Following the footprints

DO YOU look for carbon-footprint labels on goods when shopping? If you do, you are in a small minority. The practice of adding labels to foods and other products, showing the quantity (in grams) of carbon-dioxide emissions associated with making and transporting them, began in 2007 when the world's first such labels were applied to a handful of products sold in Britain. The idea was that carbon labels would let shoppers identify products with the smallest carbon footprints, just as other labels already indicate dolphin-friendly tuna, organic milk or Fairtrade coffee. Producers would compete to reduce the carbon footprints of their products, and consumers would be able to tell whether, for example, locally made goods really were greener than imported ones.

Carbon labels have yet to become as widely recognised by consumers as other eco-labels, however. A survey carried out in 2010 by Which?, a British consumer group, found that just a fifth of British shoppers recognised the carbon footprint label, compared with recognition rates of 82% for Fairtrade and 54% for organic labelling. This is understandable, because carbon labelling is a much more recent development—organic labelling dates back to the 1970s, and Fairtrade to the late 1980s—and the right ways to do it are still being worked out. Adding a carbon label to a product is a complex and often costly process that involves tracing its ingredients back up their respective supply chains and through their manufacturing processes, to work out their associated emissions. According to 3M, an American industrial giant that makes over 55,000 different products, this can cost $30,000 for a single product. To further confuse matters, different carbon footprinting and labelling standards have emerged in different countries, preventing direct comparisons between the various types of label.

Even so, proponents of carbon labels now see encouraging signs of progress. In Britain, a pioneer in carbon labelling, nine out of ten households bought products with carbon labels last year, albeit mostly unwittingly, and total sales of such products exceeded £2 billion ($3.1 billion). This exceeded the total sales of organic products (£1.5 billion) or Fairtrade products (£800m) and is largely due to the addition by Tesco, Britain's biggest retailer, of carbon labels to more than 100 of its own-brand products, including pasta, milk, orange juice and toilet paper. (Tesco said in 2007 that it would put carbon labels on every one of the 70,000 products it sells; so far it has managed to label 500 products.)

“In the last 12 months, carbon footprinting has become common currency,” says Harry Morrison of the Carbon Trust, a consultancy funded by the British government which has footprinted more than 5,000 products worldwide, from building materials to pharmaceuticals. Similar carbon-labelling initiatives have been launched in many countries, measurement techniques are gradually being formalised and a global standard is in the works. Although consumers have yet to embrace the idea, the quiet spread of carbon labels is being driven by companies, which have come to see the value of determining the carbon footprints of their products.

Footprinting's first steps

The earliest carbon-footprint labels, which appeared in 2007, indicated the promise of the idea but also highlighted the complexity of making it work. Among the first products to have carbon labels applied were the cheese-and-onion potato crisps made by Walkers, a brand owned by PepsiCo, which were found by the Carbon Trust to have a footprint of 75 grams per packet. This figure, printed on the packet with the Carbon Trust's “black footprint” logo, included the emissions associated with growing the potatoes, turning them into crisps, packaging them, delivering them to shops and disposing of the packaging after use. National averages were used to calculate the transport and disposal emissions.

It is not so much the label itself that matters, but the process that must be gone through to create it.

Carbon labels need not just measure carbon-dioxide emissions. Where appropriate, emissions of other greenhouse gases, such as nitrous-oxide from soils and methane emissions from animals, are also taken into account. These are turned into “carbon-dioxide equivalent” emissions using suitable conversion factors: 1g of methane is commonly taken to have the same global-warming potential as 21g of carbon dioxide, for example.

The process of calculating the carbon footprint for Walkers crisps revealed an unexpected opportunity to save energy. It turned out that because Walkers was buying its potatoes by gross weight, farmers were keeping their potatoes in humidified sheds to increase the water content. Walkers then had to fry the sliced potatoes for longer to drive out the extra moisture. By switching to buying potatoes by dry weight, Walkers could reduce frying time by 10% and farmers could avoid the cost of humidification. Both measures saved money and energy and reduced the carbon footprint of the final product.

The value of carbon footprinting and labelling lies in identifying these sorts of savings, rather than informing consumers or making companies look green. According to a report issued in 2009 by the Tyndall Centre for Climate Change Research at the University of Manchester, in England, “the main benefits of carbon labelling are likely to be incurred not via communication of emissions values to consumers, but upstream via manufacturers looking for additional ways to reduce emissions.” It is not so much the label itself that matters, in other words, but the process that must be gone through to create it. Walkers has reduced the footprint of its crisps by 7% since the introduction of its first carbon labels. Indeed, to use the Carbon Trust's label, companies must do more than just measure the footprint of a product: they must commit themselves to reducing it.

Another of the early products to receive a carbon label was a shampoo sold by Boots, a British pharmacy chain. Shampoo is an example of a product where the footprint associated with using the product—the so-called “use phase” emissions—can be comparable to, or even greater than, the manufacturing footprint. Initially, says Mr Morrison, the Carbon Trust's carbon labels did not include use-phase emissions, because these can vary enormously depending on consumer behaviour. The emissions associated with a bottle of shampoo depend on how long you spend in the shower, how hot the water is and what sort of boiler you have.

For many products, in short, the manufacturing footprint does not give the full picture. This is particularly true for electrical goods that are designed to use less energy. Improving energy-efficiency often involves more elaborate manufacturing processes that increase the product's manufacturing footprint. But in use, such products use less energy, so their overall footprint, considered over their entire life cycle, is smaller. A good example is flat-screen LCD televisions compared with old-style cathode-ray-tube models. “The energy consumption in use has got much better, but the manufacturing process has got more complicated,” says Mr Morrison. As a result, the Carbon Trust's carbon labels now include use-phase emissions. These are estimated by making statistical assumptions about consumer behaviour.

For some goods, customer behaviour can make a dramatic difference to the use-phase emissions. A life cycle analysis carried out for Levi Strauss, an American maker of casual wear, found that 57% of the carbon footprint of its 501 jeans was due to the emissions associated with washing them—assuming, that is, that the jeans were washed in warm water and machine-dried. Washing them in cold water and drying them on a line, however, reduces the use-phase emissions by 90%. Adding this sort of information to product labels can encourage buyers to minimise the use-phase emissions—but only if they actually read the label and act on its advice.

Given such wide variations, so-called “product category” rules are needed to ensure comparability between carbon labels on similar products. Those product-category rules, in turn, must be harmonised between countries to ensure compatibility between carbon-labelling schemes, which are growing in number and diversity.

In Japan the Ministry of Economy, Trade and Industry launched a calculation and labelling programme in 2008 which has signed up more than 300 retailers and manufacturers. As part of this scheme METI has established product-category rules for 53 products. South Korea's environment ministry has introduced a “CooL label”, now sported by over 220 products, including furniture, rice and consumer electronics. In Thailand the government is piloting labels on 65 products from T-shirts to ceramic tiles, and is developing product-category rules for rice, textiles and chicken. Other labels have been launched in America, Canada, Switzerland and Sweden.

But the country that is now making the running is France. Casino, a French retail chain, introduced carbon labels on 100 of its own-brand products in 2008 and has since added labels to another 400 items. Its Carbon Index labels show the carbon footprint per 100g of final product (use-phase emissions are not included). E. Leclerc, another French retailer, has pioneered two novel twists on carbon labelling in a handful of its stores. It has fixed labels to store shelves showing the carbon emissions per kilogram of produce next to the usual price tags showing cost per kilogram. And by roughly estimating the carbon footprints of 20,000 of its products (by dividing them into 600 generic categories) it can produce a total footprint for an entire trolley of goods that appears on the store receipt. Signs show consumers how their trolley's footprint compares with the average.

The French exception

These initiatives by French retailers are being backed by government action. A year-long experiment will begin in July, involving 168 firms in a range of industries, to apply carbon labels to products including clothing, furniture and cleaning products. An accompanying campaign will try to raise awareness of carbon labels among consumers. This is a prelude to the planned introduction of compulsory carbon-labelling rules, possibly as soon as 2012, which will apply to imported goods as well as those made in France. The new rules, devised by AFNOR, the French Standards Agency, require labels to show more than just the carbon footprint. Depending on the product category, they must also include other environmental data, such as the product's water footprint and impact on biodiversity. Product-category rules have already been drawn up by AFNOR and the French environment ministry for shoes, wood, furniture, shampoo and fabric chairs. The project is the result of Grenelle 2, a law passed in 2010 which marks the first time a government has tried to make environmental labelling mandatory.

Engaging suppliers is vital. Many firms control only a small part of their products' footprints.

Other European countries will be watching the French experiment closely, not least because their own exporters may soon have to adhere to the French rules. Inevitably this has led to calls for a European standard for carbon labelling. Last year the European Commission asked Ernst & Young, a consultancy, to evaluate and compare the various footprinting schemes in use in Europe. It found wide variation between them. “We are definitely at the early stage,” says Eric Mugnier, E&Y's director of environment and sustainability. Not all carbon-labelling schemes are verified by independent third parties, for example, or include use-phase emissions. The European Commission's Institute for Environment and Sustainability is about to launch an analysis of footprinting methods.

Meanwhile, efforts to refine and harmonise carbon footprinting and labelling at a global level are advancing. Britain's standard, called PAS 2050, which was published in 2008, is highly regarded and has influenced standard-setting elsewhere. In France, Casino is adjusting its footprinting methodology to bring it into line with PAS 2050 by including use-phase emissions, for example. The British standard has also helped shape the two global product-footprinting standards that are now in the works: ISO 14067, being drawn up by the International Organisation for Standardisation, based in Geneva, and the GHG Protocol, a project backed by two environmental groups, the World Resources Institute and the World Business Council for Sustainable Development.

The ISO standard is expected to be finalised in 2012, and the GHG Protocol standards will be released in September. Co-operation between the two bodies should ensure that their standards are highly compatible. “The marketplace is asking for one standard—not different ways in different countries. Otherwise, it becomes a trade barrier,” says Pankaj Bhatia, director of the GHG Protocol. There will still be details to fill in. But the movement towards a global set of standards is clear.

That will be reassuring for companies worried about multiple sets of standards and a growing carbon-counting bureaucracy. The difficult part remains, however: working with their networks of suppliers to determine, and then reduce, the carbon footprints of their products. This is a tricky area, says Mr Morrison, because suppliers may worry that revealing information about their processes for carbon-measurement purposes “becomes a back door to a debate about price”. Yet engaging suppliers is vital, because many firms have direct control over only a small part of their products' footprints. Gold'n Plump Poultry, a large American chicken producer, found that its own operations accounted for just 22% of the footprint of each chicken; 50% of the footprint came from the production of corn- and soya-based chicken feed.

For some firms, such as food companies and retailers, the lion's share of their emissions takes the form of these “indirect” emissions produced elsewhere. Tesco, for example, reckons its supply chain produces ten times the emissions of its direct operations (heating and lighting stores and offices, and so forth), and that consumer emissions may be ten times as big again. Similarly, Walmart, the world's largest retailer, estimates that 90% of its emissions emanate from its supply chain of over 120,000 companies.

Only by working closely with suppliers, and encouraging them to collaborate and pool expertise, will it be possible to streamline the footprinting process and label hundreds or thousands of products, says David North, director of corporate affairs at Tesco. His firm is working with Unilever, Procter & Gamble, PepsiCo and Coca-Cola, under the auspices of the Consumer Goods Forum, an industry body, to make carbon measurement easier for suppliers. “The process has to be simplified for us and others to get to scale,” he says.

Existing footprinting standards already allow for some simplification. Emissions from building factories or manufacturing capital equipment are not included, for example.“We have tried to strike a pragmatic balance, to do this in enough detail that you can find efficiencies and inform consumers, but not go to the extreme that this is so expensive that it can't be deployed at scale,” says Mr Morrison.

Dieter Helm, an energy-policy expert at the University of Oxford, proposes a colour-coded scheme that lets consumers see which products in a given category have bigger-than-average footprints, and which have smaller-than-average footprints. Unlike precise figures in grams, this would be easier for consumers to understand and for companies to compile. And arguments between retailers and suppliers about whose products were greener would helpfully raise consumer awareness, he says.

The power of the label

Given the international nature of many supply chains, the process of working out products' carbon footprints is also helping to change the way carbon emissions are reckoned. Rather than totting up national totals, it makes more sense to think about cross-border carbon flows. “This helps you understand our emissions are happening around the world,” says Mr Morrison.

Between 1990 and 2008, for example, European Union countries reduced total carbon emissions in their own territories by 6%. But this improvement was almost exactly cancelled out by the extra emissions associated with goods imported into the EU from China, according to a recent study by Glen Peters at the Centre for International Climate and Environment Research, in Oslo, and his colleagues. Add in other imports of such “embodied” carbon emissions from other countries, and Europe's overall carbon emissions actually increased by 6% over that period.

By getting firms to assess and reduce the emissions of products with imported inputs, however, carbon footprinting gives firms in the rich world a motive to cut emissions in the developing world, through efficiencies and investment in clean technologies. Carbon labels promise to make carbon footprints and carbon flows visible. But making them work on a large scale will involve striking the right balance between accuracy and practicality.