Eco-labels as Strategic Uncertainty

By Zachary Alexander on

If you read Jon Entine’s story called “Ecolabels – The wild west of labeling,” you will see that eco-labeling is in the current state of chaos. There are far too many competing standards organizations with far too many agendas. And a lot of very serious people will say why worry. For those tasked with supporting sustainability, eco-labeling represents a techno economic change that could restrict a major market or tank your entire industry.

So-called business gurus will say that eco-labels have been around since the 1970’s so why advise your clients to make any changes to their business models. However, you and your peers may want to consider the arrival of peak oil and the end of the special relationship that American companies enjoy with the American dollar. And there is the fact that our trading partners must do business with American companies to get dollars to buy oil.

More and more politicians will see the advantage of using eco-labels as non-tariff barriers to entry. All it takes is an education program, which talks about the hardships that local companies are going through to comply with enhanced environmental regulations. And the eco-labels will do the rest to shutoff markets for companies from countries with lax environmental policies like the United States.

Now is the time to identify strategic options that will guard against the long-term uncertainty posed by eco-labels. In theory, your client’s corporate social responsibility (CSR) initiatives should protect them from this evolving threat. Unfortunately, few of these programs are more than thinly veiled marketing efforts designed to build goodwill. And they won’t protect against the constant threat posed by either evolution or creative destruction.

Zachary Alexander