Literally hundreds of competing ecolabels can be found on products from food to detergents to energy tariffs. Once focused primarily on environmental concerns, labelling has expanded over the years to include social, ethical and safety issues as well.

The Ecolabel Index now lists more than 435 labels in 197 countries in 25 industry sectors. A competing organisation, Global Ecolabelling Network (GEN) has hundreds of government and advocacy group members worldwide.

Consumers appreciate the labels and the benefits are both psychological and tangible, but each one is unique and the standards used are often contradictory or subjective. Some ecolabels are regionally specific, while others are global; and some have stricter criteria than others. Compounding the problem is a lack of good quality standardised and comparable information worldwide.

Consider the organics industry, which has been at the centre of the ecolabel movement. According to Organic Monitor, an industry research group, at least 84 countries now have national organic standards. Yet they often differ, sometimes radically.

It’s reminiscent of the early days of ethical investing, when different organisations, many based on religious values of 1980s ideologies, panned and praised identical stocks based on idiosyncratic values.

Environmental or green labelling began in the 1970s with green stickers on consumer goods. By the late 1980s the Canadian government had launched its EcoLogo consumer product labelling system and the Nordic Swan system had been rolled out. In 1992, in the wake of the UN Earth Summit, the European Union initiated the pan-European Ecolabel, which sports a flower as its symbol.

The US Environmental Protection Agency subsequently debuted its own Safer Chemical Ingredients List. Green labels on the likes of cars and major appliances are now mandated in many countries. Many trade groups and advocacy organisations, particularly in the organic and renewable energy space, have launched labels as well.

A blunt instrument

At their best, labels force more transparency on corporations, which can never be a bad thing. But they are not problem-free and are often a blunt way to evaluate ethical corporations and products.

Consider the plight of Seventh Generation, a much-praised Vermont-based maker of environmentally friendly household and personal care products, many based on organic ingredients.

During the 2000s, the company embarked on a mission to develop a new generation eco-friendly laundry liquid. In 2011, it launched its breakthrough detergent, with a renewable-ingredient content up from 77% to 97%. It also reduced shipping and storage requirements by cutting doses in half, and packaged the detergent in a plastic bag surrounded by a shell of post-consumer newspaper and cardboard. Seventh Generation’s 2X Liquid Laundry Detergent was born.

Proud of its innovation, in 2012 Seventh Generation added the active ingredient to its other laundry detergents. “It’s hard to overstate just how big this is,” chief executive John Replogle said at the time. “It’s a cleaning industry holy grail of sorts, and something we’ve been working on for a long time.” The US Department of Agriculture even slapped one of its first BioPreferred labels on the innovation.

Then eco-ideology reared its head. Within weeks of the introduction, the Environmental Working Group (EWG), a Washington DC-based organisation, weighed in with a less friendly eco evaluation.

EWG issues an annual online shoppers’ guide, grading more than 2,000 household cleaners. Seventh Generation’s new detergent received a D on the A-to-F scale.

Why? It uses boric acid. The chemical, like many compounds, is poisonous if taken internally in large quantities and has been linked to endocrine disruption in rats fed doses tens of thousands of times higher than found in this product. The boric acid in Seventh Generation’s detergent is at levels that no reasonable scientist or regulatory body anywhere in the world believes is harmful.

This wrenching story – a gold-plated “good guy” corporation seeing its cutting edge product labelled positively by one label but hammered by another – is a nightmare scenario not only for companies trying to go the extra eco mile, but also for consumers struggling to find reliable information in an increasingly confusing marketplace.

The USDA’s label and EWG’s graded guide are just two labels in a crowded field. Which should be avoided? Which ones offer eco-conscious consumers reliable, sensible and balanced information?

With all their potential benefits, ecolabels should not be considered a panacea. “I don’t consider a product carrying an ecolabel as [necessarily] being more sustainable than a large-volume cleaning chemical that doesn’t carry an ecolabel,” says Kate Geraghty, global sustainability leader for Dow Chemical’s consumer and industrial solutions division.

Companies quickly learn how to “game the system”, and finding a way past the bluster is the challenge consumers face. That’s why we need a guide of the guides.

Jon Entine, founding director of the sustainability consultancy ESG MediaMetrics, is senior fellow at the Center for Health & Risk Communication at George Mason University.