Carbon Labels Are Good For Business

Carbon is the leading source of human-induced climate change. It contributes to air pollution, ocean acidification, global temperature fluctuations and on and on.

The Biden Administration has taken momentous steps toward carbon reductions-specifically in the energy sector. Now, there are more efforts toward creating a decarbonized economy than ever before making it more feasible to meet our reduction targets. However, to finish the job and go beyond those targets to close the emission gap and actually stay under 2 degrees of warming, all industries need to build on this momentum.

Many businesses have introduced carbon labels as an affordable and viable option to reduce their emissions not only to help the environment, but to strengthen their business model by better identifying risks and opportunities in processes and supply chains. Similar to a nutritional label, a carbon label or carbon emission label helps consumers understand the environmental impact of the item they are purchasing or consuming.

The carbon label describes the carbon dioxide emissions created throughout the life cycle of a product including as a by-product of manufacturing, transporting, or disposing of a consumer product.

Carbon labels can range from a general carbon neutral tag to something that resembles a nutrition label of the full life cycle emissions including a by-product of manufacturing, transporting or disposing of a consumer product. Informing consumers empowers them to measure the impact of their product lifecycle, allowing them to make informed purchasing decisions, as well as keeping businesses accountable for monitoring their emission rates.

While there is still a lack of mandatory disclosure requirements, carbon labeling has been applied to many product streams, ranging from technology, cosmetics, food, and apparel companies for three key reasons:

1. Communicating and measuring environmental impacts builds trust with consumers and increases consumer climate literacy. By enlisting carbon labels that clearly demonstrate the full impact of the product on the environment, companies are able to build a reputation among environmentally conscious consumers, reduce fears of greenwashing and empower consumers to make more informed purchasing decisions that shift the market toward products with lower emissions.
2. Consumer demand for environmentally and socially conscious products remains strong. Between 2015 and 2019, sustainability-marketed products in the consumer packaged goods (CPG) market accounted for half of overall market growth, despite representing only 16% of the CPG market. Sustainability-marketed products grow 2.7x faster in their categories than conventionally marketed products.
3. Tracking and reporting on impacts like carbon emissions are great for companies to benchmark progress, find efficiencies, eliminate waste, etc. Increasing internal visibility will make it easier to identify stages that contain high-point sources of carbon emissions. By reporting, producers are able to compare products and services to others in the industry to ensure they are meeting, or surpassing, industry standards.

Businesses that use carbon labels to sustainability-market their products are able to charge premiums over their conventional counterparts that can range from 8% to 130%. In a study of food products, it was estimated that businesses who use carbon labels also offer a carbon emissions reduction of 4.7% per meal.

Implementation of carbon labeling will aid in creating more consumer and business awareness of carbon levels in everyday items. This increased awareness is the first step to reducing our climate impact as well as reducing our overall carbon emissions. For more information on the benefits of carbon labeling, read ASBN’s Business Case For Carbon Labeling.

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The American Sustainable Business Network (ASBN) Carbon Labeling Campaign’s objective is to support policies that include carbon labeling and emissions transparency such as voluntary action and policy requirements.