6. Communicating Product Life Cycle Performance through Labels and Declarations

Companies are increasingly held accountable for their performance on sustainability. This is an established trend that also extends to the products and services that companies provide. Expectations to report on environmental performance come from many stakeholders, such as professional buyers, individual consumers, consumer advocacy groups, environmental organisations, and the government. Companies can try to meet these expectations through product level reporting, where product level refers to both products and services. This is especially relevant when communicating on issues that are not possible to discern from the product itself. One cannot see the carbon footprint of a product and one cannot tell if the wood in a product is sourced from sustainably harvested wood or not.

Using labels and declarations to communicate product environmental performance has a long history, as shown in Fig. 6.1. Two early examples are the Demeter label and the Blue Angel, both from Germany. The Demeter label was founded in 1928, allowing customer to choose products from biodynamic agriculture (Demeter 2022). The Blue Angel label was founded in 1978 and is considered as the first proper ecolabel (UNOPS 2009), with multiple criteria and a life cycle perspective. In the decades after the introduction of the Blue Angel, there was global growth in environmental labels and declarations. The EU has worked on developing and testing a methodology called Product Environmental Footprint (PEF) since 2011. As of 2022, in its transition phase, it is expected to have significant impact if and when it is introduced into EU law (EC 2022).

A timeline chart of environmental communication for products starts in 1869 and progresses through 2006. It highlights the labels and declarations in different years on the timeline.

With the increase in labels and declarations, there was a need for more cooperation between the organisations. There was also a need for stakeholders to be able to understand the quality of different programmes – which labels and declarations can be trusted? In short, there was a need for standardisation. Through the International Organisation for Standardisation (ISO), the development of a series of ISO standards was started in the late 90s. These are known as the ISO 14020 series of standards and they provide principles for communicating environmental performance through labels and declarations (ISO 14020: 2000, 14025: 2006, 14021: 2016, 14024: 2018a).

The ISO 10420 series of standards provides three different approaches for communicating on the environmental performance of products and services (ISO 2000, 2006, 2016, 2018a). Each approach has its own standard, and they are labelled type I, II and III by ISO. They must all follow the nine general principles outlined in ISO 14020, where the key message is that environmental claims must be based on science, be verifiable, be accurate and relevant, and not be misleading. Note that it is not uncommon for an organisation to use more than one of these approaches at the same time, for example to meet requirements in different markets or by different stakeholder groups. The three approaches (label type and ISO standard) are:Table 6.1 provides an overview of key differences between the three approaches. Main audience indicates if the primary audience is professional or consumers, termed business-to-business (B2B) versus business-to-consumer (B2C). Public procurement will usually be considered B2B, but smaller procurements may also be considered as B2C. Programme indicates if there is a requirement for an organisation (programme operator) responsible for running the ecolabel system.

The ISO standards provide three archetypes for ecolabels: Type I, Type II, Type III. The archetypes provide a framework for understanding product level communication. However, we often find labels and declarations that are a mix of these archetypes. These are referred to as hybrid labels. One hybrid label has become so common that it has its own ISO standard, this is ISO 14067 for reporting on the carbon footprint of products (CFP) (ISO 2018b). The growth of demand for single issue declarations, such as carbon through CFP and for water through water footprint of products (WFP) has led to the development of ISO 14026 for communication of environmental footprints.

This is a continually developing field and not all labels and declarations fit neatly into type I, II and III categories from ISO standards. Instead, a label may have elements from more than one type, and we can call these hybrid labels. The carbon footprint is perhaps the best known of these hybrid labels. It has elements of all three types: it is a label on the product, may have performance requirements, it is for a single issue, and it provides quantified information. The EU’s work on developing the Product Environmental Footprint (PEF) may result in a hybrid approach – potentially combining a quantified declaration with performance-based labelling (EC 2022).

A common trait for all labels is that they are developed to meet a perceived market need. Some may have a life cycle perspective and cover all relevant environmental aspects, but often they are for single environmental issues. For these it should be noted that there is a danger of problem shifting, reducing the environmental impact in one area at the expense of increased impact elsewhere.

The large volume of labels and declarations in use makes it difficult for companies to choose a label/declaration that best serves their needs and requirements. Finding the right approach is a balancing act where stakeholder requirements, company strategy, and resources must be considered. A key challenge is that there is no single approach that will satisfy all stakeholders. Demands may vary across markets, industries, and customer types, and continue to develop over time. The choice of approach should be developed based on the organisation’s environmental strategy and environmental ambition level.

Figure 6.2 provides an overview of the key steps required to develop and publish an EPD for a product or a service. The first step is to decide that the EPD is the preferred type of environmental label or declaration, as discussed in the previous chapter. The next step is to either identify or develop a set of Product Category Rules (PCR) for this type of product. The PCR is typically developed by EPD programme operators and detail the rules and requirements for the Life Cycle Assessment supporting the EPD. The purpose of the PCR is to ensure that EPDs are harmonised and comparable. The next step is performing the LCA. A company can choose to either use in-house expertise or engage a consultant. When the EPD has been developed and gone through an internal quality assurance check, it is ready for independent verification. Verification must be carried out by a verifier approved by the EPD programme; it is also often a requirement to have third party verification. Having gone through the verification, the EPD is ready for publication. It is the EPD programme operator who publishes EPDs, and these are typically published as a document or a dataset, or both. For companies with a large product portfolio, it is becoming increasingly common to streamline this process through EPD tools, which reduce the workload per EPD published (Fet et al. 2009).

A diagram represents the steps from declaring environmental performance to the published E P D going through product category rules, lifecycle assessment, developing E D P, quality assurance, and verification.

This chapter has provided an overview of environmental labels and declarations. The main Level in the CapSEM Model for labels and declarations is Level 2, the product system. However, communicating product performance is not enough on its own to contribute to sustainable development. The labels and declarations are end results. To improve the environmental performance of products and services it must be integrated into a system of continual improvement at multiple levels:Elements that may contribute to competitive advantage may be direct (e.g., customers’ willingness to pay a premium, gaining market access, winning tenders) or indirect (e.g., positive effect on reputation, increased capacity and knowledge base, better stakeholder communication). However, there are also risks associated with environmental labels and declarations, for example, that costs are higher than gains, the chosen label lacks customer trust, or the risk of focusing on the wrong environmental aspects.

Environmental labels and declarations are an effective tool for communicating environmental performance for products and services, but their potential goes beyond this, such as a mechanism for communicating corporate responsibility regarding products (Skaar and Fet 2012). Integrating the use of labels or declarations in an organisation’s environmental management system can ensure continual environmental improvement, contribute to reduce risks, and help to identify win-win opportunities.