A facts panel on corporate social and environmental behavior: Decreasing information asymmetries between producers and consumers through product labeling

Abstract This study focuses on information asymmetries between producers and consumers. Mandatory product labeling usually provides little information on a producer's social and environmental behavior. The authors therefore, propose a new product label, a facts panel on Corporate Social and Environmental Behavior (CSEB Facts Panel), and test its effects on consumer response. This study contributes to sustainability research by testing consumers' reactions to simultaneous, and potentially incongruent, information on social and environmental behavior on products. In four experimental studies 376 European and 126 US consumers evaluated food items and a cellphone that carried the CSEB Facts Panel. The results demonstrate that the CSEB Facts Panel empowers consumers to discern between responsible and irresponsible corporate behavior. Furthermore, the results show when consumers face a tradeoff between social responsibility and environmental responsibility, social responsibility is more important to consumers and individual difference variables, such as social consciousness and environmental consciousness, can influence consumers' responses to the CSEB Facts Panel. On a practical level this study shows that the CSEB Facts Panel could be a differentiation tool for companies adopting sustainable business models and that a government sanctioned CSEB Facts Panel could be an incentive for companies to conduct their businesses more responsibly.