FUND FOR RESEARCH INTO INDUSTRIAL DEVELOPMENT, GROWTH & EQUITY

Global Review of Eco-Labels: Implications for South Africa

PHASE ONE REPORT

3. Evaluating the Impact of the Eco-Labelling Programmes

This section provides a brief evaluation of the impact of the labelling programmes covered in the first part of Appendix 1 (excluding Australia), noting the market impact, environmental effectiveness, trade effects and key economic aspects associated with each country study. After reviewing each of the individual schemes, the section summarises some of the key conclusions arising from this review.

The difficulty in providing an accurate evaluation of the impact and efficiency of eco-labelling programmes is well recognised. For this reason the following assessment has been undertaken at a very broad level and builds predominantly on the findings of recent detailed studies that have been taken on this issue, including in particular those by the OECD, the US EPA and the European Commission. The 1998 OECD study has been particularly useful and much of the information in this section is based on that study.

3.1 Assessing the Effects of Labelling Programmes: Key Issues

The issues that are examined in the separate country-evaluations are: the market impact, economic aspects, environmental effectiveness, and trade effect. These are briefly explained below.

3.1.1 The market impact

The market impact of a labelling initiative is interesting as a means of assessing the general visibility of the programme. Market penetration statistics in themselves are not indicative of an eco-labelling programme's success. As noted earlier, the criteria of an ISO Type-I initiative are usually set - and later revised - such that only a small percentage of the products in a product category obtain the label. Nevertheless, as a market-based instrument one indication of their success is the extent to which market power is conferred on the producer who has been awarded a label. Can the product be sold at a higher price, will its share in the market increase, and/or will a new market be created for that particular product?

3.1.2 Economic aspects

A key issue to consider in the design of an effective labelling initiative is the potential cost structure associated with the implementation of the initiative. Aspects to consider include the nature of the fee structure, the extent to which financial support is provided by government, the level of costs typically incurred by the producer, and the key budget items associated with administering a labelling initiative. For a labelling programme to be efficient and effective, the gains to the recipients of information (the consumers) should outweigh the costs of providing that information.

3.1.3 Environmental effectiveness

Underlying most environmental labelling initiatives is the goal of reducing the environmental impacts of existing production and consumption patterns. Environmental effectiveness is only assured if the criteria on which the eco-label is attributed are accurate and appropriate for domestic and foreign products alike. A key difficulty in evaluating environmental effectiveness is the extent to which the label may be seen as the principal motivating factor for improvement. This data is often difficult to ascertain.

3.1.4 Trade effects

There are two opposing views on eco-labelling and trade:

• The first view (held mainly in Europe and supported by consumer and environmental organisations) is that eco-labelling schemes are not a trade issue. The argument here is that the interests of environmental sustainability mitigate against eco-labelling schemes being disciplined via trade.
• The alternative view - that eco-labelling schemes are a trade issue - tends to be found in Canada, the US and some less developed countries. For developing countries the primary trade concern lies with the focus on particular processing and production technology, which might be unavailable to their exporters.

Whichever view is held, the fact is that the larger the market impact of an eco-label, the greater the potential trade effect. If a label is so powerful that consumers will buy only labelled products, any disadvantage facing foreign producers will be extremely significant. Alternatively, if an eco-label has no impact on consumer decisions, there will be no trade effect. Overall, few eco-label criteria have been developed to address exclusively the environmental effects during the manufacturing or production phase of a product, thereby limiting one set of potential trade concerns.

It is often difficult to accurately ascertain the trade effect of a labelling initiative. In the absence of specific data, useful indicators include: the number of eco-labels developed for product groups of particular interest to developing countries (such as textiles); the extent to which the criteria focus on production methods; the proportion of foreign licensees that have obtained an eco-label for their products.

3.2 THE EU ECO-LABEL AWARD SCHEME

3.2.1 The market impact

The initial performance of the EU Scheme was disappointing, and failed to achieve much visibility on the market. Although few statistics are available on the market share of EU eco-labelled products, studies indicate that the level of market penetration has generally been low. There has been a high level of concentration of labelled products within particular product groups (notably paints and varnishes, textiles, footwear and tissue paper), as well as in particular countries (with five countries obtaining 75% of the labelled products). See further Chapter 4 and Appendix 1.

While consumer awareness and demand for products labelled with the EU Flower from the start has been limited, there are signs that visibility is improving. In 2001, for example, 29 companies were awarded labels during the first 6 months of that year. A key reason for the generally low level market penetration is the confusion that exists amongst consumers in EU countries due to the wide proliferation of eco-labels, with national labels in many cases gaining preference over the EU label.

3.2.2 Economic aspects

Substantial financial and human resources have been dedicated to the EU scheme. At the European scale, almost 40 persons (equivalent full time) are dedicated to the EU Eco-label: seven are located at the European Commission, with approximately 30 in the various Competent Bodies. Almost 70% of the persons are dedicated to technical activities, with 30% focussing on promotion and marketing activities. Two of the Competent Bodies have more than eight persons dedicated to the EU Eco-label, while eight Competent Bodies have less than one person fulltime working for the scheme. Five of the Competent Bodies have from one to three persons devoted to the administration of the EU Flower.

Although the high level of human resources has helped some Competent Bodies in developing the scheme (notably Italy and Denmark), it is not a guarantee of success. Between 1992 and 1998, for example the UK Competent Body had 14 persons dedicated to the Flower and yet only 3 companies had been awarded. Another counter example is France: with only one person devoted to the EU Eco-label, 16 companies had been awarded in four different product groups for a prolonged period.

The total budget dedicated to the EU Eco-label for 2000 has been estimated at Euros 2 524 756. Approximately 30% of this budget was dedicated by the European Commission, and 70% by the various Competent Bodies. Fees from companies using the scheme raised only Euros 280 000 in 2000. Generally, the fee structure is based on an application and an annual fee. Furthermore, testing and verification costs are not covered by the fees and have to be met by the applicant. Testing fees per licence for one product can be as much as Euros 16 722. (See Table 5).

It is estimated that 45% of the resources were allocated to technical activities (such as product group development), and 40% to marketing and promotion activities. While some Competent Bodies still have no dedicated budget for the EU label, others spend up to Euros 500 000 per annum. The origin of the budget of Competent Bodies vary from one Member State to another. Some are 100% funded by government, while others are funded by a mix of government and certification agency. The average budget of Competent Bodies that have invested in the scheme is about Euros 177 500. Some Competent Bodies have managed to secure a useful "return on investment." For example the Italian Competent Body, created in 1998, has invested about Euros 500 000 per year in the programme; by at the end of 2000 five companies had been awarded the label with 12 in July 2001. One of the key elements of success is that more than 60% of the budget has been dedicated to marketing activities.

Table 5 - Overview of the Eco-label fee structure

	Minimum	Maximum	Discounts
Application fee covers the costs of processing the application.	EUR 300	EUR 1300	25% for SMEs and applicants from developing countries
Annual fee for the use of the label = 0.15% of annual volume of sales of the product within the Community	EUR 500 per product group per applicant	EUR 25000 per product group per applicant.	25% for SMEs and applicants from developing countries 15% for companies registered under EMAS or certified under ISO 14001

3.2.3 Environmental effectiveness

There do not appear to have been any attempts to accurately evaluate the environmental effectiveness of the EU scheme. No literature has been identified on this issue, and none of the four national competent bodies that were approached on this issue during this study were aware of any such studies.

3.3.3 The trade effects

A number of non-EU governments have raised concerns regarding the potential trade effects of the EU label. Some concerns have been expressed for example with a general lack of transparency, with non-EU producers being excluded from the criteria selection process (although they have scope to submit comments, there is no opportunity for dialogue). It has also been suggested that the eco-label criteria reflect domestic environmental conditions and preferences. For example the emphasis on recycling (within the eco-label on paper products) is seen to unfairly discriminate against paper that has a high virgin content, as is the case with much of the paper produced in non-EU countries. The textile eco-label has been criticised for including issues relating to the production process within the labelling criteria. Around 80% of the value of imported T-shirts and bed linen originates in developing countries.

An UNCTAD Survey (1994) reports that if a small producer of footwear in India wanted to display the EU label, the cost of test requirements alone could amount to an increase of 50% of the factory gate price of the product. Even large producers would find their fixed capital costs escalated by 50%.

As at 2002, no EU eco-labels had been awarded to companies in countries outside of Europe. However at the time of writing this report, various South African textiles companies were in the process of obtaining the eco-label with the goal of acquiring the label prior to the World Summit on Sustainable Development. (See further Section 5.3.2).

3.3 THE NORDIC SWAN

3.3.1 The market impact

Retailers have played a major role in ensuring the effective promotion of eco-labels in a number of the Nordic countries, most notably Sweden. Nationally, awards are made to stores that offer customers a broad range of green products. Criteria for these awards include for example that 85% of dishwashing liquids should be eco-labelled. One large retailer has adopted a programme to make environmental issues a part of its ongoing strategy, including through within in its product range with eco-labelled products receiving priority. In Sweden, retailer demands within one specific product group (detergents) has lead to a situation where the presence of an eco-label has become a de facto necessity if one wants to operate in that market. Within certain manufacturing sectors (such as chemico-technical products and primary batteries), the Swan has become a basic demand to stay in business. The Swan's presence among consumer products contributes to an increased environmental awareness among private and professional purchasers. Examples also exist of when industry has been influenced by the eco-labelling criteria without actually pursuing a licence.

The widespread use of the Swan label on the most common cleaning products has contributed to the label's visibility. The Swan's credibility as both a quality and environmental label maintains and even enhances the overall quality image of products. Manufacturers consider it to be an easy way to communicate to consumers the environmental quality of products. The Swan has significant visibility. According to one survey, there was 95% recognition of the Swan amongst Swedes, with 92% of people associating products with the Swan and/or the Swedish Good Environmental Choice, as having a reduced environmental impact.

An example of a product which gained significant market share over a short period of time subsequent to obtaining the Nordic Swan was Unilever's Omo detergent. Another is in respect of photocopiers, which were already available on the market before labelling commenced. Following a promotion campaign for the newly labelled product, the market share of Scribona office machines AB rose by 20%.

In Denmark, research undertaken between January 1997 and January 2001 on actual purchasing data, has shown that consumers show a marginal willingness to pay a premium of between 10 and 17% for labelled brands of toilet paper, and a similar premium in respect of detergents. In those instance where there are seen to be more sustainable alternatives on the market (such as reusable dishcloths instead of kitchen paper), consumers will not pay extra for the labelled product. This same research project also proved that a bad environmental report (obtained from a consumer report) can result in a substantial drop in sales. Consumers generally expressed a high level of confidence in the label.

3.3.2 Economic aspects

The Nordic Swan programme is co-ordinated by the Nordic Eco-labelling Association and run by different Competent Bodies in each of the Nordic member countries. Approximately 50% of the funding for the scheme comes from the member governments, with the balance coming from fees paid by applicants. A fixed application fee is paid, with an additional annual fee of 0.4% of the estimated annual turnover in the country. In Finland, for example, Euros 605 800 was budgeted in 2000, with an additional Euros 853 890 coming from fees income. Approximately 43% of the budget is dedicated to promotion and marketing activities. It was initially intended that the scheme would be self-financing through application and annual fees, but this ambition has not been realised.

3.3.3 Environmental effectiveness

A number of studies have been undertaken to assess the environmental effectiveness of the Nordic Swan. These have generally revealed some important positive outcomes. There is evidence of a number of instances where producers - both domestic and foreign - have modified their processes and production methods to meet the eco-label criteria. Eco-labelling has also resulted in indirect effects on non-labelled products and on the product development process (such as on the choice of raw materials, production methods, waste management, and transportation).

Within the detergent industry, for example, the presence of an eco-label is seen as a baseline where practically all products for the consumer market are labelled. Another area where the eco-label is said to have had an impact on product development, is in respect of the development of chemico-technical products, as well as in the choice of chemicals within other product groups such as printing paper and printed material.

The paper industry plays a key role in the pollution of the Baltic Seas. The first eco-label for papers was developed in Norway to address this problem. Manufacturers were required to significantly modify their production processes to qualify for the Nordic Swan label. Eco-labelling of fine paper has also resulted in significant emission reductions during pulping, including an 11% reduction of sulphur emissions, 21% reduction in COD emissions and 51% reduction of AOX emissions. Detergent eco-labelling has also not only led to cessation of use of certain materials during production, but also played a major role in product development.

A survey of printing works in Norway, Finland, Sweden and Denmark was performed by the Nordic eco-labelling scheme. Approximately 86% of those who responded claimed that they had implemented changes to their production in order to fulfil the eco-labelling requirements. These changes included for example the substitution of inks and cleaners, and reduced chemicals consumption.

Regarding the impacts of the Nordic Swan on product development of personal computers it has been found that the influence has been minor. The Swan has, however, been found to function as an information carrier to an extent: one producer claimed that when changing supplier of PC casings, the Nordic Swan label criteria were taken into account and a casing containing no PVC was chosen.

3.3.4 The trade effects

With many foreign licensees and only one product category of particular interest to developing countries, the Nordic Swan has not been a source of trade concern. The requirements of retailers for eco-labelled products, rather than the transparency of the scheme itself, may have a market or trade impact. A 1998 survey indicated that 20% of licenses awarded were foreign based.

3.4 THE GOOD ENVIRONMENTAL CHOICE PROGRAMME - SWEDEN

3.4.1 The market impact

In Sweden, eco-labels (both the Nordic Swan and the Swedish Environmental Choice) have had achieved a significant market presence for a number of high-turnover consumer goods that are sold by the large retail chains. Key reasons cited for this include: the high level of pre-existing demand for environmentally preferable products; the significant role played by large retailers in promoting the labelled products; and the active marketing campaign undertaken by the Swedish Society for Nature Conservation (SSNC). With the aim of promoting products with the Good Environmental Choice label, retailers started purchasing lesser-known brands of detergents, which started winning market share from big brands. SSNC was also active in publicly promoting the best products and identifying the worst, and was responsible for leading a boycott against Unilever's Via-Omo detergent. As a result, large manufacturers were forced to reformulate their products to meet eco-labelling criteria. This increased the market share for eco-labelled detergents from 0 - 50% over a three-year period.

The SNNC also worked on influencing the production of pulp and paper over a prolonged period prior to the Falcon's launch. By 1990 consumer demand had forced mills to alter their production processes and only unbleached or environmentally bleached paper was saleable. Again the eco-label was a response to an existing demand for environmentally preferable products and therefore had a large impact on the market. Though the criteria for paper are designed to enable qualification of 10 to 15% of the market, in fact eco-labelled products generally cover between 30 - 70% of the market per product category.

3.4.2 Economic aspects

Costs are borne by the SNNC (25%) and the participating retailers (75%). Approved products are included in the register of Good Environmental Choice products, which is published by the SSNC, and are also identified by programme shelf labels in supermarkets of the three retailer sponsors. Manufacturers are not required to pay a fee to have their products listed or displayed on Good Environmental Choice shelves. Manufacturers may choose to print the Good Environmental Choice logo on their product, at a licence cost of SEK 5000 (US$500) for the first product, and SEK 1500 (US$150) for any additional products. Most companies have chosen to use the Falcon logo on their products rather than relying solely on being located on a designated supermarket shelf.

3.4.3 Environmental effectiveness

The SSNC does not attempt to perform a detailed LCA to determine product criteria. Manufacturers must declare the ingredients of their products and in some cases additional information such as the emissions generated during production. One environmental consequence of the demand for unbleached/environmentally bleached paper fibre, for example, is that discharges of chlorinated organic compounds were estimated to have been significantly reduced in 1993. Criteria for paper products were then broadened to include reduction in sulphur emissions, optical whiteners and COD.

3.4.4 The trade effects

Textiles is the only product for which a label has been developed and which is of significant interest to developing countries. No data is currently available on the extent to which licences have been obtained by foreign-based companies.

3.5 THE BLUE ANGEL - GERMANY

3.5.1 The market impact

The Blue Angel has been a particularly effective Type-1 labelling scheme, having secured an extensive degree of uptake through a large number of product groups. The success of the initiative is apparent from the level of demand for the eco-label expressed in professional and public procurement practices, with most parties considering it to be a transparent and credible programme. Particularly positive developments have been recorded for heating equipment, paints and varnishes, and paper products. Details of the number and nature of labelled products are provided in Appendix 1.

It is apparent from analysis of production trends that low-solvent/solvent free coatings have gained market share and that the market share of emulsion varnishes awarded the Blue Angel has increased by more than the average. The average production value by weight of emulsion varnishes, the majority of which had been awarded the Blue Angel, rose by more than the average, almost doubling between 1987 and 1993, while over the same period the share of coatings containing solvents fell by 9%.

Attention has been attracted from producers worldwide, as well as from other eco-labelling programmes. When consumers were asked during a survey in the early 1990's how they recognised whether a product was environmentally friendly, 50% of respondents from the former West Germany and 33% from the former East Germany cited the Blue Angel. At that time 35% of respondents in the West and 17% in the East were willing to pay more for Blue Angel products than for other products. There has been a proliferation of eco-labelling systems, however, that seems to have resulted in confusion amongst consumers, with attentiveness to the Blue Angel having fallen.

3.5.2 Economic aspects

A fee of DM 300 is charged for the application. In addition an annual contribution of DM 350 - DM 3980 (based on estimated annual turnover of labelled product) is payable. Each licensee must also contribute to the advertising fund.

3.5.3 Environmental effectiveness

Although an LCA approach is used to identify the crucial environmental impacts of a product, the LCA tends to focus mainly on consumption and disposal stages. Products that contravene environmental legislative and regulatory measures during their production stages are not even considered for the Blue Angel label. Once a large proportion of products has obtained the eco-label, the environmental qualities of the product have been improved and the eco-label may be cancelled if the environmental benefit sought has not been achieved. When criteria are revised to increase their stringency, previous licensees need to apply for the eco-label once again, and meet the new criteria.

With the Blue Angel emphasising product-related improvements, significant operation enhancements have been reported by for example oil and gas heating appliances: a few years after the introduction of Blue Angel eco-labels for these appliances, emissions of sulphur dioxide, carbon monoxide and nitrogen oxides were reduced by in excess of 30% and the energy efficiency of these appliances had improved significantly. After the introduction of an eco-label, the market share of low-solvent paints and varnishes rose from 1% to 50%, while the amount of solvents released into the environment were estimated to have been reduced by some 40 000 tons.

3.5.4 The trade effects

The Blue Angel is awarded to foreign manufacturers without discrimination and focuses on product-related criteria. Product categories that cause an unacceptable level of environmental damage during their production are not generally selected for eco-labelling. Potential negative trade effects are thereby avoided. Also whilst domestic products must comply with the local legal requirements related to the production stage of a product, imported products are not subject to these requirements.

Some complaints were registered by some developing countries over the recycled content criteria for paper products. In 1997, an eco-label for products made of rattan and jute was developed, in co-operation with developing countries. These eco-labels give developing countries the opportunity to apply for an eco-label for their products destined for export. In this way, Germany has contributed to the development of eco-labelling programmes in developing countries.

As at 1998, 145 foreign licensees held the Blue Angel. Updated information on the current status of foreign take-up is expected from the organisation and will be included following Phase II of the study.

3.6 THE STICHTING MILIEUKEUR - THE NETHERLANDS

3.6.1 The market impact

A study from the Dutch Ministry of Housing Spatial Planning and the Environment (VROM) shows that the prompted brand recognition of Milieukeur has risen from 57% in 1999 to 72% in 2000. The spontaneous brand recognition of Milieukeur is 22% in 1999 as well as in 2000. The respondents indicate that Milieukeur is a synonym for environmental friendly products and products that comply with stringent environmental criteria.

No complete evaluation has been undertaken regarding additional market power of the Milieukeur-labelled products. There are only some case studies, as discussed in the following examples.

For Wilkhahn, a manufacturer of furniture, the Milieukeur has lead to an increase in sales and reputation. It provided the company good Corporate Identity. As a result of the free publicity they where able to tap into new target groups.

Forbo-Krommenie, a manufacturer of floor covering, uses the Milieukeur as a marketing-instrument.

For Wed J.P. van Bommel, a manufacturer of shoes, the Milieukeur has lead to an increase in sales. The process of coming to the Milieukeur has lead to new technical knowledge.

No facts are available on the extent of the market penetration of the labelled products or the additional market power conferred on the producer of labelled products, due to the fact that the companies do not like to give this kind of information to the Stichting Milieukeur.

3.6.2 Economic aspects

The Stichting Milieukeur is financially supported by the government. The Ministry of VROM provides a budget spread over more years to develop the criteria. It takes between EUR 40.000 to EUR 75.000 to develop one criteria schedule. Besides this amount of money the Ministry of VROM provides thousands of Euros every year for large-scale marketing activities.

3.6.3 Environmental effectiveness

The entire life-cycle of a product is taken into account, from raw material extraction through to disposal. The environmental impact is surveyed of every life phase of a product. The related environmental criteria concern the use of raw materials, the use of energy, emissions, waste, possibilities of reuse, repair and the life-span of a product. Obviously products with Milieukeur have to be of a good quality. To keep the criteria current, they are reviewed every three to five years by the Stichting Milieukeur and adjusted if necessary. For example if new techniques make better environmental performance possible, the board decides to increase the stringency of the criteria.

A general assessment of the extent to which the eco-labelling programme has contributed to a reduction in the life-cycle environmental impacts of products has not taken place. An investigation has however been undertaken of the environmental effectiveness of the 'camping' service. It shows that a camping with Milieukeur performs better on water use, energy use and has lower environmental costs.

3.6.4 The trade effects

The Stichting Milieukeur is not aware of the use of their label for export from developing countries. The label can not contribute much as a marketing feature outside the Netherlands because of a lack of familiarity. Companies have to show independent information of the environmental impact of materials and components downstream and upstream in the chain. It is not sufficient to have a statement of the supplier. This is a bottleneck in obtaining Milieukeur, due to the fact that in many chains the information is not available not to mention the approval of the information by an independent party.

3.7 THE ECO-MARK - INDIA

3.7.1 The market impact

No products have been labelled. The manufacturer of the only product that was awarded the Eco-Mark (for detergents) chose not to market the product with the eco-label as there were not seen to be any marketing benefits associated with having the label.

3.7.2 Economic aspects

Manufacturers are required to pay for all costs involved in certification (including any testing and inspection costs, if required). This is estimated to amount to approximately 10% increase in production costs, with no guaranteed return in the form of increased profits. Applicants are charged a non-refundable fee (approximately Rs500 - R150). In addition an annual usage fee is payable, based on the annual production of the product. The label is granted for one year, with the option to renew the license, at a fee of Rs300 (R80). The requirement to conform also to quality standards and other criteria add further burdens. The high cost to applicants is seen as one of the several factors contributing to reluctance to take up the programme.

3.7.3 Environmental effectiveness

Life cycle assessments, wherever possible, are included as a criterion for the Eco-mark. However, as no products have yet been labelled, it would suggest that the initiative has not had any positive environmental effects.

3.7.4 The trade effects

Indian exporters feel that many of the product categories chosen for Eco-Mark, with the exception of textiles and certain food items, do not reflect the country's major export products for which an Eco-Mark might be of value. Several manufacturers (including those in the textiles and leather sectors) have, in fact, adopted the ecolabelling standards of their importing customers' countries in order to operate in those markets.

3.8 THE GREENLABEL - SINGAPORE

3.8.1 The market impact

A 1994 survey of 1 600 households, revealed that 50% of respondents recognised the GreenLabel. Of these, 78% recognised the label as a signature of environmentally preferable products and a 'significant number' said that they would pay a premium of up to 10% for environmentally preferable products. 30% of those surveyed considered a product's environmental attributes in their purchasing decisions.

3.8.2 Economic aspects

The ENV (Ministry of the Environment bears all administrative costs, to encourage manufacturer participation. Further financial incentives also exist (e.g. waiving of all fees for 5 years, if application is made within a year of release of final criteria). Product testing (and a minor portion of the certification fee) are for the manufacturer's cost in the event that application is received 1 year or more after release of the final criteria for a product. As the program is non-revenue-generating, media promotion is done on a relatively limited basis. The major form of promotion is actually through the manufacturers themselves.

3.8.3 Environmental effectiveness

A simplified life-cycle assessment methodology is employed by the GreenLabel, assessing the environmental impacts of the 'few most important' environmental concerns for Singapore, for each product category. No study has been undertaken to assess the environmental effectiveness of the initiative.

3.8.4 The trade effects

The number of foreign licensees is unknown.

3.9 ENVIRONMENT 2000 - ZIMBABWE

An evaluation of external and internal aspects of the programme was undertaken in 1999 by Environment 2000 in consultation with key stakeholders. The assessment examined whether the programme had had a positive impact on individual companies, the environment and the consumer. Following is a summary of the key findings.

3.9.1 Market impact

All of the companies interviewed felt that the label had a positive impact on their corporate image. However there was little evidence to show that this necessarily translated into improved sales or market-share. One company found that while initially their target audience had been receptive to environmental issues, and consequently their sales and market-share had improved through having the label, changes in the market necessitated a change in their marketing strategy with their current target audience being interested in price only. The survey found that consumers generally appeared to be neutral to the label.

3.9.2 Economic aspects

Economic and resource constraints had a significant impact on the programme. A key reason for its failure was seen to be the insufficient resources that were generated arising from the low levels of government and poor local consumer support.

3.9.3 Environmental Effectiveness

At the individual company level the impact of the label on the environment has generally been to raise environmental awareness internally. In certain instances it has led to significant and tangible environmental improvements. One applicant, a very small company, had taken extensive measures to improve its environmental. management within the company, and at every opportunity with its clients encourage environmental awareness. Another company said that having the logo displayed on their stationery has made their staff aware that the environment is important to their company, and as a result the staff had become more receptive to environmental management issues.

3.9.4 General concerns

In addition to the constraints highlighted above, the investigation identified the following concerns:

• The limited environmental auditing experience of the auditors and certifiers
• The fact that in some instances the criteria did not target the most appropriate product-specific environmentally considerations.
• Confusion in the fact that the logo was used for purposes other than for endorsing environmentally responsible organisations.
• Insufficient local and international marketing of the label.

During the assessment process, the Programme Co-ordinator and the Committee both suggested that it might be more appropriate for certain industrial sectors - including for example organic farming and tourism - should have sector-specific combined management/product labels.

Overall the study concluded that: "The Product Label, as a conventional Type I labelling programme, has failed due to the very small number of products that have been labelled, no tangible impact has been on the consumer or the environment. It will continue to struggle until there is a major shift in consumer priorities and consumer choice, which is unlikely in the near future, due to fundamental macro-economic problems in Zimbabwe."

3.10 Summary of Key Issues - Lessons Learnt

3.10.1 The market impact

Studies have shown that on the whole eco-labelled products have not had a significant impact on markets, except in specific product categories, and/or in countries with a relatively high level of environmental awareness and disposal income. Eco-labelling schemes have had a greater impact when the labels have become a requirement imposed by retailers and/or when they are used as tools within government procurement and institutional purchasing programmes. The active involvement of environmental and consumer organisations, as well as the media, has also been instrumental in facilitating the more widespread adoption of labels.

3.10.2 Economic aspects

The individual country studies have highlighted that there are two principal approaches for financing eco-labelling schemes:

Self-financing: through the implementation of a fee system that covers the actual costs linked to the administration, development of criteria and the processing of applications.

Government funding: either partially or totally.

An important budget item in the implementation of an effective scheme relates to the marketing of the scheme, targeted both at the producer / retailer, as well as at the receiver of the label, whether being a consumer, a public procurer or a company in the product chain. In considering the financial implications of implementing an eco-labelling initiative it is useful to bear in mind the Zimbabwean experience, where an important reason for its failure was seen to be the lack of governmental and consumer support that resulted in serious under-resourcing. In light of the international experience it is recommended that government financial support for the scheme would be essential, and that in all likelihood this would need to be provided for a significant period of time before the scheme is able to become self-sustaining.

3.10.3 Environmental effectiveness

The overall environmental effectiveness of the various programmes has been difficult to evaluate. In those countries where the labelling initiative has been in place for a sufficient period of time, and where specific studies have been undertaken, there are some positive indications that the eco-label has had a valuable impact on promoting direct improvements (in addition to their general awareness raising benefits). Examples include some of the specific benefits that have been attributed to the Nordic Sweden, the Blue Angel and the Swedish Good Environmental Choice. An important contributory factor to the environmental effectiveness of labels is the level of consumer awareness and attitudes, which varies considerably between countries. In Germany, Canada and Japan - all countries having a generally well informed and comparatively wealthy consumer group - the level of awareness of eco-labels is estimated at between 45-50%. A number of surveys have indicated that the consumers generally have a limited willingness to pay a premium for environmentally preferable products. The recent comprehensive study of the Nordic Swan'simpact on Danish consumers is an interesting exception.

3.10.4 Trade effects

Although concerns have been voiced by a number of parties on the potential trade restrictive nature of labels, there is not much hard evidence to verify this. A key potential for trade restriction relates to the extent to which label criteria include production-related considerations, as is the case for example with the Blue Angel, the Japanese Eco-Mark and the Canadian Environmental Choice labels relating to paper. Of the various labelled products those that are of greatest potential export interest to developing countries relate to textiles, and it has been suggested that in most cases the textiles criteria have not been a cause of direct trade concern.

A recent study by the UN Department for Policy Co-ordination and Sustainable Development of the possible effects of labels on developing countries concludes that, "at least in the short and medium-term, developing country exports are unlikely to be affected by voluntary eco-labelling schemes." The study suggests that "a large market niche will exist for products without an eco-mark that compete primarily on the basis of price."