Thomas White Global Investing
Green Reports

August 3, 2011

The Green Report


Carbon-Labelling: Count your impact as you consume

Carbon-Labelling: Count your impact as you consume

Carbon-labelling, the process of measuring and publishing information about the environmental impact of producing a product, is gaining popularity. Proactive support from retail chains is helping consumers compare the “greenness” of products across a broad spectrum of categories.

 

Perhaps the first thing a health-conscious consumer looks for in a packet of cookies or chips is the calorie count of the product. Sometimes, an inquisitive customer will even want to know whether a product is organic or not. In many cases, the cartons and wrappers that envelop the product usually answer such questions. Caloric information has been conveniently tabulated on the wrappers of products for many decades now. Since the early 80s, even information about whether a product was organically produced has been provided in order to attract natural-food enthusiasts.

But how about green-minded customers? Do products provide information about their impact on the environment as they make their way to the shelves of a supermarket? Well, slowly but steadily, products have started to reveal information about the impact they have on our planet by publishing information about the amount of carbon dioxide that has been emitted in their production. Very soon, in the corner of a packet of a biscuit, right next to the caloric information, one can expect to see a symbol of blackened footprint – a logo that signifies that the product has been measured for the carbon dioxide that was emitted in manufacturing and transporting it to the store.

Carbon labelling, among many other things, intends to empower shoppers in their quest to compare the greenness of two similar items. For instance, when there are two manufacturers of the same type of biscuits, the one who manufactures them with a lesser amount of carbon emissions for the same quantity can ultimately be deemed greener than the other. This way, the increasing competition should encourage innovation and reduce the overall amount of carbon emissions involved in production.

As a concept, carbon labelling is relatively young. To be precise, it is just four years old. The first carbon labels started appearing on the wrappers of consumer staples such as chips in 2007. Under the auspices of Carbon Trust, a British government initiative focused on measuring carbon emissions, the first ever blackened footprint logo was slapped on a packet of potato chips made by Walkers, a British subsidiary of PepsiCo.

At that time, the carbon spewed in producing a packet of Walkers’s chips was measured from the point of cultivating and procuring the potatoes from farmers to manufacturing and packing them. Even the carbon emitted in the production of the oil used to fry the chips and the method of frying were taken into consideration, as well as the carbon emitted in transporting the packet of chips and displaying them on the supermarket’s shelf. In short, measuring the carbon footprint of this packet of chips involved tracing the entire supply chain from beginning to end.


Carbon-labelling, the practice of measuring and conveying the
amount of carbon and other green-house gases emitted in producing a
product is gaining significant attention in many parts of the world.

This kind of rigorous quantification of a product’s carbon footprint makes for a mind-bogglingly complex task. Yet in the past four years there has been tremendous progress on the carbon-labelling front, thanks mainly to retail chains the world over. In early 2007, Sir Terry Leahy, the chief executive of Tesco, a British retail chain, vowed to bring about “a revolution in green consumption” by putting a carbon label on every one of its 70,000 products. In France, retail chains have urged nearly 200 supplier firms to provide information on their energy usage to determine the carbon impact of the end product. In Japan, the government has joined hands with retailers and manufacturers to devise a carbon-label project. The U.S., South Korea, and some Scandinavian countries too are ramping up their efforts to come up with carbon labels.

The results of these efforts are slowly trickling down to consumers. Sales of products with carbon-labels reached almost £2 billion ($3.3 billion) in Britain. This figure is much higher than sales of products with organic labels. In 2010 alone, there were more than 5000 carbon-labeled products in the U.K. Products from pharmaceuticals to construction materials now boast labels bearing their carbon impact.

But despite all the progress made in this area, for every one carbon-labeled product there are more than 1,000 that are not labeled. Even Tesco, the retail chain that had pledged to assign carbon-labels to thousands of products it sells, has managed to label only 500 products in the last three years. Sales of products with carbon labels account for less than 1% of all the products sold in the world.

One reason for the snail’s pace of progress is the cost involved in carbon-labelling. It is estimated that calculating the carbon-label for certain products costs tens of thousands of dollars. That puts a limit on how much a firm can measure within a given year. Still other suppliers of products might be wary of revealing the true “cost” of their product lest they might reveal their trade secrets and lose bargaining power to retailers. And if every country launches its own carbon-labelling standards, then the information conveyed by carbon-labelling may not be of great use or in cases might even confuse a consumer. Others fear that the carbon-labelling idea could create a bureaucratic mess obstructing the free movement of goods and products.

Many governments seem to understand some of the challenges posed by carbon-labelling. So efforts to launch an effort at an international level are underway. Britain and France, the pioneers of the idea, are agreeing on common standards, and increasingly, they are influencing international standards as well. Encouragingly, the International Organization for Standardization (ISO) based in Geneva is working on a much broader set of rules for carbon-labelling.

So it seems that the world is slowly moving forward with the plan into slap the “blackened-footprint” carbon-label on the products it consumes. And that could leave a trail of green footprints on the ground.

Image Credit: Lee Maguire on Flickr under a Creative Commons license

 

 


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