strategy

Using environmental labelling

Synonyms:
Providing eco-labels on consumer goods
Labelling products with ecological information
Environmental marking of goods
Ecolabelling
Description:
Ecolabels condense complex scientific information about products to inform purchasing choices. They are intended a guide for consumers to choose products and services that cause less damage to the environment and health.

Eco-labelling schemes based on life cycle analysis for products whose production, distribution, use or disposal could affect biodiversity.

Context:
Consumers may be made aware of the health and environmental impact of products through means such as consumer legislation and environmental labelling - "ecolabelling". Environmental labelling makes a positive statement that identifies products and services as less harmful to the environment than similar products or services used for a specific function. The purpose of such programmes is to contribute to environmental improvements by providing information to consumers and to encourage producers to shift to more environment-friendly production processes. Most ecolabelling aims to identify those products in any category which do least harm to the environment and enable consumers to buy so-called "greener products".

Ecolabelling responds to consumers' growing desire to choose products which minimize the harm which their consumption causes to the environment, and their demand for information about products and the way in which they are produced which will enable them to exercise choice. Many consumers do not understand the often complex scientific background to the environmental impact of products which they buy. Ecolabelling also reflects a movement towards the use of market-based instruments to protect the environment in place of regulation, or as a supplement to it. Through ecolabelling, consumer choice rather than government intervention creates pressure for environmental protection.

Legislation on quality labels can also contribute to biodiversity. It helps to maintain a genetic pool of rustic domesticated species and plant varieties contributing to prevent genetic erosion. It also helps to maintain land use practices beneficial for biodiversity. Organic farming should also be supported by certification systems. Protection of geographical indications and designations of origin and specific characters for agricultural products and foodstuffs is also important and can contribute to the conservation of special agro-ecosystems enhancing biodiversity.

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.

Implementation:
There are various types of environmental labels and labelling schemes: national, regional and international; however in most countries ecolabelling is still in its infancy. It reflects social attitudes towards the environment and so is instituted in countries with a sophisticated response to environmental protection, such as the Nordic environmental mark.

Ecolabelling programmes cover a variety of product categories. Some, such as paper products, detergents, batteries, paints and certains household appliances, are covered by various programmes. The EEC/EU has approved eco-labelling criteria for two product categories, washing machines and dishwashers, and many others are due to follow.

Many ecolabelling schemes are underpinned by life cycle assessment (LCA). LCA involves scientific analysis of the environmental impacts of a product from "cradle to grave". This includes "upstream" environmental effects such as the extraction of raw materials and well as the impacts of process and production methods (PPMs). The phases of development of an LCA-based ecolabel are: determining feasibility, studying the market, making an inventory of impacts, assessing impacts and setting criteria. A simpler alternative is to restrict ecolabelling information to the main environmental impact of the product (the basis of the German [Blue Angel] mark) or to its impacts at the disposal stage and/or potential contribution to recycling (the focus of the Japanese [EcoMark]). The German and Japanese systems are regarded as the most successful programmes in terms of numbers of products, although in the case of Germany approximately half the ecolabelled products belong to only a few categories, especially low pollutant coatings, recycled paper products and recycled cardboard products.

The environmental effects of ecolabelling depend on the relevance and significance of eco-labelling criteria as well as the quantity of eco-labelled products. It is argued that ecolabelling can only be an effective marketing instrument for environmental purposes if there is public awareness of ecolabelling programmes and ecolabelled products and producers are interested in making a significant volume of ecolabelled products available in the marketplace. Ecolabelling programmes are becoming increasingly known among consumers. Opinion polls conducted in 1993 indicate that 53% of the consumers in Japan knew the [Ecomark], as compared to 22% in 1990. A survey carried out in Singapore in March 1994 showed that more than half of the population recognized the [GreenLabel] mark. In Canada, awareness for the national EcoLogo increased to 51% in 1993 from 19% in 1990 and in Norway the recognition of the [White Swan] increased from 12% in 1992 to 66% in 1994.

In 2000, the first standards for environmental labeling -- ISO 14020, 14021 and 14024, were published in Europe after protracted debate. This series offers three alternate environmental statements. (1) Type I environmental labelling, also known as seals fo conformity, are granted by third parties -- a certifying body. This type of environmental seal consists of environmental approval logos or stamps applied to the package indicated the environmental impact of the product relative to others in the same category. (2) Type II environmental labelling consists of self-declared environmental information, whether certified or not, whether directly relevant to impact or not. (3) Type III labelling refers to the product life cycle, detailing all the environmental impacts of a product.

For ecolabels to be effective and command credibility, consumers need to have confidence in the label and producers need to believe that better environmental performance will increase their sales. It is important to provide opportunities for input from the public (including consumer and environment groups) and producers in the development of ecolabelling schemes. Very few consumers will unaided avoid damaging products or check the small print details of products to make the own judgement on which products to buy; most who express green preferences will not discriminate on anything more than a label. This is why consumer organizations and environmental groups want legislated standards rather than a voluntary schemes; and why in the USA there are now federal definitions for all other the usual ecological claims: recyclable, recycled content, ozone safe, biodegradable, etc.

Ecolabelling schemes can be slow to effect market changes, but it is increasingly accepted that their impact on markets can be significant. In trade terms, ecolabelling promotes product differentiation on the basis of environmental quality and may thus have effects on competitiveness. There is evidence that voluntary self-declarations have resulted in innovations on the the US, European and Japanese markets, such as greater use of recycled material, the elimination of "secondary" packaging and increased use of lighter packaging. Exporting firms have the option of either applying for an ecolabel (focusing competitiveness on non-price factors) or to continue selling unlabelled products (focusing competitiveness on price factors). When eco-labelling becomes an important factor in the marketplace, its effects may be similar to those of mandatory regulatory measures, raising questions of market access.

The Canadian Environmental Choice Program's [EcoLogo] is an eco-labelling programme that influences producers as well as consumers. For example, the reduction in the volatile component of paints in Canada can be attributed in part to industry competition for Environmental Choice certification. Even where labelling programmes do not induce competition, they can encourage producers to revise their designs to meet or exceed the criteria required for certification.

The conditions of competition in the market place and trade can be influenced by decisions about which product categories are to be labelled and the criteria by which they are to be judged. These conditions may reflect the environmental conditions and priorities in the country or region granting the label. These may derive from local resource constraints, local consumer preferences and local industries' interests, but give little weight to the concerns of producers in other countries. This may be because companies in the awarding country or region are more readily able to participate in the process of developing criteria and selecting types of products.

In order to allow an opportunity to foreign producers to explain the processes they use, the procedures for developing criteria for an ecolabel need to be transparent and allow for consultation with all interested parties at key stages. Transparency at the development stage increases opportunities for access to the ecolabel for exporters. For example, the USA government regulatory system for dealing with proposals for environmental standards (including ecolabelling) involves: (a) publication of a proposal; (b) special notification to interested parties; (c) a period for comments (usually 60-90 days); and (d) preparation of a summary and response to comments. This process is time-consuming and involves costs but improves the credibility of the standard or regulation which results.

The provisions of the [Technical Barriers to Trade Agreement (TBT Agreement)] have the potential to respond to trade-related concerns and be used to provide transparency and consultation over ecolabelling. Eco-labelling is permitted under the TBT Agreement where it fulfils one of the legitimate objectives, is not more trade-restrictive than necessary and complies with notice and transparency requirements and other provisions. However, on any conservative reading of WTO, permitted eco-labelling only applies to product characteristics and not PPMs (product production methods). In 1995, this was largely untested and there was was still some debate as to whether voluntary ecolabelling schemes are legally covered under the [TBT Agreement].

Positive effects of ecolabels on developing country producers might be to niche-market products to obtain price premiums which may not be available in the home market. Export product development can also be based on materials which are essentially environment-friendly -- such as jute which is largely supplied by least-developed countries (LDCs). On the other hand, it has been reported, for example, that Norway's imports of fine paper originating in Brazil declined significantly after the introduction of an ecolabel. Ecolabelling may also have negative effects on suppliers of material used to manufacture ecolabelled products. The major concern of Brazilian exporters of pulp with a recently introduced EEC/EU ecolabel on tissue paper referred precisely to such indirect effects. Similarly ecolabelling in footwear (the European Flower whose development has been led by the Dutch Foundation for Ecolabelling) could have effect on leather tanneries in developing countries. T-shirts, which have been earmarked for ecolabelling in the EEC/EU, represent a significant share of total exports of Bangladesh, Maldives and Laos to the EEC/EU.

A number of developing countries and countries in transition have established national ecolabelling programmes (eg India, Republic of Korea and Singapore) or are in the process of doing so. As in the case of developed countries, the purpose of such programmes is to contribute to heighten consumer awareness of environmental issues, encourage a shift to more environment-friendly products and and encourage producers to shift to more environment-friendly processes. However, since the domestic market for ecolabelled products tends to be small, the conservation of export markets and the improvement of export competitiveness are often among the key objects. This means that in practice the establishment of ecolabelling programmes in developing countries may be particularly difficult. The challenge is to establish criteria which are significant and relevant in the context of local environmental and developmental conditions of the country of production, taking into account local bases of raw materials and technologies, while at the same time satisfying the high standards for acceptance in developed country markets. Normally, ecolabelling also requires government funding, at least at an initial stage, to support the selection of product categories, the establishing of ecolabelling criteria and for educational and promotional purposes. The above points to the need for technical assistance in capacity building, the role of aid agencies and the need for special trade considerations for LDCs.

In the longer term it seems necessary to explore the scope for mutual recognition or equivalence between ecolabelling schemes. Harmonizing of ecolabelling schemes, strictly interpreted, would mean agreement on uniform criteria. Where a product or production process has a global impact on the environment (such as the impact of CFCs on the ozone layer) it may be possible to base ecolabelling schemes in different countries on the same criteria. However, in most cases ambient environmental conditions and production processes vary nationally and regionally, so that harmonization through basing schemes on uniform criteria does not seem likely to be politically practical or fruitful approach in terms of overcoming trade distortions. Moving in the direction of mutual recognition of schemes seems more practical. For this purpose, a common set of principles would be needed of what is good practice in an ecolabelling scheme to provide a basis on which equivalence can be established.

Claim:
1. Ecolabels help create markets for products with lower environmental impacts and encourage manufacturers to change their products and processes to obtain the labels.

2. Environmental labelling is fundamentally different from the setting of minimum product standards or requirements. The key difference is that environmental labelling is intended to reward environmental leadership.

3. WTO rules create obstacles for eco-labelling because it is based on how the product is produced, not simply on the product's characteristics.

Counter Claim:
1. If an ecolabel reflects processes and production methods appropriate to local conditions, foreign producers may fail to qualify for it, even though their processes and production methods are appropriate to their own environment. Developing country production is often in small home-based units and resources may be lacking to undertake costly assessment or to establish and maintain suitably accredited testing houses. This unfairly penalizes producers in developing countries in their trade with developed countries.

2. A proliferation of different ecolabelling schemes operating under different rules with different criteria and fees increases costs for exporters in seeking access to them. It also sends a confused and perhaps conflicting message to improve their products. Moreover, manufacturers operating in more than one country will not want to have different specifications of a product in order to meet the criteria under different schemes.

3. The claimed benefits of ecolabelling are not proven, particularly in the area of ecological management, [ie] producing environmental improvement which would otherwise not occur. In its 1991 report on ecolabelling, the UK House of Commons select committee on the environment noted that not one of its witnesses could provide any objective, quantifiable evidence, one way or the other, as to the impact of ecolabelling on the environment. Reports from Germany and Canada -- two countries which have established schemes -- suggest that there is no evidence that ecolabels boost sales.

4. In some countries eco-labelling initiatives have been taken by the private sector to advertise particular product brands or types of product using criteria which do not guarantee the objectivity of the label and its attribution. This proliferation of various eco-labelling programmes can mislead the consumer and result in a loss of credibility for the entire eco-labelling concept.

5. According to European Commission Vice-President Sir Leon Brittan speaking at a high level WTO meeting on trade and the environment in Geneva (March 1999) it is important to take a clear and workable approach to the compatibility of labelling schemes with World Trade Organization rules. "It seems to me perfectly legitimate to inform the consumer that particular goods have been produced in third countries in a way which meets certain agreed standards or is, at least, more environmentally friendly than other methods" he said.

6. Labelling criteria should also reflect public concerns, e.g. there should mandatory labelling of products containing or originating from genetically modified material.

Subjects:
Ecology
Information
Consumers
Merchandise
Products
Signs and labels
Trademarks
Environment
Type Classification:
D: Detailed strategies