INTRODUCTION

  1. This inquiry by the Environment Sub-Committee takes place at a particularly interesting point in the development of policy on consumer products and the environment, both at a national level and in the EU context. The Department of the Environment, Transport and the Regions (DETR) has set out an overview of the issues, together with some proposals, in a consultation paper, Consumer Products and the Environment, issued at the end of October 1998.

  2. This memorandum aims to provide the Sub-Committee with a short explanation of the factors which have prompted new thinking at the national and EU level and an outline of the developments in hand.

BACKGROUND

  3. Much of the policy focus of the last ten years was rooted in the interest in "green consumerism" which emerged in the late 1980s. This development encouraged some suppliers to market new "green products", or to market existing products on the basis of "green claims" about their environmental performance. This market interest was seen by policy-makers in many countries as an opportunity to stimulate the production and consumption of goods which were genuinely less damaging to the environment. A key concern was the quality of information available to consumers to help them identify products which really were less harmful.

  4. The EU eco-labelling award scheme was developed as a voluntary instrument to stimulate the market for products of a good environmental standard, by providing an authoritative label for manufacturers who wished to apply. The UK took an active part in the creation of that scheme, which was launched in 1992 and continues to be a leading participant in development of the scheme at EU level.

  5. In practice, disappointingly, the EU eco-labelling scheme has made very little direct impact in the market. So the major source of product information to UK consumers continues to be the declarations and claims made by manufacturers and retailers. In the early 1990s concern grew that many of these claims were too vague to be of real use, or were confusing or even misleading. In 1995, the Government commissioned the National Consumer Council (NCC) to conduct a survey of the environmental claims that were being made by businesses about their products. The NCC's report found many environmental claims about products which, although not actually false, were nonetheless confusing or so generalised that they were incapable of being verified. And for many other products there was little or no information available to enable consumers to exercise effective choice.

The previous policy framework

  6. Until quite recently the main features of policy in this field, in the UK, could be characterised as (a) developing an authoritative third party label, the EU ecolabel, which would help consumers to identify and choose the least damaging products of their type, and (b) improving the reliability of environmental declarations made by businesses about their products. Most of the administrative and programme resources which DETR devoted to this policy field went into the former.

The EU ecolabel

  7. The aim of the EU ecolabel is to provide a single, authoritative and widely-recognised guide to consumers on products which do less harm to the environment than their alternatives. The scheme was one of the first of its kind to award labels on the basis of serious assessment of the environmental impact of products throughout their life cycle. It has done much to raise the profile of life cycle assessment (LCA) as a policy and product management tool.

  8. When the EU scheme was adopted in 1992 there were already some national labelling schemes established or being developed in other member states. In the UK, however, the view was taken that the EU ecolabel should be the sole "official" award label. The decision to concentrate on promoting the EU scheme, and not to develop a national labelling initiative, was based on the view that a proliferation of national labels could add to the confusion felt by consumers and increase costs to industry. It was also consistent with support for a single market in traded goods.

  9. Unfortunately, six years on, the EU scheme has not achieved the market profile that was originally hoped for. The reasons have been examined in detail in reviews undertaken by the European Commission in 1996 and by the Government in early 1998. The review by the Commission led to the publication in December 1996 of a proposal for the revision of the scheme. The Commission's proposal was discussed by the Council of Ministers in June 1998, under the UK Presidency. The European Commission is in the process of revising its proposals in the light of that debate and of comments from the European Parliament.

  10. The findings of the review carried out in the UK are attached as an annex to this memorandum. This review found that the UK Eco-labelling Board, the body administering the scheme within the UK, had done a good job in difficult circumstances. However, because of the low market take-up of the label, and because the Board's duties could not be widened without new legislation, the Government considered it would not be justified in retaining an executive Non-Departmental Public body to administer this sole function. It therefore decided to wind up the UK Eco-labelling Board and to transfer responsibility for administering the scheme to DETR, where wider policies were being developed.

  11. The Government considers that there is still an important role to be played by the EU voluntary award scheme, but that additional measures are necessary to move the consumer products market towards more sustainable patterns of production and consumption. It believes the scheme should be repositioned, in order to link more strongly to EU environmental priorities, and that it should concentrate on key products which are traded across the Community.

Measures to improve the quality of environmental information about products.

  12. The Government's objective is to ensure in time an effective legal framework for dealing with all misleading product claims, including those on environmental issues. But any changes to the present statutory framework would not be quick or easy, so steps have been taken to promote improvement through voluntary action by business. This is a practical way of starting to tackle the problem: for the legislative framework to work effectively, there needs to be more of a consensus on what constitutes acceptable standards and good practice. It also serves the wider purpose of improving the standard of products themselves, not simply the information about products: a key requirement for this is the constructive participation of manufacturers and retailers.

  13. An important first step was the Green Claims Code, issued by DETR and DTI in February 1998 with the support of the Confederation of British Industry, the British Retail Consortium and the national trading standards body, LACOTS. The Code sets out some sound basic principles for businesses making environmental claims about products.

  14. Meanwhile the international organisation for standardisation, ISO, has been developing an international standard on environmental declarations (ISO 14021). This has already had quite wide exposure in draft and is likely to be adopted formally in the first half of 1999. it is consistent with the Green Claims Code, but covers the field in much greater detail. Given the importance of ISO standards in the context of international trade, ISO 14021 is likely to become a strong influence in raising the quality of environmental information available in the market.

  15. DETR will be monitoring the effect of the Green Claims Code and ISO 14021 on product declarations in the national market. A further large survey will be carried out in February 1999. This should reveal the extent of improvement in the market since 1995, and highlight the areas which need most attention. The results of a smaller interim survey conducted during the summer of 1998 suggest that there has been an overall improvement, but that there are problem areas within some particular product categories.

OTHER RECENT DEVELOPMENTS AND INFLUENCES ON POLICY

Research on consumer attitudes

  16. In 1996, the Department commissioned the National Consumer Council to conduct a survey of consumer attitudes to the environment. The results were published by the NCC in a report, Shades of Green, which found that concern for the environment was generally a secondary issue for consumers and that they were more likely to be guided by other factors—not lest price—in choosing between products of a similar type. Nonetheless, it found that a significant minority of consumers were prepared to take positive steps to buy environmentally improved products and that these consumers had the potential to exert real influence through the effect on a product's relative share in the market. However, a fundamental barrier identified by the survey was a shortage of demonstrably "green" goods actually on the shelves.

  17. The findings of the NCC's report have been reinforced by a report, Sustainable Consumption, from the Advisory Committee on Business and the Environment (ACBE) in September 1998. The report argued that consumers need to be given a convincing reason to change, and that the perceived inconvenience or "risk" of doing so needs to be kept to a minimum. It found that concern is still widespread among consumers about the cost and performance of "greener" products, and about the validity of environmental claims made by businesses.

  18. The Government recognises that improving the environmental information available about products will often be insufficient on its own to persuade consumers to exercise more sustainable choices in purchase and use. In many cases this needs to be reinforced by awareness of tangible benefits to the individual (for example, through lower fuel bills from energy efficiency) or to the local quality of life (for example, through lower air pollution from traffic) associated with more sustainable patterns of consumption. This thinking has been incorporated in the DETR "Are You Doing Your Bit" promotional campaign.

The growth of national labelling schemes

  19. Since the EU eco-labelling scheme was set up in 1992, the number and market presence of national labelling schemes in EU member states have increased. The larger schemes, the "Blue Angel" in Germany and the "Nordic Swan" in the Scandinavian countries, now have a strong market profile in their area. Their success may be due in part to the existence of relatively strong consumer and environmental awareness in those countries. But it also seems likely that the design of the schemes may be a factor, allowing more flexibility towards market conditions than the approach currently followed by the EU scheme.

The "market transformation" approach

  20. The "market transformation" approach, which is currently being used to secure reductions in the energy consumed by the main types of electrical appliance, has been making significant progress at EU level, in a programme co-ordinated by the European Commission. A similar policy approach is being used in the EU measures for reducing the environmental impacts of cars.

  21. The approach makes use of a combination of measures to achieve defined environmental objectives. The measures in use for domestic appliances include:

—  a mandatory graded information label (the EU energy label) about the energy efficiency of the product;

—  negotiated agreements with sectors to improve the performance of products across the market;

—  in some cases, regulated minimum standards to remove, progressively, the worst-performing products from the market;

—  in some cases, incentive schemes for consumers to replace old and inefficient appliances more quickly, and procurement initiatives to hasten the market for efficient new technologies.

  22. The principle underlying the "market transformation" approach—the use of a combination of product-related measures to achieve defined environmental objectives in a priority product area—has a potentially wide application, though the actual selection of measures may differ from product group to product group. This idea of a co-ordinated use of a package of measures, to suit the circumstances of a particular product sector, is a fundamental part of the more "integrated" approach to products and the environment which is increasingly attracting interest.

  23. The Government is currently exploring with the European Commission and other member states the potential to extend the "market transformation" approach to product areas other than electrical appliances. However, it recognises the point made by ACBE and other organisations that further regulatory approaches to standards and labelling need to be proportionate to the environmental gain which can be demonstrated.

TOWARDS AN INTEGRATED APPROACH FOR REDUCING THE ENVIRONMENTAL IMPACT OF CONSUMER PRODUCTS

The emergence of "integrated product policy" at EU level

  24. Although a recent concept, integrated product policy (IPP) is receiving increasing attention within the EU and in the wider international arena. A report produced for the European Commission earlier this year, by the consultants Ernst & Young and the Science Policy Research Unit at the University of Sussex, outlines the developments in thinking in this area across the EU.

  25. The growth in interest in IPP reflects the growing recognition that "traditional" approaches to environmental policy, which have typically tackled environmental problems relating to production processes, may not be capable of dealing with significant impacts which occur after the product has been made. Process-related controls have been successful to a large extent in reducing industrial pollution, and they remain a vital part of the picture. But in more recent years policies have been developed for dealing with the disposal or "end-of-life" phase of certain products and materials. And increasingly there will be areas where the pay-off in terms of environmental benefit will be much greater from action to tackle the consumption phase. The measures which are being taken to reduce CO₂ and other emissions from cars are an example of this new consumption-led focus.

  26. The emergence of IPP also reflects the experience from the EU ecolabel scheme that, in many product areas, it may not be enough to rely on consumer action alone to transform the market. The lesson being learned from some of the product areas where real progress is being made is that a comprehensive approach towards each key product market is needed, with Government working in negotiation and partnership with business and other key players.

  27. The attraction of the IPP approach is its potential for delivering environmental benefits throughout the entire life cycle of a product. In effect, it means focusing high-level environmental aims through the "lens" of each product sector, selecting the priority areas for improvements, and deciding on the policy and market measures best suited to deliver the improvement. The processes involved in IPP are inherently more complex than traditional policy approaches which focus on the control of sites and materials, because its application ranges across whole product sectors and is shaped to fit their particular market circumstances. Despite this inherent difficulty, the approach is worth developing because of the high potential for environmental gain in may product sectors.

Future direction of policy at EU level and nationally

Progress within the EU

  28. The report by Ernst & Young and SPRU showed that the development of IPP across the Community varies considerably from country to country. Although a few member states have articulated a broad strategy for products and the environment, the incidence of specific product measures is patchy. The report identified two main trends in the development of IPP: an incremental approach, which develops from existing product-related policies, such as those dealing with the management of waste; and a comprehensive approach, where product sectors are consciously made a focus for delivering key environmental objectives. At present most EU member states are in the early stages of an "incremental" approach. The report to the Commission suggested a framework of actions, building on developments which have begun in some of the member states, which could be co-ordinated at EU level to develop a properly integrated product policy.

  29. The UK was able to help raise the profile of developments in policy thinking, in the course of its recent Presidency of the EU Council of Ministers. The most recent development has been a workshop in December 1998, hosted by the European Commission to gauge the level of interest in the IPP among member states, and to inform future action at a Community level. Both the Council of Ministers' debate and the European Commission's workshop have shown there is a high level of interest in IPP in several of the member states. But it is also clear that interpretations of the nature and scope of IPP vary widely between member states and between interest groups.

  30. Germany has indicated that IPP will be the main theme of the informal Environment Council during its Presidency in the first half of 1999. The European Commission has indicated that after that, in the second half of 1999, it plans to publish a formal discussion paper on a possible framework for action at the Community level. So it is likely that the profile of this subject will grow considerably at EU level over the coming year, even if at this stage it is difficult to predict the direction and pace of activity.

Progress within the UK

  31. DETR's October 1998 consultation paper, Consumer Products and the Environment, outlines proposals for a more integrated approach to the use of information to reduce the environmental impact of consumer products. Although the main focus of the paper is on the role of information as an agent of change, it suggests a possible framework for tackling a range of issues throughout a product's entire life cycle. In this respect, it aims to build a more comprehensive approach to policies on products and the environment.

  32. The consultation paper proposes a number of options for action at a UK level, to complement the existing EU ecolabel and energy label schemes. Depending on the results of the consultation exercise, the Government expects to begin rolling out some of these initiatives during 1999. These could include:

—  support for initiatives by industry to provide standardised information to consumers at the point of purchase, and to provide advice on the better use and disposal of products;

—  a possible role for certification bodies in accrediting environmental declarations against the new international standard, ISO 14021;

—  a role for a new advisory panel (see below) in ensuring the adoption of good practice on environmental claims and, in the longer term, a stronger legislative framework for dealing with misleading claims;

—  a possible role for industry standards bodies in incorporating environmental criteria into product standards, or for developing free-standing product environmental standards;

—  options for new labels and awards in the UK domestic market; including high-level awards for innovation and labels for types of product that are inherently better for the environment than their alternatives, or for categories of product that are designed to carry out an environmentally beneficial function.

  33. The experience of other member states which have begun to move towards an integrated approach suggests that it will take a number of years for a fully integrated framework, founded upon a life cycle approach, to develop. Nonetheless, the Government considers that the measures outlined in the consultation paper are an important first step towards such an approach.

The advisory panel

  34. For an integrated approach to be successful, the paper argues that policies should have consistent priorities and goals, be underpinned by reliable analysis and information, focus on the most significant points in a product's life cycle, and reinforce one another. To help develop policies in that way, a new advisory panel of people from relevant stakeholder backgrounds is being set up (it should be in place early in 1999). The panel's remit is expected to be broad, and to include advice to Government on:

—  priority areas for research into product and consumer markets;

—  priorities for future action;

—  mechanisms for use in the UK market;

—  the promotion and co-ordination of measures.

  35. The new panel will also have a specific role in encouraging good practice among business in relation to "green claims" about consumer products. It will be expected to work in partnership with business, consumer and trading standards organisations to ensure that the principles contained in the Government's Green Claims Code, and in the new international standards being developed, are widely adopted in the UK. One of its first tasks will be to assess the extent to which the principles of the Code are already being adopted, and to highlight ares in which significant problems remain.

  36. The new panel should also be able to help promote the recognition of the life cycle assessment (LCA) approach, as a tool for good product stewardship and its wider use by businesses. The Government is seeking views, as part of its consultation exercise, on ways in which the LCA approach can be developed.

DOCUMENTS REFERRED TO IN THE MEMORANDUM

  Green Claims: A consumer investigation into marketing claims about the environment. National Consumer Council. March 1996.

  Proposal for a Council Regulation on a Revised Community Eco-label Award Scheme (COM(96)603 final 96/0312). European Commission. December 1996.

  Shades of Green: Consumers' attitudes to green shopping. National Consumer Council. December 1996.

  Sustainable Consumption. (In the eighth progress report to and response from the Deputy Prime Minister and the Secretary of State for Trade and Industry.) Advisory Committee on Business and the Environment. October 1998.

  European Commission: DGXI: Integrated Product Policy. A study analysing national and international developments with regard to Integrated Product Policy in the environment field and providing elements for an EC policy in this area. Ernst and Young/Science Policy Research Unit. March 1998.

December 1998