House of Commons - Environmental Labelling - Environmental Audit Committee

Environmental Labelling - Environmental Audit Committee Contents

5 Engaging business

35) Most environmental labels are targeted at consumers. It was thought that "good information about products would create consumer demand for greener products and 'pull' them through the supply chain".[50] Indeed, Tesco noted how labelling, when accompanied by appropriate information and incentives, had significantly influenced customer choice in areas such as organic food and nutritional labelling.[51]

36) Environmental labels may, however, only influence the minority of environmentally aware and engaged consumers. The majority of mainstream consumers select their purchases on the more conventional factors of price, brand, and convenience.[52] Greg Archer, Director at the Low Carbon Vehicle Partnership (LCVP), described how in most cases, environmental information was an 'important precursor' for encouraging an environmental choice, but that without personal environmental commitment and understanding, consumers were unlikely to make the leap from feeling they should make an environmentally positive choice to actually taking that decision.[53] The Sustainable Development Commission (SDC) told us, "the green consumer alone cannot change the mass market".[54]

37) Defra told us that research on consumer choice and behavioural change had demonstrated that consumer information could only bring about significant behavioural change if accompanied by other measures as part of a strategic approach.[55] Commitment is needed throughout the supply chain.[56] The SDC concluded that government, business and consumers all needed to work together to achieve change[57] and this view was echoed by Defra in its recent progress report into Sustainable Products and Materials.[58] Marks & Spencer stressed that the consumer role in this partnership, and the consumer response to labels, remained important in spite of the limited impact of consumer choice:

If consumer confidence is to be maintained in this 'green' business revolution and the initial tentative steps towards sustainable consumption are to be translated into sustained, mass change in behaviour then it is imperative that consumers receive accurate and useful information on the social and environmental issues associated with the products they buy.[59]

Effective environmental labelling must be part of a wider partnership between government, consumers and business if the goal of a more sustainable economy is to be achieved. Arguments about the accessibility of labels must not lead to an over-simplification or lowest common denominator effect; the aim should always be to raise standards.

The potential for engaging business

38) Mike Barry of Marks & Spencer described the role labels played in driving change within the company: "a lot of what we currently call environmental and social labels are actually management tools by which we can drive and enforce change across our supply chains and then report to society on the progress we are making".[60] The SDC set out ways in which companies could use these labels as tools to improve their environmental performance:

Labels and their underlying standards can help to stimulate businesses to change production methods, demand higher standards from suppliers, or encourage retailers to 'choice edit' the products they offer. They can also be used as a performance benchmark that prompts competition amongst businesses.[61]

39) Where businesses make significant use of certification schemes and associated standards to reduce their environmental impact and communicate changes to customers, the company's brand reputation as a whole can be improved. This can be more valuable to a business than consumer shifts from one product to another. Mr Barry, from Marks & Spencer noted:

What consumers were telling us was, 'Great, M&S, I'm not going to automatically buy more of that one specific product in this campaign, but I will shop more with the brand because I trust that you're managing all these issues across everything that you sell.' So in terms of brand and reputation it is hugely powerful.[62]

Businesses can also benefit in other ways. By rationalising and 'greening' their supply chains, money could be saved on energy consumption and production processes, while the higher environmental standards of their products could mean that consumers are willing to pay a premium. Farmers too can benefit from environmental certification, with benefits from better farm and business management coming alongside better recognition in the marketplace.[63] We look at the role of carbon labelling and lifecycle assessment later in this report (see paragraphs 52 to 64).

40) The most effective partnership in environmental labelling is not always between the labelling scheme and the consumer, but very often between the scheme and industry, and it is this interaction that should be prioritised when developing a label. The standards and requirements of environmental labelling schemes can provide a framework for driving change within a supply chain or manufacturing process, while the label itself allows the manufacturer to tell consumers what improvements have been made. Environmental labels and the businesses that use them should seek to go beyond simply rating and certifying the status quo; instead, they should encourage continual improvements in standards. In many ways, environmental labelling's real potential lies not in changing consumer behaviour, but in changing business behaviour and thereby improving the sustainability of the manufacturing process and the products available to the consumer. In improving the overall environmental performance of the economy, the Government must work more closely with business to show how environmental labelling can help them to drive changes in their business and in their supply chains. In order to do this effectively, labels should be underpinned by proper systems for analysis, audit and accreditation.

Product road-mapping

41) Dr Knight from the SDC noted that for labels that identify a single dimension of improvement, corporations are more willing to "get behind them and make them work".[64] One of the best ways to identify the areas of greatest relevance to the product is through product road-mapping, which brings together many different actors (businesses, policy makers, environmental groups, &c.) to discuss the processes and supply chain of a particular product, identifying the major issues in the process and assessing where in the production chain these issues can best be resolved. Marks & Spencer noted that this process may not always identify labelling as the best method for tackling the major issues around a product: "it is about looking at all these products and picking out where the labelling is actually a benefit. It is not everywhere and it will not in every instance be the right educational tool, but sometimes it will be".[65]

42) Marks & Spencer also noted that product road-mapping is "a great role for government to get stuck into".[66] The Government is currently piloting product road-mapping in ten product areas. The SDC told us they were pleased that the Government recognised that "businesses and retailers, and also public policy, have a bigger role here than just devising labelling schemes for the customer to make the choice".[67] However, Dr Knight argued that the Government needed to be bolder in assuming the "thought leadership" role in the road-mapping process.

43) Product road-mapping is an important innovation in efforts to improve the environmental impact of supply chains. The Government has a vital role to play in this process. We welcome the Government's current pilots on product road-mapping and we urge it to extend this work to further product ranges as soon as this is feasible.

Voluntary action

44) Although regulatory action is important for ensuring labels are accurate and robust, action on a voluntary basis by business and industry can be a swifter and more effective way to raise minimum standards and drive out poorly performing products. Voluntary action can be more flexible and responsive to changes in product performance or consumer preferences. Voluntary initiatives have been undertaken on a unilateral basis by single companies, or based on agreements across sectors. On occasion, this has occurred at a European level (for example, the code of conduct to improve the energy efficiency of digital TV services). The Government has said "very significant improvements can be delivered as a result of these types of initiative, and Government will continue to play its part in supporting and facilitating them".[68] We note the effectiveness of voluntary initiatives in driving up environmental standards in industry and we are encouraged that the Government is involved in these processes. Carbon labelling is of such importance that it may require a different approach and we discuss this later in the report (see paragraphs 52 to 64).

The role of retailers

45) Environmental labels are a means for businesses to convey information to the consumer. It is the retailers, at the point where the consumers are making their choice, who may have the greatest capacity to influence a consumer's decision. Jonathan Murray of the Low Carbon Vehicle Partnership confirmed the vital role played by the retailer in supporting the role of environmental labels in consumer decision-making: "the car dealership and the point of sale is still the primary source for the vast majority of people in looking for information and choosing the car".[69]

46) By engaging with labelling schemes the retailer's environmental image may be enhanced, but it can also increase sales. The EST told us that "retailers noted […] it was easier to sell an Energy Saving Recommended product to a customer that was already aware of the logo".[70]

PROVIDING CONSUMERS WITH INFORMATION

47) The main way in which retailers can support labels is through the provision of information. Tesco noted that the behavioural change that resulted from their new nutritional labelling system was dependent on the information provided "in store, through leaflets and online [that] empowered them to use the information on the labels effectively".[71] SMMT said that in car showrooms, display materials and leaflets explaining the vehicle emissions label had played an important role in informing customer choice.[72] There is also scope for less direct but equally persuasive ways of promoting labels, for example the inclusion of LEAF (Linking Environment and Farming) labelled produce on Waitrose recipe cards or using the customer magazine to run features on the purpose of the label.[73] However, the most direct and helpful place to supply labelling information is at a point where the consumer makes his or her decision: as near to the product itself as possible. In addition to the traditional methods of in-store display and promotion, there are other innovative ways for retailers to support labelling and certification schemes. For example, the barcode on products could act as a gateway to further information on environmental issues if in-store scanners and displays were provided for consumers by retailers. The Government should seek to establish an agreement between major retailers, encouraging them to make more information on major environmental labels available to consumers, both in store and online. In particular, retailers should be encouraged to provide this information close to where the products are found (for example, in the aisles themselves), rather than solely at information desks or on request.

48) Staff should be trained to understand the major environmental labels. The role of staff members will differ depending on the sales environment, and it is important that training reflects this. For instance, in sectors where staff participation in the purchase decision is more significant, such as in car showrooms, staff have a more influential role in supporting the label and need to be trained accordingly.

49) Written information must be backed up by staff knowledge. The EST told us that sales of ESR-labelled goods increased when staff pointed out the label to a customer and explained its purpose.[74] The SMMT told us that "the training and awareness of showroom sales staff is necessary to facilitate customer assimilation of the labelling system and ultimately help them to make an informed decision".[75] Disappointingly, extensive discussion of the vehicle emissions label still only occurs in a minority of sales pitches: an LCVP survey found that the label "was referred to and used extensively in a sales pitch by 28% of sales staff once it was revealed that fuel consumption was important to the potential car buyer".[76] However, LCVP also told us that SMMT has been keen to encourage wider training on the vehicle emissions label, especially given rising awareness of such issues among prospective car buyers.[77]

ENFORCEMENT

50) It was brought to our attention that some car dealerships are still failing to display statutory EU information on fuel consumption, etc. This compulsory information is included on the vehicle emissions label, and although the label itself is voluntary, LCVP told us that if dealerships were forced to comply with the EU requirements "the overwhelming majority of showrooms would choose to adopt the voluntary colour-coded approach".[78] The SMMT told us that the problem was probably due to a lack of resources for Trading Standards officers.[79] It is unacceptable that certain car dealerships are still failing to display mandatory EU information on vehicle performance. The Government must ensure that trading standards have the training, resources, powers and sanctions necessary to tackle failures of this kind in every aspect of compulsory product labelling.

INCENTIVES

51) Retailers can also help to encourage sales of high-performance environmental products (contributing also, perhaps, to their own overall sales figures) by using incentives to reward the purchases of products in a particular band, or awarded a particular certification. These could be price incentives (Tesco found that halving the price of energy-efficient light bulbs quadrupled their sales),[80] special offers, or rewarding certain purchases with extra loyalty points. Retailers should be encouraged to use incentives to increase sales of environmentally certified goods. Even if these special offers are only of a short duration they could still play an important role in raising awareness and changing purchasing habits. Tesco told us how their actions had contributed to the expansion of organic produce:

People will make greener choices if we give them the right information, opportunity and incentive. By expanding our range and promoting organic products through green Clubcard points and point of sale information, buying organic has become much more mainstream, with one in three customers putting at least one organic item in their trolley. We now have over 1200 own brand organic products and our organics business is growing twice as fast as our main food business.[81]

While individual environmental certifications may struggle to engage consumers on an equal scale to the organic movement, the transfer of organic produce to the mainstream looks like an impressive example of the power retailers wield in supporting certification schemes. Retailers could also look at the way loyalty card schemes could be used to draw attention to labelled products, by for example, offering additional reward points.

50 Ev 108 Back

51 Ev 43 Back

52 Ev 139 Back

53 Q 265 (Mr Archer) Back

54 Ev 33 Back

55 Ev 109 Back

56 Ev 108, Ev 32 Back

57 Ev 32 Back

58 Defra, Progress Report on Sustainable Products and Materials, July 2008 Back

59 Ev 10 Back

60 Q 39 Back

61 Ev 33 Back