Well, it depends what you mean by eco-friendly. Paper is theoretically a “renewable” resource and it has the potential to break down in a landfill, so that makes it an eco-friendly product label – right? Well... not necessarily. When you factor in the carbon footprint of all the logging trucks and paper mills, it’s not as clear-cut as it may seem. Then, if you stick a paper-based custom label on a plastic container (or apply a plastic over-laminate to protect it, which is very common indeed), the recycling stream gets very complicated as well.
We're also aware of some interesting materials claiming to be eco-friendly, but some of the claims are questionable upon further investigation. There are indeed label materials made from corn - and even stone! But if you consider the less obvious impacts on the environment (food chain disruption in the case of corn, and the carbon footprint associated with quarrying stone and then converting it into a usable product), as usual there are differing perspectives on the overall ecological benefit of such initiatives.
It's also important to consider some of the other factors involved in printing product labels. When compared with traditional printing presses (which still produce the vast majority of product labels in circulation) our digital presses consume less energy, produce less waste, use less ink, and require much less industrial chemicals for cleanup. In the bigger picture, these factors can have a significant impact on the whole "eco friendly" discussion - so it's not appropriate to focus on just the material your labels are printed on.
We’re certainly not experts in eco-management, but we tend to think the primary purpose of a product label is to help “sell” the product – and the label is a very small part of a product in the overall analysis. If you’re comfortable using plastic containers for practical reasons (even as a consumer), then applying a plastic label doesn’t seem like a major abandonment of principle – and it may even help the recycling stream in a small way too.