“Green” Seal: Opportunity for Consumer Badging

2 Nov

Energy Star LogoI see a significant opportunity for someone to create a credible and well-branded “green seal” for products which are environmentally friendly. This application of a certification to an existing, branded product is often called “badging” and measures a product against a specific set of standards. It enables a company to say “look, we care!” and justifies charging a price premium.

While today many companies make claims about being environmentally friendly, most do so without applying a rigorous, broadly-recognized standard.

Consumer Badges:

Three consumer badges come immediately to mind in this area. Each involves a certification that a product has met certain criteria:

Energy Star: A certification for things like computers, appliances, lighting, etc. created by the US Environmental Protection Agency (EPA) and Department of Energy to create an incentive for manufacturers to meet certain energy efficiency requirements on their products.

Fair Trade: A US certification based on an international standard for specific agricultural crops that their producer is being paid a fair price, that they work under fair labor conditions, under fair terms, in a sustainable manner.

Organic: A relatively new certification regulated by the US Department of Agriculture (USDA) which sets criteria for products made without the use of synthetic chemical inputs (e.g. fertilizer, pesticides, antibiotics) or genetically modified organisms, produced on farmland that has been free of such chemicals for at least three years. It also regulates how they can be labeled.

What is Missing:

In light of the growing chic-ness and popularity of products that help demonstrate a consumer’s environmental conscience, there is an eco-branding opportunity. Beyond products that just claim to be “environmentally friendly,” however, the real opportunity would exist for an organization which could actually credibly certify products as “green.” Not only that, but the brand could actually be a force for good – driving consumer product and service manufacturers to strive to reach a certain high standard or bar.

So who could feasibly create such a standard?

  • The Government: Similar to Energy Star and Organics, individual country governments, or an international governance organization like the UN, WTO, or EU could establish a standard and related brand
  • An NGO: An organization which has credibility with consumers (particularly liberal ones), perhaps the Sierra Club, Green Peace, or even something like the National Academy of Sciences could certainly create a “green seal”
  • Individual Businesses: Companies such as Proctor & Gamble could create their own “clean” brands, but might lack real credibility with consumers. This is the current status quo and will likely continue in the absence of some superior option
  • Industry Association: An industry organization, such as the National Retail Association of the US, could set a standard through the cooperation of its member businesses.
  • Brand Licensing Company: An individual business could be built as a brand with a corresponding set of standards, whose sole operation was the licensing of that standard to other companies for application on their products. I cannot think of a good analogy here, and an obvious challenge once again would be gaining credibility.

Some Business Opportunities:

There are two major revenue opportunities that I see here. One is licensing, and the other is testing and certification. Both could generate a lot of money for the right organizations.

Licensing: The organization which established the standard and the brand could license it to a broad group of audiences for a small fee. Any company wishing to apply the brand to their product or service would need to pay a small royalty, which would cover administration and monitoring of the brand (i.e. preventing its application without permission) as well as providing a small kickback to its creators.

Testing and Certification: A quick look at the similarities of the companies that certify Organic and Fair Trade labels and those which certify financial statements should hopefully be sufficient to convince you that there is a lot of money in auditing. These companies would ensure that client organizations and their products / services are meeting the established standards in order to qualify for the brand. Any company that wants access to the brand would have to hire a certified auditor – the fewer and more differentiated they are, the greater value they could capture.

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