Third-Party Certification: An Effective Approach to Market Transformation Part 1: Origins and Trends

By Ella Rosenkranz, SWEEP Intern and Washington University in St. Louis Alumna

When it comes to working towards an environmental mission, how can an organization prove to its stakeholders that it is, in fact, walking the walk? This series of three articles explores 1) the origins of third-party certification, 2) the characteristics of effective certifications and 3) the benefits of credible third-party certifications.

Third-party certifications like SWEEP, LEED, TRUE and B Corp have given companies and municipalities ways to improve their environmental performance, track their impact using energy, emissions, waste management and water consumption data, as well as user-friendly ways to report their progress to stakeholders. These certification programs offer sets of performance standards that both complement and supplement what is already legally required of these organizations, giving them the opportunity to go the extra mile and stand out as industry leaders.

Caveat Emptor, “the buyer beware” used to be the main watchword for consumers facing product and service claims in the marketplace. As awareness of corporate abuses to the environment and public health and safety grew in the late 60s and early 70s, numerous legislative vehicles were introduced governing minimum acceptable performance and behavior across a range of activities. However, beginning in the 80s with the Reagan administration and continuing through the Clinton administration, government regulation fell increasingly out of favor as a tool for governing private sector behavior. Consumer sentiment, however, continued to become more aware and more discerning and activist. As a result, voluntary third party product labeling and certification exploded in the mid 90’s, showing little sign of slowing down 25 years later.

Current market trends show that stakeholders increasingly value the verification of advanced performance associated with third-party certifications. Consumer demand has increasingly driven changes in companies’ practices, shifting them in favor of independently verified, market-leading performance. This success is an important driver for more companies to adopt these standards. For example, a study from NYU Stern’s Center for Sustainable Business shows us that in recent years, 50% of growth in consumer packaged goods came from products marketed as sustainable, and the market share of these products has seen a steady increase to meet these demands.

Another report from Nielsen shows that 73% of millennials are willing to pay more for sustainably produced goods. The impetus for improved sustainability performance not only affects consumer behavior, but also spurs movements at the city level. Since 2005, 96 cities around the world, representing approximately 8% of the world’s population and a quarter of the planet’s GDP, have signed on to be considered as C40 Cities, signaling their work towards meeting the climate goals set by the Paris Agreement. Municipalities, businesses and consumers alike are striving to improve their environmental performance, and adopting third-party certifications can be a great way to measure success and stay accountable.

It is clear that voluntary third-party certification is an important complement to regulation in promoting triple-bottom-line performance in both the private and public sectors. What makes for an effective third-party certification regime? This is explored in part 2 of this series.

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