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Eco-labelling: Effect and

Extent
Rakesh Kumar and Saphallya Misra

Submitted to

Dr. C Shambu Prasad

Eco labelling
In recent times the responsible consumerism movement and responsible consumer
behaviour has brought into focus pollution control in manufacturing and production
process to attain sustainable growth.

Eco labelling is a process of certifying products of their being environmental friendly


which is the impact of such products on environment in the entire product lifecycle,
production, usage and disposal is minimal. These environmental schemes are
awarded by government and private organization thus providing information to
consumers, in order to reduce or eliminate the negative externality of asymmetric
information regarding specific products and product attributes.

Eco-labels are affixed to products that pass eco-friendly criteria laid down by
government, association or standards certification bodies. The criteria utilise
extensive research based on the product's life cycle impact on the environment.
The objective of eco-labelling is to affect production and supply through the
demand. The idea is to encourage the demand of those products and services which
are less harmful for the environment.

Goals of Eco Labelling

• Mark products or services as environmentally preferable to their counterparts


so consumers can make decisions based on the product’s or service’s
environmental impact.

• Provide market advantage to environmentally sound goods and services

• Assure consumers products have met strict criteria set by an independent


organization

Methods of Eco labelling


Eco
-Labelling
Types of Eco labelling

The International Organisation for Standardisation (ISO) identifies three types of


voluntary labels, with eco-labelling
Countries which have Government and Third party based eco-labelling
schemes

Ecolabelling Schemes

Eco labels are mostly formulated by non – governmental agencies and [private
organisations in collaboration with government. These schemes Are mostly limited
to a nations geographic reach.Though there re multi national ecalabelling agencies
yet they have not been effective enough.

Some of the green labels have been described below


Global Eco labelling Programmes

ISO/TC 207 Environmental Management (1991)

• International Standards Organization (Geneva)

• Goal: Standardize environmental management tools and systems

• Environmental Labelling Subcommittee (SC3): standardize first-party (self-


declaration) practices and set guiding principles for third-party certification
programs

European Union Eco-Label (March 1992)

• Council Regulation: must be implemented in each country

• Use of label is not compulsory, national programs can coexist along with EU
label
• Targeted at consumer goods, not at manufacturers or companies. 200
products to-date

Nordic Environmental Labelling System (1989)

• Finland, Norway, Sweden, Iceland. Denmark participates in the EU program

• Ecological criteria developed for 29 product groups and being developed for
15 product groups. Over 650 products carry the label

• Companies must submit detailed documentation plus proof of test by


independent laboratories to the national environmental labelling organization
in their own country

• Label awarded in one country can be used in others

• Labelling organization has right to carry out periodic inspections

China’s Environmental Labelling Program: a Detailed Study

The paper begins with the brief introduction of emergence of the concept of eco
labelling came. The major beneficiaries were Chinese Government and the Chinese
enterprises .Government wanted to manage environmental problem where as
entrepreneurs endeavoured to eliminate non-tariff barriers for their exports and
allow them to expand their domestic market shares. However, the labelling
procedures had been developed in OECD countries; it was to be managed by
Chinese government. The certification is done voluntarily by a third party who can
either be public or private based on its eco-friendly effect. Different organisations
like OECD, UNCTAD and GATT had different definitions but the concept was same
i.e. product is environment friendlier than the similar other product in the market.

GATT also talks about different labels viz. eco-label, single-issue label, negative-
issue label. The China Certification Committee for Environmental Labelling of
Products (CCELP), which is very much similar like that of Germany, was established
in May 1994. There had been 22 environment labels issued by China by the end of
2007.

During 1990, there was a period of great economic growth which put pressure on
insufficient natural resources. As a result, Chinese government started making
people aware about environmental protection in place of “command and control”. It
was started by Xie- Zhenhua, administrator of NEPA (National Environment
Protection Agency). The awareness was made about choosing product not only on
the basis of price & functional quality but also the environmental impact. One
another factor was the export of refrigerators which had plummeted drastically (by
58%). As a result Xiament silk export company & some household refrigerators
company asked NEPA to establish eco labelling programme in china. The intention
was also to improve image among the Chinese customers. As a result of
surmounting pressure, Xie Zenhua was charged with the task of creating a Chinese
environmental labelling programme in 1992.

In 1993, NEPA in association with CRAES (Chinese Research Academy of


Environmental Sciences) studied Eco labelling programme of other countries and
investigated feasibility of set up in china.

The logo contained mountain, sea and the sun in the middle. The circles
represented the people of china. The message of the logo was “human beings
should unite to protect the environment they live in.

Then in 1994, CCELP (China Committee for Environment labelling of products) was
established by NEPA.

There were 24 officials out of which 15 were from government agencies.

There was establishment of CCELP secretariat which looked into the administrative
functions of labelling. Before giving labels, enterprises were investigated by CCELP.
SEPA and SBQTS provided leadership and guidance for the labelling programme.
The labelling was based on labelling procedures of OECD countries with some
changes as per china’s social, economic and environmental situation.

The certification process comprised of three main stages:

1. Selecting product categories

2. Assessing environmental impact


of the products in their life cycle

3. Applying for certification

After the product categories are


approved by SEPA, CCELP and SBQTS,
they are announced in china
environmental news and other newspapers. The product categories that are
primarily focussed for labelling are:

• Product closely linked with human health

• Product made of substances related to global environment problem

• Product causing impact during production or disposal

• Export product that one included in environment labelling in other countries.

Since one of the objective was to promote Chinese export, so CCELP paid special
attention to products that had export potential.
Procedure to get labelled

CCELP Secretariat
sends notices to
EPB and Enterprise

No
Yes

Criterion Development

Here the drafting of criterion or technical requirement of product category is done.


It is based on:

• Life cycle assessment and key process assessment


• Product quality assurance

• Consistence with criterion in other countries

• Practicability and sustainability

These entire criterions were so fixed so as to satisfy on 20% of the enterprises.

An enterprise is charged a fee for a certificate that allows it to use environment


labels. There is a renewal process done every time the product is revaluated. Fee
varies from 15,000 to 50,000. The contract is for a period of 3 years.

Effectiveness

The effectiveness of an environment labelling programme can be measured by:

• Consumer’s awareness of the environmental effects of the product

• Change in purchasing behaviour of customer

• Improve in manufacturer’s design of products

• Help in improving environment quality

At the end of 1997, the awareness of the Eco label was up to 30% in china and
there were some 3.5 million green products across the country.
Moreover to increase the awareness, SEPA and CCELP organise events on world
environment day and consumer day. Massive ads by refrigerator companies are the
biggest factor in bringing up the awareness. There has been a significant impact of
eco label on paint and laundry industry.

Behavioural changes that has been so far in enterprises is the rise in prices of
product. This is because of the additional cost incurred in taking the license. The
environmental benefit has not been considerably much as there are very less
product categories which have eco label. But then, there is reduction in CFC
emissions.

India’s EcoMark: A Study

To increase consumer awareness, the Government of India launched the eco-


labelling scheme known as `EcoMark' in 1991 for easy identification of environment-
friendly products. Any product which is made, used or disposed of in a way that
significantly reduces the harm it would otherwise cause the environment could be
considered as Environment-Friendly Product.

Objectives of the Scheme

• To provide an incentive for manufacturers and importers to reduce adverse


environmental impact of products.

• To reward genuine initiatives by companies to reduce adverse environmental


impact of their products.

• To assist consumers to become environmentally responsible in their daily


lives by providing information to take account of environmental factors in
their purchase decisions.

• To encourage citizens to purchase products which have less harmful


environmental impacts.

• Ultimately to improve the quality of the environment and to encourage the


sustainable management of resources.

Mechanism of the Scheme

There are three committees involved with the criteria development for each product
category and the award of the EcoMark:

1. A Steering Committee, set up in the Ministry of Environment and Forests, to


determine the product categories for coverage under the scheme and also
formulate strategies for promotion, implementation, future development and
improvements in the working of the scheme.

• Determine the product categories to be taken up under the scheme.


• Create mass awareness for promotion and acceptance of the scheme.

• Formulate strategies for future development of the scheme

• Identify specific products for classifying as environmental-friendly.

• Set-up sub-committees for each product category, if required, to draft the


Ecomark criteria.

• Recommend the most appropriate criteria and parameters to designate


various products as environment-friendly.

• Review from time to time, the implementation of the scheme by Bureau of


Indian Standards (BIS).

The Central Pollution Control Board has become the member of Global Eco-labelling
Network (GEN) since March 2000.

2. The Bureau of Indian Standards to assess and certify the products and draw up a
contract with the manufactures, allowing the use of the label, on payment of a fee.

• Identify specific products for classifying as environmental-friendly.

• Set-up sub-committees for each product category, if required, to draft the


Ecomark criteria.

• Recommend the most appropriate criteria and parameters to designate


various products as environment-friendly.

Criteria for Eco Mark

The criteria are based on the cradle-to-grave approach, i.e. from raw material
extraction to manufacturing and to disposal. The basic criteria cover broad
environmental levels and aspects, but are specific at the product level. A product is
examined in terms of the following main environmental impacts:

• That they have substantially less potential for pollution than other
comparable products in production, usage and disposal.

• That they are recycled, recyclable, made from recycled products or bio-
degradable, where comparable products are not;

• That they make significant contribution to saving non-renewable resources


including non-renewable energy sources and natural resources compared
with comparable products;

• That the product must contribute to a reduction of the adverse primary


criteria which has the highest environmental impact associated with the use
of the product, and which will be specifically set for each of the product
categories.
Product General Requirements:

The product general requirements deal with the issues of compliance of the
pollution control acts; raising environmental awareness among consumers etc., in
addition to safety, quality and performance of the products.

• Product Specific Requirements :

• While determining the product specific requirements, the following issues


have been taken into account:

• Production process including source of raw materials;

• Use of natural resources;

• Likely impact of the environment;

• Energy conservation in the production of the product;

• Effect and extent of waste arising from the production process;

• Disposal of the product and its container;

• Utilisation of "Waste" and recycled materials;

• Suitability for recycling or packaging; and

• Biodegradability

Ecomark Criteria of the Product Categories covered under the scheme.

The Government of India has notified the final criteria for the following 16
product categories:

• Soaps & Detergents

• Paper

• Food Items

• Lubricating Oils

• Packaging Materials

• Architectural Paints and Powder Coatings

• Batteries

• Electrical/Electronic Goods

• Food Additives
• Wood Substitutes

• Cosmetics

• Aerosol Propellants

• Plastic Products

• Textiles

• Fire-extinguisher

• Leather

Fees

The following fees are required to be paid to the Bureau of Indian Standards for
obtaining the Ecomark :

• Application fee of Rs.500/= per application, which is non-refundable;

• Testing charges of the independent laboratories for the samples drawn prior
to the grant of licence;

• Annual license fee at the rate of Rs.500/= per license;

• Renewal application fee at the rate of Rs.300/= per application when a


license is due for renewal; and

• Marking fee, depending upon the quantum of the annual production of the
licence.

Review of EcoMark Programme

Issues Needs
License fee charged by BIS, is a Such regulatory eco labelling schemes
deterrent for companies to use would require free of cost processing.
this mark
Brand leaders give more Awareness monitoring and adhering to
importance to BIS’s ISI mark the scheme’s standards of Ecomark is
required. Certain sectors need
mandatory legislation to carry the
mark.
Customer awareness Awareness campaign through mass
media, vehicles is needed
ISI mark is mandatory for govt. Mandatory legislation to carry Ecomark
tenders whereas Ecomark isn’t to participate in govt. tenders
Process of obtain the license to use EcoMark

CSE Green Rating

Centre for Science and Environment has started the green ratings project which is
an effort to rate industrial units within a specific sector on the basis of their
environment friendliness. The project aims at encouraging companies to
adopt better environment management policies.

Objective

• To develop and function as a form of governance based on public


participation, transparency, non-bureaucratic institutions and market-
oriented policies.

• To monitor the existing environmental performance of companies and


influence the future industrialisation in the country.
• To prepare environment inventory of companies by systematically collecting
information about their environmental performance. This information will be
further analysed, comparatively evaluated and disseminated.

• To develop a market-based incentive through the rating to encourage


industries to voluntarily improve their environmental performance;

• To empower communities and markets to proactively participate in


accelerating sustainable economic growth;

• To aid in better regulation of industrial pollution by regulatory authorities


and,

• To aid in better formulation of policies by the government leading to


sustainable development of Indian industries.

Methodology followed by
CSE (see insert)

Criteria

The major criteria are:

Criteria for raw material


sourcing and processing

Criteria for production plant


level environmental
performance

• Input Management

• Process Management

• Waste Management

Criteria for product-use performance Criteria for product-disposal performance

Criteria for corporate environmental policy and management system

• Corporate policy related to environment

• Procurement policy and supply chain management

• Status of corporate environmental management and environment


management systems
• Research and development

• Health and Safety

• Transparency

Criteria for community and regulatory perception and compliance status

• Compliance with pollution control board regulations and perception of


PCB officials

• Perception of local community

• Perception of local NGOs and media

• Perception of CSE’s green inspector.

Review of Green Rating

CSE has already undertaken three sectoral ratings programme in chloral alkali
sector, pulp and paper sector as well has automobile sector. Apart from these, it has
also undertaken a survey in cement industry. Outcomes of these reports has
created furore in media as well as in corporate world. A working paper by Mr.
Srikant Gupta and Vishwanath Golder of Delhi School of Economics has taken up the
impact of these ratings and other environmental standards and compared it to
capital markets.

CSE is and always has been a controversial body. Many industries boycott the
organisation. So, many companies decline to participate in its environmental rating
programme. CSE’s green rating is sometimes based on primary data and caters to
specific industry. In its nascent form the implication of such rating is difficult. Yet, in
course of time and with participation of various companies and industries, CSE’s
model of green rating by taking the regulatory standards as the benchmark would
be able to achieve larger recognition. Transparency of participating companies and
credibility of information provided and methodology has also been questioned.

Stakeholder Analysis of Eco- Mark

Stakeholder Mandate Importanc Influence Net Way


e Impact Ahead
Government Policy Making . High High High Monitoring
Implementation and
Evaluation
Companies Profit and Social High High Medium Relook at
Responsibility Technology
Responsible
Behaviour
Raw Material Profit , Quality High Low Low Technologic
Suppliers al changes
and Quality
Check
Label Standardisation High Hugh High Awarding
Awarding process
Agency
Consumers Better Products High Low Medium Willingness
Responsible to pay
Products higher
Environment Concerns about Low Low low Awareness
Activists environmental
issues

Fair Trade : Social and Eco


Labelling

As per FLO, Fair trade is an alternative


approach to conventional trade and is
based on a partnership between
producers and consumers. Fair trade
offers producers a better deal and improved terms of trade. This allows them the
opportunity to improve their lives and plan for their future. Fair trade offers
consumers a powerful way to reduce poverty through their every day shopping.

Fair trade Labelling Organizations International (FLO), created in 1997, World Fair
Trade Organization (formerly the International Fair Trade Association), Network of
European Worldshops (NEWS), created in 1994 and European Fair Trade
Association (EFTA), created in 1990 together formed FINE.

FINE is an informal association whose primary goals of FINE is:

• To harmonize fair trade standards and guidelines

• Increase the quality and efficiency of fair trade monitoring systems, and

• Advocate fair trade politically

Fair trade:

A better deal for producers in the developing world,a partnership between


consumer and producer,

Fair trade:

• A better deal for producers in the developing world,

• a partnership between consumer and producer,

• Fair trade help producers take more control over their lives.
• market-based approach that aims to help producers in developing countries
and promote sustainability

• strategic intent is to work with marginalized producers and workers in order


to help them move towards economic self-sufficiency and stability

• Great stakeholders in their own organisation and a wider role in international


trade

Benefits of fair trade:

• Stable prices

• A fair trade premium

• Partnership

• Empowerment of farmers and workers

Environment Aspect

Fairtrade rewards and encourages farming and production practices that are
environmentally sustainable. Producers are also encouraged to strive toward
organic certification.

The Basic Guidelines for Producers are:

• Protect the environment in which they work and live. This includes areas of

natural water, virgin forest and other important land areas and dealing with

problems of erosion and waste management.

• Develop, implement and monitor an operations plan on their farming and

techniques. This needs to reflect a balance between protecting the

environment and good business results.

• Follow national and international standards for the handling of chemicals.

There is a list of chemicals which they must not use.

Not, intentionally, use products which include genetically modified organisms

(GMO).
Work out and monitor what affect their activities are having on the environment.

Then they must make a plan of how they can lessen the impacts and keep checking

that this plan is carried out.

Rug Mark

Speciallized social labeling against child labour used in


carpet industry especially in Nepal and India
License Fee used for rehabilitation and services

RugMark producer country offices establish license


agreements with exporters. They agree to the following
terms:
• not to illegally employ children
• to allow unannounced, random inspections by
RugMark inspectors
• to pay fair adult wages
• to notify RugMark of all sales of labeled carpets

RugMark's trained inspection teams carry out random


unannounced inspections of village looms and factories to make sure that the conditions of
the license agreement are being adhered to.

Conclusion

The concept of eco labelling has been existent for decades. Yet, implication of these
has not been spectacular. Issues concerning the failure of these schemes can be
attributed to many causes mostly pertaining to regulatory practices. Lack of
standard norm among policy makers and planners has resulted in imbalance in the
rating systems and methodology followed in various eco labelling schemes.

To receive various ecolabels, companies need to adhere to higher standards and


practices which result in higher cost of production at various levels. This is due to
the fact that cleaner technology involved in making greener products is costlier as
well as well as difficult to procure. Thus, for eco labelling schemes to succeed, the
customer should be willing to pay a premium for green products, services to make it
sustainable for producers/manufacturers. This can only be achieved by creating
awareness among customers. Media campaigns, mandatory regulations and best
practices are the tools by which the reach and impact of eco labelling can be
realised to its full potential. Opportunities galore as there has been a rise in
consciousness about environment and the present form of consumption economy
which greatly negate the balance of nature. In recent years, environmental activism
and growing concern on the part of the corporate world has resulted in focus on
sustaining earth’s ecosystem.

References
1. Alain Nadaï, 2007,Conditions of Development of a Product Ecolabel,
Department of Engineering and Public Policy ,Carnegie Mellon University

2. Mercedes Bleda , Marco ,Graded eco-labels: A demand-oriented approach to


reduce pollution, Valente Manchester Institute of Innovation Research, Manchester
Business School

3. Jimin Zhao and Qing Xia, China’s environmental labelling program, Stanford
University, Chinese Research Academy of Environmental Sciences.

4.(Centre for Science and Environment, 2009)

5.Centra Pollution Control Board


(http://www.envfor.nic.in/cpcb/ecomark/ecomark.html

6. Eco labelling http://ecolabelling.org/