Eco-labels Positioning your brand, product portfolio and supply chain

Table of contents

Executive summary 1

The eco-labeling environment 2

Motivators of eco-label strategies 3

Coercive motivators 4

Competitive and comprehensive motivators 5

Strategic choices 6

Finding the right match 8

Changing course on the supply chain 10

Alternative strategies 12

The bottom line on eco-labels 13

What steps can you take? 14

Crafting your eco-label strategy – A roadmap 15

About Deloitte Research

Disclaimer

2

“This is a complex market to play in, especially for a global player. As a company, you face a mosaic of different national consumer demands, regulation, product and production process constraints, the number, size and geographic distribution of suppliers, and the question of how to label a composite product.”

1

pre-competitive environment

1

Executive summary

Fortune Global 500 Consumer Products Company

Eco-labels: Positioning your brand, product portfolio and supply chain 1

2

A noisy marketplace

The eco-labeling environment

Figure 1: Eco-labels per launch year

4

Figure 2: Organizations managing eco-labels

3%18%

8%

4%

58%

Source: 2010 Ecolabel Monitor4

10%

Industry Association For-Profit Government

Hybrid (for/non profit) Non-Profit Other

Figure 3: Types of verification/certification

64%

5% 4%

Source: 2010 Ecolabel Monitor

27%

Third party Second party VariedFirst party

Eco-labels: Positioning your brand, product portfolio and supply chain 3

Motivators of eco-label strategies

Table 1: Motivators of eco-labeling and certification strategy

Coercive motivation Competitive motivation Comprehensive motivation

coerced

Business Strategy and the Environment.

Harvard Business Review.

4

Coercive motivators

Eco-labels: Positioning your brand, product portfolio and supply chain 5

Driving growth

Enhancing a brand

Gaining competitive advantage

Competitive and comprehensive motivators

6

high brand equity

high brand equity low sustainability integration,

high brand

equity and high sustainability integration,

low brand equity

low sustainability integration

low sustainability integration

Strategic choices

Table 2: Brand equity and the wholly sustainable enterprise

High brand equity

Low sustainability integration High sustainability integration

Low brand equity

“We invest in internal resources and systems. Then it is only natural to ask the question whether a third-party statement might add additional value to what we are already doing internally.”

Fortune 100 consumer products company executive

Eco-labels: Positioning your brand, product portfolio and supply chain 7

Figure 4: Factors improving trust in standard systems

Verification Content Standard-setting Governance Impacts

Source: ISEAL Alliance, “The ISEAL 100, A Survey of Thought Leader Views on Sustainability Standards 2010”

55%

38%35%

32%

11%

0%

10%

20%

30%

40%

50%

60%

8

Issuing organization

Transparency and accountability

Rigor versus flexibility

Finding the right match

“Credibility ultimately matters the most.”

Table 3: Rigorous versus flexible certification criteria

Rigor Flexibility

Advantages

Disadvantages

Senior retail executive

Eco-labels: Positioning your brand, product portfolio and supply chain 9

Maturity and effectiveness

11

11

10

Changing course on the supply chain

Table 4: Strategic dilemmas in the supply chain

Diversity

(conventional supplies) Certified sustainable

Advantages

Disadvantages

Eco-labels: Positioning your brand, product portfolio and supply chain 11

The pay-off

12

Alternative strategies

“Certi"cation is about communicating relevant environmental information to consumers; you can do this in many ways.”

Figure 4: Factors improving trust in standard systems

Source: Golden et al, “An Overview of Ecolabels and Sustainability Certifications in the Global Marketplace,” Duke University, October 2010

5%

5%

5%

9%

9%

14%

18%

27%

32%

50%

0 10 20 30 40 50

Public/Consumer Awareness

Funding

Marketing

Increased Memebership

Refinement of criteria

Partnership

More staff

More expertise

Consumer purchases of labeled

Harmonization of standards

Fortune 100 consumer products executive

Eco-labels: Positioning your brand, product portfolio and supply chain 13

Guides for the Use of

Environmental Marketing Claims

The bottom line on eco-labels

“In the past it was market pull. In the future it will become a strategy around market and brand leadership.”

In the transition phase before the market #oor has risen, due to market self-regulation or policy/regulation, competition is tight.

Large retail executive

Fortune Global 500 consumer products executive

14

What steps can you take?

Eco-labels: Positioning your brand, product portfolio and supply chain 15

Is an eco-label right for you?

Eco-label selection:

Step 1: Establish a policy with selection criteria for the eco-label:

−

−

−

−

−

−

Step 2: Attributes of a desired certifier:

−

−

−

−

−

−

Step 3: Identify the message the eco-label should deliver (varies

by topic and country/culture):

−

−

−

Step 4: Narrow your selection:

−

Potential investments:

Are you ready for a supply chain transformation?

Assess your overall organizational readiness:

Crafting your eco-label strategy – A roadmap

16

About Deloitte

Authors

Chris Park Dinah A. Koehler, Sc.D.

Acknowledgements

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