Understanding How Consumers Value Climate Neutral Certification

Graham Gephart
March 30, 2022
Is going carbon neutral more beneficial to companies than expected? New research from Rare.org & Climate Neutral suggests green actions can drive the bottom line by putting consumers in the front seat.

In a time when climate pledges abound and consumer skepticism of greenwashing remains high, we've always believed the clarity and accountability of becoming Climate Neutral Certified is its real power. One label, one process, easy to understand: every certified company meets the same standard for climate action today. Through certification, businesses get independent verification of their actions and earn the label, which in turn gives consumers an easy way to find the brands and products that match their values.

With three years and hundreds of brand certifications under our belt, we wanted to know how consumers actually perceive the label at the point of purchase, especially when comparing like products between brands. So in 2021, we helped Rare and The Center for Behavior and the Environment conduct an independent research study to assess consumer valuation of the climate neutral labels. Through consumer surveys and in-depth interviews, Rare set out to answer a number of valuable questions: How do consumers perceive them? What attributes matter to them? How do carbon neutrality labels influence a consumer's perspective on products?

We'll go into greater depth in the coming months, but we're excited to share a summary view from Rare and The Center for Behavior and the Environment today: 

Consumer Value of Climate Neutral Labeling Research

Conducted by Rare and The Center for Behavior & the Environment. Written by Sania Ashraf, Vaidehi Uberoi, Rakhim Rakhimov, and Erik Thulin. Published on ClimateNeutral.org with permission.

Originally published at Rare.org

Is going carbon neutral more beneficial to companies than expected?

New evidence suggests green actions can drive profit by putting consumers in the front seat.

Research summary by Sania Ashraf, Vaidehi Uberoi, Rakhim Rakhimov, and Erik Thulin.

Consumer concern over climate change has soared in the last decade. As people become more aware of climate change’s impact and consider going carbon neutral, seven out of ten consumers want to know what brands are doing to address social and environmental issues and 46% take it into account while buying a product.

Just 100 companies are responsible for nearly three-quarters of world greenhouse gas (GHG) emissions. Some of these established companies have publicly committed to reducing their carbon footprints in line with the U.S. government’s aggressive goals to reach net-zero emissions economy-wide by no later than 2050.

Meanwhile, newer companies like Climate Neutral have emerged to meet a shorter-term, urgent need: providing companies and consumers with a straightforward way to participate in creating a net-zero future. Climate Neutral, for example, helps companies move toward carbon neutrality and certifies those who have achieved it. Those certified receive a label to place on their products to signal this green action to consumers—and consumers then have the power to factor in green actions in their purchase decisions.

But does that label work, and will consumers pay more for it? Climate Neutral worked with us at the Center for Behavior & the Environment at Rare to find out.  

Americans value the label

A simulated market study revealed that 87% of Americans value carbon-neutral labeled products over similar ‘unlabeled’ products. Using in-depth interviews, we found that this value is driven by better brand perceptions and feeling better when buying the product.

People placed a considerable monetary value on carbon-neutral products—a point of particular interest to brands who want to know how people will behave when given a choice between two equivalent products. In an online experiment, we found that consumers consistently reported they were willing to pay more for labeled products compared to equivalent products in a shopping scenario. The label held substantial appeal across demographics, skewing slightly towards women. Carbon neutral products were similarly appealing across income, post-high school education levels, race, and age.

“[When seeing a carbon-neutral label] I feel like it’s a more ethical company that makes a greater effort to do good. They are not just solely focused on profits, and it makes me feel better, more positive about the purchase and taking action personally.” – Interview respondent.

Americans value the halo

Based on our mixed-method research, the label directly affects consumer behavior—and our qualitative insights helped explain why: A striking 92% of surveyed respondents perceived carbon-neutral labeled products to be more sustainable, healthy, and of higher quality.

The ‘green halo effect’ – a known psychological phenomenon where people associate unrelated positive attributes to a product, brand, etc. based on one’s opinion or feelings in other areas—drives this behavior, as evidenced by one survey response:

“Higher quality, more organic, more natural. I just feel like I’m getting a better overall product that’s going to last longer.”

 

Eco-friendly Companies Benefit Too

As big companies go green, our data support a potential return on investment in doing so. A carbon-neutral label provides brands with a boosted marketing opportunity to leverage positive associations in their advertising. Integrating customer values can motivate customers to choose a carbon-neutral labeled product over a similarly priced product.

Our findings add to other studies that highlight how efforts to be carbon neutral go beyond just appeasing environmentalists—they boost company profits from higher demand for consumer products. Eco-friendly companies also benefit from tax breaks, subsidies, savings, and increased demand for their products.

Offsetting carbon is one of the highest-impact actions that companies and consumers can take to reach climate goals. Now we know that labeling products as ‘carbon neutral’ is one avenue to getting us there faster.  

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About the Author

A marketing leader and content strategist, Graham brings nearly two decades of media, brand, and nonprofit experience to Climate Neutral’s business and consumer storytelling. A Vermonter transplanted to Seattle, Graham is often found (and only occasionally lost) in the Cascades, working hard to pass his love for the mountains to his young kids.

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