What’s in a Label?

As consumers, we face hundreds of choices each day: What kind of shampoo should I use? Where should I buy a cup of coffee? What brand of shoe is best for my workout?

For most consumers, the choice is automatic; many will select the cheapest option, while others will make their decisions on the basis of habit or social cues. Each of these factors poses barriers to ethical consumption, and NGOs and campaigns have focused on asking consumers to change in order to overcome those barriers.

Of course, NGOs have created some innovative tools to help consumers make ethical purchasing decisions more easily. These types of tools are essential, and many are Web-based so they can be consulted on smart phones. But there is still the problem of how to inform decision making at the point of sale. Activists have tried to guide shoppers by creating labels that should be instantly recognizable. Unfortunately, there is now a proliferation of labels, rankings, scorecards, guidelines, and phone apps that add further complication. And by asking consumers to consider so many issues—environmental health, resource conservation, ethical trade, workers’ rights, human rights, animal rights—we risk making them feel guilty if one of their favorite products falls short. This atmosphere of anxiety and judgment may be part of the reason why only a small percentage of consumers act on their convictions.

If you play out each scenario for making an ethical choice, you quickly realize the difficulties. One option is to research online the products you intend to buy before you go to the store. Possible, but not very practical, and of no help when it comes to the “impulse buy.” A little more likely is that you check labels to see if products have been certified by one of the initiatives that works on the issues that matter to you. Fair trade and organic products are easily identified, as are those that protect endangered species and certain scarce resources, such as ethically harvested woods. Those labels are generally reliable, especially when they deal with one standard, but the consumer can easily zone out when there are competing labels.

And what does the consumer do when there are no labels to guide them? This is where organizations such as GoodGuide come in, collecting data on products and categorizing it according to relevant criteria or filters. GoodGuide’s smart phone app makes it practical to check on products even in the store, so there is no excuse for not making informed choices.

There is, however, a huge gap in the system of labels and guides when it comes to labor and human rights. Information about these issues is harder to collect and categorize. There are very few large-scale scientific surveys of the effects of supply chains on labor and human rights, making it hard for groups such as GoodGuide to rank the performance of different brands. Publicly available information is usually concerned with specific cases or subjective reports and hence difficult to generalize. Information on labor and human rights is also likely to be qualitative rather than quantitative, making it harder to “crunch the numbers” for the consumer. Thus consumer-driven change in response to these rights issues is limited to individual cases. Reports of labor rights violations in the manufacture of toys in China led to only a short-term drop in sales of those products, although the reputational damage to the brand arguably lasted longer.

The only way to get brands to make a significant contribution to improving respect for labor and human rights in their supply chains is to get them to adopt a system of due diligence and remediation. The integrity of that system needs to be verified by independent, external agencies. This does not mean that there will not be labor and human rights abuses in those supply chains, but it does mean that the brand has a program in place to identify and remedy them when they occur. That is as good as it gets and will enable consumers to shop with greater confidence and thereby reward the companies that are really trying.

Rather than an all-or-nothing approach to ethical consumption, we should be more realistic: Has company X made a public commitment to ethical production? Has it followed through on its promises in a timely fashion? Is follow-through verified by a credible third party? These are the types of questions consumers should ask. The smart companies will make it easy for consumers to find the answers, and those companies will set the bar for others in their industry who claim to be socially responsible. This could stimulate a “race to the top” supported, maybe even driven, by market reaction.