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    Eco-labelling: Effect and

    Extent

    Rakesh Kumar and Saphallya Misra

    Submitted to

    Dr. C Shambu Prasad

    Eco labelling

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    In recent times the responsible consumerism movement and responsible consumer

    behaviour has brought into focus pollution control in manufacturing and production

    process to attain sustainable growth.

    Eco labelling is a process of certifying products of their being environmental friendly

    which is the impact of such products on environment in the entire product lifecycle,

    production, usage and disposal is minimal. These environmental schemes areawarded by government and private organization thus providing information to

    consumers, in order to reduce or eliminate the negative externality of asymmetric

    information regarding specific products and product attributes.

    Eco-labels are affixed to products that pass eco-friendly criteria laid down by

    government, association or standards certification bodies. The criteria utilise

    extensive research based on the product's life cycle impact on the environment.

    The objective of eco-labelling is to affect production and supply through the

    demand. The idea is to encourage the demand of those products and services which

    are less harmful for the environment.

    Goals of Eco Labelling

    Mark products or services as environmentally preferable to their counterparts

    so consumers can make decisions based on the products or services

    environmental impact.

    Provide market advantage to environmentally sound goods and services

    Assure consumers products have met strict criteria set by an independent

    organization

    Methods of Eco labellingEco

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    Types of Eco labelling

    The International Organisation for Standardisation (ISO) identifies three types of

    voluntary labels, with eco-labelling

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    Countries which have Government and Third party based eco-labelling

    schemes

    Ecolabelling Schemes

    Eco labels are mostly formulated by non governmental agencies and [private

    organisations in collaboration with government. These schemes Are mostly limited

    to a nations geographic reach.Though there re multi national ecalabelling agencies

    yet they have not been effective enough.

    Some of the green labels have been described below

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    Global Eco labelling Programmes

    ISO/TC 207 Environmental Management (1991)

    International Standards Organization (Geneva)

    Goal: Standardize environmental management tools and systems

    Environmental Labelling Subcommittee (SC3): standardize first-party (self-

    declaration) practices and set guiding principles for third-party certification

    programs

    European Union Eco-Label (March 1992)

    Council Regulation: must be implemented in each country

    Use of label is not compulsory, national programs can coexist along with EU

    label

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    Targeted at consumer goods, not at manufacturers or companies. 200

    products to-date

    Nordic Environmental Labelling System (1989)

    Finland, Norway, Sweden, Iceland. Denmark participates in the EU program

    Ecological criteria developed for 29 product groups and being developed for

    15 product groups. Over 650 products carry the label

    Companies must submit detailed documentation plus proof of test by

    independent laboratories to the national environmental labelling organization

    in their own country

    Label awarded in one country can be used in others

    Labelling organization has right to carry out periodic inspections

    Chinas Environmental Labelling Program: a Detailed Study

    The paper begins with the brief introduction of emergence of the concept of eco

    labelling came. The major beneficiaries were Chinese Government and the Chinese

    enterprises .Government wanted to manage environmental problem where as

    entrepreneurs endeavoured to eliminate non-tariff barriers for their exports and

    allow them to expand their domestic market shares. However, the labelling

    procedures had been developed in OECD countries; it was to be managed by

    Chinese government. The certification is done voluntarily by a third party who can

    either be public or private based on its eco-friendly effect. Different organisations

    like OECD, UNCTAD and GATT had different definitions but the concept was same

    i.e. product is environment friendlier than the similar other product in the market.

    GATT also talks about different labels viz. eco-label, single-issue label, negative-

    issue label. The China Certification Committee for Environmental Labelling of

    Products (CCELP), which is very much similar like that of Germany, was established

    in May 1994. There had been 22 environment labels issued by China by the end of

    2007.

    During 1990, there was a period of great economic growth which put pressure on

    insufficient natural resources. As a result, Chinese government started making

    people aware about environmental protection in place of command and control. It

    was started by Xie- Zhenhua, administrator of NEPA (National EnvironmentProtection Agency). The awareness was made about choosing product not only on

    the basis of price & functional quality but also the environmental impact. One

    another factor was the export of refrigerators which had plummeted drastically (by

    58%). As a result Xiament silk export company & some household refrigerators

    company asked NEPA to establish eco labelling programme in china. The intention

    was also to improve image among the Chinese customers. As a result of

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    surmounting pressure, Xie Zenhua was charged with the task of creating a Chinese

    environmental labelling programme in 1992.

    In 1993, NEPA in association with CRAES (Chinese Research Academy of

    Environmental Sciences) studied Eco labelling programme of other countries and

    investigated feasibility of set up in china.

    The logo contained mountain, sea and the sun in the middle. The circles

    represented the people of china. The message of the logo was human beings

    should unite to protect the environment they live in.

    Then in 1994, CCELP (China Committee for Environment labelling of products) was

    established by NEPA.

    There were 24 officials out of which 15 were from government agencies.

    There was establishment of CCELP secretariat which looked into the administrative

    functions of labelling. Before giving labels, enterprises were investigated by CCELP.

    SEPA and SBQTS provided leadership and guidance for the labelling programme.

    The labelling was based on labelling procedures of OECD countries with some

    changes as per chinas social, economic and environmental situation.

    The certification process comprised of three main stages:

    1. Selecting product categories

    2. Assessing environmental impact

    of the products in their life cycle

    3. Applying for certification

    After the product categories are

    approved by SEPA, CCELP and SBQTS,

    they are announced in china

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    environmental news and other newspapers. The product categories that are

    primarily focussed for labelling are:

    Product closely linked with human health

    Product made of substances related to global environment problem

    Product causing impact during production or disposal

    Export product that one included in environment labelling in other countries.

    Since one of the objective was to promote Chinese export, so CCELP paid special

    attention to products that had export potential.

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    Procedure to get labelled

    Criterion Development

    Here the drafting of criterion or technical requirement of product category is done.

    It is based on:

    Life cycle assessment and key process assessment

    Yes

    No

    CCELP Secretariat

    sends notices to

    CCELP Secretariat

    sends notices to

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    Product quality assurance

    Consistence with criterion in other countries

    Practicability and sustainability

    These entire criterions were so fixed so as to satisfy on 20% of the enterprises.

    An enterprise is charged a fee for a certificate that allows it to use environment

    labels. There is a renewal process done every time the product is revaluated. Fee

    varies from 15,000 to 50,000. The contract is for a period of 3 years.

    Effectiveness

    The effectiveness of an environment labelling programme can be measured by:

    Consumers awareness of the environmental effects of the product

    Change in purchasing behaviour of customer

    Improve in manufacturers design of products

    Help in improving environment quality

    At the end of 1997, the awareness of the Eco label was up to 30% in china and

    there were some 3.5 million green products across the country.

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    Moreover to increase the awareness, SEPA and CCELP organise events on world

    environment day and consumer day. Massive ads by refrigerator companies are the

    biggest factor in bringing up the awareness. There has been a significant impact of

    eco label on paint and laundry industry.

    Behavioural changes that has been so far in enterprises is the rise in prices of

    product. This is because of the additional cost incurred in taking the license. Theenvironmental benefit has not been considerably much as there are very less

    product categories which have eco label. But then, there is reduction in CFC

    emissions.

    Indias EcoMark: A Study

    To increase consumer awareness, the Government of India launched the eco-

    labelling scheme known as `EcoMark' in 1991 for easy identification of environment-

    friendly products. Any product which is made, used or disposed of in a way that

    significantly reduces the harm it would otherwise cause the environment could be

    considered as Environment-Friendly Product.

    Objectives of the Scheme

    To provide an incentive for manufacturers and importers to reduce adverse

    environmental impact of products.

    To reward genuine initiatives by companies to reduce adverse environmental

    impact of their products.

    To assist consumers to become environmentally responsible in their daily

    lives by providing information to take account of environmental factors in

    their purchase decisions.

    To encourage citizens to purchase products which have less harmful

    environmental impacts.

    Ultimately to improve the quality of the environment and to encourage the

    sustainable management of resources.

    Mechanism of the Scheme

    There are three committees involved with the criteria development for each product

    category and the award of the EcoMark:

    1. A Steering Committee, set up in the Ministry of Environment and Forests, to

    determine the product categories for coverage under the scheme and also

    formulate strategies for promotion, implementation, future development and

    improvements in the working of the scheme.

    Determine the product categories to be taken up under the scheme.

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    Create mass awareness for promotion and acceptance of the scheme.

    Formulate strategies for future development of the scheme

    Identify specific products for classifying as environmental-friendly.

    Set-up sub-committees for each product category, if required, to draft the

    Ecomark criteria.

    Recommend the most appropriate criteria and parameters to designate

    various products as environment-friendly.

    Review from time to time, the implementation of the scheme by Bureau of

    Indian Standards (BIS).

    The Central Pollution Control Board has become the member of Global Eco-labelling

    Network (GEN) since March 2000.

    2. The Bureau of Indian Standards to assess and certify the products and draw up acontract with the manufactures, allowing the use of the label, on payment of a fee.

    Identify specific products for classifying as environmental-friendly.

    Set-up sub-committees for each product category, if required, to draft the

    Ecomark criteria.

    Recommend the most appropriate criteria and parameters to designate

    various products as environment-friendly.

    Criteria for Eco Mark

    The criteria are based on the cradle-to-grave approach, i.e. from raw material

    extraction to manufacturing and to disposal. The basic criteria cover broad

    environmental levels and aspects, but are specific at the product level. A product is

    examined in terms of the following main environmental impacts:

    That they have substantially less potential for pollution than other

    comparable products in production, usage and disposal.

    That they are recycled, recyclable, made from recycled products or bio-

    degradable, where comparable products are not;

    That they make significant contribution to saving non-renewable resources

    including non-renewable energy sources and natural resources compared

    with comparable products;

    That the product must contribute to a reduction of the adverse primary

    criteria which has the highest environmental impact associated with the use

    of the product, and which will be specifically set for each of the product

    categories.

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    Product General Requirements:

    The product general requirements deal with the issues of compliance of the

    pollution control acts; raising environmental awareness among consumers etc., in

    addition to safety, quality and performance of the products.

    Product Specific Requirements :

    While determining the product specific requirements, the following issues

    have been taken into account:

    Production process including source of raw materials;

    Use of natural resources;

    Likely impact of the environment;

    Energy conservation in the production of the product;

    Effect and extent of waste arising from the production process;

    Disposal of the product and its container;

    Utilisation of "Waste" and recycled materials;

    Suitability for recycling or packaging; and

    Biodegradability

    Ecomark Criteria of the Product Categories covered under the scheme.

    The Government of India has notified the final criteria for the following 16

    product categories:

    Soaps & Detergents

    Paper

    Food Items

    Lubricating Oils

    Packaging Materials

    Architectural Paints and Powder Coatings

    Batteries

    Electrical/Electronic Goods

    Food Additives

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    Wood Substitutes

    Cosmetics

    Aerosol Propellants

    Plastic Products

    Textiles

    Fire-extinguisher

    Leather

    Fees

    The following fees are required to be paid to the Bureau of Indian Standards for

    obtaining the Ecomark :

    Application fee of Rs.500/= per application, which is non-refundable;

    Testing charges of the independent laboratories for the samples drawn prior

    to the grant of licence;

    Annual license fee at the rate of Rs.500/= per license;

    Renewal application fee at the rate of Rs.300/= per application when a

    license is due for renewal; and

    Marking fee, depending upon the quantum of the annual production of the

    licence.

    Review of EcoMark Programme

    Issues Needs

    License fee charged by BIS, is adeterrent for companies to usethis mark

    Such regulatory eco labelling schemeswould require free of cost processing.

    Brand leaders give moreimportance to BISs ISI mark

    Awareness monitoring and adhering tothe schemes standards of Ecomark isrequired. Certain sectors needmandatory legislation to carry the

    mark.Customer awareness Awareness campaign through mass

    media, vehicles is neededISI mark is mandatory for govt.tenders whereas Ecomark isnt

    Mandatory legislation to carry Ecomarkto participate in govt. tenders

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    Process of obtain the license to use EcoMark

    CSE Green Rating

    Centre for Science and Environment has started the green ratings projectwhich is

    an effort to rate industrial units within a specific sector on the basis of their

    environment friendliness. The project aims at encouraging companies to

    adopt better environment management policies.

    Objective

    To develop and function as a form of governance based on public

    participation, transparency, non-bureaucratic institutions and market-

    oriented policies.

    To monitor the existing environmental performance of companies and

    influence the future industrialisation in the country.

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    To prepare environment inventory of companies by systematically collecting

    information about their environmental performance. This information will be

    further analysed, comparatively evaluated and disseminated.

    To develop a market-based incentive through the rating to encourage

    industries to voluntarily improve their environmental performance;

    To empower communities and markets to proactively participate in

    accelerating sustainable economic growth;

    To aid in better regulation of industrial pollution by regulatory authorities

    and,

    To aid in better formulation of policies by the government leading to

    sustainable development of Indian industries.

    Methodology followed byCSE (see insert)

    Criteria

    The major criteria are:

    Criteria for raw material

    sourcing and processing

    Criteria for production plant

    level environmental

    performance

    Input Management

    Process Management

    Waste Management

    Criteria for product-use performance Criteria for product-disposal performance

    Criteria for corporate environmental policy and management system

    Corporate policy related to environment

    Procurement policy and supply chain management

    Status of corporate environmental management and environment

    management systems

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    Research and development

    Health and Safety

    Transparency

    Criteria for community and regulatory perception and compliance status

    Compliance with pollution control board regulations and perception of

    PCB officials

    Perception of local community

    Perception of local NGOs and media

    Perception of CSEs green inspector.

    Review of Green Rating

    CSE has already undertaken three sectoral ratings programme in chloral alkali

    sector, pulp and paper sector as well has automobile sector. Apart from these, it has

    also undertaken a survey in cement industry. Outcomes of these reports has

    created furore in media as well as in corporate world. A working paper by Mr.

    Srikant Gupta and Vishwanath Golder of Delhi School of Economics has taken up the

    impact of these ratings and other environmental standards and compared it to

    capital markets.

    CSE is and always has been a controversial body. Many industries boycott the

    organisation. So, many companies decline to participate in its environmental rating

    programme. CSEs green rating is sometimes based on primary data and caters tospecific industry. In its nascent form the implication of such rating is difficult. Yet, in

    course of time and with participation of various companies and industries, CSEs

    model of green rating by taking the regulatory standards as the benchmark would

    be able to achieve larger recognition. Transparency of participating companies and

    credibility of information provided and methodology has also been questioned.

    Stakeholder Analysis of Eco- Mark

    Stakeholder Mandate Importance

    Influence NetImpact

    WayAhead

    Government Policy Making .Implementation

    High High High MonitoringandEvaluation

    Companies Profit and SocialResponsibility

    High High Medium Relook atTechnologyResponsibleBehaviour

    Raw MaterialSuppliers

    Profit , Quality High Low Low Technological changes

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    and QualityCheck

    LabelAwardingAgency

    Standardisation High Hugh High Awardingprocess

    Consumers Better ProductsResponsibleProducts

    High Low Medium Willingnessto payhigher

    EnvironmentActivists

    Concerns aboutenvironmentalissues

    Low Low low Awareness

    Fair Trade : Social and Eco

    Labelling

    As per FLO, Fair trade is an alternative

    approach to conventional trade and is

    based on a partnership betweenproducers and consumers. Fair trade

    offers producers a better deal and improved terms of trade. This allows them the

    opportunity to improve their lives and plan for their future. Fair trade offers

    consumers a powerful way to reduce poverty through their every day shopping.

    Fair trade Labelling Organizations International (FLO), created in 1997, World Fair

    Trade Organization (formerly the International Fair Trade Association), Network of

    European Worldshops (NEWS), created in 1994 and European Fair Trade

    Association (EFTA), created in 1990 together formed FINE.

    FINE is an informal association whose primary goals of FINE is:

    To harmonize fair trade standards and guidelines

    Increase the quality and efficiency of fair trade monitoring systems, and

    Advocate fair trade politically

    Fair trade:

    A better deal for producers in the developing world,a partnership between

    consumer and producer,

    Fair trade:

    A better deal for producers in the developing world,

    a partnership between consumer and producer,

    Fair trade help producers take more control over their lives.

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    market-based approach that aims to help producers in developing countries

    and promote sustainability

    strategic intent is to work with marginalized producers and workers in order

    to help them move towards economic self-sufficiency and stability

    Great stakeholders in their own organisation and a wider role in internationaltrade

    Benefits of fair trade:

    Stable prices

    A fair trade premium

    Partnership

    Empowerment of farmers and workers

    Environment Aspect

    Fairtrade rewards and encourages farming and production practices that are

    environmentally sustainable. Producers are also encouraged to strive toward

    organic certification.

    The Basic Guidelines for Producers are:

    Protect the environment in which they work and live. This includes areas of

    natural water, virgin forest and other important land areas and dealing with

    problems of erosion and waste management.

    Develop, implement and monitor an operations plan on their farming and

    techniques. This needs to reflect a balance between protecting the

    environment and good business results.

    Follow national and international standards for the handling of chemicals.

    There is a list of chemicals which they must not use.

    Not, intentionally, use products which include genetically modified organisms

    (GMO).

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    Work out and monitor what affect their activities are having on the environment.

    Then they must make a plan of how they can lessen the impacts and keep checking

    that this plan is carried out.

    Rug Mark

    Speciallized social labeling against child labour used in

    carpet industry especially in Nepal and India

    License Fee used for rehabilitation and services

    RugMark producer country offices establish license

    agreements with exporters. They agree to the following

    terms:

    not to illegally employ children

    to allow unannounced, random inspections byRugMark inspectors

    to pay fair adult wages

    to notify RugMark of all sales of labeled carpets

    RugMark's trained inspection teams carry out random

    unannounced inspections of village looms and factories to make sure that the conditions of

    the license agreement are being adhered to.

    Conclusion

    The concept of eco labelling has been existent for decades. Yet, implication of these

    has not been spectacular. Issues concerning the failure of these schemes can be

    attributed to many causes mostly pertaining to regulatory practices. Lack of

    standard norm among policy makers and planners has resulted in imbalance in the

    rating systems and methodology followed in various eco labelling schemes.

    To receive various ecolabels, companies need to adhere to higher standards and

    practices which result in higher cost of production at various levels. This is due to

    the fact that cleaner technology involved in making greener products is costlier as

    well as well as difficult to procure. Thus, for eco labelling schemes to succeed, thecustomer should be willing to pay a premium for green products, services to make it

    sustainable for producers/manufacturers. This can only be achieved by creating

    awareness among customers. Media campaigns, mandatory regulations and best

    practices are the tools by which the reach and impact of eco labelling can be

    realised to its full potential. Opportunities galore as there has been a rise in

    consciousness about environment and the present form of consumption economy

    which greatly negate the balance of nature. In recent years, environmental activism

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    and growing concern on the part of the corporate world has resulted in focus on

    sustaining earths ecosystem.

    References

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    1. Alain Nada, 2007,Conditions of Development of a Product Ecolabel,

    Department of Engineering and Public Policy ,Carnegie Mellon University

    2. Mercedes Bleda , Marco ,Graded eco-labels: A demand-oriented approach to

    reduce pollution, Valente Manchester Institute of Innovation Research, Manchester

    Business School

    3. Jimin Zhao and Qing Xia, Chinas environmental labelling program, Stanford

    University, Chinese Research Academy of Environmental Sciences.

    4.(Centre for Science and Environment, 2009)

    5.Centra Pollution Control Board

    (http://www.envfor.nic.in/cpcb/ecomark/ecomark.html

    6. Eco labelling http://ecolabelling.org/

    http://www.envfor.nic.in/cpcb/ecomark/ecomark.htmlhttp://ecolabelling.org/http://www.envfor.nic.in/cpcb/ecomark/ecomark.htmlhttp://ecolabelling.org/

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