The importance of consumer labels in the era of sustainability and corporate transparency
March 2, 2023
Table of Contents
In recent years there has been an increase in environmental regulations and consumer labels due to several important factors, in particular due to increased awareness of the importance of sustainability: Around the world, more and more people are becoming aware of the importance of sustainability and the negative effects of climate change, biodiversity loss and pollution. This has led to an increased demand for more sustainable and responsible products.
Reporting frameworks and consumer labels
To adapt, reporting frameworks, a structured methodology for collecting, analysing, and presenting data in a way that is meaningful and useful, have been implemented, a well-designed reporting framework provides relevant information for appropriate decision-making. There are important tools for measuring and communicating an organisation’s performance that have clear objectives that will be measured through key performance indicators (KPIs).
Reporting frameworks and labels are related in the sense that both are used to provide information on sustainability and corporate social responsibility. Consumer labels can be seen as a form of simplified reporting, using a stamp to communicate key information about the product or company, while reporting frameworks are more detailed tools that allow companies to report on a wide range of issues related to their social and environmental performance.
Main Reporting frameworks
The most common reporting frameworks are the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and the Integrated Reporting Framework (IRF). These provide guidelines for companies to report on their performance in areas such as governance, environment, human rights and labour practices, among other topics.
Main Consumer labels
Consumer labels can be seen as a complementary tool to reporting against these frameworks, as they provide an easy and quick way for consumers to identify products and companies that meet certain environmental or social standards. Some of them can also be linked to specific reporting requirements, which can help ensure that companies report on their performance in more detail using one of the reporting frameworks mentioned above.
Labels may be regulated by different entities depending on the country or region in question. Even so, they are not always subject to regulation and, in some cases, may simply be an industry or organisational initiative. It is therefore important to research the source and meaning of a consumer label before relying on it as an indicator of quality or social responsibility. Some of the main ones are:
- Rainforest Alliance Certified: This seal certifies that the product comes from a company that has adopted sustainable practices in its production, including the protection of the environment and the promotion of workers’ rights.
- Fairtrade: This label certifies that products have been produced and traded under fair trade conditions for producers and workers.
- Organic: Certifies that products have been produced without the use of pesticides and other chemicals harmful to human health and the environment.
- LEED: Certifies that buildings have been constructed and designed according to sustainability standards set by the U.S. Green Building Council.
These are just a few examples of the consumer labels that we can now relate to Environmental, Social and Governance. Each label has its own criteria and standards, but all have in common the promotion of sustainable and responsible practices in the production and promotion of products and services. CONNECTS invites you to join us in our efforts to improve the assessment of the social impact and sustainability of each company. To do so, if you would like to learn more, we encourage you to join our ESG Countdown community and our events, hosted by expert speakers in the field.