People, Cities & Urbanisation

Labelling and certifications: A guide for businesses in sustainability

Global Initiatives | Jun 25, 2020

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This is an original article by Cedric Choo from Global Initiatives.

As climate change has become a more prominent issue requiring urgent attention, many companies and organizations have started to examine their contribution and complicity to the problem.

It is well-documented that a mere 100 companies contribute to 71% of emissions globally. Such is the impact of the business sector on the global environment. 

This news about the detrimental effects of corporations on the environment – from contributing to waste and pollution, among others – has put a spotlight on business operations and galvanized civil society organizations to put pressure on them to change their practices. 

As a result, many corporate leaders have started to realize that the future of business must entail some accountability for their actions, both as a necessary PR move and to keep their businesses sustainable in the long-run. 

Examples of Certifications

Along with a greater consciousness for sustainability and climate change is a proliferation of more green labels and certification to endorse the environmentally sustainable practices of businesses. Prominent examples of internationally-recognized certification standards include those by B Corporation and LEED. 

B Corporation is a private certification issued to for-profit companies based on an assessment of their social and environmental performance, which encourages them to place greater emphasis on issues other than just shareholder profit. 

The Leadership in Energy and Environmental Design (LEED) certificate is a green building certification developed by the US Green Building Council (USGBC) and is used worldwide as a rating system to encourage the building of environmentally sustainable physical infrastructure. 

Image by B Corporation Europe / Facebook

More companies are signing up for these green labels. Since its inception in 2007, the number of certified B Corporations has increased exponentially to 3,393 companies in more than 71 countries.

Household names such as Ben & Jerry’s, Patagonia, and Klean Kanteen are just some of the recognizable B Corporation certified brands.

Recently, in 2018, Danone, a multinational food-products corporation, became the largest company to be B Corporation certified. Similarly, the LEED certificate has helped certify more than 83,000 projects worldwide since its founding in 1993. 

Image by Open Sourced Workplace

The Benefits of Certification

This begs the following questions: why are companies increasingly turning to such certifications to endorse their business practices? How are such certifications beneficial for companies?

There are two main reasons for this. For one, receiving such third-party certification for their practices communicates a genuine desire by businesses to do good for social and environmental causes. 

And second, such certifications allow them to stand out from an increasingly crowded field of companies jostling for the attention of customers while signaling that their claims are not simply attempting to greenwash their operations. 

At a time when climate change is becoming an increasingly acute problem, companies are recognizing that they no longer can stand by idly and go about business-as-usual.

Many are realizing that shifting towards more environmentally responsible practices is becoming an expectation rather than a voluntary initiative, one that can withhold customer trust in order to ensure long-term sustainability.

By extension, shareholders and stakeholders of such companies stand to benefit from companies obtaining such certifications.

Given that millennials are estimated to be worth about $1 trillion in consumer spending, with 73% saying that they are willing to spend more on sustainable products, such a market cannot be ignored if businesses wish to stay profitable and if shareholders wish to continue reaping shareholder value in the long-term. 

Hence, obtaining such green labels and certification is becoming an increasingly crucial part of business operations. As climate change becomes a more pressing issue and as more people become environmentally-conscious, businesses need to adapt to stay relevant.

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