FUND FOR RESEARCH INTO INDUSTRIAL DEVELOPMENT, GROWTH & EQUITY

Global Review of Eco-Labels: Implications for South Africa

PHASE ONE REPORT

5. Introducing Eco-Labels in South Africa: The Current Context

This chapter outlines the current legislative and institutional context relating to the possible introduction of an eco-labelling initiative in South Africa, before briefly reviewing some recent relevant environmental labelling initiatives in the country. This serves as a basis for the assessment of the implications of introducing eco-labelling in South Africa that is undertaken in the subsequent chapter.

5.1 The current legislative context

As has been highlighted by the country-specific reviews undertaken in chapter two, voluntary eco-labelling schemes are not typically regulated by legislation (an important exception being the EU flower, which is a specific consequence of its trans-national nature). Despite this, the legislative context within which a labelling scheme operates will have twofold relevance:

• The eco-label scheme may be a legitimate and potentially effective mechanism for giving effect or furthering the aims and objectives of policy and legislation and;
• The policy and legislative direction will have a bearing on the relevance of creating the conditions that facilitate the successful introduction of an eco-labelling system.

5.1.1 Environmental Policy Context

It is well-known that South Africa's environmental legislation has been in a state of flux since 1994. Following South Africa'sre-acceptance into the international community (both politically and economically) and its adoption of a progressive Constitution and Bill of Rights, the policy approaches to environmental regulation and management in South Africa have changed substantially. This has been undertaken with a view, inter alia, to giving effect to sustainable development and to providing some alignment with international trends.

The new approach to environmental management is reflected in the White Paper on the Environmental Management Policy for South Africa, 1998. The White Paper sets out the basis of fundamental policy shift to an approach based on sustainable development as required by the Constitution. The environmental policy has been detailed in several subsequent sector-specific policies such as the White Paper on Integrated Pollution and Waste Management for South Africa, 2000 (IP&WM).

Whereas the White Paper on Environmental Management Policy delineates government's broad policy on environmental management, the White Paper on IP&WM sets out the vision, principles, strategic goals and objectives that government will use to achieve integrated pollution and waste management. It too reflects a paradigm shift from end-of-pipe approach to the management of pollution and waste underpinned by the following concepts:

• Pollution prevention;
• Waste minimisation;
• Cross-media integration;
• Institutional horizontal and vertical integration of departments and spheres of government;
• Involvement of all sectors of society in pollution and waste management.

Many of the principles contained in the White Papers, as well as the broad management approach to the environment have been given legislative effect in the National Environmental Management Act 107 (Act 107 of 1998) (NEMA). The Act provides for co-operative environmental governance by establishing:

• Principles for decision-making on matters affecting the environment;
• Institutions that will promote co-operative governance;
• Procedures for co-ordinating environmental functions exercised by organs of state; and
• Approaches to integrated environmental management.

The Act aims to give effect to the obligations relating to co-operative government contained in Section 41 of the Constitution for environmental matters. It should be viewed as a framework for the integration of sound environmental management into all government activities.

Of particular relevance to this study are the principles contained in Section 2. These serve as a general framework within which environmental management and implementation plans must be formulated, and constitute guidelines by reference to which any organ of state must exercise any function when taking any decision in terms of a statutory provision concerning the protection of the environment. The principles, which are of particular relevance to the development of an eco-labelling initiative, include:

• Socially, environmentally and economically sustainable development
• Cradle to grave and life cycle responsibility
• Participation, including the development of capacity to facilitate equitable and effective participation
• Empowerment through environmental education and the raising of environmental awareness
• Transparency in decision-making.

At present, the strategic direction of the IP&WM White Paper has not been given practical or legislative effect. However, the law reform process initiated by DEAT is expected to result in the publication of a Waste Management Bill and an Air Quality Management Bill before the end of the year. Whilst the White Paper does not have an expressly integrated product management approach, it is anticipated that elements of such an approach will be introduced in the law reform process, particularly in respect of the Bills on Waste Management and Air Quality Management.

The shift in the policy and legislative approach to environmental management has established many of the supportive elements that could facilitate the introduction of an eco-labelling scheme. This included for example, the recognition of the need for a suite of tools to facilitate the move towards sustainable production, as well as the provision for awareness raising and participation. However, there are certain factors that have not yet reached optimum maturity. These include the fact that the current legislation does not provide for an integrated product management approach, nor does it contain adequate standards for all media. The leverage that an integrated product management approach could have with respect to the domestic market is not a reality as yet.

5.1.2 Industrial policy context

In addition to the developments in environmental policy and legislation, it is also important to consider the changes that have taken place within policy approaches to industrial development, and the relationship to environmental management. Industrial policy prior to 1994 included import-substitution industrialisation and resource-orientation. The orientation of industry was also inwards which encompassed both protectionist policies in the form of tariffs and import control, but also limited the role of South African industry internationally.

Post 1994, the new macro-economic policy has been reflected in the Reconstruction and Development Programme (RDP), 1994 and the Growth, Employment and Redistribution Strategy (GEAR), 1996. These policies focused on redressing the inequities and imbalances resulting from apartheid, creating jobs and stimulating the small business sector.

The Integrated Manufacturing Strategy looks at accelerated removal the constraints in the domestic economy, our relationship to global production systems, and the changing basis of competitiveness. The focus is on competitiveness through "increased knowledge intensity, value addition, wider and more equitable participation in the economy and regional production systems".

The Constitution, legislation such as NEMA, and international competitiveness dictate that environmental legislation and policy giving effect to sustainable development should be aligned with industrial development policy. A key interface between industrial development policy and environmental policy occurs through the process of developing, submitting and approving environmental implementation plans (EIPs) as provided for in NEMA.

Much of the industrial development legislation has the potential to support and give effect to the environmental objectives, for example:

The Manufacturing Development Act (previously the "Regional Industrial Development Act") (Act 187 of 1993) provides for the establishment of programmes for manufacturing development as well as the establishment of the Manufacturing Development Board. In order to promote and support manufacturing growth and development, the Minister may, on the recommendation of the Board and with the approval of Cabinet, establish a programme for manufacturing development in terms of which funds appropriated annually by Parliament may be granted to manufacturers by way of incentives or concessions. In exercising its powers, the board can promote environmental initiatives. It is also clear that environmental conditions can be imposed as a requisite for receiving assistance.

State procurement is regulated by the State Tender Board Act 86 of 1968. In terms of the powers granted under the Act, the State Tender Board may stipulate conditions subject to which offers to tender are made. (It is implicit that these conditions may include environmental matters). Government published a Green Paper on Public Sector Procurement Reform in April 1997.

In terms of the Sale and Services Matters Act, 1964 (Act 25 of 1964), the Controller may prescribe the amount of refund to be made on the return of a container in which any goods have been sold as well as the conditions on which the refund must be made; or prescribe the amount which a person selling goods in a container must pay to a purchaser for a similar container. In exercising these powers, the Controller may differentiate between classes or categories of persons and classes or kinds of goods. This provision could be used to facilitate the introduction of, for example, eco-labelling. The Controller may also prohibit the sale of goods or rendering of a service which could be used to regulate the sale of environmentally unfriendly goods.

The National Small Business Act, 1996 (Act 102 of 1996) establishes the Ntsika Enterprise Promotion Agency. Environmental issues, such as training, advising and the dissemination of information can be accommodated within the legislated functions of the Agency.

5.2 The Current Institutional Context

The review of the existing eco-labelling schemes indicates that the majority of these schemes are of a national nature with strong government participation, from an institutional, administrative and / or financial aspect. This section accordingly provides a very brief overview of the government institutional context of particular relevance to the study.

5.2.1 Government Departments

As both trade and the environment have been designated as areas of concurrent competence in terms of the Constitution, there are several government departments at different levels of government that could potentially participate and play a role in an eco-labelling system. However, in view of the nature of an eco-labelling system, it would be necessary for the national level of government to assume lead responsibility. Amongst the national departments, the requisite skills for government involvement in an eco-labelling programme could be drawn from the Department of Environmental Affairs and Tourism (as lead agent for the environment), the Department of Minerals and Energy (as lead agent for energy), the Department of Arts, Culture and Technology (as lead agent for technology) and the Department of Trade and Industry (as lead agent for trade and industrial development).

The Department of Trade and Industry also has a family of institutions that focus on, inter alia, development finance, regulation and/or specialist service provision. Co-ordination and alignment of the institutions takes place through the Council of Trade and Industry Institutions (COTII) which was established in 2000. The family of institutions includes:

• Industrial Development Corporation
• National Empowerment Fund
• Khula Enterprise Finance
• Micro Finance Regulatory Council (MFRC)
• South African Bureau of Standards
• South African National Accreditation System (SANAS)
• Ntsika Enterprise Promotion Agency
• Council for Scientific and Industrial Research (CSIR)
• National Co-ordinating Office for Manufacturing Advisory Centres (NAMAC).

An analysis of the different roles that should be undertaken by the various departments will be conducted in Phase 2.

5.2.2 The South African Standards, Quality Assurance, Accreditation and Metrology (SQAM) system

Key aspects of an eco-labelling system may include accreditation, certification and the setting of standards. These elements fall within the scope of the SQAM system that is co-ordinated by DTI. SQAM is comprised of various bodies including, for the purposes of this report, the SABS and SANAS (which are discussed further below). As a whole, the SQAM system is responsible for "setting standards, developing and maintaining physical standards, performing quality assurance tests and guaranteeing that role players are competent to carry out their tasks".

In 1999, a research project was commissioned by FRIDGE to analyse the SQAM system and identify areas for improvement by benchmarking the system against international best practise. Several findings were made in the study, which have resulted in the DTI deciding to implement certain reforms and initiatives in the SQAM system within the next five years. These initiatives will include the following:

• A new framework for the development of technical regulations will be adopted;
• A law reform process will be undertaken in respect of the Acts which regulate the activities of SQAM bodies;
• An accreditation framework will be developed which will include the drafting of an Accreditation Act; and
• A quality promotion strategy with an emphasis on SMMEs will be developed.

The implementation of these initiatives will result in the institutional strengthening and efficiency amongst the SQAM bodies. Given that at least two of the bodies viz. SANAS and SABS have the potential to play a key role in the adoption of an eco-labelling system, the DTI initiatives will therefore have the potential to contribute to the institutional preparedness of these bodies.

5.2.3 Accreditation in South Africa

SANAS is the single National Accreditation Body that accredits laboratories, certification bodies, inspection bodies, product conformity certification bodies and bodies responsible for the certification of personnel and training. SANAS is established in terms of section 21 of the Companies Act, 1973 (Act 61 of 1973) and is an independent non-profit organisation, with membership of both ILAC and IAF. Due to the numerous reciprocal recognition agreements between SANAS and international accreditation bodies, widespread international acceptance of SANAS accredited certification authorities is assured.

Services offered by the South African accreditation authority SANAS include the following:

• Laboratory Accreditation
• Certification Body Accreditation
• Inspection Body Accreditation
• Training.
• Certification and Setting of Standards

SABS is a statutory body that is now governed by the Standards Act, 1993 (Act 29 of 1993). It is the official body for the development and publication of standards, with an emphasis on products and services. (Approximately 3 500 standards have been developed to date). There is some limited stakeholder involvement in the development of standards.

SABS is also one of the primary certification bodies in South Africa. It certifies both systems such as ISO 14 000 as well as products. Product certification includes an environmental mark, safety mark and packaging mark. A number of other certification bodies operate in South Africa, most of whom are accredited by SANAS are who have formed an association called the South African Association of Certification Bodies. Organisations that fall into this group include the South African Bureau of Standards (SABS, countrywide representation), SGS International Certification Services (Gauteng), BVQI (Gauteng), Kennedy & Donkin (Gauteng) and TÜV Bavaria South Africa.

5.2.5 Stakeholder participation

The primary vehicle for stakeholder participation in environmental matters should be the National Environmental Advisory Forum, which is established by NEMA. The forum has however, not yet been constituted.

5.3 Experience with Existing Labelling Initiatives in South Africa

This sub-section provides a brief review of three current eco-labelling schemes in South Africa that have a particular bearing on the possible introduction of an ISO Type-I initiative in the country. This review is not comprehensive and may be further updated as part of Phase II of this study. The review does not include an examination of some of the non Type-I environmental labelling initiatives that have been introduced in South Africa.

5.3.1 The Proudly South African Campaign

Proudly South African, established in 2001, is an initiative aimed at promoting demand for South African products and services that achieve standards of good and responsible manufacturing practice, thereby helping to create jobs and economic growth in the country. It is an initiative of the National Economic Development and Labour Council (NEDLAC) and is supported by organised business, labour, government and community groups.

At the heart of the campaign is the Proudly South African logo. Companies who meet the standards set by Proudly South African can use the logo to identify themselves, their products and services. The following criteria must be met before the logo can be used:

• The company's products or services must incur at least 50% of their production costs, including labour, in South Africa, and be "substantially transformed" (in other words a product that is merely imported and re-packaged would not be eligible)
• The company and its products or services must meet high quality standards
• The company must be committed to fair labour and employment practices
• The company must be committed to "sound environmental standards". This is not defined in any explicit manner. (The scope for using this requirement as the basis for a South African eco-label is discussed later in this report, as well as in Phase Two of the study).

Proudly South African is administered by a not-for-organisation with a staff of ten. The six founding sponsors of the campaign are: Telkom, Eskom, South African Airways, the Department of Trade and Industry, Old Mutual and SABC. Membership is open to a wide range of organisations, including businesses, schools, sports clubs, and municipalities. There are currently over 150 participating organisations. (A full list of the founding organisations is provided in Appendix 2).

Organisations that wish to join the campaign need to complete an application form, sign a pledge committing themselves to a set of principles relating to local content, quality, labour and environmental standards, and submit supplementary documentation in supporting evidence of their compliance with these principles. Each application is dealt with on its own merit by the membership pane comprising members of the Proudly South African management team, as well as outside experts such as auditors, lawyers and technically qualified individuals. An annual membership fee is levied on each member of the campaign according to the annual budgeted sales turnover for those goods identified on the member's product list.

The Proudly South African trademark may only be used in association with those products that meet the compliance criteria detailed in the Code of Practice. The initiative does not include a detailed system of third party verification, but relies instead on rivals and consumers to raise the alarm if any member companies slip below the minimum standards. The initiative does not yet entail the direct labelling of products; this is a key objective of the next stage of the programme. At the time that the study for this report was undertaken, Proudly South African launched an extensive marketing campaign - entitled Appearing Soon on SA's Finest - in magazines, newspapers and on outdoor billboards. The idea of the campaign is to link the logo to products. The campaign shows the logo appearing on a range of SA-made products like fruit, jeans, leather goods, beer and food, with a call-to-action to buy South African and boost job creation and economic development. The objective of the campaign is to introduce the logo to consumers, as well as to encourage producers and manufacturers to join the campaign.

Due to the recent establishment of the initiative it is too early to assess its impact in terms of promoting any changed behaviour in consumption patterns. While it may be encouraging to note the fairly widespread adoption of the programme by key South African organisations, it is pertinent to bear in mind that not only has the initiative been accompanied by an extensive marketing campaign, but there are also no application fees associated with joining.

5.3.2 DANCED/DANIDA Textiles Project

The Danish Co-operation for Environment and Development (DANCED) has been active in recent years in supporting the promotion of cleaner production practices in South Africa through capacity building, practical demonstration and the dissemination of information. One of their projects is a 3-year programme aimed at promoting cleaner production in the textile sector that focused on cotton growing (for cotton based yarns), textile manufacturing, and the washing and drying of the textile product. As part of this project, DANCED agreed to support a baseline study on textiles' certification and labelling in South Africa. The study had the following objectives:

• To assess if the present organisational set-up and infrastructure in terms of test laboratories and production quality management systems in South Africa, have adequate capacity for the certification of textile products
• To assess the present markets' certification and labelling requirements and the current approach to environmentally friendly textile and clothing products
• To assess the specific requirements, which need to be met for certification and labelling and outline the key constraints and barriers to such certification and labelling
• To assess how such constraints and barriers should be overcome in order to ensure that certification and labelling works in a timely and appropriate manner
• To recommend amendments and support to the provider of certification and labelling services to the textile sector, if needed.

The study was undertaken in October 2000 by a mission team comprising Danish and South African consultants. During the study the team interviewed a number of different stakeholders, including authorities, business organisations, individual companies, a retailer group, an environmental NGO and a research and development body, with the aim of assessing the interest in developing a national eco-label or using foreign eco-labels for export markets.

Following is a summary of some of the key findings of this aspect of the study:

SACOB expressed a positive interest in using eco-labels as a means of gaining competitiveness on international markets, and highlighted the need for more information on foreign labels. They also emphasised that any national eco-labelling initiatives should be involve government and be a general initiative covering all relevant industrial sectors. In addition they suggested that for most domestic consumers, price is the main criterion and that the main business incentive for a label is likely to be as an export marketing tool.

Most of the interviewed companies (predominantly from the textiles sector) noted that there is very little or no interest in eco-labels amongst either domestic consumers or foreign (export) customers. Although none of the interviewed companies had yet been asked to comply with any eco-label criteria, many of the companies had been requested to avoid chemicals on the "German red list"; furthermore there was a growing assumption that companies would be required to have a quality management system in place. Most of the interviewed companies suggested that they would quite easily be able to meet the criteria for foreign labelling schemes if required. This validity of this sentiment is supported by subsequent developments outlined below.

This general finding was supported by Consumer International South Africa, who maintained that the vast majority of domestic consumers are not prepared to pay more for environmentally preferable products, with price being the predominant consideration.

A large retail group that was interviewed maintained that the domestic market had been affected by a number of environmental claims, some of which were false. They suggested that if an eco-label scheme was introduced in South Africa then it should only be initiated by government and cover a broad spectrum of industry sectors.

At a general level the team argued that there is currently limited need for a national eco-labelling scheme due to the low level of domestic consumer demand as well as the lack of a government policy on environmental considerations in public procurement. The study advised against the establishment of a national eco-labelling scheme solely for textiles and clothing products.

Following this study, and as an important component of the overall Textiles Cleaner Production project, four textiles companies agreed to obtain the EU Flower for particular products, one of the aims being to showcase these products at the WSSD. During mid-2002, these companies employed the services of a Danish and South African consultant to undertake the certification process. This process has involved certifying, inter alia, that: the raw material cotton is free of specific pesticide residues; a supplier polyester manufacturer emits below a defined level of antimony; the dyes used comply with specific criteria; and that the finished product complies with quality requirements relating to colour fastness.

The process of certifying these products was still in progress at the time of undertaking Phase I of this study, and it is thus too early to draw any firm conclusions to inform the outcome of this investigation. It is anticipated however that data will be available during Phase II. Initial results however indicate that the process of securing certification against the criteria of the EU flower is not too onerous or expensive, and it has been suggested that a number of the local textile companies would find it relatively easy to qualify. It was also noted however that few of the companies had had any requests for the label, and that without the intervention of Danced they were not likely (at least at this stage) to seek a licence to use the label.

5.3.3 Proposed Fynbos Certification Scheme - Agulhas Biodiversity Initiative

The Agulhas Biodiversity Initiative (ABI), funded by the Global Environment Facility (GEF) and the United Nations Development Programme (UNDP) and implemented jointly by SA National Parks and Fauna and Flora International (FFI), is focussed on identifying and implementing mechanisms for increasing the land under conservation management within the Agulhas region. As part of this initiative it is anticipated that a certification scheme will be developed to promote the sustainable and ethical harvesting of fynbos wildflowers.

In 2000, the Flower Valley Conservation Trust, together with FFI, the Western Cape Nature Conservation Board, SA National Parks and the Botanical Society, established a Certification Working Group that has developed a draft set of environmental and social guidelines for "ethically, biodiversity-friendly and sustainably harvested" wild fynbos flowers. It is anticipated that the following work will be undertaken during mid-2002:

• Review and finalise the draft environmental and social guidelines;
• Review relevant local and international certification schemes, noting the implications for developing and introducing the scheme in South Africa;
• Assess and allow for further development of guidelines as more detailed information becomes available on sustainable harvesting;
• Identify the most suitable existing international or national certification system to which the fynbos certification scheme may be linked;
• Identify the most suitable lead organisation to manage the certification process in South Africa, noting staffing levels, organisational structure, and administrative requirements;
• Identify the requirements for auditing the certification scheme;
• Develop a programme for setting up a certification Agency.

There is evidently close synergy between the goals of the proposed fynbos certification scheme initiative and the aims of this FRIDGE study. Further clarity on this proposed scheme (and similar related initiatives) will be obtained during Phase II of the study.