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When consumers make a purchase, it serves as a

vote in favor of a companys products and theway in which they produce them. Because consumerscontinue to purchase products made in an unsustaina-

ble manner, their choices are not sending signals tobusinesses to change their practices. This loop drivesecosystem degradation and resource depletion. Thecontinued purchase of environmentally degradingproducts is largely a result, however, of the lack ofknowledge 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 knowabout 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 aretoxic to health, home or environment are continuallypurchased . 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 havebeen made if individuals were provided the necessarytools. 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). Anudge, 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 junkfood 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 throughRadical 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, byencouraging 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 Business

Certification & Eco-Consulting and serves on the

board 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 Briefs

are written by students on relevant issues in busi-

ness and the environment. Learn more at http://

environment.wharton.upenn.edu

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How can businesses and policymakershelp consumers become better decision-makers in the marketplace?

Consumers, upon having understandable informationabout what it takes to produce the products they buy,

would be able to vote for sustainable goods with theirpurchases. Information about products could encouragecollective consumer action by which groups of consum-ers could establish demand for sustainable products andin so doing could shift markets to adopt the sustainableproduction processes they advocate (Goleman139). Studies have shown that goods with eco-labelsoutsold those without the label by a factor of 2:1 whencompetitively priced (Goleman 118). Companies can al-so leverage their sustainable practices in comparison toothers in the market in order to gain competitive ad-

vantage.

An expansion in information availability can encouragemore sustainable decision-making by both producersand consumers. By providing both consumers the nec-essary informational tools and businesses the incentivesthey need to adopt more sustainable behavior, interests

will be aligned for consumers and businesses with sus-tainability. Moreover, increased information availability

will spur positive feedback: as consumers continue toraise their expectations for sustainable products, busi-nesses will have the incentive to continue to progress indeveloping products in a sustainable manner to meet

these demands. Some examples of transparent firmsinclude Patagonia and Whole Foods. Likewise,GoodGuide.com serves as a source of information forconsumers on the environmental, health, and social im-pacts of the products they purchase.

Works Cited

Goleman, Daniel.Ecological Intelligence - The Hidden Impacts ofWhat We Buy. New York: Broadway, 2010. Print.

Miller, Douglas J. "A Study on Sustainable Behavior Inducement:The Role of Information and Feedback." (2011). WhartonSchool of Business. Initiative for Global EnvironmentalLeadership (IGEL), 15 Sept. 2011. Web. 4 Oct. 2011..

Thaler, Richard H., and Cass R. Sunstein.Nudge - Improving Deci-sions About Health, Wealth, and Happiness. New York:Penguin Group, 2009. Print.

The Initiative for GlobalThe Initiative for Global

Environmental LeadershipEnvironmental Leadership

For more information about IGEL or to contact

us, please see our website:

http://environment.wharton.upenn.edu

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