Consumers, who are becoming more and more aware of the environmental and social impact of their choices, rely on ESG (Environmental, Social, and Governance) labels to make informed decisions about products that adhere to ethical and sustainable standards. But which labels are the most common, and how can companies leverage these certifications to enhance their performance? Recent studies offer data and insights that can help food and beverage producers and distributors navigate this shift towards an increasingly "green" market.

In the upcoming paragraphs, we will explore the market data and consumer behaviors that have emerged in recent years, along with the changes analysts anticipate in the near future.

What are ESG labels and why are they important

ESG (Environmental, Social, and Governance) labels are certifications or product statements that reflect compliance with criteria related to environmental sustainability (E), social responsibility (S), and ethical corporate governance (G).

Recent market research suggests that consumers are positively influenced by ESG labels, and products that carry one or more labels tend to achieve better sales performance compared to those without such labels.

These labels aim to provide consumers with transparent information about how a product was made, considering its environmental impact, respect for workers' rights, and responsible business practices.

• Environmental: relates to the product’s environmental impact, such as resource usage, carbon emission reduction, and waste management.
• Social: focuses on aspects concerning people's well-being, including workers’ rights, working conditions, and positive contributions to society.
• Governance: refers to the ethical and transparent management of the company, such as integrity in business practices and accountability to stakeholders.

Market studies and data on sustainable labels

Below are some recent studies on sustainable labels in the food and beverage sector, offering valuable data for companies engaged in distribution and production.

Combined labelling systems

A study conducted by Wageningen University & Research, titled "Effective labelling of sustainable products", analyzed the effectiveness of sustainable labels, revealing that combined labelling systems (which include environmental certifications such as Fair Trade and climate neutrality declarations) tend to be more effective than single labels.

The report emphasizes that these systems can boost the acceptance of sustainable products, although the complexity and variety of labels might confuse consumers. The overall effectiveness of labelling was measured, indicating that, on average, labels contribute to an 18% increase in consumer acceptance compared to non-labelled products. However, trust in the labels remains a key factor for their success, with a clear preference for those issued by independent organizations rather than by companies or other private entities.

Growth in sales of products with ESG labels

According to an analysis by McKinsey & Company and NIQ, sales of products with environmental and social sustainability claims have experienced significant growth over the past five years. The data spans more than 600,000 products across 32 food, beverage, and consumer goods categories, clearly showing that consumers are becoming more inclined to choose products with ESG labels.

The increase in sales of labelled products compared to those without labels reflects a growing consumer preference for sustainable products. This trend underscores the importance for producers to align with these demands to remain competitive.

Specifically, products with ESG claims contributed 56% of overall growth in the food and beverage sector, surpassing initial expectations by 18%. These products achieved cumulative growth of 28%, compared to 20% for products without ESG labels, further demonstrating their rising relevance in the market, now representing almost half of retail sales within the examined categories.

Consumer preferences for sustainable products

A recent study by the World Economic Forum revealed that 65% of consumers aim to make purchasing decisions that support a more sustainable lifestyle. However, a major challenge is the confusion caused by the wide array of eco-labels available, with over 450 different certifications globally. To reduce this confusion and promote sustainable purchases, label information must be clear, credible, and verified by third-party organizations.

The impact of sustainability labels

A systematic review published in the journal Nutrients by the MDPI group (titled "Consumer Interaction with Sustainability Labelling on Food Products") confirmed that sustainability labels can positively influence consumer choices, particularly those that highlight the environmental impact of products, such as carbon footprint labels and ecolabels.

However, the study also emphasized that not all labels have the same impact, and the credibility of the information provided is crucial to capturing consumer attention and gaining their preference. In particular, recognizable labels issued by third-party organizations are the ones that enjoy the most trust.

Another 2024 study, conducted by Johns Hopkins University, explored the influence of climate labels on food choices. Climate labels, which indicate a food's environmental impact in terms of greenhouse gas emissions, were shown to positively influence students' decisions on university campuses, encouraging them to choose foods with a low climate impact.

For further insights into the latest trends in young consumer preferences, see also: "Gen Z: A New Force in the Global Market. What Food Companies and Distributors Need to Know".

Launch of new products

In 2024, the European Commission released a report titled "Sustainability labelling in the EU food sector," which revealed significant trends, especially regarding the launch of new products.

The study thoroughly analyzed 2021 data from the European market, highlighting trends that are now even stronger in Europe and globally. Notably, 20% of new food products launched on the European market featured at least one sustainability certification.

Among the most widely used labels are those related to environmental and social sustainability, such as Fairtrade, Rainforest Alliance, UTZ, and FSC (Forest Stewardship Council). FSC, which focuses on sustainable packaging practices, was the most prevalent, representing 6% of all new food product launches in 2021.

Trends in major European markets

Although the rise in the adoption of sustainable labels is widespread across the EU, the European Commission report highlights notable differences between individual countries. In markets that are more receptive to environmental certifications, such as the Netherlands, Germany, and Sweden, the penetration of sustainable labels exceeds 20% of new products. Conversely, in emerging markets like Italy, France, and Hungary, the growth has been more moderate, though steady.

Product categories with higher adoption

The adoption of sustainable labels also varies by product category. Sectors such as hot beverages (particularly coffee and tea), chocolate, and ready-to-drink products show the highest adoption of sustainability certifications. In contrast, categories like cereals, snacks, and ready meals have a lower presence of sustainable labels.

Food companies may find new business opportunities by recognizing that some product categories, compared to others, still have a relatively low level of sustainable practices or environmental certifications. Investing in sustainability in these underdeveloped categories could be a successful strategy for companies. As demand for sustainable products continues to rise, being among the first to introduce sustainability labels in these categories can help a company differentiate itself from competitors, attract environmentally conscious consumers, and establish a leadership position in a still-evolving market segment.

The most reliable labels and the role of certifications

A key factor in choosing a sustainable label is its reliability. According to the European Commission study, labels supported by third-party verification are regarded as the most reliable by consumers. Approximately 45% of the labels reviewed are based on external verification, while the remaining 55% rely on self-verification systems or internal assessments.

The credibility of a label is critical for companies aiming to ensure transparency and foster consumer trust through their communication.

What are the most common labels?

The most common ESG labels in the food and beverage sector encompass a variety of certifications addressing different aspects of sustainability. Here are some of the most prominent:

1. Fairtrade: likely one of the most globally recognized labels, Fairtrade ensures that products are produced according to fair standards for workers, promoting safe working conditions and fair prices for producers in developing countries.

2. Rainforest Alliance: this widely adopted certification focuses on biodiversity conservation and improving the livelihoods of rural workers. Certified products include coffee, tea, bananas, cocoa, and more.

3. Forest Stewardship Council (FSC): particularly relevant for products containing wood or paper packaging, FSC guarantees that materials are sourced from sustainably managed forests.

4. Marine Stewardship Council (MSC): specializing in sustainable fishing, the MSC label certifies that fish is sourced through responsible fishing practices that minimize environmental impacts on marine ecosystems.

5. UTZ (now part of Rainforest Alliance): focused on coffee, cocoa, and tea, this certification aims to enhance the welfare of agricultural workers while reducing environmental impact.

6. EU Ecolabel: this label, established by the European Union, certifies products and services that meet high environmental standards throughout their life cycle, from raw material extraction to production, distribution, and disposal. It applies to a wide range of categories, including food packaging.

Risks of greenwashing for companies

The greenwashing phenomenon, beyond being an unethical practice, represents a substantial risk for companies in the food and beverage sector. This term describes the practice of falsely suggesting that a product or company is more sustainable than it truly is, often through vague environmental claims or statements not supported by adequate evidence.

The repercussions of such practices can be serious: in addition to harming a company’s image and undermining consumer trust, companies may face legal penalties, particularly with the enforcement of stricter regulations like the EU directive on greenwashing, which came into force in 2024.

The future of sustainable labels in the food and beverage sector

Looking toward 2025 and beyond, we can expect a continued rise in the adoption of sustainable labels in the food and beverage sector, driven by growing consumer interest in products that embody ethical and environmental values. Recent data clearly demonstrates that products with ESG claims have experienced higher growth than those without such claims, and this trend is likely to persist. Companies investing in recognized and third-party validated sustainability certifications are likely to see their market share increase while also enhancing consumer trust.

Furthermore, with the implementation of stricter regulations against greenwashing, companies will be increasingly urged to ensure that their environmental claims are backed by robust and verifiable evidence. This could lead to greater transparency and a reduction in misleading market practices, ultimately boosting consumer confidence in sustainable labels.

Opportunities for food companies

The adoption of sustainable labels is no longer merely an option, but a necessity to respond to the growing demand for transparency and environmental accountability. For producers and distributors in the food and beverage sector, selecting reliable and recognized labels presents an opportunity to differentiate, improve their reputation, and expand their customer base. Additionally, focusing on product categories that are less developed in terms of sustainability, and offering alternatives with ESG labels, can provide a competitive edge.

In conclusion, companies that embrace responsible practices can align their profitability goals with the protection of society and the environment. Investing in sustainability enables them to integrate economic success with a commitment to the greater good.