This research investigates two main types of eco-labels - multiple-criteria- based programmes (ISO Type I) and self-declared environmental claims (ISO Type II) - both of which are simultaneously introduced due to the environmental concerns of consumers. It studies the outcomes of eco-labelling in autarky and upon trade integration in the presence of two types of heterogeneity, across countries and across producers. The model illustrates the polarisation of eco-labels when the least productive firms tend to avoid green strategies, and the most efficient firms are incentivized to greenwash. The choice of middle-productive firms is determined by the stringency of the environmental programmes and the eco-sensitivity of consumer demand. It also shows that eco-labelling leads to substantial productivity effects in the market upon opening to international trade. The model predicts average market productivity losses for the relatively more eco-concerned country, and average market productivity gains for the relatively less eco-concerned country.