the advantages and disadvantages of ecolabels

Product labeling is a tool for promoting markets with specific product characteristics. When implemented systematically and structurally, ecolabels labels provide reliable and credible information about environmental performance that would typically be unobservable or difficult for consumers to assess.

What are ecolabels?

Ecolabels are a specific type of product labeling that certifies the environmental performance of products and services. To be certified with an ecolabel, the product or service must demonstrate that it can reduce the overall environmental impact of its production or use by fulfilling specific, predefined criteria. The certifications are issued by a third-party.

Understanding the advantages and disadvantages of ecolabels is particularly important as these environmental certifications become increasingly prevalent in consumer markets.

In essence, ecolabels are seals of approval that declare that a certified product is more sustainable or environmentally superior than functionally or competitively similar products.

Businesses, private organizations, and governments developed ecolabels to encourage both the consumption of more environmentally friendly products and the use of sustainable production practices.

The advantages and disadvantages of ecolabels for businesses

Understanding both sides of ecolabel certification is crucial for making strategic decisions about whether and how to pursue these credentials for your products or services.

Key advantages of ecolabels

For businesses navigating today’s sustainability-focused marketplace, in additional to being strong commercial tools, they offer significant benefits

• Brand Credibility: Strengthen trust with increasingly eco-conscious consumers through verified environmental claims
• Market Access: Open doors to sustainability-driven markets and public tenders requiring certification
• Innovation Driver: Stimulate development of more sustainable products and processes to meet certification requirements
• Premium Pricing: Command higher margins for certified sustainable products
• Risk Reduction: Mitigate greenwashing accusations through third-party verification of environmental claims
• Supply Chain Improvement: Identify efficiency gains through documentation and audit processes
• Competitive Differentiation: Stand out from competitors without verified sustainability credentials
• Stakeholder Confidence: Build trust by demonstrating measurable progress toward environmental goals
• Reporting Efficiency: Reduce CSRD and ESG reporting effort through third-party verification

Key disadvantages of ecolabels (where business get burned):

• Despite their advantages, ecolabels present challenges that businesses must navigate carefully:
• Certification Costs: Direct expenses for application fees, audits, and renewals add up quickly
• Implementation Resources: Indirect costs for documentation, data collection, and process alignment strain budgets
• Label Confusion: Fragmentation and proliferation of ecolabels create buyer confusion and limit cross-border recognition
• Scope Limitations: Many certifications miss material impacts such as biodiversity or Scope 3 emissions
• Static Standards: Criteria often update too slowly compared to scientific advancements or product innovation cycles
• Recognition Challenges: Low buyer awareness can weaken demand signals and undermine ROI
• Compliance Mindset: Focus may shift to obtaining the logo rather than improving actual environmental performance
• SME Barriers: Smaller businesses often lack resources to navigate complex certification processes

Weighing the advantages and disadvantages of ecolabels for your business

As certification schemes grow in importance, businesses need a strategic approach that maximizes benefits while minimizing drawbacks. Here’s a practical framework to ensure your ecolabel investment delivers results:

1. Prioritize credibility by selecting labels with independent governance and transparent criteria
2. Ensure relevance by matching certification to your material environmental impacts
3. Confirm recognition by verifying buyer requirements and tender preferences
4. Calculate total ROI by comparing all costs against potential margin improvements
5. Validate data readiness to ensure reliable capture of required metrics
6. Choose improvement pathways through schemes with tiers that reward progress

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Is your business ready to navigate the advantages and disadvantages of ecolabels?

The most successful companies approach certification strategically rather than reactively. Before investing resources, it’s essential to assess your readiness and determine which ecolabels might bring the greatest return on effort.

Our free Ecolabel Readiness Scorecard for SMEs helps you to:

• Evaluate your preparation for applying to the right certification programs
• Identify where you already meet common ecolabel standards
• Spot documentation or data gaps early
• Understand how ecolabels align with your CSRD and ESG reporting

Start smart: Take ten minutes today to determine if your business is ecolabel-ready and which certifications offer the best balance of advantages versus disadvantages for your specific situation.

Download the Ecolabel Readiness Scorecard

Want to learn more about ecolabels? Check out these other great posts.

• the different types of ecolabels
• what are ecolabels
• challenges to ecolabels
• the disadvantages of ecolabels
• drivers of ecolabel adoption – what factors lead to ecolabel uptake and acceptance?

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Updated with the latest research on the advantages and disadvantages of ecolabels from 2024-2025 sources including EU Ecolabel statistics, Frontiers research on eco-labeling effectiveness, and global certification trends. Originally published in September 2019.

Updated Sources & Further Reading (2024, 2025)

Sources & Further Reading (Updated 2024–2025)

• EU Ecolabel — Personal & Animal Care (sector criteria)
• EU Ecolabel — Official Overview
• EU Ecolabel for Businesses (how companies engage)
• EU Ecolabel — Product Groups & Criteria
• How to Apply for the EU Ecolabel
• EU Ecolabel — Facts & Figures (live stats)
• News: EU Ecolabel nears 100,000 certified products (Oct 2024)
• News: Record numbers & growth (Oct 2025)
• Frontiers (2024): Strengths & Weaknesses of Food Eco-Labeling — Review
• PMC Open Access Mirror of the 2024 Review
• MDPI (2023): Effects of Multi-Level Eco-Labels on Product Evaluation & WTP
• Ecolabel Index — Global Directory of Ecolabels
• Global Ecolabelling Network — EU Ecolabel Profile
• EU Ecolabel — Clothing & Textiles (sector criteria)

Original Sources

• Bleda, M. and Valente, M. (2009) Graded eco-labels: A demand-oriented approach to reduce pollution. Technological Forecasting and Social Change, 76(4).
• European Commission (2016). The EU Ecolabel.
• European Commission (2016). FAQ.
• Goedkoop, Marc Frederik, et al. Product Sustainability Information: State of Play and Way Forward. 2015.
• Golden, Jay S. (2010). An Overview of Ecolabels and Sustainability Certifications in the Global Marketplace. Corporate Sustainability Initiative.
• International Institute for Sustainable Development (2013). Benefits of eco-labelling.

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