Memorandum submitted by the British Retail
Consortium (BRC)
The British Retail Consortium (BRC) welcomes
the opportunity to contribute to the EAC sub-committee inquiry
into the issue of environmental labelling. The BRC is the leading
trade organisation representing the retail sector and exists to
defend and enhance the economic, political and social climate
in which its members operate. There are over 180,000 VAT-registered
retail businesses in the UK operating in more than 270,000 retail
outlets. The retail industry employs nearly three million people
and accounts for more than 11% of the total UK workforce, an increase
of almost 100,000 over the last five years. UK retail turnover
in 2006 reached over £255 billion.
Retailers serve millions of customers. Every
day our members are in a unique position to comment on the impact
and effectiveness of labelling. Retailers use labels to give customers
essential information about products and to help them make choices.
It should be noted that for the vast majority of customers, particularly
when shopping for groceries, price and quality are the key factors
of choice and far outweigh other factors such as environmental
standards. Having said that concern over environmental standards
is growing and retailers are responding to the market by both
improving standards and making more information available to customers.
We agree with the recent interim report issued
by the Better Regulation Executive (BRE) and National Consumer
Council (NCC)[16]
that "policy-makers need to take more care and attention
to determine when regulated information should be used" and
that doing so will require achieving a deeper understanding of
consumers and the circumstances in which information will change
their behaviour. The retail sector is ideally placed to assist
Government in educating consumers, as the success of a retail
business is directly determined by that business's level of understanding
of what its customers want. Understanding customer concerns and
demonstrating that their business is acting on them is fundamental
to customer retention and growth, and therefore retailers are
expert communicators. In order to respond to the needs of their
customers BRC members carry out considerable consumer research
to ensure the information they provide, whether that is on pack,
at point of sale or through sales promotions, is representative
of the needs of the customer.
We agree that there are some elements of labelling
that need to be mandatory but there are also elements which should
remain voluntary. The second element is particularly true where
retailers are using them to differentiate a product for more discerning
customers, for example where the standards to produce those products
exceed legislative requirements. This would apply to environmental
issues and retailers recognise the benefit of using voluntary
labels to help customer choice. Retailing in the UK is highly
competitive and we have seen a growth in voluntary labelling of
environmental issues as retailers respond to consumer demand.
It is important to remember that competition between retailers
on environmental issues is delivering real change, not only in
choice for customers but also in the overall sustainability of
our supply chains. This has been achieved by the market on a voluntary
basis and by allowing the appropriate labels for the right customers.
Intervention to ensure more mandatory labelling might stifle competition
and confuse customers through a proliferation of the wrong mix
of labels.
We believe that any labelling scheme, voluntary
or mandatory, must appeal to the consumer in a language he or
she understands. Successful labelling schemes have to communicate
clearly on a single issue, respond to existing consumer concerns,
be easy to use, empower positive behaviour and be fair and honest.
Labelling does have a role to play, but in isolation labelling
schemes cannot deliver market transformation. All tools, including
voluntary standards, mandatory standards, fiscal intervention,
trading schemes, product labelling and consumer education need
to play their part.
1. SUMMARY
1.1 A small but growing proportion of consumers
want information about social, environmental and ethical standards
of retail products. Retailers play an important role in informing
and educating consumers through many forms of communication, of
which labelling is one. Where specific information is not provided
through a label, this does not mean that the information is not
available elsewhere. For example, there is a wealth of other information
on company websites, in store magazines and independent assurance
schemes.
1.2 Experience and research show that depending
on the type of information, some communication methods are more
appropriate than others. Price or promotion information is often
placed on shelves; other kinds of information can be given through
leaflets, at the point of sale, through the Internet or on back
of pack.
1.3 UK retailing is extremely competitive
and successful retailers must respond to consumer demand. They
conduct extensive daily research to understand what consumers
want to know. Consumers shop in those retailers and buy those
products which provide them with the information they want in
the way that they want it. Successful retailers and manufactures
are those that provide this, so although there may be differences
of approach between retailers, as the sub-committee suggests,
these differences have only occurred as a result of significant
consumer research and consequently consumer demand.
1.4 Government should therefore allow businesses
to retain the flexibility to provide information to consumers
through labelling schemes if they determine, based on substantial
evidence, that it is the most effective way to educate its customers.
1.5 The environment is not a single issue,
for example it could cover carbon emissions, use of pesticides
or change in land use. Customers choosing products on environmental
grounds will focus on those issues they perceive are important
to that product. To try and represent all environmental issues
on a single label would mean one of two things. Either a one size
fits all label that incorporates all the elements, whether they
are key to that product and choice or not, or a mass of labels
ranking key elements. Neither of these will help customers, rather
it will complicate labels and prevent progress in tackling the
key environmental issue to that product.
1.6 It is important that any move to reform
environmental labelling in the UK is considered in conjunction
with conclusions from the comprehensive European labelling review.
2. RESPONSES
TO QUESTIONS
2.1 Products requiring labelling
Under European law a wide number of consumer
goods such as washing machines, dishwashers and ovens have to
display energy labels to help customers make a choice on efficiency
grounds. The labels are recognised by customers but it is harder
to distinguish if the labels themselves have driven changes in
the products or if that process was already under way responding
to customers who expect them to be more energy efficient. There
is also a requirement to demonstrate compliance with some environmental
schemes, for example the certification body for organic food must
be shown on the label.
There are a plethora of other voluntary environmental
labels that are used covering thousands of products, both food
and non-food. The majority of these labels, for example, Forest
Stewardship Council (FSC), Marine Stewardship Council (MSC), WRAP
recycling symbols and Energy Savings Recommended (for the most
efficient 20% of electrical products) are operated by third parties
and are only used by retailers with the permission of the schemes
"owners". A much smaller number are labels are developed
by retailers to communicate on an issue where an existing scheme
is not available. Our view is that voluntary labelling can help
customers make a choice when used appropriately but do not believe
there is a requirement for them to be mandatory. This is particularly
true for environmental issues, where a number of factors may be
relevant to customer choice. For example both LEAF and organic
schemes are environmental labels but the standards cover different
issues relevant to the customer purchasing the product. However
it would be difficult to develop a single mandatory label that
covered these and the other environmental labels currently used
on food packaging.
2.2 What should be shown under a labelling
system?
We do not believe it would be practical, desirable
or possible to produce a standardised environmental label. BRC
members have lengthy internal protocols with detailed rules on
the format and presentation of their different brands, sub-brands
and product categories. It is impossible to establish brief general
rules regarding a format applicable to the 50,000 product lines
that some big retailers sell.
As mentioned above the environment is not a
single issue. Customers choosing products on environmental grounds
will focus on those issues they perceive are important to that
product or to them as individuals. To try and represent all environmental
issues would be impractical—either a one size fits all label
(similar to the unsuccessful EU Eco-label) that incorporates all
the elements, whether they are key to that product and choice
or not, or a mass of labels ranking key elements providing potentially
conflicting messages. Neither of these will help customers, rather
it will complicate labels and prevent progress in tackling the
key environmental issue to that product.
We believe there are several issues to consider
on the use of carbon footprint labels. Firstly, do consumers really
understand this complex topic or do they need more education to
be able to make an educated choice not only in their shopping
behaviour but their contribution to sustainability. Secondly,
there needs to be agreement on a method to measure carbon emissions,
hence our full support for the current BSI/Defra project, as we
must have a common system to ensure consistency across all products.
Finally, we need to return to a fundamental examination of the
target of carbon reduction and how to achieve it. Is it best to
use the work on carbon measurement to analyse and improve the
supply chain, or do we rely on labelling to drive demand and product
improvement? Defra itself has separated the measurement work it
has commissioned BSI to undertake from the labelling aspect for
the very reason that there is uncertainly over how best to use
the information on the carbon embodied in products and services.
2.3 The case for rationalising environmental
labels
We have real concerns that there is a tendency,
particularly within Government sponsored bodies, to always point
to labels as the way to drive change amongst consumers. Retailers
know from their own experience that labels have to be very carefully
prepared to ensure the customers have the information they need
without confusing them. Communication of labels can only be successful
within the context of education and marketing campaigns. We need
to recognise that customers often have a limited time to shop
and, therefore, to read and absorb labels.
We agree with the principle behind the current
European review of food labelling which is to return to first
principles and establish what the essential mandatory requirements
are. Voluntary labelling would then be used above and beyond that
based on customer demand and competition.
2.4 The impact of environmental labelling
on consumer behaviour
Consumers in the UK are far more environmentally
conscious than they ever have been, and they are far more likely
to act on environmental issues by changing their behaviour. For
this to happen they need to be provided with the necessary information
to make those decisions but, as consumer attention is finite,
that information has to be targeted. We know that for example
in food consumers are mostly satisfied with the current amount
of information on labels despite not using it all.[17]
However, a contradiction was highlighted in
a number of studies; whereby consumers support the inclusion of
the maximum amount of label information, yet regularly claim to
feel confused or overloaded by the information provided.
A significant difference in the way that consumers
use labels during the first and subsequent times they make purchases
was also found. Of those that use more than basic information
(about half), the information sought was on nutrition, ingredients,
general information and in a small number, ethical information.
When it comes to habitual use, however, consumers stated that
product recognition is the most important consideration, because
it facilitates repeat purchasing.
Consumers have suggested that effective alternative
ways of providing information include bar-code readers, phone
lines and websites. There is also a demand for more detailed off-pack
information on fruit juice production, for example leaflets or
online.
Consumers felt very strongly that "clear,
honest and transparent food labelling is the foundation of consumer
choice". Significant minorities of consumers surveyed claimed
that they felt strongly enough about a number of issues (eg exploitation
of developing countries, pollution, factory farming) to stop buying
products where those issues arose as even though more customers
than ever before are considering environmental issues when choosing
a product, the significant majority will still be driven by issues
such as price and brand preference.
2.5 The regulation of environmental labelling
There are a number of ways in which labels are
regulated, ranging from European standards on energy labelling,
through to private schemes accredited to international audit standards.
We believe there is sufficient information on the standards that
underpin the labels provided by the schemes that operate them
and this is supplemented by information on green claims provided
by Defra.
We do not believe further regulation is necessary.
The key thing is customers understanding what standards lie behind
the label which can be provided and the robustness of auditing
to ensure standards are adhered to. Responsible retailers ensure
that the systems that underpin an environmental scheme are robust
before associating themselves with them as they know it is vital
to have customers' trust in the products they are buying. It is
a commercial imperative to ensure labels are adequate and the
standards that underpin them are adhered to.
2.6 Exports from developing countries
The current debate on the air freighting of
organic food is a good example of the complexity of this issue
and demonstrates the different factors that motivate customers
to select a product.
As we have stated earlier, customers will use
a number of factors when deciding which product to buy and will
weigh those up when making their choice. In this case one of the
key consumer issues, after quality is fair trade, understanding
purchasing fair trade products is a contribution to the economic
sustainability and growth of a developing country. We believe
customers should be able to make individual judgements when choosing
to purchase products from particular countries, and it would be
unfair on developing countries to demonise their product through
environmental labelling. Of course, in the case of many products
due to climatic advantages the overall carbon emissions may be
better from developing countries, despite longer transport, than
growing them in protected conditions in the UK.
We also believe that this problem has been made
worse by a poor understanding of the scale of food imports, particularly
air freighted products into the UK. The vast majority of food
sold in the UK is produced in the UK. Where imported food is sold
around 1% is transported by air. In 2007, BRC members Marks &
Spencer and Tesco introduced a voluntary air freight symbol in
response to concerns about the unnecessary use of air transport
with the aim of increasing transparency. Marks & Spencer report
that their sales have been unaffected. The major wins in carbon
reduction are in the UK food supply chain and would be grossly
unfair to stymie the development in these countries based on perception
and misinformation.
October 2007
16 Warning: Too much information can harm (2007)
www.cabinetoffice.gov.uk/regulation/documents/next<mv3>-<mv-3>steps/warning/too<mv3>-<mv-3>much.pdf Back
17
What consumers want-a literature review by Food Standards
Agency, March 2007. Back
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