The green lifestyle has gained significant traction in the recent past, with a substantial number of customers prioritizing environmentally friendly products. Research indicates that 73.8% of consumers in China prefer to purchase products that are eco-friendly. One of the essential tools used by companies to showcase the green attributes of their products is through the utilization of eco-labels.

Eco-labels can come in various forms, including certification labels and self-labeling. Certification labels are issued by third-party organizations such as Energy Star and Organic Food. On the other hand, self-labeling involves manufacturers declaring the green status of their products on the packaging. Although certification labels are generally more trusted by consumers, there are limitations in conveying the full extent of green attributes beyond the standard.

A study led by Professor Gaoxiang Lou and Professor Yi-Ming Wei delved into the eco-label selection preferences within the green supply chain. The research involved a manufacturer and a supplier, with the supplier providing green raw materials and the manufacturer responsible for green manufacturing and eco-label selection. The findings revealed conflicting preferences between upstream and downstream companies in the supply chain. Suppliers preferred certification labels, while manufacturers leaned towards self-labeling, despite the potential for higher social welfare with certification labels. This underscores the importance of enhanced coordination among supply chain members to address conflicting preferences.

In response to the identified challenges, researchers expanded the certification label levels from single-level to multiple levels. For instance, the Cradle to Cradle Certified was divided into five levels. The study showed that when consumers exhibit low trust in self-labeling and the barriers to green investment are minimal, manufacturers are more inclined to choose multi-level certification labels. This strategic choice is supported by scientific evidence, providing a basis for the adoption of multi-level eco-labels.

Impact of Consumer Preferences on Profitability

An interesting revelation from the research was the potential negative impact of consumers’ green preferences on companies’ profitability when adopting single-level certification labels. As consumers’ green preferences intensify, certification agencies are compelled to establish stricter certification standards, which can inadvertently challenge companies’ profitability. This highlights the delicate balance that companies must strike between meeting consumer demands and maintaining financial viability in the green product market.

Technology

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