It means the item is made with the environment in mind.
It means no poisonous chemicals were used to grow the cotton, no harmful dyes were used to get the shirts their colors, and the people who worked on your shirt were paid a livable wage (instead of a fraction of their worth).
Lastly, it means there are audits performed, so you can know that everything from how the cotton is grown to how it's packed for final delivery is done in a way that makes you want to smile.