Ecolabels boost sales of ‘green’ products in Denmark
Ecolabelling in Denmark has boosted the sales of greener versions of certain consumer products, indicating a willingness to pay up to 17% more for some products, according to one of the first empirical surveys of consumer reaction to ecolabels.
However, the results may not be representative of consumer behaviour elsewhere, say the researchers at Denmark’s Institute of local government studies (AKF). They point out that conditions in Denmark are particularly conducive to the success of environmental labels, notably the high public confidence in the government, which certifies the label; and apparent wide acceptance of a policy of pursuing relatively ambitious environmental goals.
The survey monitored customer reaction to the Nordic Swan ecolabel on various brands of toilet paper, kitchen paper towels and compact laundry detergents, starting soon after Denmark joined the scheme in 1997. It continued until 2000, during which time researchers monitored reaction to a brand before and after it displayed the label.
Choice of toilet paper illustrated the highest willingness to pay extra for an ecolabelled product, varying between an extra 10% to 17% more. The Swan label had a similar effect on the choices of detergents, but was lower, or even absent, for paper towels. The latter was expected as ‘green householders’ most likely to take note of ecolabelling were considered less likely to purchase disposable paper towels.
In the case of detergents, the survey also confirmed that a bad environmental reputation from a consumer report, could result in a substantial drop in sales. Swan labelled products were estimated to have the following market shares: 6-7% for toilet paper, 4% detergents and 0.5-1.5% for kitchen towels.
Males and households with children were less likely to be influenced by the Swan label in choice of toilet paper and paper towels. In a number of cases the effect of the label also varied with levels of income and education, but the directions were not consistent across different products groups.
The Nordic Swan label was officially accepted by the Nordic Council of Ministers in 1989, and the first licenses to use the label were awarded at the end of 1991. Products must not only meet conditions on entry to the scheme, but must be able to keep pace with gradually increasing requirements, which are revised every third year.
Denmark joined the scheme in 1997, and by the end of 2000, the Swan had appeared on 13 different brands of toilet paper, 9 brands of paper towels and 3-4 brands of detergents. During this period other surveys indicated that the number of consumers who correctly understood the label increased from 30% in 1997 to 46% in 2000, at which point, 63% had confidence in the label.