Preface

 This paper is the final report of an examination of the actual market, trade and environmental effects of eco-labelling programmes carried out by the OECD Joint Session of Trade and Environment Experts. 

T'he study is based on information collected from varíous sources and interviews with representatives from eco-labelling programmes, government and interest groups (e.g. industry, consumer, environment and trade groups) in Sweden, USA, Belgium, Germany, Canada, Japan and France.

 Executive Summary 

T'he purpose of this paper is to examine the actual market, trade and environmental effects of a selection of eco-labelling programmes operating in OECD countries: the EU Eco-label Award Scheme, the Nordic Swan, the Swedish Environmental Choice Programme, the Canadian Environmental Choice Programme, the Blue Angel, the Green Seal, the Japanese Eco-Mark and the French NF Environnement.

Transparency and Consultation 

Examination of the various schemes reveals that a similar procedure is used for the development of the different eco-labels. The transparency and consultation processes follow the same general pattem with certain variations. Eco-labelling programmes all have mechanisms for transparency, ranging from publication of information to active dissemination to interested parties, to simply establishing inquiry points; and they have similar consultation processes. Once product groups have been selected by the decision-making body, representatives of various interest groups generally participate in the expert group responsable for the development of the eco-label criteria. The draft criteria are then available for public review before the final criteria are adopted by the decision-making body. Lack of consideration given to comments provided on the draft criteria has been a source of criticism.  Furthermore, decision-making on the final eco-label criteria is generally not open to outside participation. While no examples of overt discrimination have been found in the course of this study, for practical reasons, access to information and participation in criteria development will be more difficult for foreign producers without a domestic presence. The need for an international notification system centralising information on all eco-labelling programmes has been suggested, by those running eco-labelling programmes, as a way to minimise these problems.

Market Impacts

The market impact of eco-labels may be examined from two perspectives. From the schemes' perspective, the market impact of eco-labelled products is an indication of success. From the trade perspective, the bigger the market impact the bigger the potential trade impact. However, in practice, data concerning the market impact of eco-labelled products is very difficult to obtain. lt is often confidencial commercial information in the hands of industry. Some scattered anecdotal evidence shows that sales have increased when an eco-label has been obtained, but there is no statistical data in general to show the market power an eco-label may confer on a product. Producers however continue to apply for and pay for eco-labels, indicating they have some market value. Also, it is difficult to separate out the market impact of the eco-label from other factors which influence a products' market share.

Eco-labelling programmes have been more successful in countries or regions which benefit from a higher level of consumer awareness of environmentally preferable products and therefore a consumer demand for eco-labelled products (e.g. Sweden). Environmental NGO_s, consumer groups and the media have contnbuted to increasing consumer awareness of environmentally preferable products through consumer awareness-building campaigns of various kinds (e.g. the Swedish Society for Nature Conservation in Sweden, consumer organisations and the specialised press in Germany). In certain cases, eco-labels have had a significant impact on the market for specific product categories (e.g. detergents in Sweden).

Eco-label criteria are generally set so that only a small percentage of products in a product category (5 to 30 per cent) can obtain the eco-label. In practice, eco-labelled products which are successful often cover more than 30 per cent of the market share in a product category. Eco-labels then no longer selectively identlfy a sub-set of products which are environmentally preferable to other products in the same product category, but tend to become a de facto voluntary standard. lf the product is highly traded, and if the eco-label contains production and process-related criteria, the eco-label may constitute a barrier to competing in the market place as regards foreign products which do not conform to the eco-label criteria.

Overall, eco-labelling has only been moderately successful with the individual consumer.
However, eco-labels may have an important market impact when retailers specify they want to stock products with eco-labels (e.g. ICA retailers in Sweden) or when they become a tool in identifying environmentally preferable products for govermment procurement (e.g. Canadian Environmental Choice Programme, Japanese Eco-Mark) and institutional purchasing (e.g. Green Seal Environmental Partners, Canadian Environmental Choice Programme).

T'he fear of losing market share to eco-labelled competing products rather than the drive to increase market share has often motivated producers to obtain an eco-label for their products. Eco-labels are also considered by manufacturers as a valuable tool to communicate the environmental qualities and quality image of their product and their company. Research has shown that improvements in environmental performance of a product only became a significant competitive factor once competitive levels of product performance, quality and value are attained.¹

Most official government supported eco-labelling programmes have limited their coverage to products. However the Canadian Environmental Choice Programme, which is govermment-owned and directed but delivered through the private sector, has now begun developing eco-labels for services. Private eco-labelling programmes such as the Swedish Environmental Choice and the Green Seal have used product eco-labelling as one element of a broader environmental strategy aiming to educate consumers and guide them in their purchasing decisions, e.g. green shopping guides, and "shop and act green" campaigns.

Trade Effects

Information gathered during the course of this study, recognising data limitations, did not reveal hard evidence of changes in trade flows arising from the selected eco-labelling programmes. However, fears and concerns have been voiced as to potential effects.

Eco-labelling schemes raise particular trade concerns when they include production-related criteria. Such criteria can discriminate against imports when they reflect exclusively the environmental conditions and preferences of the importing country, and the effects can be particularly acute for developing countries and countries heavily dependent on exports²

In the absence of hard evidence regarding the trade effects of the selected eco-labelling schemes, it is useful to examine the eco-label criteria to determine whether circumstances potentially leading to trade concerns exist. For instance, the extent to which eco-labels include production related criteria and whether eco-labels were developed for products of export interest to developing countries.

Certain eco-labelling programmes, such as the Canadian Environmental Choice and the Japanese Eco-Mark have mostly developed eco-labels for products which reduce environmental damage during the use and disposal phase. These programmes encourage the use of recycled products to limit waste generation and limit consumption of non-renewable resources. Only a limited number of eco-labels include requirements exclusively related to the environmental effects which occur during the production phase (e.g. water effluents, air emissions). The Blue Angel does not develop eco-labels for products which are the source of environmental damage during the production phase.

As for product categories of specific interest to developing countries, the Canadian Environmental Choice Programme (ECP), the Green Seal and the Eco-Mark have developed an eco-label for textiles. The ECP and the Green Seal eco-labels for cotton reusable utllity bags do not include any production related requirements; rather criteria address exclusively the use and consumption phase of the product. The eco-label for textiles developed by Eco-Mark encourages textile products made of recycled fibre. The Blue Angel is examining the possibility of developing eco-labels for rattan and jute products in co-operation with developing countries. No eco-labels for products of particular export interest to developing countries had been developed by the Blue Angel previously.

Eco-labelling programmes such as the EU Eco-label Award Scheme, the Nordic Swan, the Swedish Environmental Choice Programme and NF Environnement generally include production-related requirements in their eco-label criteria.

T'he eco-label for T-shirts and bed linen and the eco-labels for paper products developed by the EU have bcen the largest source of trade concerns because they  include criteria related to the production stage of products which are largely imported into the EU. The importance of the EU market and the economic stakes involved explain the level of concern with respect to these eco-labels. Under these circumstances a high level of transparency and adequate consultation mechanisms would need to be ensured.

2 Report on Trade and Environment to the OECD Council at Ministerial Level, Paris
   1995,OCDE/GD(95)63.

1. Introduction

Considerable work has been conducted in various international fora, including the OECD Joint Session of Trade and Environment Experts on the potential trade implications of eco-labelling programmes. Life-cycle approaches have been recognised as valuable tools for goverments, industry and consumers in understanding the complex environmental effects of products from "cradle to grave", and in reducing environmental burdens caused by products during their life cycle³ The relatively recent trend for eco-labelling programmes to be based on more extensive life-cycle criteria, specifically production related criteria, is a source of trade concern with respect to eco-labelling schemes. The possible trade effeets of eco-labelling programmes have been identified and solutions are now being examined in various fora to minimise these potential trade implications. A number of steps to avoid unnecessary trade impacts on foreign exporters were in fact recommended in the 1995 Report on Trade and Environment to the OECD Council at Ministerial Level.

T'he main purpose of this study is to examine the real effects of eco-labelling programmes based on a selection of eco-labelling programmes operating in OECD countries. lt is to provide a factual analysis, examining the actual market, trade and environmental effects of the selected eco-labelling schemes, including their effects on the export of products from developing countnes.

The main objectives of the study are the following:

i) the market impact of eco-labelled products;

ii) the impact of eco-labelling programmes on trade, particularly for
    imports from developing countries;

•   Evaluate the environmental effectiveness of eco-labelling schemes and give an
    indication  of public awareness and attitudes within OECD countries, including the
  degree to  which ecolabelling affects purchasing decisions by consumers and evidence of   any particular demand for eco-labelled products.

Environmental labelling has become a popular tool to promote environmentally preferable consumption and production pattems. Different types of environmental labels exist which operate in different ways and whose effects may be quite different. A certain amount of confusion and misunderstanding over the effects of eco-labelling schemes may be due to the different types of environmental labels which are referred to as eco-labels.

T'he present study will look at one specific type of environmental label, multi-issue voluntary labels commonly referred to as eco-labels (Type 1 environmental labels as defined by the Intemational Organisation for Standardisation). In general, these schemes are designed to apply to a small proportion of products in a product category which are determined to have lessened adverse environmental impacts. Within a product group, eco-labels are meant to distinguish between products, to identify ones which are deemed environmentally preferable to others. The label is meant to indicate the overall environmental quality of a product, in order to encourage consumers to purchase it. Eco-labelling programmes are often government-supported, third party certification programmes. They are voluntary since manufacturers have the choice of whether or not to apply for the eco-label.

Although the scope of this study has been limited to eco-labelling programmes, it should be mentioned that increasing attention is being given to other types of environmental labels such as Type II and Type III environmental labels as they have been defined by ISO. Type II environmental labels are informative self-declaration environmental claims made by manufacturers, importers, distributors or retailers. Type III environmental labelling is quantified product information labelling based upon independent verification using pre-set indices. Due to their nature, the effects of these other types of environmental labels may be very different from the effects of eco-labelling schemes. Other environmental labels also exist which fall outside the definitions of Type I to Type III environmental labels e.g. private industry-based environmental labels for textiles. These labels, often referred to in the literature as eco-labels, may be the source of some trade effects and may have been confused with eco-labels as defined in this paper. T'he impact of these labels needs to be further investigated.

T'he eco-labelling programmes selected for this study are the following: the German Blue Angel, the Nordic Swan, the Swedish Environmental Choice, the EU Eco-Label Award Scheme, the Canadian Environmental Choice Program, the Green Seal operated in the USA, the Japanese Eco-Mark and the French NF Environnement. Aside from practical considerations, most of these schemes were chosen because they are some of the oldest schemes. lt was also considered interesting to include two private schemes such as the Swedish Environmental Choice and the Green Seal in the analysis. Although very few products have been awarded the EU eco-label, it is an interesting scheme to analyse because it has been the source of some concem from non-EU producers.

A description of these eco-labelling schemes is provided in the first part of the study.⁴   Most of these schemes are relatively recent and/or are still evolving. Their structure and procedures are being modified on a trial and error basis. The description provided below reflects their present structure and operating procedures. Particular attention is directed towards their transparency and consultation processes. Transparency and consultation have been recognised as essential to ensure the credibility of eco-labelling schemes, and they have been advocated as minimum requirements to avold unnecessary trade effects.

The transparency of the programmes is examined to determine the information mechanisms or
notification procedures available and the information provided during the various stages of development of eco-labels. The consultation process in each scheme is examined to determine the opportunities available for interested parties, including foreign producers, to provide input and participate throughout the development process of eco-labels, from the product selection until the adoption of the final criteria. Any official public review mechanism, allowing interested parties to provide comments during the development of the eco-label, is examined, as is the consideration given to comments on the final criteria.

To illustrate the process, a simplified chart identifies the main steps which characterise the general procedure for the development of eco-labels:

EU ECO-Label  Award Scheme

A Community Eco-Label Award Scheme was established on 23 March 1992, by the adoption of Council Regulation (EEC) No 880/92⁵. On 10 December 1996, the European Commission proposed a major revision of Council Regulation 880/92 which would include the following changes among others: the introduction of a graduated label; the establishment of an independent European Eco-label Organisation to develop eco-label criteria; increased complementarity between the EU scheme and the national schemes; a ceiling for the annual fee to be charged for the use of the label and a reduced fee for SMEs and applicants from developing countries; and formalisation of the consultation process. The proposed revision has been presented to the Council and the European Parliament the Economic and Social Committee and the Committee of the Regions will also be consultes Deliberations on the proposed revision will be held throughout 1997⁶. Until the revision is formally adopted by the Council, the programme will continue to operate on the basis of its current structure and operating procedures as described hereafter.

Administrative Structure 

T'he procedure being relatively complex, guidance documents were developed by the European Commission in 1994 to assist in the establishment of product groups and ecological criteria.⁷ 

A number of bodies are involved at various stages in the development of ecological criteria for product groups, namely: 

-- the European Commission; 

-- Competent Bodies designated in Member States for the administration of the eco-label
     award scheme; 

-- the Committee of Competent Bodies comprised of two representatives of each Competent
    Body; 

--the Consultation Forum which represents five interest groups at the European level: industry,
   environment, consumers, commerce and trade unions. The first four are each representad by
   three members, one head of delegation and three substituta members. The trade unions have
   one representative and one substitute;

-- the Regulatory Committee which consists of the representatives of the Member States;

-- the Council of Ministers. 

5 The scheme does not cover food, drinks and pharmaceuticals.
6 European Conunission, Newsletter on the EUEco-Label, Issue N' 16, January 1997.
7Procedural Guidelinesfor the Establishment of product Groups and Ecological Criteria, EC Eco-Label Newsletter, N' 6, June 1994; A Framework ofpolicy Principlesfor the Establishment of product Groups and Ecological Criteria, Draft 2, May 1994; Guidelinesfor the Application of Life-Cycle Assessment in the EUEco-labelling Programme, Final Report of the First Phase, September 1994.

DGXI of the European Commission runs the scheme in consultation with other Commission services. Competent Bodies of each Member State and members of the Consultation Forum are consulted throughout the process.

Ad Hoc Working Groups, which assist in the development of criteria, are composed of interested Commission services, two representatives from Competent Bodies in each Member State, two representatives from each interest group nominated by the Consultation Forum and two representatives of the Consultation Forum.

As of 27 September 1996 a total of 24 products had been awarded the EU eco-label. Seven labels had been awarded to Hoover Limited for washing machines, but have since expired as new revised criteria were set in August of 1996. Four eco-labels were awarded for kitchen towels, four for toilet paper and nine for indoor paints and varnishes. As of 16 December 1996, eco-label criteria had been published for a total of 12 product categories: washing machines (revised criteria published in August 1996), dishwashers, soll improvers, toilet paper, paper kitchen rolls, laundry detergents, single-ended light bulbs, paints and vamishes, bed-linen and T-shirts, double ended light bulbs, copying paper and refrigerators.

Product Selection

A list of priority product groups for consideration is established by the Commission upon consultation with the competent bodies. According to information from the Consultation Forum, a matrix of selection criteria developed by the Consultation Forum for the choice of new product categories was taken into consideration in deciding on the seven new product groups. Some of the criteria suggested by the Consultation Forum for deciding which products are priorities for developing eco-labelling criteria are: visibility of the product, frequent use consumer products, relevant share of every day consumption, consumer choice, competition, percelved environmental relevance, availability at retail outlets, acceptance by producers.⁸ The Policy Principles say that international aspects are also to be taken into account when identifying product groups for criteria development but the practical effect is unclear.⁹

Criteria Development

T'he procedure for the development of criteria for new product categories was recently slightly modified. Initially, once new product categories had been identified, a Lead Competent Body was responsible for developing proposals for eco-labelling criteria, e.g. UK Eco-labelling Board for washing machines and dishwashers. In July 1995, DGXI opened calls for tenders for developing eco-label criteria for seven new product groups. As a result separate study contracts were awarded for consultants to carry out a life-cycle assessment for each of the following product groups: batteries consumer goods, floor cleaning products, sanitary cleaning products, detergents for dishwashers, shampoos, rubbish bags and converted paper products. These studies are to be completed within a fourteen month period.

The various phases for the development of the criteria are the following":

T'he first phase aims to establish the feasibility of developing an eco-label for a specific product category, based on considerations such as the nature of the market, the perceived environmental issues, the advantages of the product group being labelled and the identification of problem areas.¹¹

Based on the results of the feasibility study, DGXI determines whether to proceed with the establishment of an eco-label for a product category, following a meeting with the Committee of the Competent Bodies, the Consultation Forum and the relevant Commission Services.

During Phase Three and Four, the Inventory and Environmental Irnpact Evaluation, the draft ecological criteria are developed based on a life-cycle analysis.

During Phase Five, based on the results of the LCA study, the draft criteria are drawn up by the Commission. In this phase, a number of elements are determined including the most important environmental impacts, the applicable criteria, the standard to be set for each criterion, the necessary test methods and the certification procedures.

During Phase Six, the draft proposal is presented by DGXI to the Consultation Forum for a formal Opinion. Following a six week period, the Opinion of the Forum will be transmitted to all Competent Bodies and relevant Commission Services. After internal consultations within the Commission, a final draft decision is presented to the Regulatory Committee. The Regulatory Committee votes on the draft decision. lf the vote is affirmative, the Commission establishes the decision and it is published in the Official Joumal. lf the Regulatory Committee majority is not in favour of the decision put forward, the Commission may decide to present the draft decision to the Council.

At the end of each phase, meetings of the Ad Hoc Working Group are held to discuss progress and provide input into the process.

T'he policy principles provide that eco-labelled products should  " indicatively and initially" represent no more than 30 per cent and no less than 5 per cent of the market share, unless the rapid introduction of clean technologies justifies a lower percentage.¹³

11Official Journal of the European Communities  No C 203/20, Open procedure.
12 Id.
13 Policy Principles, Section of Characteristics of Eco-labelling Criteria, art.4.

Duration of Criteria Validity

Critenia for each product group remain valid for three years.

Application -- Licences

Manufacturers or importers may apply for the award of an eco-label only to the Competent Body or Bodies of a Member State in which the product is manufactures or first marketed or imported. On the basis of documents to be submitted by the applicant, the competent body will assess compliance with the criteria and decide whether or not to award the label. The Commission and other competent bodies are to be informed when a label is awarded.¹⁴

lt is stated in the "Policy Principles" that the EU eco-label applies to imported products without discrimination. The conditions and criteria for application are exactly the same as those applied to European Union producers.

An application fee of ECU 500 and a royalty of 0.15 per cent on the tumover of the eco-labelled product, or a minimum of $US660, is applied.

Transparency - Consultation

A. Transparency

Commission Decisions on product groups and ecological criteria, the list of products for which an eco-label has been awarded, the names of licensees, and the names and addresses of the competent bodies are published in  the Official Joumal of the European Communities.

A quarterly Newsletter is also published by the Commission which provides an update of the work in progress for each product group. Over 10 000 copies are printed and posted to subscribers  in over 50 countries. Contact points for the Competent Bodies and members of the Consultation Forum are also listed.¹⁵  Foreign producers may be informed through their trade representatives in Brussels.

B. Consultation

Interest groups are consulted both through the Ad Hoc Working Group meetings and the Consultation Forum.

i) Ad Hoc Working Group Meetings

T'he Consultation Forum is invited to nominate experts from environment, consumer, industry and commerce to participate in the Ad Hoc Working Group meetings during the development of criteria for each product group. Ad Hoc Working Groups generally meet four to five times during the development of criteria for a product category, particularly at the end of phases two, three, four and five. The same experts are meant to follow the development of criteria for one specific product group through the Adc Hoc Working Group meetings organised to assist in the development of criteria. Foreign producers may be nominated as experts by Euro-Commerce¹⁶

14  Council Regulation (EEC) NO 880/92, article 10.
15  WTO/CTE, Eco-Labelling Programmes, G/TBT/W/23, 19 March 1996, p. 10.

Initially, the Ad Hoc Working Group met in the lead country where national interest groups could have more influence. For the seven new product groups however, the Ad Hoc Working Group meetings take place in Brussels. T'his is intended to provide a better representation of interest groups at the European level. Reimbursement is provided for environment and consumer groups but not for industry and commerce. According to a Euro-Commerce representative, this has made it difficult for EuroCommerce to find experts to attend meetings. 

ii) Consultation Forum

Once a draft proposal for criteria.has been established by the Commission (end of phase five), the Consultation Forum is given a six week period to elaborate a formal opinion on the proposal. The Consultation Forum holds a meeting with members of the five interest groups, experts nominated by the groups and the consultant in charge of developing the criteria for the product group under discussion. The meeting is chaired by the President of the Consultation Forum. Following a presentation by the consultant, experts from the interest groups are also given the given the opportunity to provide their input. 

Following these presentations, the draft proposal for criteria will be discussed. After experts and the consultant have left the meeting room, a synthesis of opinions expressed is distilled and diverging conclusions are noted. After the draft opinion has been reviewed by the members of the Forum following a strict procedure, the Opinion is finalised. The final Opinion of the Forum is reached through consensos, however diverging opinions expressed by minority groups will be highlighted in the Opinion. The Formal Opinion is sent to the Commission and to the Competent Bodies. 

Although the Consultation process is quite elaborate, members of the Consultation Forum have expressed concern  that their opinions were not duly taken into account by the Commission and the Regulatory Committee. The Forum has also argued that it is consulted too late in the process ¹⁷ 

In practice, interest groups are generally not represented by the same persons in the Ad Hoc Working Groups and in the Consultation Forum. In the Ad Hoc Working Groups, experts are invited to provide input to the discussion relevant to their area of expertise (e.g. in meetings for discussions on criteria for detergent, the industry will likely be represented by the professional organisation of soaps and detergents). However, in the Consultation Forum, based on the information provided by experts, members of the Forum (e.g. UNICE for industry) need to reach a consensus on the criteria proposed. 

lt is the responsibility of the Consultation Forum to ensure that "adequate consideration" is given to the point of view of non EU producers, through Euro-commerce, the representative of commerce/ importers/ distnbutors. Procedural guidelines also provide that "third country producers have access through the Consultation Forum to the same information available to European Union producers and be able to submit their point of view".¹⁸ 

16  Euro-Commerce is the official representative of Commerce interests in the Consultation Forum. EuroCommerce is an association which represents wholesalers, importers and retailers at the European level. lt is also through Euro-Commerce that foreign producers are involved in the consultation process.
17 Consultation Forum for the European Eco-Label, Report - The EU Eco-label Scheme: Overview and Analysis to Date, 31 January 1996.
18 Procedural guidelines, Section V on Procedural requirements, section on consultation, art. V.8 

An information meeting organised by the Consultation Forum was held in June 1994 on Aspects and Implications for Third Countries of the EU Eco-label Award Scheme in response to criticisms from non EU Members. 

Swedish Environmental Choice 

The Swedish Society for Nature Conservation (SSNC), founded in 1909, is the largest environmental NGO in Sweden with over 200 000 members. The establishment of the Swedish Environmental Choice also known as the Good Green Buy or the Falcon was one of the outcomes of a popular trend towards green consumerism which started with the Shop and Act Green Project initiated by SSNC to increase environmental awareness in consumption patterns. Initially, the Good Green Buy was conceived to pave the way for the Nordic Swan. 

The Good Green Buy was established in 1990 by the Swedish Society for Nature Conservation and three Swedish retailers (ICA, KF and Dagab) who control 75 per cent of the grocery business in Sweden. 

In order to increase consumer awareness of eco-labelled products, campaigning through various activities of the SSNC has been a major strategy (e.g. promoting shops with the biggest percentage of labelled products). 

As of Apnl 1996, criteria had been established for 27 product groups and approximately 695 products have bcen awarded the eco-label. Products groups for which criteria have been developed include:different types of detergents (e.g. laundry, dishwashing), stain removers, all-purpose cleaners, diapers, different types of paper (e.g. toilet tissue, paper towels, office paper, coffee filters), and textiles.

Administrative Structure 

Since 1992, a Board composed of an equal number of representatives of the SSNC and three Swedish retailing companies has managed the programme. SSNC has three votes and the retailers each have one. The chairperson appointed by the SSNC has deciding power in case of disagreement. The Board chooses the product categories for which criteria should be developed and decides when to revise the criteria. 

T'he Society for Nature Conservation is responsable for developing the criteria. The final decision on the criteria is taken by the SSNC's Secretary General. 

The retailers provide 3/4 of the financing for the scheme and the SSNC the other 1/4.  

Product Selection

The Board will  decide for which products groups criteria should be developed. Not all products are considered suitable for eco-labelling. Goods which are not considered necessary are not selected for eco-labelling, e.g. fabric softeners.

Criteria Development 

As a first step a preliminary study is conducted to identify the main environmental problem
caused by the product chosen. An evaluation of the market situation for that product is undertaken by an externa; consultant for SSNC.  Within a period of six months, based on the latest scientific findings, interviews with manufacturers and retailers, a preliminary draft will be drawn up. T'his draft is widely circulated for comments to industry, science, universities and trade representatives. 

T'he draft proposal, containing lists ranking the environmental impacts of the product, is  reviewed by the Society's panel of experts and debated. On the basis of the proposal and the outcome of discussions, agreement is reached on criteria for the product category. The final criteria are ratified by the Society's head of conservation and the environment. The Board then decides when the criteria should take effect.                                                                                                                                                                                                                                                                                                                                                                                           

 Once most products in the same group are covered by the eco-label, the Board will decide that the criteria must be revised. Once the criteria are reformulated, producers are given 6 months to comply with the new criteria. For example, the criteria for detergents has been revised four times since 1990. While the initial criteria usually address one particular environmental impact, the scope of the criteria will broaden at each revision to address a greater variety of environmental impacts of a product during its life cycle (e.g. for detergents the criteria initially concentrated on chlorine bleaching). 

The criteria are established so that approximately 10 to 15 per cent of the existing market should qualify for the label.

Application - License

 Once the final criteria have been adopted, applications can be submitted for the eco-label. Applicants must declare the composition of their products to the Society and products which meet the criteria will obtain shelf marking in retail outlets at no cost. However, the producer has to pay a fee for his product to be eco-labelled and a license agreement will be signed between SSNC and the applicant. The fee is 5000 SEK for the first product and 1500 SEK for each additional product. T'his fee is paid only once unless the product is disqualified and a new application is submitted.

The products are not tested, a license is granted on the basis of the information and guarantees provided by the applicant, including results from laboratory testing if necessary. lf the information furnished is found to be unreliable, the applicant will be subjected to heavy fines. 

Transparency - Consultation

 New criteria are published via press-releases, the SSNC newsletter and letters to producers and traders. One major difference with official schemes is that producers, domestic or foreign, are not involved in the criteria development. Their input is limited to comments they may provide on the draft criteria during the public review process. The draft criteria are all translated into English and some into German.

Nordic Swan 

In 1989, the Nordic Council of Ministers for Consumer Affairs introduced an eco-labelling
programme for products, common to Sweden, Norway, Finland and Iceland. The logo for the programme displays a white swan flying against a green background. lt is the first multi-nacional eco-labelling scheme.

 One essential objective of the Nordic Swan was the harmonisation of eco-labelling programmes in the Nordic countries, in order to avoid confusion in the marketplace resulting from a proliferation of eco-labelling schemes. 

An evaluation of the Nordic eco-labelling system was ordered by the Nordic Council of Ministers in 1994-95 and carried out by a group of research scientists at the Intemational Institute for Industrial Environmental Economics at Lund University. As a follow-up to the evaluation, revised Guidelines were adopted by the Nordic Council of Ministers in January 1996, and an Environmental Strategy was adopted in February 1996 by the Nordic Eco-labelling Board, primarily aimed at preserving and reinforcing the credibility of the system among consumers, purchasers and producers. Procedures for criteria development, for licensing and inspection are also to be adopted by early 1997^19.

 Administrative Structure 

National Boards in Norway, Sweden, Iceland and Finland administer the programme. National Boards are comprised of consumer representatives, environmental agencies, NGO_S, trade, industry and research institutes and associations of importers. 

T'he Nordic Co-ordinating Body, comprised of the Director and President of the Board from each country, makes final decisions on the selection of product categories and on the final eco-label criteria. 

As of November 1996, a total of 215 licenses were awarded for 45 different product groups. More than 1 000 products are now labelled with the Nordic Swan. Criteria have been approved for the following product categories among others: all purpose cleaners, car care products, detergents for textiles, fine paper for copying and printing, processed fine paper products, paper envelopes, rechargeable batteries, copying machines and toner cartridges. The Nordic Swan covers a broader range of products than the Swedish Environmental Choice which mainly focusses on various types of paper products, detergents and cleaning agents. 

19 Nordic Council of Ministers, Nordic Eco-labelling - Scheme and evaluation. 

Product Selection 

National agencies handle proposals for new product groups which are then submitted to the Nordic Co-ordinating Body. Once the Nordic Co-ordinating Body has approved a new product category, a lead country is chosen to develop the criteria for the new product group. 

The choice of product categories by the national board is based on various considerations: the environmental impact associated with the products, potencial for environmental improvements and potencial for succeeding in the market. The selection is based on a market analysis which assesses: what products are available in the market, the quantities in which they are manufactures on the Nordic market, quantities imported, the need for consumer guidance, producer structure and competition. 

The Environmental Strategy, adopted in February 1996, suggests that the Nordic Swan could also cover services, particularly those associated with products for which eco-label criteria have already been drawn up.

Criteria Development

A Nordic expert group created by the national board and formally appointed by the Nordic Coordinating Body is responsable for the development of the criteria. lt includes representatives of all interested parties, such as representatives from industry, importers, governmental authorities, research institutes, and environmental NGO_S. 

 T'he expert group considers the environmental impact of a product throughout its entire lifecycle, from cradle to grave. Criteria are then established to address the most important environmental  impacts of the product group. 

The proposals are sent out for comments and public review by interested parties, "for practical reasons normally to interested parties in the Nordic countries only"²⁰. Based on the comments, a final draft proposal adopted by the National Board is sent to the Nordic Co-ordinating Body for approval. 

The Environmental Strategy document contains principles on which the development of the criteria should be based: criteria must be based on a life cycle assessment; criteria must be aimed at factors which have a bearing on environmental impacts; environmental priorities of Nordic countries' are to be addressed on a priority basis; performance and quality of product must be equivalent to similar products on the market; criteria must be stringent; transparent and consistent.

A new "Demand Side Management Approach" is now used to chose product categories for ecolabels, whereby industry expresses interest in the development of a guideline for a product category. Industry interest is generally identified through the Panel Review Certification Process.²⁵

This process was developed to certify products for which product guidelines do not exist.
Products recognised as environmentally preferable to their altemative on the market may obtain the EcoLogo certification following evaluation by the Panel. lf more than three companies wish to obtain certification for a product in the same product category, ECP may decide to develop a technical guideline for the product category. Criteria development will then be initiated in response to demand.

Criteria Development 

Once a product category has been selected, a technical briefing note is prepared by Terra Choice which includes the following: a life cycle review, a profile of the industry, an assessment of potential economic aspects, assessment of the market status of the product category. 

On the basis of this technical briefing note, Ten-a Choice drafts the initial guideline. The draft guideline highlights the environmental benefit of certain product characteristics and establishes the award criteria. Product-specific technical review committees, formed of government NGO_S, academic experts and key industry sector representatives, are set up by Terra Choice to assist in the development of the guidelines. They review and comment on the proposed guideline aiming to ensure that all relevant technical issues are addressed; that the life-cycle review is scientifically based; and that the criteria are economically feasible. 

Once the draft guideline is developed, a four to eight week public review period is announced in the Government of Canada's official publication for announcements, the Canada Gazette. Interested groups and individuals are also directly notified. The opportunity is given for manufacturers, consumers and any member of the general public to suggest improvements to the criteria in writing. The draft guideline is then revised by Terra Choice and the Review Committee, taking into account the comments received. The final guidelines reviewed by the interdepartmental representatives are announced in tlie Canada Gazette. 

The objective is for approximately 20 per cent of products in a product category to meet the criteria.

Duration of Criteria Validity 

Guidelines or eco-label criteria are generally reviewed every three years to ensure their continued relevance and stringency. They may then be reconfirmed, revised or revoked. The criteria may however be revised at any time, lf significant technical or market developments occur. For instance, lf large portions of the marketplace are able to meet the criteria, the guideline may be reviewed. Revisions are announced periodically in the Canada Gazette. All licensees affected by the revision of the guideline and other interested parties are notified of the content of the revision (and are also involved in the revision process through direct input and expert review). Licensed companies will receive specific instructions in order to proceed with necessary adjustments to remain in compliance with the new guideline²⁶ 

25 Terra Choice Envirotunental Services, Environmental Choice Program - Certification Overview,
     November 1995 

Application - Licenses 

Applications are submitted to Terra Choice. Once Terra Choice is satisfied of compliance with the criteria through testing and verification, a license agreement will be signed between the applicant and Terra Choice. The annual licence fee, based on the gross annual sales of the certified product or service, is of maximum $CAN10 000 per agreement. For a company with several license agreeements, the maximum fee is of $CAN20 000. The minimum license fee is $350 per license²⁷. Testing and verification fees are charged by Terra Choice or by an associated extemal auditor for the auditing of pertinent documents. The EcoLogo can then be used on packaging and for promotional and marketing activities. The annual license fee may be reduced by 20 per cent lf a company demonstrates product marketing initiatives incorporating the EcoLogo. Licensed companies can also participate in the ECP's marketing, media and advertising campaigns.

In order to obtain the EcoLogo, products must meet established industry standards for safety and performance and must stand up to any products in their category .²⁸

 T'he same procedures and requirements for obtaining the eco-label apply to foreign producers
without discrimination.

Compliance Verification 

Terra Choice monitors, investigates and attempts to alleviate misuses or abuses of the EcoLogo. When Terra Choice can not achieve a remedy, Environment Canada is notified for follow-up action. Environment Canada, as owner of the EcoLogo official mark, has the authority to demand and control proper use. Licensed companies must submit annual attestations, and Terra Choice officials may also conduct inspections or product testing, to confirm continued compliance. In cases of persistent noncompliance, the license agreement is terminated.

Transparency - Consultation 

The current and proposed work programme of the ECP, including newly developed or revised guidelines, is announced through the Canada Gazette and publications targeted to potential licensee groups. T'his information is also forwarded to interested parties on request. Manufacturers interested in the Canadian market can request information on product categories and final guidelines through Canadian embassies and consulates. A mailing list, including embassies and foreign entities, has been established and is regularly updated to provide notification and/or copies of guidelines. 

Two newsletters were created by Term Choice: Choice Words designed for the licensees and general audiences and the EcoBuyer designed for the professional procurement audience. 

Comments and input can be made at any point during and after the development of the guidelines. T'his also applies when guidelines are being revised. Interest groups are represented in the technical review committees which participate in the development of the guidelines. A 40 to 60 day public review process also permits input.

26  Certification Overview, Canadian Environmental Choice, September 1996,
27  Certification Overview, Attachment 1: Annual License fees, September 1996,
28  Environment Canada leaflet, EcoLogo products and services.   

As of December 1996, 920 manufacturers or importers had been awarded the Blue Angel for a total of 4 1 00 products in 76 different product categories³⁰. The following are examples of product categories for which criteiia have been developed: returnable bottles, low pollutant coatings, recycled paper, zinc-air batteries, sound-proofed glass collection bins for noise-sensitive areas; products made from recycled plastics, wall paper and ingrain wall covering made from recycled paper, low emission gas bumers, reusable ribbon cassettes and refillable toner cartridges, computers, copiers, printers and hydraulic fluids (see Annex for complete list).

Administrative Structure 

The Blue Angel is administered by three bodies: the Jury Umweltzelchen; the German Institute
for Quality Assurance and Labelling (RAL); and the Federal Environmental Agency (Umweltbundesamt). 

T'he Jury is the decision-making body, formed of representatives from industry, the scientific, business and environment communities, consumer organisations, trade unions, and the Churches. They are appointed by the Federal Minister for the Environment, Nature Conservation and Nuclear Safety (BMU) for a period of three years. Federal States, the BMU, the Federal Environment Agency and RAL also take part in discussions of the Jury.

The Federal Environmental Agency is the environmental scientific body. The RAL, a non-profit
standards organisation founded in 1925, is the administrative body.  

29  Environmental Labelling in OECD Countries, Paris 1991,
30   Data obtained from Harald Neitzel of the Federal Environmental Agency. 

Product Selection 

In theory, anyone may submit proposals to the Federal Environmental Agency. However, in
reality all proposals originate from manufacturers . New proposals are reviewed by the Agency and results of preliminary testing and evaluation are submitted to the Jury who will decide which proposals deserve further investigation.

lt is interesting to note that, generally, product categories for which the environmental damage is related to the final product, and not to its production stage, will be chosen for eco- labelling. Legislative and administrative measures are meant to address the reduction and avoidance of environmental damage which occurs at the production stage. lt is considered that difficulties in defining and verifying environmentally sound production standards are thereby avoided.³² 

Criteria Development

A preliminary draft of the criteria is developed by the Federal Environmental Agency. An expert hearing is then organised and chaired by the RAL to discuss the draft criteria and all other matters relevant to the labelling of the specific product category. During the expert hearing, representatives of various interest groups (environment industry, consumers) stakeholders and independent experts are given the opportunity to provide their input into the process. T'he Federal Environmental Agency will revise the draft and present it to the Jury for the decision-making process. 

Based on the results of the expert hearings, the Jury decides on the criteria for the product groups by majority vote. Decisions are regularly published in a press bulletin of the Federal Ministry for Environment, Nature Conservation and Nuclear Safety. 

Life-Cycle Analysis is used to identify the most important environmental impacts in a products' life-cycle and criteria are developed to address these. Criteria which directly address the   production stage of a product have rerely been defined.³³   However, criteria which address the use of substances included in the production and which are possible to identify in the final product (e.g. hazardous substances, chlorine free bleaching) have been developed.

Transparency - Consultation 

As mentioned above, decisions on the final criteria are published in a press bulletin of the Federal Ministry for Environment, Nature Conservation and Nuclear Safety. 

Interested parties, including foreign producers, may take part in the development of the criteria by participating in the expert hearing. However, in practice this has rarely been the case. The composition of the Jury indicates that the position of various interest groups, excluding foreign producers, is also likely to be taken into consideration in the decision making process.  

31 TheEnvironmentalLabel Introduces Itself, January 1995,Edition,
32  Neitzel, Harald, Comparison of Working Methods and Procedures Between the German Environmental
      Labelling Scheme and the European Scheme, presentation at the UTEC Berlin, 27 February 1996.
33  Neitzel, Harald, The Development of the Blue Angel Scheme in Germany, March 1995 paper.

 Applications may be submitted to the RAL as soon as the criteria for a new product category have bcen adopted. The RAL certifies the product following the examination of the applications in colaboration with the FEA and the Federal State. In general, a binding declaration from the manufacturer demostrating compliance with the criteria  including additional information, such as the composition of the product, will be sufficient. The fulfilment of emission standards (air and noise) or biodegradability standards will be checked by independent test reports. Minimum fitness for use and safety requirements should also be respected. When the applicant is deemed to successfully meet the award criteria, a contract is signed between the producer or importer and RAL. The manufacturer undertakes to meet the criteria for the entire duration of the contract. 

A fee of DM 300 is charged for the application. An annual contribution is then Payable to the RAL (in the range of 350 DM to 3980 DM) based on the estimated annual tumover of the labelled product. Every licensee must also contribute to the advertising fund. 

The Blue Angel eco-label is awarded to foreign manufacturers without discrimination.

Duration of Criteria Validity 

An eco-label may be awarded for a maximum of 4 years. The Environmental Label Jury revises criteria regularly to determine lf it they can be improved and if further environmental aspects can be included. When the criteria for a product category are revised, producers need to apply for the label once again. 

Green Seal

Administrative Structure 

The US Green Seal  is a national non-profít organisation 1990. The Board of Directors , is composed of business people, public figures,  leaders of major national environmental, consumer and other public interest organisations. 

An Environmental Standards Board formed of experts such as academia scientists approves the final criteria. 

The product testing and factory inspections are generally conducted by Underwriters Laboratories Inc., a respected non-profit organisation founded in 1898, well known in standard setting for product safety.

^{34  The Environmental Label Introduces Itself, January 1995}  

The main purpose of the Green Seal  is to identify and promote products which cause less harm to the environment than similar products. Its aim is to help consumers, both individuals and institutions identify environmentally preferable products. Green Seal's Environmental Partners' Programme assists institutions to incorporate green policies into their purchasing decisions and thereby increase the purchase of environmentally preferable products. Environmental partners include retailers, government agencies, non-profit groups, associations, educational institutions, foundations and others. Environmental partners are granted the use of a Green Seal Partners Mark on their annual reports, letterhead and store signane.

Green Seal is building consumer awareness through public education campaigns using television, trade publication and environmental press.

Product Selection 

On the basis of proposals made by lndustry and the public, Green Seal selects product categories for the programme. A number of factors are considered in selecting product categories such as the significance of environmental impact, the opportunity for its reduction, public interest, manufacturer interest and promotional opportunity.

Criteria Development

Criteria development for each product is based on an Environmental Impact Evaluation. This evaluation identifies the most important environmental impacts of a product's life-cycle. Criteria (which Green Seal refers to as standards) are set for the most important points in extraction, manufacturing, distribution, use and disposal stages of the product's life cycle. 

The standards developed generally aim to address the following objectives depending on the product: "'reduce air and water pollution; cut the waste of energy and natural resources; slow ozone depletion and the risk of global warming; prevent toxic contamination; protect fish and wildlife and their habitat"³⁵

The criteria are developed with the help of an advisory group of stakeholders formed of parties interested in the product category. The draft criteria are then sent for comments to relevant parties, such as government, trade associations, manufacturers, environmental and consumer groups and any other interested party upon request. A forty to sixty day period is set for comments. The revised final standard is then sent for approval to the Environmental Standards Committee of Green Seal's Board of Directors along with responses to all comments.

^{35  Green Seal brochure}

^{36 Green Seal Annual Report, 1993-1994}

^{The Eco Mark Expert Committee is formed of experts in environmental impact assessment. It is responsible for preliminary surveys and approving Eco Mark products.}

^{As of June 1996, 2 023 products were awarded the Eco-Mark in 69 product groups.}

^{Product Selection}

^{On the basis of the procedures laid out in the "Guidelines for Suggestion of New Eco Mark Product Catetories" suggestions for new product categories can be presented by anyone. A survey or hearing is then carried out by the Secretariat following which the products categories will be selected by the Eco Mark Promotion Committee.}

^{Newly selected product categories are announced in the Eco Mark Newsletter and elsewhere.}

^{Criteria Development}

^{A working group, set up by the Secretarial, formed of experts and interested parties establishes a draft of the eco-labeling criteria on the basis of the analysis of environmental impacts throughout the product's life cycle. The product's life cycle (resource extraction, manufacture, distribution, use and consumption, disposal and recycling) is considered on the basis of a chart which takes into account a selection of environmental impacts (the consumption of resources, emissions of green house gases, emission of ozone layer depleting substances, destruction of eco-systems, the exhaust of air pollutants, the emission of water contaminants, emission/disposal of wastes, use/emission of toxic substances and other environmental impacts).}

^{The draft criteria will then be publicised in Eco Mark News and elsewhere for 60 days in order to receive comments and suggestions. The draft criteria are then presented to the Promotion Committee for its approval. If the draft has been approved by the Promotion Committee, the Secretariat will announce the final criteria on Eco Mark News.}

^{The objective of the programme is to cover a small percentage of products within a product category. If labelled products cover a large portion of the market for one product category, then the criteria for the product group will be revised to increase the stringency of the criteria or the product category will be abolished.}

^{Transparency - Consultation}

^{The draft criteria are available for comments and suggestions  for 60 days through Eco Mark News and electronic communication in EIC-Net. The newsletter also contains information on the recent progress of the programme, new product categories and their criteria, revision of the criteria, the final criteria adopted and other information relevant to the programme. The Eco Mark Newsletter is only available in Japanese. Background information on the Eco-Mark, procedures and criteria are available in English.}

^{Application - License}

^{Once the application has been approved, a license contract will be concluded between the applicant and JEA for the use of the Eco Mark. The license fee is relative to the retail price of the awarded products, paid to JEA. The testing and verification expenses conduced by an independent laboratory are borne by the applicant. The contract, effective for two years, is renewable. JEA has trademark rights on the Eco Mark.}

^{Verification of Compliance}

^{No verification or investigation system exists as such to ensure the proper use of the Eco-Mark. However, information regarding the misuse of the Eco-Mark is provided by consumers, manufacturers and governmental organisations. If the Eco Mark is improperly used, JEA shall terminate the license contract or take other necessary legal procedures.}

^{Duration of Criteria Validity}

^{The criteria are reconsidered every 3 to 5 years. Is is then decided whether it is necessary to revise the criteria or abolish the eco-label for a product category on the basis of considerations such as market trends and technological innovation.}

^{Nf Environnement}

^{Work started on the creation of an eco-labelling scheme in 1989 and the eco-labelling programme was officially in place in 1991. Industry was initially strongly against eco-labels. Pharmaceutical products, services the automobile sector and foodstuffs are not covered by the programme..}

^{Administrative Structure}

^{A number of bodies are involved in the NF Environment eco-labelling programme, including the following:}

^{37   The Scientific Council is a network of environment experts appinted by the Director General of AFNOR}

^{AFNOR manages the NF Environment eco-labelling programme under the direction of the Committee38. A "Groupe de travail restreint" or limited working group, formed of a representative from each interest group (industry, retailers, environment and consumer NGOS), ADEME and AFNOR is responsible for the elaboration of the draft criteria.}

^{In December 1996, eco-labels had been developed for: paints and varnishes; dustbin bags, glues for floor coatings; mechanical washing aids and vacuum cleaners. Licenses have been awarded for paints and varnishes and dustbin bags. Over 200 products have been awarded the NF Environnement.}

^{Product Selection}

^{New product groups for eco-labelling are generally proposed by industry representatives or environmental authorities (ADEME or Ministry of Environment). The proposals are collected by AFNOR and the Committee will then select new product categories. In reality, for a product to be selected at least one company must support the project.}

^{Criteria Development}

^{Following a hard fight between environmentalists and the industry, it was agreed that the whole life cycle of the product should be considered in the establishment of the criteria for the eco-labels.}

^{The method used for the development of the criteria has been modified over time. The method presently being applied is called the "simplified approach" Once product groups have been selected, a preliminary feasibility study will be undertaken by the ADEME in collaboration with interested industry representatives. Once this study has been validated by the Committee, work will start on the development of the draft criteria (referred to by AFNOR as technical rules).}

^{A limited working group, convened by the ADEME, including a representative from each interest group (industry, retailers, environment and consumer NGOS) and AFNOR is responsible for the development of the draft criteria. Upon request, experts from the concerned professional sector may also participate.}

^{The draft criteria are distributed to all interested parties and particularly industry representatives for their comments. Comments will then submit the draft technical rule for approval by the General Director of AFNOR. The adopted criteria are finally published in the Official Journal.}

^{Products bearing the NF Environnement must be as fit for use as other similar products on the market.}

^{Transparency - Consultation}

^{Once the preliminary feasibility study is completed by ADEME and has been validated by the Committee, industry representatives are informed of the development of a new eco-label. Draft criteria are then elaborated by the limited working group and validated by the Committee. The draft criteria is then notified to industry representatives, consumer and environment associations and various government ministries for their comments.}

Verification of Compliance

Application - License

Issues for examination in this part will cover: market impact, trade effects and environmental effectiveness.

Impact on the Market 

Market impact is interesting from two perspectives. From the schemes' perspective, it concerns the visibility and to some extent the success of the eco-labelling programme. From a trade perspective, the bigger the market impact, the bigger the potential trade effect. At one extreme, if an eco-label is so powerful that consumers will only buy labelled products, then any disadvantage facing foreign producers in the whole eco-labelling process, will be extremely significant. At the other extreme, if an eco-label makes no impact on consumer decisions, then no matter how big any bias in the scheme may be, there will be no trade effect.

An over-riding problem in analysing the market and trade impacts is the fact that the vast majority of data on the experience of individual eco-labelled products is considered by producers as confidential commercial information, and is hence unavailable. However, some specific examples have been found and are included below. 

Market penetration statistics are not intrinsically indicative of the success of eco-labelling programmes. As described in the first part, the criteria are generally set so that only a small percentage of products in a product category (5-30 per cent) can obtain the eco-label. Once a substancial share of the market is occupied by eco-labelled products, the criteria are revised to be more stringent and to once again create an incentive for producers to improve the environmental aspects of their products. 

Nevertheless, eco-labels are market instruments and therefore one indication of their success is the market power conferred on the producer which has been awarded an eco-label, i.e. whether the product can be sold at a higher price, whether its market share will increase or whether a new market will be created for a new product. In order to measure this, available data will be presented on the market share of eco-labelled products. Information has been gathered to illustrate the market impact of eco-labels for specific brands or companies.

Most eco-labelling programmes are relatively recent and their environmental effectiveness has not been evaluated. Also, the environmental benefit of eco-labelled products is difficult to differentiate from the environmental benefit achieved through other environmental measures. lt is diffícult to determine whether the eco-label was really the source of the environmental improvement of a product or whether manufacturers would in any case have developed a product which is environmentally preferable.
T'he marketing of green products through eco-labelling may nonetheless be worthwhile. lt has been demonstrated that, in order to succeed in the market, green products also need to be competitive on the market in terms of performance, quality and economic value^43.

One way of calculating environmental effects is in terms of avoidance of pollution with respect to a certain product (e.g. phosphates for detergents). Some evaluations of this type have been conducted which give an indication of the environmental benefit achieved through eco-labelling of particular products. 

In the absence of data on the environmental benefit achieved through eco-labelling, the environmental effectiveness of eco-labelling will be evaluated indirectly on the basis of the following points: consumer awareness, changes in consumer behaviour and changes in the behaviour of manufacturers.⁴⁴

EU Eco- Label Award Scheme 

Although the EU Eco-label award scheme has a very small number of eco-labelled products on the market so far, it is nevertheless the most controversial eco-labelling programme. In this context, it is interesting to note that the EU scheme is the first eco-labelling programme to cover such a large market. This may explain at least in part the high level of concern directed towards this scheme at this early stage, even though it is too early to determine the actual impacts of the scheme. Indeed the size of the market covered has certainly contributed to fears regarding the potential trade impacts of the scheme. The EU scheme is also one of the first eco-labelling programmes to take into account the whole life cycle of the product and to develop criteria which address the environmental effects of a product from cradle to grave. 

As the EU scheme is still in its early stages, it is very difficult to find any relevant data on the impact of the scheme elther on the market, on trade or on the environment. The following will therefore attempt to draw a picture of the present situation of this programme noting the various concerns expressed. 

 Market Impact

 The EU scheme got off to a slow start but seems to have gained momentum recently. Indeed, several criteria were adopted over the past year and a number of eco-labels were awarded to manufacturers. 

From its inception in 1992 until end-1995, the EU eco-label had only been attributed to two UK manufacturers: Hoover for washing machines and Fort Sterling for kitchen towels and toilet paper. In 1996, the number of licensees has doubled. The EU eco-label was awarded to a French manufacturer, Dalle Hygiene, for kitchen towels and toilet paper sold in a large French retail chain Monoprix. Also, nine licenses were awarded for indoor paints and varnishes. Four of these licenses were awarded to Swedish manufacturers, three to UK manufacturers, one to a Danish manufacturer and another to a Portuguese producer.

T'he three Swedish companies were awarded a label for water-based wall and ceiling paints.
Alcro-Beckers, one of the Swedish companies awarded a license for 13 paints claims that these labelled products account for more than 50 per cent of the Swedish market. The firm apparently applied for the EU eco-label because the Nordic Swan has not developed an eco-label for paints. So far, no eco-labels have been awarded for copying paper or T-shirts and bed linen. However, at least one UK company is apprently interested in applying but is waiting to see how other eco-labelled products will do on the market.⁴⁵

The trade effeets of eco-labels for copying paper or T-shirts and bed linen are uncertain. The criteria have only recently been published and no eco-labels have been awarded to date. Other eco-labels developed by the EU have not been the subject of such concern and it is still too early to establish any trade effects.

The life cycle assessments conducted for washing machines, single ended light bulbs, laundry detergents, soil improvers and dishwashers indicated that the main environmental impact occurred during the use of these products. The criteria developed therefore mainly address the utilisation phase of these products.

T'he criteria for washing machines cover energy use, water and detergent loss during the use of the machine. Both the criteria for single-ended light bulbs and for double ended light bulbs focus on energy efficiency in the generation of electricity, mercury content and recycled content for the packaging. The use of compact fluorescent lamps which are more energy efficient are favoured⁵². The criteria for laundry detergents relate to emissions to water and more specifically to the total content of chemicals, phosphates, insoluble and soluble organics, and non-biodegradable organics. The criteria included for packaging encourage reuse and recycling through limitations on the use of virgin material⁵³. Criteria for dishwashers focus on energy and water consumption. The criteria for soil improvers encourage the use of "treated" or recycled waste as soil improvers with the aim of reducing soil and ground water pollution. 

For paints and varnishes, the life-cycle assessment revealed that the main environmental impacts resulted from the production of titanium dioxide for the white pigments and the emissions (into air and water) during the utilisation of paints. The environmental criteria more specifically set parameters on the maximum white pigment content in the paint, emissions and waste for titanium dioxide production, the maximum VOC content in the paint and the maximum volatile aromatic hydrocarbon content in the paint. Certain substances are not allowed to be used in the pigments and certain other dangerous substances are excluded from the paint formula⁵⁴. Other ecological criteria address the environmental effects occurring during the utilisation phase.

To date, eco-labels awarded have all been to European companies. 

Swedish Environmental Choice⁵⁵

The Swedish Society for Nature Conservation (SSNC), the largest environmental non- governmental organisation in Sweden, formed in 1909, has a long history of environmental protection and has developed considerable influence and credibility in Sweden.

The Shop and Act Green Campaign initiated in 1989 by the SSNC, including the publication of a Green Shopping Book, was welcomed by Swedish consumers and was the first response to a growing need and demand for information regarding the identification and purchase of environmentally preferable consumer goods. The Shop and Act Green Project also encouraged manufacturers to develop more environmentally friendly products. The strong demand for environmental information created an incentive for SSNC and three large retail chains in Sweden to develop a commercially independent, unbiased, environmental label: the Swedish Environmental Choice or Falcon. Since the creation of the Swedish Environmental Choice, SSNC has been supporting the eco-label through active campaigning on green consumption.

 Market Impact

In Sweden, eco-labels (both the Nordic Swan and the Swedish Environmental Choice) have had an important market presence for some high-turnover consumer goods sold in large retail chains. 

The Pre-existing demand for environmentally Preferable products has greatly contributed to the success of eco-labels. Also, the association of SSNC with large retailers has assured them a certain influence. Retailers are intermediaries between consumers and manufacturers. As one of the most important transmission mechanisms between production and consumer demand, they have important influence in the decisions to produce environmentally preferable products.

 26 out of the 27 product categories covered by the Falcon are various types of detergents, cleaning agents and paper products. An eco-label was also developed for textiles but it has only been awarded for 6 products which cover a small market segment. SSNC has also elaborated criteria for newspaper print, personal transport and electricity independently of retailers. 

An illustrative anecdote is the rise in popularity of eco-labels for detergents. In the beginning, large detergent manufacturers were not interesed in eco-labelling their products. In order to sell products bearing the Falcon, retailers started to purchase detergents from lesser known brands of washing powder. These detergents then started winning market share from the big brands. As a further incentive, SSNC decided to promote the best products and identify the worst.  One of their strategies was to lead a boycott against the Unilever washing detergent (Via- Omo). In response to this pressure, the big manufacturers were forced to develop new formulations for their products to meet the eco-label criteria and carry the eco-label⁵⁶. Consequently, when the criteria were published in 1990, the market share for eco-labelled product was negligible and in 1993 it was close to 50 per cent.

One particularity of the Falcon is that producers whether domestic or foreign are not included in the initial development of the criteria. They may however provide their comments on the draft criteria. Once the draft criteria have been developed and comments have been provided by interested parties, the final decision on criteria is taken by the SSNC. The transparency of the programme could in these circumstances be criticised by manufacturers, domestic as well as foreign, who wished to participate in the criteria development. Also the fact that various interest groups do not take part in the final decision making could be criticised. Although the transparency of the scheme could be questioned, the exclusion of both domestic and foreign industry could in fact reduce the tendency for bias in the criteria toward domestic industry. 

lt is mentioned in the first part of the paper, providing a description of the programme, that the criteria are established so that 10 to 15 per cent of the existing market for a product group should qualify for the label. However, eco-labelled products generally cover between 30 to 70 per cent of the market for each product category. The criteria are revised when most products within a group are eco-labelled. The revised criteria should then allow for a small portion of products in the product group to obtain the ecolabel based en the new revised criteria. 

The only product of significant interest for developing countries for which a label has been developed is the eco-label for textiles. lt has only been awarded for 6 products which cover a small market share. 

Licensces are essentially domestic companies, companies from Nordic countries and
multinacional companies such as Procter and Gamble, Johnson Wax, Unilever and Ultrarnar which are represented in Sweden. 

56  SSNC, Re-mark-able eco-labelling and the Swedish Societyfor Nature Conservation, 1993,
57   Eiderstróm Eva, The Merits OfEco-Labelling, 1993. 

Multinational companies which sell the same type of products , Sweden and other countries
have accused the Falcon and the Nordic Swan of creating negative trade effects for their products in the form of increased costs in terms of market segmentation. Indeed for certain products such as detergents, the fact that the European formula needs to be changed for the Swedish market has induced a loss in economy of scale. One large detergent manufacturer has alleged an increase in costs of 15 per cent.

Environmental Effectiveness 

One environmental consequence of the demand for unbleached or environmentally bleached paper fibre is tliat the discharges of chlorinated organic compounds were estimated to have been reduced from 175 000 metricc tonnes to less than 1 0 000 tonnes in 1993. The criteria for paper products have now been broadened to include the reduction in sulphur emissions, in optical whiteners and in the emissions of COD-⁵⁸. 

Nordic Swan

Market Impact

In recent guidelines adopted by the Nordic Eco-labelling Board⁵⁹, it is recognised that: "The market share held by eco-labelled products has a considerable bearing on the overall environmental gain. Accordingly, in the future efforts must be concentrated on the marketing and promotion of the ecolabelling scheme to maximize the availability of eco-labelled products through the retail trade (and) ... the need to develop a common Nordic marketing strategy should be considered, with a view to increasing the overall impact of the eco-labelling scheme." 

As demonstrated under the section addressing the effects of the Swedish Environmental Choice, eco-labelling has had an important market impact in Sweden, particularly for products such as detergents, paper products and cleaning products which are sold in retail chains. 

As previously mentioned, retailers have played a major role in promoting eco-labels in Sweden.

 ICA, one of the three largest retail chains in Sweden, decided in 1987 'lo launch a programme to make environmental issues a part of their ongoing business and strategy of work". The environmental policy and business plan developed aim to mitigate the environmental impact caused by the goods themselves, from production to consumption, and their distribution and handling. The environmental policy encompasses product range, consumer information, storage, packaging and transportation. The implementation of this policy with respect to the product range has namely given priority to eco-labelled products. Striving for a range of products as benign as possible, they influence their suppliers to develop products with as little adverse environmental impact as possible, throughout the product's entire life cycle.⁶⁰

The table below illustrates the Progress of eco-labelled products in ICA stores, from 1994 to 1995⁶²: 

 Both the Good Environmental Choice and the Nordic Swan have developed eco-labels for laundry detergents, dishwashing detergents and cleaning agents. 

T'he Swan has also had a visible impact on the market for photocopying machines. T'his is one example of a product which was already available on the market before it was labelled. Following a promotion and advertising campaign in 1995 for the newly labelled product, the market share of Scribona Office Machines AB rose by 20 per cent." 

Companies have also chosen to obtain the Nordic Swan for product advertising. 'The credibility of the Swan as both a quality and environmental label has served to enhance or at least maintain the overall quality image of products. lt is therefore in some cases not a question of market share but rather a question of image. For example, MIELE washing machines are top of the line products which are substantially more expensive than competing products on the market in Sweden. The MIELE washing machine is the only one to bear the Nordic Swan on the Swedish market. Obtaining the label for their product was considered as an additional guarantee for the consumer of the superiority of their product. 

61  Id,
62  The table was copied from the ICA Handlanlas AB Envirorunental Report 1995,
63  ICA Annual Report,
64  Nordic Swan Brochure.

⁶⁵  Personal communications with representatives of various companies with products bearing
      the Nordic Swan such as: Byggelit (building boards); Forbo (floor convering).

lt is interesting to note that products for which an eco-label is sought must comply with all relevant provisions in the legislation/laws of the place/ country of production.

Environmental Effectiveness

As an indication 16 environmental effectiveness of the Nordic Swan, a rough estimate was made by the Swedish Organisation which indicated that the eco-labelling of fine paper had resulted in an 11 per cent reduction in sulphur emissions from Swedish pulp and paper mills, a 21 per cent reduction in COD emissions and a 50 per cent reduction in AOX emissions. However, these figures are only indicative. 

A 1996 booklet published by the Nordic Council of Ministers containing results of an evaluation of the Nordic Swan⁶⁷ gives some indications of the environmental benefit achieved by the Nordic Swan to date. 

lt states that the eco-labelling of detergents has seen a complete end to the use of optical whiteners, certain surfactants and chelates. lt is also stated that the industry has confirmed that eco-labelling of these groups has played a major role in product development. Also, Swan-labelled oil-fired biolers reduce CO emissions by 78 per cent, NOx emissions by 58 per cent and CxHy emissions by 64 per cent compared with standard boilers, but since fewer than one per cent of all oll-fired boilers are Swanlabelled, the environmental effect is not significant.

 The fact that paper and detergents have long had a symbolic status in the debate, as was demonstrated under the section addressing the market impact of the Swedish Environmental Choice, may explain the good results for paper and detergents. 

With respect to consumer awareness of the Nordic Swan, the evaluation states that, based on a survey made in 1996, the Nordic Swan is known to 72 per cent of consumers in Norway, over 80 per cent in Sweden and 80 per cent in Finland.

A survey carried out by Eureka Research and the Roper Organisation in 1995⁶⁸gives an indication of the Swedes' attitudes and behaviour with respect to consumption patterns and lifestyles in relation to the environment. One section of the survey was devoted to environmental labels and other symbols and was carried out on the basis of 500 face-to face interviews in five different towns (Stockholm, Goteborg, Helsingborg, Karlstad and Umeea). The respondents were 50 per cen men and 50 per cent women, in the 16-74 age group.

According to the results of this survey, the Nordic Swan is recognised by virtually everybody (95 per cent). The Bra Miljovoval  is not as well known (48 per cent). However, it appears from successive surveys that knowledge of this environmental label has increased significantly over the past two years. In general, women know the symbols and trademarks better than the men and younger people better than older people. The proportion of people who associate the Swan and the Swedish Environmental Choice with less environmental pollution, environmental protection, something environment-friendly are 92 per cent for the Swan and 81 per cent for the Falcon. The proportion who consider that the symbols are very or fairly reliable are 68 per cent for the Swan and 69 per cent for the Falcon. 

Market Impact 

T'he Canadian Environmental Choice Programme (ECP) has gone through important changes
since its inception in 1989. Delivery of the programme has been privatised and it has evolved from a confrontational to a collaborative relationship with industry. Nineteen new guidelines (eco-label criteria) were released over the past year. 

Also, the scope of the programme has been extended from consumer products to the inclusion of services and events. The certification of services and events is growing rapidly. 15 to 20 per cent of the guidelines are now for services and 2 to 5 per cent of licensees are service companies. Certification of services can include printing, cleaning, Photo-finishing and car washes. The expansion of the programme to include services could have a substancial impact. Indeed, having 20 to 30 per cent of car wash services licensed could mean thousand of licensees. The certification of events such as the Pan Am Games would include the certification of design facilities, the management of waste and water, also the materials and energy used. 

Also, a strategy is presently being developed by Terra Choice to involve retailers in promoting the Eco-label and to incorporate the ECP in the development of public procurement policies. 

So far, general government procurement policies have not included environmental considerations, however some government departments have independently been developing their own green purchasing policies, such as Environment Canada, Transport Canada and Public Works and Services. No standard operating procedures have been developed concerning the purchase of green products which has made it difficult both for suppliers and purchasers. The EcoLogo, in this context, is serving as a useful tool to help government officials to identify environmentally preferable products. However, the product categories covered by the ECP do not respond to all their needs.

It is stated in the 1994-1995 Annual Report that:

A 1994 Environment Canada study of public sector procurement reported that federal, provincial and territorial governments are increasingly using the ECP, its guidelines and its certified products list to guide their procuremen activities. The ECP has also been approached by numerous representatives of cities, municipalities, school boards and other public sector organizations to get information on certified products to assist them in the greening of their procurement activities. ECP staff regularly make presentations at conferences, are invited guests at procurement courses and provide information sessions to companies on the Program and its participants.

 Also, accordIng to the ECP 1994-95 Annual Report, total public sector procurement in Canada, including provincial and municipal governments, Crown corporations and agencies, and institutions, is more than $75 billion per year. The ECP is a member of several procurement organisations (e.g.: ACCESS - Association of Canadian Cities for Environmentally Sound Strategies and GIPPER - Governments Incorporating Procurement Practices to Eliminate Refuse) which have mandates to promote green procurement practices.

An EcoLogo Products Catalogue has been produced. Known as the Ecobuyer Catalogue, this catalogue promotes EcoLogo products and services to senior buyers and material managers in municipal, provincial and federal government, the private sector and institutional markets plus specification writers, architects and designers across Canada and key buyers in the US. High levels of demand have emerged for the catalogue, which will be updated quarterly.

Information on the market impact of the ECP is largely anecdotal. The first few years of the ECP were not very successful but the programme has since greatly benefited from the new approaches developed following changes in its administrative structure.

Once again, the motivation for obtaining an EcoLogo is often associated with the fear of losing market share rather than the drive to increase market share. Improving or maintaining company image is also a key motivation.

The most successful product categories to date have been paints, fine paper and ethanol blended fuel. Their success could, at least in part, be due to the high level of consumer awareness with respect to the environment issues related to these products. Also, the EcoLogo for paints has become a public purchasing requirement. Approximately 70 to 80 per cent of paint companies have lines of paint which are eco-labelled.

Approximately half of ECP licensees are SMEs which have chosen to eco-label their products to create a market niche for new products they are launching on the market. Certain companies will choose no to apply for the EcoLogo fearing that they will not be able to keep it when the criteria is revised.

Often, once one company has applied for the EcoLogo for a specific product, competitors will follow and also apply for the eco-label.

Trade Effects

The Environmental Choice Programme seems to have a high profile internationally. Companies in Costa Rica and Argentina have requested information on the ECP.

15 per cent of licensees are foreign licensees and most of these are US. License fees are the same for foreign and domestic licensees. Testing and certification of applicants by Terra Choice may be more expensise if plants are located overseas. Foreign and domestic companies and products are treated equally, providing requirements are met.

One product category covered by the ECP for which products are largely manufactured in developing countries is reusable utility bags. The Canadian distributors for these products have applied for the EcoLogo. The main environmental goal is to reduce the number of regular, lightweight bags used in Canada. Reusable utility bags are meant to help reduce the petroleum and forest resources needed to make utility bags and also to decrease the amount of plastic and paper packaging destined for municipal landfill sites. In order to qualify for the EcoLogo, reusable utility bags must be made of strong and durable material, either natural or synthetic and may be reinforced by rivets or other strengthening parts.

Reusable utility bags also need to comply with some performance criteria such as minimum capacity requirements to qualify for the EcoLogo. 

The main purpose of the eco-label criteria on reusable utility bags is waste avoidance and the criteria is exclusively related to the use and disposal of the product. Under these circumstances, the EcoLogo should not constitute a trade barrier for products manufactured in developing countries, rather it could be seen as a market opportunity for utility bags made out of natural fibre.

 A majority of the eco-label criteria developed aim to promote products which reduce environmental damage during the use and disposal phases of the products. For instance the reduction of toxic emissions during the use of certain products such as ethanol blended fuels, driveway sealants, adhesives, water borne surface coatings, the reduction of energy consumption for household appliances, energy-efficient lamps. Others will aim at the reduction of waste such as reusable cloth diapers, reusable utility bags.

Only a limited number of products, such as sanitary paper products, do take into account non- product related externalities such as energy consumption, chemical oxygen demand, effluent toxicity and waste generation during the production process. A number of eco-label criteria also aim to promote the consumption of recycled products to limit waste generation and the consumption of non renewable resources (e.g. gypsum wallboard), the use of recycled oils in automotive engine oil, the use of recycled rubber for various types of products (e.g. automotive products, building and construction materials, sporting goods), fine paper from recycled paper (50 per cent recycled paper requirement), newsprint from recycled paper, remanufactured printing cartridges.

Under these circumstances, trade effects arising from productora related criteria remain a largely theoretical issue.

 On the basis of a Memorandum signed in October 1995 between ITRI and Terra Choice, the Green Mark Program implementation body in ROC (Taiwan) - the Industrial Technology Research Institute (ITRI), and Terra Choice Environmental Services Inc. agreed to pursue a bilateral co-operation and collaboration agreement addressing the mutual recognition of eco-labelled products.

 An informal agreement regarding harmonisation and mutual recognition has also been carried out with the Green Seal eco-labelling programme. This may include for instance, the mutual recognition of certification methods, the adoption by one programme of eco-label criteria developed by another (further details provided under Green Seal).

Environmental Effectiveness 

According to John Polak, the President of Terra Choice, the environmental benefit of ecolabelling will only be measurable in about ten years time. Eco-labelling is too recent to evaluate its environmental effectiveness. 

To achieve an environmental benefit there is a need to strike a balance between the stringency of the criteria and the number of licensees. The environmental benefit will accrue over the years with the increase in number of licensees and the increased stringency of the criteria. T'he key is to find the right balance. On the one hand, lf the criteria are too stringent and the number of licensees is limited then no environmental benefit can be achieved. On the other hand, if the criteria are too weak and a large number of licensees bear the EcoLogo . the environmental benefit can not be achieved.

 According to the 1994-95 Annual Report en the Environmental Choice Programme:

Public opinion surveys on Canadians and the Environment in 1994 indicated that the Environmental Choice Programme has credibility and is well positioned to provide needed consumer information and that consumers are interesed in environmental information on the Products being purchased. Our aggressive marketing efforts in the latter part of this year have allowed us to achieve  a 7per cent increase in overall awareness levels (from 37per cent in the fall of 1994 to 44per cent in early 1995). 

T'he 1995-96 Report indicates that in 1996, the awareness of the EcoLogo and the Program stands at 49 per cent. This represents an increase of five points over the level of April 1995 and a 12 point increase over the level of October 1994. The 1995/1996 strategy has been to build on the awareness achieved to date, to mercase the visibility of products carrying the EcoLogo and to stimulate awareness and demand in selected markets. 

The Report also highlights that, according to a recent survey conducted on behalf of the ECP, by Insight Canada Research, over 69 per cent of Canadian public and private sector paper buyers are aware of the EcoLogo and the ECP. 

Blue Angel

 The main forces which have contributed to the success of the Blue Angel are the media and consumer organisations. The media, more specifically local media and the specialised press, have been very active in raising environmental awareness and have contributed to increasing awareness of die Blue Angel and the greening of consumption and production pattems more generally. Campaigns were also organised by consumer organisations to encourage consumers not to buy self certified labelled products. T'hey have worked jointly to inform and advise consumers on environmentally preferable products and in this context, the Blue Angel has served as an educational tool and a catalyst in the discussion on environmentally preferable products. The Blue Angel is considered as a transparent, credible programme whereas self-declaratory claims have rather created confusion among consumers.⁶⁹

 Market Impact

Public procurement also gave a strong impetus to the increasing success of the Blue Angel. in Lander and municipalities, public procurement guidelines recommend the use of the criteria developed for the award of eco-labels as a valuable tool to identlfy environmentally preferable products. 

Concerning data en the actual market share of eco-labelled products, very little information is available. The following gives an indication of the market impact of eco-labelled products for certain specifíc product categories. 

In March 1995, the market share of Blue Angel paints was above 60 per cent in the Do-It Yourself-sector, but only 20 per cent In the handicraft sector. In 1981, the market share for low emission paints was 1 per cent. For recycled paper products, an increase in market share of eco-labelled products was observed as follows: in 1993, 64 per cent for sanitary paper products compared to 32 per cent in 1986; and respectively 24 per cent for administrative paper products compared to 13 per cent.

Some products have not fulfilled the expectations in terms of consumer demand, e.g. products made from waste plastics or soil improvers containing compost rather than peat. 

An assessment of the Blue Angel's impact on the market share of emulsion coatings (low pollutant paints) was undertaken. According to the Verband de Lackindustrie and the Pigments and Coatings Research Institute⁷² most low solvent/solvent-free emulsion coatings used for painting and decorating and reported in official production statistics now bear the Blue Angel eco-label. 

The effect of the Blue Angel was identified through a comparative analysis of production trends for emulsion varnishes and other low-solvent/solvent-free coatings and solvent containing coatings. 

The share of low-solvent/solvent-free coatings as a proportion of total output in Germany increased from around 14 per cent in 1986 to over 22 per cent in 1993. The share of coatings containing solvents fell from 86 per cent to 77 per cent over the same period. The share of alkyd resin varnishes as a proportion of total production fell from 28 per cent in 1987 to 22 per cent in 1993. The share of emulsion varnishes, the more environment-friendly substitute products awarded the Blue Angel in 1988, rose over the same period from 2.7 per cent to almost 5 per cent. The share of emulsion varnishes as a proportion of total production rose much more sharply than that of all low-solvent/solvent-free varnishes. At the same time, the share of alkyd (synthectic) resin varnishes fell more sharply than that of all solvent-containing varnishes. 

It is apparent from these production trends that low-solvent/solvent free coatings have gained market share and that the market share of emulsion varnishes, awarded the Blue Angel, increased by more than the average. lt may be plausible to conclude that the Blue Angel was the key factor behind this increase in market share, especially as the market share of the directly substitutable product, alkyd resin varnish, fell by more than the average.

 T'he average production value by weight of emulsion varnishes, the majority of which have been awarded the Blue Angel, rose by more than the average, almost doubling between 1987 and 1993. 

⁷³  The two charts were provided by the RAL, Umweltbundesamt.

Soil improvers and soil adjuvants made from compost which have been awarded the Blue Angel still have a very small market share. However, substitute unlabelled products also would satisfy the label criteria. While it might be the case that the Blue Angel has had an impact akin to standard-setting, the market effects per se have not been discernible.

The eco-label for rapidly biodegradable hydraulic fluids has been extensively discusse in symposiums and workshops, therefore it is thought to have achieved important influence on the production behaviour of manufacturers. The laber for sound-proofed glass collection bins for noise-sensitive areas has had an important effect in improving the sound attributes of these products even though the label for these products is not very visible on the market.

The Blue Angel has contributed to the establishment of environmental standards for office equipment such as copiers and computers. These new eco-labels have attracted attention from producers world-wide and also from other eco-labelling programmes. Also, reusable ribbon cassettes and refillable toner cartridges have had important effects, indeed without the Blue Angel the product would be very difficult to sell in Germany.

Trade Effects

The Blue Angel focusses on product related criteria. The reduction and avoidance of environmental damages which occur during the production stage of certain products are left to legislative and regulatory measures. Therefore, product categories which cause an unacceptable level of environmental damage during their production are not generally selected for eco-labelling Methodological difficulties in defining and verifying environmentally sound production standards and potential negative trade effects or concerns are thereby avoided ^74.

Although the Blue Angel eco-label criteria for paper products does set minium thresholds for wastepaper content, it does not however include requirements to minimise environmental externalities which occur during the production of paper. To address environmental effects which may be caused by the chlorine content in paper (e.g. to water) criteria have been developed to avoid chlorine bleaching processes.

Also, in order to obtain the eco-label, domestic products mus comply with the legal requirements of competent states (Lander) related to the production stage of a product. Imported products are not submitted to these requirements.

Of the 76 product categories covered by the Blue Angel, none are products of particular export interest to developing countries. However the FEA is now working on the development of an eco-label for products made of rattan (furniture) and jute in co-operation with developing countries. These eco-labels would give developing countries such as Bangladesh and India the opportunity to apply for an eco-label for their products destined for export⁷⁵. In the context of the German development co-operation programme, FEA employees have contributed as consultants to the development of eco-labelling programmes in developing countries.

According to Harald Neitzel of the FEA, one third of the products which have obtained the Blue Angel are foreign products. However, since the eco-label is often awarded to the importer or distributor, only 17 per cent⁷⁶ of parties awarded the Blue Angel are foreign licensees.

Some complaints were expressed by Chile, Brazil, Canada and the USA over the recycled content criteria for paper products.

The following list illustrates the number of foreign companies with which contracts have been signed for the use of the Blue Angel: ⁷⁷

Environmental awareness has increased significantly in German households in recent years. However, sociological studies hive shown that higher levels of environmental awareness do not necessarily translate into corresponding patterns of purchasing behaviour. A 1990 market survey showed that although over half of all German households consider themselves to be environmentally aware, environmental awareness translates into corresponding consumer behaviour in only a third of them. Numerous factors influence the relationship between environmental awareness and consumer behaviour such as the pleasure of consumption, effectiveness, identification to environment related features, cost, personal utility and availability.⁷⁹

When asked how often they paid attention to labels on packaging giving indications about the environmental effects of products, 48 per cent of respondents in the West and 44 per cent in the East answered either "always" or "often". lt can be concluded from this that less than half of all consumers pay much attention to environmental indications on packaging. The other half seem to be only moderately interested in such information or case ignore it entirely. 

When consumers were asked how they recognised whether a product was environment friendly, 50 per cent of respondents In the West and 33 per cent in the East cited the "Blue Angel". According to the study, since 1992 attentiveness to the Blue Angel as a label for environment-friendly products seems generaly to have fallen in West and East alike. Overall, the results may be taken to indicate that consumers are slowly but surely becoming confused by the proliferation of eco-labelling systems. 

78 Karl Ludsvig Brockmiii and Jens Hermelskalnp, Umwelízeichen und Verbraucherverhalten - Wie,,grinl,         ist der Blaue 1-,'n g c 1 ?, Zentrum für Europaische Wirtschaftsforschung, Mannheim, 2 October 1995, 79 Eine Infonnation des Bundesumweltministeriums, Umweltbewubtsein in Deutschland - Ergebnisse einer        reprásentativen Bevolkerungsumfrage 1996, Berlin 1996.

With respect to changes in producer behaviour, it appears that the Blue Angel has accelerated the development of technology  for different heaters and other equipment⁸⁰. For instance, the criteria for oil burners have been revised five times since 1980. 

In a study, carried out by UNCTAD in 1995⁸¹, it is reported that a few years after the introduction of Blue Angel eco-labels for oll and gas heating appliances, emissions of sulphur dioxide, carbon monoxide, and nitrogen oxides were reduced by more than 30 per cent and that the energy efficiency of these appliances had improved significantly. Also, after the introduction of an eco-label, the market share of low-solvent paints and vamishes went up from 1 per cent to 50 per cent while the amount of solvents released into the environment were estimated to have been reduced by some 40 000 tons. 

Green Seal

Market Impact 

Infomation concerning the effect of the Green Seal on sales or market share is not available. Green Seal has sought this information from certified product manufacturers but was not able to obtain it as it is considered as proprietary marketing information. However, several manufacturers were willing to attest that the Green Seal has contributed to increasing their sales of household cleaning and paper products. The Green Seal Annual Report 1993-1994 contains the following quote from Scott Petrequin of Mohawk Paper Mills Inc.: The Green Seal shows that the manufacturer has taken the extra step to go to a non-politicized third party group for certification of its environmentally sound products. And we're particularly pleased that the Green Seal on our products has boosted sales. 

T'he success of thc Green Seal eco-labelling scheme has been rather limited so far, in part due to the reluctance of industry to engage in third party eco-labelling. Nevertheless, some well-known manufacturers such as General Electric, Sherwin-Williams, Carrier and others are part of the programme.

Procurement, namely through the Environmental Partners programme has been an important source of demand for Green Seal products. Under this programme, Green Seal helps organisations, such as businesses, universities and local governments to develop and adopt a green procurement policy. This policy will involve the purchase of Green Seal certified products and other environmentally preferable products. These products must however be cost-competitive and meet the Partners requirements for quality and performance. Some Environmental Partners even demand that their suppliers provide Green Seal certified products. Manufacturers may also be encouraged to have their products certified to benefit from the large market which Environmental Partners represent. 

 Trade effects 

As of September 1996, out of a total of 17 licensed companies, 4 of these are foreign licensees (3 Canadian and 1 Korcan) which corresponds to approximately 24 per cent of licensed companies. These 4 foreign companies have obtained an eco-label for 26 products out of 318 products bearing the label. A Korean company. Oxy Company Ltd has obtained the Green Seal for Oxy-Clean Powdered Bleach. 

T'hese foreign manufacturers have had products labelled In household cleaners paper/newsprint water efficient fixtures and automotive products.

Some American companies have also obtained the Green Seal for products manufactures in foreign countries. A.V. Olsson Trading Co. has obtained a license for 3 products (Beyond Gourmet Unbleached Coffee Filters, Beyond Gourmet Unbleached Baking Cups, Beyond Gourmet Unbleached Parchment) which are maufactured in Canada and Sweden. 

T'he Green Seal and the Canadian Environmental Choice Program have experimented, to some extent, with harmonisation and mutual recognition. For instance, several standards from the ECP have been adopted by Green Seal. such as eco-label criteria for newsprint and reusable utility bags. T'his process has helped Green Seal to develop eco-label criteria more quickly. Also, manufacturers who sell on the North-American market can more casily apply for both the Green Seal and the ECP lf the eco-label criteria for both programmes are similar. 

The mutual recognition of certification methods has also been trialled. Since the eco-label criteria of the Green Seal and the ECP were comparable, a programme was set up to recognise ECP certification for certain paper categories. Green Seal, in return,, has provided the ECP with  a number of eco-label criteria. Finally, Green Seal has also adopted some Canadian procedures for certification.

Environmental Effectiveness

An evaluation of the credibility of the Green Seal was done at the inception of the program. A survey indicated that consumers would trust the independent Green Seal even more than a government label. The recognition level of the Green Seal has never been evaluated. 

T'he Green Seal is considered as having had modest success so far. Green Seal has certified over 300 products which is reasonable for a young program but relatively small compared to the overall American market. The environmental benefit to date can therefore only be limited.

Japanese Eco - Mark

Market Impact 

The market penetration of eco-labelled products has never been evaluated. The portion of EcoMark labelled products en the market is considered to be relatively small. The programme does not cover complicated products such as household appliances, office machines, automobiles or detergents.

The most successful product categories so far seem to have been printing and copy paper which have succeeded ni promoting increased recycled pulp content which can meet the Eco-Mark criteria. When the Eco-Mark for paper products was first introduced, industry was not ready to comply with the criteria for obtaining the Eco-Mark which required a high level of recycled paper. However, along with increasing consumer awareness of environmental issues, consumers demonstrated their preference for Eco-Mark paper products and industry increased the recycled paper content of their products in order to qualify for the Eco-Mark. 

82  Outline of Green Purchasing Network, February 1996
83 The Action Plan for Greening Government Operations, June 13, 1995 

V. General Remarks on the Actual Effects of the Schemes

Market impact 

The information gathered for this study suggests that the impact of eco-labelled products on the market is directly linked to the general level of environmental awareness and consequently the consumer demand for green products. In a country such as Sweden with a relatively high level of environmental awareness of green products there has been a significant impact on the market. In general however, eco-labelled products have not had a significant impact on the market, except in specific product categories. T'he involvement of environmental NGOs, consumer organisations and the media are key factors which have contributed to increasing the level of consumer awareness of environmentally preferred products in certain countries (e.g. Sweden, Germany).

Overall, eco-labelling has been, at best, moderately successful with individual consumers. The Proliferation of all types of environmental labels on products has created confusion among consumers and official eco-labelling programmes have not succeeded in avoiding this problem. Also, the current difficult economic situation has stimulated consumers to "buy cheap" rather than "buy green".

Eco-labelling schemes have greater impact when eco-labels become a requirement imposed by  retailers and/or when they are used as tools to identify green products for government procurement and institutional purchasing. In this context, the demand for eco-labelled products has encouraged and sometimes even forced manufacturers to obtain an eco-label for their products. This is the case for detergents and cleaning agents sold in retail chains in Sweden; for paints purchased by public authorities in Canada; for products sold to public authorities in Germany; and for products sold to Green Seal Environmental Partners in the US.

For both of the private eco-labelling Programmes the Swedish Environmental Choice Green Seal, and also for the, ECP, the privately managed government Programme, eco-labelling is part of a broader strategy aiming to educate consumers at various levels (individual, institutional, governmental), guide them in their purchasing decisions and sometimes grant them a "green" image. The eco-label is only one of the tools used. For the Green Seal and the Falcon, a variety of other tools have been developed, e.g. green shopping guides, campaigns (Green Seal -- University Outreach Program including the "Campus Green Buylng Guide"-, Good Green Buy: Shop and Act Green Campaigns).

While official government supported eco-labelling programmes have traditionally limited their focus to product eco-labelling, they seem to be increasingly shifting their attention towards government and institutional purchasing. Some eco-labelling programmes, such as the Canadian ECP and the Nordic Swan, are now turning to tlie eco-labelling of services.

The impact of the eco-label on the market for a specific product is difficult to evaluate. The eco-label is only one of many factors which can influence the market penetration of products. Nevertheless, in choosing the eco-label for their products, manufacurers are often motivated by the potential competitive advanage the eco-label may procure them.

It should be stressed that market impact of eco-labelled products is only one indication of an eco-labelling programmes success. In fact, eco-labelled products should not cover more than a small percentage of the market in order to attain their goal of selectivity. For eco-labels to reach their optimal objective, a balance should be reached between the strigency of the criteria and the number of eco-labelled products. -The number of licensees and the number of eco-labelled products are considered by those running eco-labelling programmes as the main indication of a Programmes' success.

Trade Effects

Information gathered during the course of this study, recognising data limitations, did not reveal ard evidence of changes in trade flows arising from the selected eco-labelling Programmes. However, fears and concerns have been voiced as to potential effects.

 85  House of Commons Session 1995-96, Environment Committee, Fourth Report, Workd Trade and the En
       vironment, Volume 1, p lix, Box 9 -- The Impact of Eco-labelling Schemes in Thailand : Portion of text was
       extracted from "Trade and Environment - Thailand and Eco-Labelling - First Draft" by Sophia Wegzell
       for the Thailand Environment Institute. Text distributed at the UNCTAD workshop on Eco-labelling and
       trade in June 1994.

* "Foreign Licensees " is not equivalent to "foreign products" or foreign firms".