INSIGHT: Carbon footprint labelling – a growing trend among consumer goods companies

Author: Agata Wolk-Lewanowicz

2020/07/20

LONDON (ICIS)--Consumer goods companies increasingly decide to communicate product environmental impact to consumers on a carbon footprint product label.

Unilever recently announced the introduction of Carbon Labels on 70,000 products. On pack labels will show the quantity of greenhouse gas emitted in the process of manufacturing and shipping products to consumers. The company plans to reduce carbon emissions from its own and suppliers’ operations to zero by 2039.

Unilever's announcement coincides with L’Oreal's pledge to gradually roll out environmental and social impact labelling for its products by 2030.  These efforts will be coupled with actions focused on greenhouse gas emissions reductions of its products and across its operations.

Some companies such as the dairy-free milk firm, Oatly Inc. or Quorn, the meat substitute brand,  already have introduced carbon dioxide emissions information on their product labels.

A product carbon footprint is the full inventory of all greenhouse gas emissions released throughout the product life-cycle. It is important to define the scope when calculating the carbon footprint of a product.  Cradle-to-grave approach captures emissions from the extractions of raw materials, through to product’s manufacture, distribution, use and eventual disposal.  According to Carbon Trust, this is the most used approach by consumer goods companies, and it is in line with the principles of a circular economy, where the full life-cycle of a product, including its end of life needs to be considered.

As we can see on the below, Unilever example, most of the environmental impact of many consumer products is incurred while the consumer uses the product.

Unilever GHG footprint - Measured 1 July 2018 - 30 June 2019

Image Source: www.unilever.com

However, how consumers interact with a product can be influenced by product design, marketing or point of sale information. For example, a change in laundry detergent formulation, could potentially reduce both the amount of water needed and the greenhouse gas emissions generated by wash cycles.

Influencing consumers towards environmentally sound disposal practices can be done through choices in packaging type and even through external initiatives to increase recycling and reuse.

And finally, a carbon product footprint label on the product packaging can empower consumers to purchase a product with overall lower environmental impact.

However, currently there are no commonly used and accepted standards on how to calculate or communicate a product carbon footprint to consumers.

Carbon Trust footprint labels are one example of how environmental impact information can be communicated to consumers on a product label.

  • CO2 Measured: product’s carbon footprint has been measured.
  • Reducing CO2: there is a company commitment to reduce a product’s carbon footprint.
  • Lower Carbon: carbon footprint of a product is lower from the market dominant product.
  • Carbon Neutral: carbon footprint has been reduced and outstanding emissions are offset.

 Image Source:   www.carbontrust.com

L’Oreal on the other hand wants to score its products from A to E with ‘A’ representing the ‘best in class’ in terms of impact. This approach certainly allows to compare L’Oreal products among each other.  However, an industry standard would be needed to ensure that corporate claims are substantiated, and that information provided on a label is comparable between different product brands.

Let’s now have a look at what are the driving forces behind these carbon footprint labelling initiatives.

Growing consumer environmental awareness.

Future growth will depend on aligning with consumers' priorities.

The European Consumer Organisation (BEUC) latest research shows that most EU consumers are willing to make more sustainable choices, but face difficulties. For a sustainable purchase choice to become easier consumers need to receive improved information, the right price signals, and more sustainable options.

International consumer research study undertaken earlier this year by Carbon Trust shows continuing levels of support for carbon labelling on products, with two-thirds of consumers saying they think it is a good idea.

Additionally, some studies, such us the Chalmers Technological University in Sweden research, suggest that carbon labels actually work. The traffic-light coloured label was implemented in a student catering facility and covered all seven dishes on offer. According to the research findings, sales of green labelled (low emission) dishes increased by 11.5% compared with the control phase.

Legislative pressures.

Companies are under pressure to move to a product life-cycle approach to sustainability not only from consumers but also from governments. As more countries are enforcing environmental legislation and extended producer responsibility policies, companies need to innovate when it comes to the product, packaging as well as their relationship with consumers.

Companies can reduce the impact they are responsible for not only internally through their operations, but also externally by increasing consumer awareness.

In the Circular Economy Action Plan published in March 2020, the European Commission proposes a revision of EU consumer law to ensure that consumers receive trustworthy and relevant information on products at the point of sale. The EC will also propose that companies substantiate their environmental claims using Product and Organisation Environmental Footprint methods.

In the Circular Economy Action Plan, the EC announced that it will consider strengthening consumer protection against green washing by setting minimum requirements for sustainability labels and logos and other information tools.

Leadership from major consumer brands such as Unilever and L’Oreal along with European Commission position may lead to an emergence of an industry standard for carbon footprint labelling.

This in turn will hopefully lead to a more widespread adoption of carbon footprint labelling across products and brands to empower consumers to make more informed, sustainable choices.

By Agata Wolk-Lewanowicz