The Influence of Eco-Labeling on Green Supply Chains

The green lifestyle trend has gained momentum in recent years, with a growing number of consumers prioritizing environmentally friendly products. According to the 2023 China Consumption Trend Report, a whopping 73.8% of customers prefer to purchase goods that are sustainable and eco-conscious.

In an effort to cater to this eco-conscious consumer base, companies have turned to tools such as eco-labels to showcase the sustainability of their products. These eco-labels come in the form of either certification labels, issued by third-party certification bodies like Energy Star and Organic Food, or self-labeling, where manufacturers declare the green status of their products on the packaging.

A research team led by Professor Gaoxiang Lou and Professor Yi-Ming Wei conducted a study on green supply chains, focusing on the preferences of manufacturers and suppliers regarding eco-label selection. The research found that suppliers tend to prefer certification labels, while manufacturers lean towards self-labeling, despite the potential for higher social welfare with certification labels.

The conflicting preferences between upstream and downstream companies in the supply chain highlight the importance of coordination among supply chain members. In order to maximize social welfare and address these conflicting preferences, further collaboration and communication are essential.

In an effort to provide more options for eco-labeling, the researchers expanded the certification label level from a single level to multiple levels. For instance, the Cradle to Cradle Certified now includes five levels of certification. This shift offers manufacturers a broader range of eco-label options to choose from.

The researchers also discovered that when consumers prioritize green products and single-level certification labels are adopted, it can have negative implications for a company’s profitability. As consumer demand for sustainable products increases, certification agencies may impose stricter standards, making it challenging for companies to meet these requirements while remaining profitable.


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