W
hen consumers make a purchase, it serves as a
‘vote’ in favor of a company’s products and the
way in which they produce them. Because consumerscontinue to purchase products made in an unsustaina- ble manner, their choices are not sending signals to businesses to change their practices. This loop drivesecosystem degradation and resource depletion. Thecontinued purchase of environmentally degradingproducts is largely a result, however, of the lack of knowledge consumers have relating to the ecologicalimpacts of the products they buy (Goleman XI). It isdifficult for individuals to determine how much energy, water, and raw material was used to make the productson store shelves, as well as how much waste was gener-ated through production. Consumers may not know about ingredients and products that are harmful totheir own health, the environment or communities.The complex and ever-changing issues in supply chain,ingredients and resources use are beyond many con-
sumers’ capacity or interest. Thus, products that are
toxic to health, home or environment are continually purchased . Studies show, however, that about two-thirds of consumers weigh factors such as sustainabil-ity in their purchasing decisions, but will only go so farto find this information (Goleman 120). Hence,
‘greener’ purchases will be made if the related infor-
mation is easy to find and understand. While peoplemust remain free to choose what they believe is the best choice given the information they have available,for the purpose of mitigating environmental problemsit is legitimate for policymakers and businesses to in-fluence consumers in such a way that promotes health-ier and more sustainable decision-making.Individuals often make decisions not in the best inter-est of their health, wealth, and surrounding natural en- vironment. Such decisions, however, would not have been made if individuals were provided the necessary tools. How can businesses and policymakers help con-sumers become better decision-makers in the market-place? Consumers can be presented with a
nudge
to- ward optimal choices (Thaler 3). A
nudge,
a termcoined by Richard Thaler and Cass Sunstein, is a meth-od for presenting choices to individuals to modify theirdecision-making in a predictable manner without re-stricting their choices or changing their economic in-centives. (Thaler 6).
Transparency in the Marketplace: Opportunities for Business
By Douglas Miller*
For example, providing environmental impact in-formation about a product in the form of color willgive consumers feedback on their choices and en-courage them
–
though not force them
–
to makemore sustainable choices (Miller). Similarly, put-ting fruit at eye level is a nudge, but banning junk food is not (Thaler 6).To benefit from this concept, companies must pro- vide transparent product information in a simple,easy-to-understand format. Furthermore, radicaltransparency must be authoritative, impartial, andcomprehensive to gain consumer trust. Certifica-tions, bar codes that lead to websites with productinformation and eco-labels can help in infor-mation organizing and dissemination.One of the best ways for a company to nudge con-sumers is through
Radical Transparen-cy
(Goleman). Radical transparency involvestracking the various impacts of an item from crea-tion to disposal and then providing informationabout these impacts to consumers in an under-standable manner (Goleman 79). Transparency transforms the perception shoppers hold about theecological impact of products they purchase andprovides consumers with a tool for making sus-tainable choices (Goleman XII, 120). Further, by encouraging consumers to make more sustainablechoices, businesses adopting sustainable practices will establish a competitive advantage.
*Douglas Miller is a senior at the University of Pennsylvania pursuing a double major in Philoso- phy, Politics, Economics (PPE) and Environmental Studies. At Penn, he founded Green Acorn BusinessCertification & Eco-Consulting and serves on theboard of several sustainability-related organiza-tions.
**IGEL is a Wharton-led, Penn-wide initiative to facilitate research, events and curriculum on busi-ness and the environment. IGEL Research Briefsare written by students on relevant issues in busi-ness and the environment. Learn more at http:// environment.wharton.upenn.edu
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