3: Labels & Certification7:38

Lesson 4: Advertising and Greenwashing9:58

Lesson 5: Doing an LCA (Life Cycle Assessment)12:05

Michelle Reott - The Importance of Design15:38

Rencontrer les enseignants

John Byrd
Senior Instructor
Managing for Sustainable & Finance
Kenneth Bettenhausen
Professor
Management

Hi, welcome back to week three of becoming a sustainable business change agent.

We began this week by looking at green design.

Suppose your company's making great green products and doing other wonderful things.

Earlier we talked about how enhancing your company's reputation and

attracting new customers were ways to make the business case for sustainability.

How can you actually do that?

Somehow, people have to know what your company is doing.

Take this shirt.

It's moderately priced from a big internet retailer.

When we talked about life cycle impact I mentioned that traditional

cotton production was very chemical intensive.

Now, I'd like to support clothing companies that use organic cotton, or

the new category sustainable cotton, which is low impact but

not as low as organic cotton.

On the retailer's website, I found a sustainability page with six or

eight different initiatives about the company, and what it's pursuing including

one called Blue Sign that had to do with safe textiles.

But, nowhere can I figure out how the cotton was grown to make this shirt.

Remember when we talked about market failures?

I used GDP Gross Domestic Product as an example of an information failure.

It was a measure that didn't give us the information we wanted or

needed to make good decisions.

Well, this is another information market failure.

I can't figure out if a product satisfies my criteria for being green.

So what do I do?

For this shirt I hope that the sustainability initiatives that

the company's pursuing spill over into the cotton it uses.

But, if that were the case wouldnt the company be telling customers about it?

And if the company did brag about using organic cotton or

some other things that they've done.

How would I know whether, I could believe them?

A company has to tell people about what it's doing.

It has to explain that its products are using less energy or

that the material that it uses come from legitimate sources or

that the product can be easily recycled.

One approach is to just make all these claims and hope people believe you.

Trust me, or you could put big bold letters on the package of product saying,

low energy, recyclable, on natural, biodegradable, improved.

Any company could do this because there's no penalty for

using any of those words, none of them have a strict meaning

that has to be adhered to before you can put that on the label.

It costs companies nothing to use a bunch of these words to attract customers

even if they've done nothing to change the product so

it actually has some of these characteristics.

But people are smart.

So, they aren't tricked by these kinds of ads or labels.

Therefore, to convey to people the good things that your company is doing,

requires more than just talking about it.

If it applies the word organic, that has a special meaning.

The federal government's established a standard that has to be

met before a product can be called organic.

This is a meaningful label because US Department of Agriculture enforces

the standards and it can fine farms up to $11,000.

Or it can remove their organic certification if they cheat.

This is crucial, there has to be a penalty for cheating.

Some companies use third party certification and eco-labels.

Here are two examples from Home Depot.

One is for lumber, Forest Stewardship Council.

The second is, Energy Star from the United States Environmental Protection Agency for

energy efficiency.

These are third parties, that examine the products or

the production to make sure that they met whatever the appropriate criteria are.

Here are some other labels you might have seen.

As consumers, we like these labels because we assume

that they mean the product has met some rigorous standard of quality.

We also assume that experts have established the criteria that

have to be satisfied, so these products really will result in a better world.

What do you think is necessary for a label to be credible?

Or for you to believe it really signifies a superior and greener product.

Here's a short poll that you can take to answer that.

Economics tells us that signals or labels work, if a couple of things are true.

First of all, it's expensive for a bad product to get the label.

Second, there's a penalty for cheating.

To be labelled an organic farm,

a farmer has to not use bad chemicals for three years.

It has to pay someone to test the soil and so on.

This is expensive because during those three years,

the farmer may be getting a lower yield.

But doesn't get the price premium for producing organic food.

If the farmer claims his produce is organic but it isn't.

He can be fined up to that $11,000 I mentioned earlier.

Real organic farmers have an incentive to file complaints against cheaters.

One of the pull options was that.

Lots of producers use the label or the certification.

Why is this important?

If the certifying groups are letting in cheaters,

that tarnishes the quality of all the other members using that equal label.

The more products being certified,

the more pressure there is to maintain the standards because the potential value loss

across all of those participants is so large.

Also, a large group is more likely to do effective policing to identify fakes so

they maintain their investment in the label.

Would you trust my Label?

You shouldn't trust my label.

Now, according to the Ecolabel Index, there are 377 ecolabels.

Here's a video that shows them.

It seems like there's a label here for everyone and every product.

But a lot of them won't do your company any good because they aren't credible.

To let consumers know the good things you're doing,

you need to find a credible way to send a signal.

One way is with a legitimate and well-known ecolabel.

Let's change gears.

What would would be a great, in fact, almost a perfect signal for

the claim that your product can be recycled.

How about if your company took the product back

that would be a powerful affirmation that it could be recycled or reused.

If it couldn't be then the company would be bearing unnecessary costs.

To make the business case for becoming sustainable, you

have to make sure that you can tell your story and that consumers will believe you.

Ecolabeling is one way, product take-back is another.

Next, we'll talk about greenwashing.

What it is, and if it's a serious problem, thanks.

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