Adoption and diffusion of environmental and social standards The effect of stringency, governance, and media coverage

Purpose - The increased focus on sustainability has led firms to incorporate a range of sustainability practices in their products, processes and supply chains. Because these practices are typically difficult to observe, firms often seek an independent verification and adopt voluntary environmental and social standards and eco-labels such as ISO 14000, FSC, USDA Organic or Fairtrade. The purpose of this paper is to study several factors linked to their adoption. Design/methodology/approach - Drawing on existing theory, the authors hypothesize that environmental and social standards will be more widely adopted if they are better-governed, less stringent and more favorably covered in the media. The authors collect data on 41 eco-labels from multiple data sources. Findings - The authors find that the better-governed labels are more widely adopted, but that more stringent labels within the sample are not less widely adopted. More favorable media coverage is not associated with wider adoption. Research limitations/implications - The study focuses on the diffusion of a sample of well-established eco-labels. To establish causal links, longitudinal data on governance, stringency, adoption and media coverage would be needed. Practical implications - Managers deciding which eco-label to adopt need not be concerned that a more stringent label will inevitably yield less business value due to the label being less widely adopted. However, they should care whether a label is seen to be well-governed. Managers cannot use the way a label is portrayed in the media as a predictor for adoption. Originality/value - Past research has often ignored how characteristics of environmental and social standards impact their diffusion. The work contributes to the growing literature on diffusion of voluntary standards and eco-labels by adding a quantitative and multi-sectoral perspective.