The Midlife Crisis Of Carbon Labels

Wednesday, 01 February 2012

Large procurers such as BT, McDonalds and Wal-Mart are increasingly requiring evidence of suppliers’ environmental credentials while multinationals such as Apple and Unilever are shifting from a narrow ‘enterprise sustainability’ view to focus on product level sustainability. Both of these developments lead back to thinking about the best use of voluntary environmental product labels.

January 2012 saw two moves in different directions within the carbon labelling sphere. SGS Consumer Testing Services launched a new carbon labelling scheme on January 12 while Tesco announced on January 30 that it is phasing out Carbon Trust footprint labels and has abandoned its 2007 commitment to labelling 50,000 own brand products. What do these two contrasting events tell us about the future of carbon labelling?

The first issue is that consumers need ecolabels to be engaging. The Fairtrade label appeals to consumer concern for fairer outcomes for farmers trading with large firms of considerable bargaining power, and the realities of global competition. The label’s resulting mass take-up by firms including Nestle and Starbucks has led to recognisability and trust. Tesco’s key reason for dropping its labels was that 260 grams of CO2 per serving of orange juice is a meaningless number for pretty much all customers. But even with increased adoption, would carbon be engaging enough to sway consumer purchasing decisions?

Simultaneously, businesses look for ecolabels that provide material benefits. The Forestry Stewardship Council (FSC) label, certifying forest products from a responsible and verified source, has achieved remarkable adoption as firms such as Kingfisher seek to eliminate the risk of reputational damage caused by rainforest depletion in their supply chains. Do carbon labels provide such business benefit?

Finally, analysis of standalone issues, such as carbon, competes with more comprehensive multi-criteria (and often life cycle) sustainability analyses being conducted by a host of multinationals including Kraft and BASF on entire product portfolios. France’s environmental product labelling scheme, compulsory for consumer-facing firms from July 2012, is multi-criteria and widely considered to be a test-bed for future EU policy.

Within this context, carbon labels have a fight on their hands to demonstrate the business appeal and the customer communication potential needed for widespread adoption.

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