Corporate-NGO Partnership for eco-labeling Dorothée Brécard * Avril 2018 First Draft Abstract How can an eco-label emerge from a corporate-NGO partnership? How can an environmental NGO both favor eco-label development and adoption by its corporate partner and eco-label diffusion to its partner’s competitor? Treating the eco-label as a product innovation, we analyze a three-period game where a firm and an environmental NGO bargain first to develop an eco-label fulfilling their common goal, next the corporate partner adopts the label in order to vertically differentiated its product from the unlabeled one, and next its competitor can also adopt the label if the eco-labeled product is more cost effective than still supplying the differentiated, low quality product. We investigate the respective roles of market-driven incentives and corporate- NGO partnership on the adoption and the diffusion of the eco-label according to the nature of the competition. Keywords Eco-label, Environmental quality, Product differentiation, Product innovation, NGO JEL classification D62, L13, L15, L21, L31, Q58 1. Introduction Corporate-NGO partnerships play an increasing role in international environmental NGO strategies to “influence the course of conservation” (World Wide Fund for Nature, WWF). 1 WWF was amongst the first environmental NGOs to develop such partnerships for eco-labeling. It spearheaded the Forest Stewardship Council (FSC), founded in 1993 for sustainable forest management, and the Marine Stewardship Council (MSC), founded in 1996 for sustainable fishing. The WWF’s Global Forest & Trade Network (GFTN) was established in 1995 in order to initiate partnerships between WWF and companies because of “the commitments, influence, and purchasing power of businesses to bring about market change” 2 through the use of FSC-certified products in their supply chain. The MSC was born from a partnership between WWF and Unilever, formalized in a statement of intent ‘to ensure the long-term viability of global fish * Université de Toulon, LEAD, Campus porte d’Italie, 70 avenue Roger Devoucoux, 83000 Toulon, France. Email: brecard@univ-tln.fr. 1 See the WWF web page on partnerships, https://www.worldwildlife.org/pages/partnerships# (accessed 2018/04/19). 2 See the WWF web page on GFTN, http://gftn.panda.org/ (accessed 2018/04/19).