The Institutional Design of Ecolabels: Sponsorship Signals Rule Strength

Darnall N., Ji H., Potoski M. The institutional design of ecolabels: Sponsorship signals rule strength. Regulation & Governance. Forthcoming.

15 Pages Posted: 28 Jun 2017 Last revised: 13 Aug 2019

See all articles by Nicole Darnall

Nicole Darnall

Arizona State University - School of Sustainability; Sustainable Purchasing Research Initiative

Hyunjung Ji

University of Alabama- Department of Political Science

Matthew Potoski

University of California, Santa Barbara

Date Written: June 26, 2017

Abstract

Ecolabels are designed to help consumers identify environmentally superior products and services, however, they are not all created equal. Some ecolabels have strong rules that promote environmental improvements, while others have weaker rules that permit free-riding. Since information about ecolabel design and rule strength is typically not readily available at the point of purchase, consumers struggle to differentiate stronger ecolabels from weaker ones. We investigate whether ecolabel sponsorship is a signal that can help consumers distinguish among ecolabels according to the quality of their institutional design. Using data for 189 prominent ecolabels, we find that while most ecolabels have basic rules for environmental performance, monitoring, and conformance, the strength of these rules varies across labels according to sponsoring organization. Independent sponsors have the strongest ecolabel rules, followed by governments. Industry sponsored ecolabels have the weakest rule structures. Taken as a whole, these findings suggest that sponsorship may signal to consumers important information about whether an ecolabel is designed with rules that effectively condition firms to promote environmental performance outcomes.

Keywords: ecolabel, design, ecolabel sponsor, environmental performance standards, monitoring and conformance

JEL Classification: H70, H83, L38, Q56, H11, H41, M14, M38, M48, Q58, Q59, M31, Q01

Suggested Citation

Darnall, Nicole and Ji, Hyunjung and Potoski, Matthew, The Institutional Design of Ecolabels: Sponsorship Signals Rule Strength (June 26, 2017). Darnall N., Ji H., Potoski M. The institutional design of ecolabels: Sponsorship signals rule strength. Regulation & Governance. Forthcoming.. Available at SSRN: https://ssrn.com/abstract=2992475

Nicole Darnall (Contact Author)

Arizona State University - School of Sustainability ( email )

800 S Cady Mall, PO Box 87402
Tempe, AZ 85287-5402
United States
602.496.0445 (Phone)

HOME PAGE: http://isearch.asu.edu/profile/1811617

Sustainable Purchasing Research Initiative ( email )

Arizona State University
https://sustainability.asu.edu/spri/
United States

Hyunjung Ji

University of Alabama- Department of Political Science ( email )

310 ten Hoor Hall
Tuscaloosa, AL Tuscaloosa 35487
United States

Matthew Potoski

University of California, Santa Barbara ( email )

IA 50011
United States

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