Does Eco-labeling boost sales? Comparing environmental product declaration and low-carbon product certification

Global efforts to address climate change and achieve sustainable production (SDGs 12 and 13) require market-based tools that encourage action from consumers, producers, and policymakers. These tools include eco-labels such as the Environmental Product Declaration (EPD) and the Low Carbon Product (LCP) certification. Although eco-labels are known to mitigate climate change and boost sales, it is unclear whether environmental disclosure-based labels, such as EPD, and performance-based labels, such as LCP, have the same effect on the market. This study investigates the economic effects of two major environmental certifications, EPD and LCP, on company sales growth in South Korea. Using propensity score matching (PSM) on the Korean Corporate Finance and Certification Database, we found that the sales growth effect of the two certifications was similar in the first year. However, in the second year, LCP-certified companies achieved 18.1 % sales growth, significantly outperforming the 8.4 % growth of EPD-certified companies. Furthermore, small enterprises showed the most significant gains, with LCP certification driving over 52.8 % growth in sales in the second year. These findings suggest that the additional efforts required for LCP certification, such as reducing carbon emissions, yield substantially more market benefits than simple information disclosure, like that required for EPD certification. This study suggests that environmental policies combining disclosure with performance verification can simultaneously promote climate action and enhance company competitiveness, thereby contributing to SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action).