First carbon label hits the shelves

The Carbon Trust is trialling a "carbon footprint" label for products with Walkers Crisps, Boots and Innocent. As well as informing consumers, it will encourage businesses to cut products’ carbon emissions from source to shelf. Susanne Baker reports

The Carbon Trust’s label follows what was quickly descending into a race, with retailers, government and public bodies all vying to position themselves as the first to embrace the concept of product carbon labelling.

In January, Tesco CEO Sir Terry Leahy set the ball rolling with a bold announcement that the company would be measuring the carbon footprint for all 70,000 products the company sells (ENDS Report 385, p 4 ).

"Customers want us to develop ways to take complicated carbon calculations and present them simply," said Sir Terry. The company will "begin the search for a universally accepted" and "commonly understood measure of the carbon footprint" looking at its complete life cycle from production through distribution to consumption.

Armed with this information, he went on to say, the "customer is really in charge", allowing shoppers to compare carbon footprints as easily as they currently compare price or nutritional profile.

Barely a month after Tesco’s announcement, Environment Secretary David Miliband outlined a wider vision for food labelling at the National Farmers’ Union conference, envisaging the next step where "environmental standards become the norm on food packaging" covering "a range of factors including energy inputs, fertiliser use, soil management, waste management and water pollution" (ENDS Report 386, p 23 ).

He committed the Environment Department (DEFRA) to working on a "green standard that allows consumers to know something about the environmental provenance of what they are buying."

It is not the first time the government has tried to push through its own eco-label. In 2001, the Department of Trade and Industry floated the idea of getting a kitemark for approved green claims onto the statute book following a spate of false green claims (ENDS Report 314, p 33 ). It was quickly dropped after failing to secure support among retailers (ENDS Report 319, p 32 ), partly because they felt a label would render any products not carrying it as inferior.

So why the change of heart? Euan Murray, head of strategy at the Carbon Trust who helped develop the carbon label said it was the result of a switch in demand.

"Companies that have come to us recognise that their consumers are interested in the information and are asking for it," he said. "Forward-looking businesses see there are real business opportunities in meeting that need."

Stimulating supply chains
For products to carry the Carbon Trust’s label, companies will need to complete a "rigorous" carbon analysis of their supply chains following an agreed methodology1 which identifies and quantifies "significant" emissions sources. In the pilots this was defined by mass with "at least" 90% of the mass of the final product being analysed.

The analysis does not take into account emissions generated while in store or emissions in use. Any carbon offsetting by companies in the supply chain is ignored, as are emissions from "very minor" raw materials which make up only small fractions of the total product.

Companies must also commit to reducing the carbon footprint of the product within two years. Products that fail to do this will be stripped of the label - a "reduce it or lose it" clause. If, after the two years, a company wants to retain the label it must recertify and recommit to further reductions.

The labels should therefore stimulate activity along the supply chain, potentially improving efficiency upstream.

This is significant. On the face of it, supermarkets and retailers are responsible for only a fraction of the UK’s total carbon emissions. This year investment research company Trucost found that the combined direct emissions of Tesco, Sainsbury's, Marks and Spencer and Morrisons amounts to just 0.72% of overall CO2 emissions. But look into their supply chain and the carbon emitted in the production and transportation of the products they buy is over 30 times larger than what they are directly responsible for.

Clearly the immense purchasing power that retailers and manufacturers exert means they are in a strong position to impose better environmental standards on suppliers and their own processes.

By carrying out carbon audits of products, companies can begin to prioritise emission reduction efforts across all emission sources. Audits may also stimulate swifter progress on product replacements, particularly on materials used in packaging.

Retailers and manufacturers may also move to fully integrate environmental impact measurements into their procurement policies and systems, potentially driving further improvements.

In the longer term, the market may begin to see companies competing against each other on their green credentials, for example between raw materials suppliers with differing CO2 footprints.

But is there a risk the label will reward companies which have yet to take action on their products? Euan Murray thinks not. "We’ve been working with some companies for over five years and have yet to reach a ceiling. There is always an opportunity to drive further reductions."

Communicating to customers
The label will allow consumers for the first time to see at a glance the embedded carbon footprint of products.

Provided there is significant uptake - with a price tag of £50,000 for the label the degree of market penetration is uncertain - consumers will in theory be able to compare carbon labels to help inform their buying decisions.

Ultimately the Trust says it hopes this will stimulate change in market behaviour in a similar way that energy efficiency labelling has stimulated demand for A-rated white goods.

However, analysis by the Sustainable Development Commission has found that rapid efficiency gains were only made when labelling was combined with minimum standards (ENDS Report 376, pp 5-6 ).

While some NGOs such as Friends of the Earth and WWF wonder whether the power of the label is more in the ability to stimulate activity along the supply chain rather than educate consumers, it is clear that for companies this presents a sizeable green marketing opportunity.

Last November, market research by the Carbon Trust revealed that nearly two-thirds of UK consumers are more likely to buy from a business they think is taking action to tackle climate change. To help them do this, they want to know the carbon footprint of the products and services they buy.

As Terry Leahy said: "The market is ready. Consumers tell us they want our help to do more in the fight against climate change if only we can make it easier and more affordable."

How to communicate that information is still up for debate. The Trust is leaving it to companies to decide how they want to present information to their customers, but consumer bodies are warning that consistency is needed to avoid confusion.

"We are a little concerned that if [the label] isn’t meaningful, consumers won’t know what it and embedded carbon really means," said Lucy Yates, policy officer at the National Consumer Council.

"Front-of-pack nutrient labelling was very confusing for consumers; for carbon labelling the potential for confusion is even greater and the issue is even more important. Consumer interests need to be taken into account."

Questions as to what is a good or bad level of carbon will also need to be addressed. There is also potential for conflict over alternative judgments as to what is "good" or "ethical," for example under Fairtrade labelling.

And to ensure consumers are not being hoodwinked the NCC thinks regulations should be in place to "verify that claims are being met and ensure the integrity of the information provided."

Friends of the Earth agrees. Climate change campaigner Mary Taylor said any approach based on life-cycle assessment, "which is a complex and easy-to-manipulate methodology", should be made publicly available for scrutiny.

The trials
Walkers, Boots and Innocent are trialling the label on their products and will be judging consumer reactions for a year.

Walkers: The first product to appear on shelves with the new logo from mid-April will be Walkers’ cheese and onion crisps, the company’s best selling flavour. Pepsico-owned Walkers is working to extend the label to every product within its range.

"It’s the right thing to do," said Walkers chief executive Neil Campbell. "All companies have a responsibility to the environment and should look for ways to improve their performance."

Having drawn up a list of the key stages in the supply chain it calculated that 44% of carbon emissions were generated in the production of its raw materials and 30% were during manufacture. Packaging accounted for 15% of total emissions, distribution 9% and disposal just 2%. The total carbon footprint per packet is estimated to be 75g.

The work follows a project with the Carbon Trust last year (ENDS Report 383, pp 25-26 ) which reduced Walkers crisps’ carbon footprint by a third by improving efficiencies in the company’s processes.

The logo displaying the footprint is to be printed on the front of each bag of crisps, with background information on the back along with additional information on the company website.

While conceding the 75g figure is not meaningful "because nobody else has done it yet", Mr Campbell said the key thing was that the intent is there along with a commitment to reduce emissions. "That comes across clearly and we’ve found people like that."

The company, which has targets to reduce energy use by 3% per year, said the labelling scheme gave the targets an "extra bite."

"What we have found is that we have been able to spot areas for continual improvements in all elements of the supply chain," said Mr Campbell. "It’s an important step in helping us at Walkers understand where to focus our resources to reduce carbon."

He confirmed that the company is now looking to increase the efficiency of heat exchangers and peeling technology and is considering a wind turbine at one site. It is also looking to work with the Carbon Trust to help suppliers improve their own performance "rather than imposing things".

Last year, Walkers got embroiled in the debate around nutritional labelling when it rejected the Food Standards Agency’s traffic light system in favour of the industry-preferred guideline daily amount system. But it now appears to be keen to avoid controversy by supporting a single standard approach.

"The good thing is that the Carbon Trust is getting everybody involved, doing a bit of a test and looking to adopt one process that industry is supportive of," said Mr Campbell. "So there will be only one standard across the whole of the industry."

Boots: The company will be trialling the label on its Botanics and Ingredients shampoo in 250 stores from July. Having already cut the carbon footprint of the shampoo by a fifth through previous work with the Carbon Trust, the company says it is "ideally" placed to work on the first trials.

"Boots is the most trusted brand in the UK - what better foundation on which to start," said Boots sustainability manager Andrew Jenkins.

"Consumers are interested in what the industry can do and the steps they can take. But there will probably be some big business benefits - enhancing our brand trust as well as highlighting positive changes."

Boots’ assessment found the shampoo had a carbon footprint of 148g. A list of possible improvements has been drawn up which includes using more recycled polyethylene terephthalate (PET) in packaging, changing factory processors and improving freight activities.

Mr Jenkins said it also became apparent that, for shampoos, the consumer phase is significant in terms of carbon emissions. "We have a unique role in that we can help provide advice," he said.

This has influenced the approach it is taking to displaying the label. It will be using point-of-sale material to explain how customers can help reduce impacts by using cooler water, which Boots says is also better for hair.

This approach was also attractive because it avoids having to relabel products "every two to three months because of minute changes" to the product recipe or manufacturing process.

However, the point-of-sale material does not explain to the consumer what the 148g means, nor does it highlight that by displaying the label Boots is seeking to reduce the carbon footprint of that product. Boots is clear that the label is not the "be all and end all", more "an extra string to our bow".

"We had a choice. We could form a big industry group and talk about it for years and years or we could get on with it," said Andrew Jenkins.

"We want to work actively on the evolution of this, we want to be at that table and make it work in a way which is most efficient for industry and consumers."

Discussions are under way to extend the labelling scheme to other products. Boots says that as lots of ingredients are used in other products, it is aiming to build up a library of ingredients so that over time analysis will be less onerous.

Innocent: The smoothie manufacturer is trialling a different approach. It is displaying the label for all smoothie recipes on its company website, starting with its mango and passionfruit smoothie, a 250-millilitre bottle of which has a carbon footprint of 294g. A 250ml serving from its 1 litre carton has a footprint of 190g.

To communicate this information to consumers and put the data into perspective, Innocent has developed a "guideline daily allowance" of CO2.

This was calculated using the government’s current recommended target for a 60% reduction in total CO2 emissions by 2050. Using a sliding scale per annum to get to that reduction, the company calculated that this equates to 8.3 tonnes of CO2 emissions per person in 2007 and a daily allowance of 22 kilograms.

To put it further into perspective, it used research from the Carbon Trust which attributed 13% of each person’s annual emissions to the manufacturing, transporting and consumption of food and drink. Innocent then concludes that one smoothie equals 9% of a person’s daily CO2 allowance from food and drink.

It’s a difficult message to convey and the company is looking for customer feedback to help refine its approach.

"We felt we had to put some meaning around the information for our drinkers, just putting a gram figure doesn’t have a great deal of meaning," said Jess Sansom, Innocent’s sustainability manager. "It’s great as a symbol of a company’s commitment, but it doesn’t really empower drinkers to understand where it fits into their life."

In fact, the company was already "carbon auditing" its products in collaboration with the Edinburgh Centre for Carbon Management before working with the Carbon Trust - because sustainability "is at the heart of our business model and has been since the beginning," according to Ms Sansom.

"By knowing where the mess is being made we can start to tidy things up, by working both internally and with our suppliers to streamline and green our processes, stripping out as much carbon as possible," said Ms Sansom.

Some difficulties emerged trying to source data from suppliers in the agricultural sector. It sources 54% of its fruit from Europe, but for some of the other countries "less engaged in the climate change debate" data can be patchy.

In some cases it has to take the industry average rather than a specific farm’s emissions, but it plans to improve on this in the long term by including data requirements in future specifications for ingredients.

To date, three areas for work have been identified. It plans to increase the amount of recycled plastic it uses, although its bottles already contain 50% recycled PET.

To reduce emissions during manufacture the company is planning energy audits with manufacturing partners to cut energy usage and to increase the amount of power sourced from renewable resources.

It is also reviewing UK distribution by working with its freight suppliers to improve load and fuel efficiencies and explore the use of alternative fuels.

So far only informal discussions have taken place and no strategy has been developed for engaging and working with suppliers. Whatever approach is taken the company will be "strongly encouraging" suppliers to reduce their carbon footprint.

Future development
Over the next year, a series of parallel projects will be undertaken with "ten or so" companies to help further refine the methodology. A full consultation process will follow, led by a technical advisory group being established by the Carbon Trust.

Many firms and organisations have confirmed they will be working with the Trust to develop the methodology including Tesco, Marks and Spencer, Sainsbury’s, Cadbury Schweppes, Duchy Originals, the Co-operative Group, the Climate Group, the British Retail Consortium, WWF, Green Alliance, the Food and Drink Federation and Forum for the Future.

While the initial driver for the label has been with retailers and manufacturers in the food and drink sector, the Trust has ambitions to roll out the label to other products, particularly those where it has identified significant emissions being generated upstream.

Fast moving consumer goods, clothing, paper and publishing have been earmarked, but other products are being considered.

The only listed exceptions for the label are for fuel, which is being pursued in Europe, and labels for energy-using products. While admitting that for products which use energy "emissions in use could be large" and an "important industry driver and purchase criterion", it says that consumer information on energy use by appliances is available through other labelling schemes.

However, given Tesco’s ambitions for a "universal label" the Carbon Trust may be pressured into widening the label’s scope to include emissions in use.

The Carbon Trust is certainly not ruling anything out. Its chief executive Tom Delay has emphasised this "is the start of an exciting journey" and that while "we do not have all the answers", "it is time to take action".

Genuine concerns are being voiced that the approach is too simplistic and ignores other important environmental and ethical impacts of production, but DEFRA is clear that the result of the Trust’s labelling "experiment" will inform its wider work on developing environmental standards for food production.

If David Miliband’s ambitions were to be realised, then the Trust’s label will represent a small but significant step towards a wider and more comprehensive environmental labelling scheme for products.