"Mass chaos."

This is how Scot Case, executive director of the EcoLogo certification program, describes the current state of eco-labeling. If this sounds like entirely bad news, it's not. It's a sign that after twenty sluggish years, the market is finally waking up.

Eco-labeling in North America dates back to around 1990, a time when people were very excited about green consumerism as the Next Big Thing. The logic for eco-certification was compelling. If the anticipated throngs of eco-conscious buyers could be helped along in their purchase decisions by clear, straightforward guidance about what products were environmentally preferable, this would eliminate marketplace uncertainty and send green consumerism into the stratosphere, to the benefit of eco-vendors and the planet.

Unfortunately, the eco-labeling rocket never achieved lift-off.

In large part, this was because green consumers turned out to have more bark than bite. "We went through a period when there was appalling consumer interest," recalls  Case. Another factor was that in the giddily free-market United States, the federal government took a hands-off approach and left it to small, modestly-funded entities to drive eco-labeling. Inevitably this led to factionalization and fragmentation—and sharply curtailed market inroads.

By the late 1990s, consumer eco-certification was on life support. Market leaders EcoLogo and Green Seal turned for survival to institutional markets such as higher education and government. Because the buyers were professional and often had a mandate to buy green, this was a more orderly and attentive market. It proved robust enough to sustain the eco-labeling organizations through their dark times.

Green Seal and EcoLogo never lost interest in their original market. Indeed, both viewed their institutional customers as potentially a back door into the consumer sector. "We believed that if we could develop eco-labels for enough institutional markets, that would prove there was demand for what we were doing, and the products would trickle across to retail," explains Mark Petruzzi, Green Seal's vice-president for certification.

Their faith was borne out. "To take one example, there are now about 600 certified institutional cleaning products," says Petruzzi. "This creates enormous market pull that is carrying over to the consumer side."

Increased retailer interest is another reason for eco-labeling's new traction. In 2006, Wal-Mart pledged to source all wild-caught fresh and frozen fish for the U.S. and U.K. market from fisheries that meet the Marine Stewardship Council’s (MSC) independent environmental standard. In 2007, Home Depot introduced its Eco Options program, which affixes a green label to selected products. "Home Depot's program has some flaws, but it's drawn attention to green products and that's a good thing," says Petruzzi.

A third factor has been the rise of organic foods, which have been growing at 20% per year and are increasingly finding a place on supermarket shelves, where about half of organic products are now sold. In 2002, the U.S. Department of Agriculture approved a standard for organic food. The "certified organic" label has become a familiar sight on supermarket shelves—and the awareness of one eco-label gets people looking for others.

These trends, along with the more general rise of interest in all things sustainable, have produced a supply-side boom in eco-labeling. "There are 398 and counting eco-certification programs in the U.S.," says EcoLogo's Case.

Making it even more confusing, eco-labeling programs come in a bewildering array of shapes and sizes. There are labels certifying single attributes in single products, labels covering multiple attributes and products, and product "scorecards" that grade multiple product attributes in a single mind-bending matrix. In addition to the green labels developed by known and respected organizations like Green Seal and EcoLogo, there are certifications from newcomers, fly-by-night organizations, and manufacturers who have developed their own labeling standards. Step right up and get your chaos!

What has given birth to this free-for-all? Eco-labeling continues to be an unregulated industry. Because there are no sheriffs in town, anyone can claim pretty much anything with impunity.

It's also problematic when companies certify their own products as green without external verification. Paint manufacturer Sherwin-Williams does this with its GreenSure program. While there's no particular reason to distrust Sherwin-Williams, it's also the case that some corporations have earned a less than stellar reputation for disclosure about their products and processes over the years.

The market isn't completely chaotic. In addition to the Green Seal, EcoLogo and USDA organic labels, certification programs for fish (the Marine Stewardship Council), forest products (the Forestry Stewardship Council), and fair trade (TransFair USA and the Fair Trade Federation) are among the most respected, and enjoy good name recognition. With so few trusted names in a field with 398 eco-labels and counting, there a lot of unknown entities to confuse consumers.

In addition to the Wild West character of the current market, eco-labeling proponents have another big problem. Only a tiny percentage of products actually undergo certification. At Home Depot, for instance, about 6,000 products are expected to carry the company's Eco Options label by 2009. While that's an impressive number from one perspective, it's only about 3% of their total product line. "Paucity of coverage is the Achilles heel of eco-labeling," says Case.

How consumers respond to this marketplace madness depends on how knowledgeable they are about sustainability. "What we call 'core" sustainability consumers understand the intricacies of labeling and appreciate the diversity," says Laurie Demeritt, president and chief operating officer of The Hartman Group, a consumer research organization. "However, for the vast majority of consumers, it can feel quite overwhelming."

For the eco-certification market to flourish, order will need to emerge from the chaos, and credible green labels will need to become a much more visible fixture on the retailing landscape. EcoLogo's Case envisions three ways this could happen. First, the leading certifying organizations would collaborate more. Second, more retailers step up. "Since retailers are vouching for the eco-claims of the products they carry, it's in their interest to exercise oversight," he says.

Finally, the federal government could seize the current opportunity and extend involvement beyond its USDA program. "An enormous amount of money is going to be pushed through Congress to stimulate the economy, and a lot of these funds are pegged for green-collar jobs. If we're going to do this effectively, we'll need to define what green is—and that's what eco-labeling does," according to Case.

Not only products have life cycles; markets have them, too. Eco-labeling is now in its awkward phase of rapid growth, thrashing about with the frenetic energy of an adolescent drunk on hormones. Like every teenager, it will need strong supervision to reach market maturity.