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Sustainability labels lose their edge

More and more companies are waking up to the imperative of social responsibility – but the golden age of the sustainability label is over, a report by London consultancy SustainAbility has concluded.

More and more companies are waking up to the imperative of social responsibility – but the golden age of the sustainability label is over, a report by London consultancy SustainAbility has concluded.

According toSigned, sealed, delivered? sustainability labels cannot deliver sufficient business value or drive the level of consumer demand needed to transition to a sustainable economy.

“Labels now need to fade into the background, acting as trust marks for those who seek them and leaving brands to delight and mobilise consumers into adopting more sustainable behaviours," said lead author Patrin Watanatada.

The report assesses the value and challenges faced by businesses when using sustainability labels to improve economic, environmental and social outcomes across global value chains.

The problems the report highlights with the current model include the reduced value of sustainable labels. It said labels no longer had the value they once had – Fairtrade-branded chocolate bars in the UK have now become the norm, for example, so the label now fails to differentiate brands.

Another problem is a lack of familiarity with sustainability labels, where uninformed customers don’t know which brands to choose.

The report recommends shifting to a new model where companies no longer rely on third-party labels to promote sustainability. Rather, they should work on incorporating higher standards and using strategic marketing in order to generate consumer demand and shape a more sustainable market.

“The time has come to reassess how businesses both deliver and demonstrate how we can support thriving communities in our supply chains,” said Ben Packard, VP of global responsibility at Starbucks.

“The trick for all of us is to figure out how we do it in a way that creates value to suppliers, operates at scale and creates meaningful connections for consumers.”