Eco-labelling, also called “environmental labelling”, means providing information about the environmental friendliness of a product or service; it reflects a value-added characteristic of a product or service. Eco-labelling is a voluntary method of environmental performance certification and labelling that is practiced around the world.
The overall goal of environmental labels and declarations can be stated as follows: through communication of verifiable and accurate information – that is not misleading – on environmental aspects of products and services, to encourage the demand for and supply of those products and services that have a less negative impact on the environment, thereby stimulating the potential for market-driven continuous environmental improvement.
The roots of eco-labelling can be found in growing global concern for environmental protection on the part of governments, businesses and the public. As businesses have come to recognize that environmental concerns may be translated into a market advantage for certain products and services, various environmental declarations/claims/labels have emerged on products and with respect to services in the marketplace (e.g. natural, recyclable, eco-friendly, low energy, recycled content, etc.). By choosing a product with an eco-label, the consumer makes a deliberate and informed choice to purchase a product or a service that causes less damage to the environment than a similar product or service. The label does not imply that the product has no negative influence on the environment, but it does mean that the product is appreciably better than another product or service. While these have attracted consumers looking for ways to reduce adverse environmental impacts through their purchasing choices, they have also led to some confusion and scepticism on the part of consumers.
Without guiding standards and investigation by an independent third party, consumers may not be certain that the companies’ assertions guarantee that each labelled product or service is an environmentally preferable alternative. This concern with credibility and impartiality has led to the formation of both private and public organizations providing third party labelling. In many instances, such labelling has taken the form of eco-labels awarded to products approved by an eco-labelling programme operated at a national or regional (i.e. multi-countries) level.
Some eco-labels mean that the producer shows the product’s contents and environment impacts on the package, other eco-labels take into account the whole production process and also health and safety aspects (for both manufacturing employees and end users) of the product. There are many different voluntary environmental performance labels and declarations run by governments, private companies and non-governmental organizations, but all boil down to the three basic types of labels established by the International Organization for Standardization (ISO), defined in the standards ISO 14020 to ISO 140253 dealing with the subject of environmental labelling:
Type I labels compare products with others within the same category, awarding labels to those that are environmentally preferable through the whole life cycle. The criteria are set by an independent body and monitored through a certification, or auditing, process. Ranking products in this way requires tough judgment calls: consider two otherwise identical products, one air polluting, another water polluting. Which is superior?
Type II labels are environmental claims made about goods by their manufacturers, importers or distributors. They are not independently verified, do not use pre-determined and accepted criteria for reference, and are arguably the least informative of the three types of environmental labels. A label claiming a product to be “biodegradable”, without defining the term, is a type II label.
Type III labels list a menu of a product’s environmental impacts throughout its life cycle. They are similar to nutrition labels on food products that detail fat, sugar or vitamin contents. The information categories can be set by industrial sectors or by independent bodies. Unlike type I labels, they do not judge products, leaving the task to consumers. Critics question whether the average consumer has the time and knowledge to judge whether, for example, emissions of sulphur are more threatening than emissions of cadmium.
Eco-labelling is becoming increasingly important as a marketing tool and as a market requirement in developed countries but it is also a trade-related instrument, affecting both consumers and producers. Since Germany started the first eco-labelling programme, the “Blue Angel” in 1980, more than 30 countries run eco-labelling schemes dealing with a vast number of products ranging from air-conditioning, automotive products, housing products, dairy products, paints, paper products to windows and doors, and many more.
The market preference for Eco-labelled products is expected to force manufacturers or producers to redesign their products, their packages and their processes to make them more environmentally acceptable. The provider of the product or service hopes the Eco-label will influence the purchasing decision in favour of its product and service. If the Eco-label has this effect the market share of the product or service can increase and other providers may respond by improving the environmental aspect of their products or service to enable them to use environmental labels, resulting in reduced environmental stress from that product or service category. This is the pursued objective of eco-labelling.
Until now, only a small fraction of eco-labelled products originates in developing countries. The reason for this is that most eco-labels apply to products for which developing countries have only a small market share in world trade.
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