opportunities in europe for environmental...

Opportunities in Europe for Environmental Labels

Countries: France, Germany, Italy, Poland, Sweden

European Commission/Environment Directorate-General (DG Environment) 16th of May 2017 Edita Bauzinske Team Lead Tel: +370 5 243 1577 x 4627 [email protected] Jon Haydon Head of Consulting (Europe) Tel: +44 207 251 8024 x 1217 [email protected] Sarah McArthur Consulting Manager London New Business Tel: +44 207 251 8024 x 1281 [email protected] Ruth Bysshe Account Manager Tel: +44 207 251 8024 x 1353 [email protected]

© Euromonitor International Ltd 2017. All rights reserved. This report was produced by Euromonitor International for the

European Commission/Environment Directorate-General (DG Environment). The information in this report includes

research estimates based on publically available sources, trade interviews and data manipulation. The bases and

assumptions for the projections assume a stable social and economic environment and outlook in the relevant countries

and assume there will not be any external shocks. All source material is therefore provided without any warranties or

representations and any reliance on such material is made at users’ own risk. Excerpts from this report can be used on

condition that their source and author are identified. Contract ref number is: ENV.B.1/SER/2016/0042MV

mailto:[email protected]




Environmental Label Analysis – Opportunities in Europe for Environmental Labels

2

List of Contents and Tables

1. ENVIRONMENTAL FEATURES ANALYSIS ............................................................. 3

1.1 ABSTRACT ....................................................................................................................... 3

1.2 RESEARCH BACKGROUND ................................................................................................ 4

1.3 RESEARCH METHODOLOGY ............................................................................................. 5

1.4 RESEARCH FINDINGS ..................................................................................................... 10


© Euromonitor International

1. ENVIRONMENTAL FEATURES ANALYSIS

1.1 ABSTRACT Euromonitor International was commissioned by European

Commission/Environment Directorate-General (DG Environment) in order to

understand the market potential of products with environmental labels and/or

those that communicate such a message.

The objective of this study is to provide data estimates on market evolution of the

sales of products carrying certified environmental features, and benchmark their

evolution in comparison to overall growth in the respective categories. It also aims

to measure the success of products perceived as environmentally-friendly by

consumers and gauge the relative success of particular types of certifications/labels.

Assessing the economic impact that such labels have on product performance will

help to inform future policies that the EU could enact in this sector.


Euromonitor International

1.2 RESEARCH BACKGROUND Companies are under increasing pressure to demonstrate social conscience and a

commitment to corporate social responsibility, led by both consumer demand and

business stakeholders. In response, such companies are more sensitive about the

environmental impact of the goods and services they provide, which has led to a

proliferation of labels and claims for environmental features. Awareness around

environmental labelling has helped to develop demand for certified products, and

for products and supply chains that are ethical, sustainable and environmentally-

friendly.

Within the European Union (EU), several policies have been established in order to

promote sustainable production and consumption. Examples of existing EU policies

include EU Ecolabel, the energy label and green public procurement (GPP).

Following Recommendation 179/EC published in 2013 on Product and Organisation

Environmental Footprint methods, the Environment Directorate-General of the

European Commission (DG Environment) started a three-year pilot phase in order

to test these two methods and develop product-specific and sector-specific category

rules for the calculation of the environmental footprint of products and

organisations. Since the end of the pilot phase is approaching (expected in

November 2017), DG Environment is looking into the possible use of these methods

in existing and future policies.

To assess the economic impact of changes in existing policies and introduction of

future policies related to “green products”, DG Environment commissioned a report

to understand the market potential of products with environmental labels and/or

those that communicate such a message as a relevant input. In order to achieve this,

DG Environment required data on the evolution of sales of products that carry

certified environmental features, their share of sales within categories and a

benchmark of their growth in relation to the overall category.



1.3 RESEARCH METHODOLOGY

Research scope

Euromonitor International used existing data in conjunction with desk research,

store audits and trade interviews to assimilate market sales data for 2015 and 2016

for five key countries to capture the diversity that exists within the EU:

France

Germany

Italy

Poland

Sweden

These countries were selected in collaboration with the European Commission

during the alignment phase as best matching client interests. Market sales data for

2015 and forecast data for 2016 was collected for these markets. Existing internal

data was finalised in 2015 using 2015 as the base year. Although the custom

research conducted for the additional label categories included in this report was

carried out in 2016, 2015 was retained as the base year for standardisation

purposes.

The sales data covers the following food and drink and non-food and drink

categories:

Food and drink:

Wine

Apples

Coffee

Olive oil

Cheese

Dried pasta

Processed meat

Bottled water

Dog food

Non-food and drink:

Laundry care

Footwear

Jackets and coats

Shirts and blouses

Decorative paint

Televisions



Research stages

Stage 1: Leveraging in-house data

In the initial phase, Euromonitor International collated market data available in its

own in-house database, Passport, which contains data on retail sales and brand

shares from 2015 to 2016 on hundreds of consumer products across its research

scope of 25 consumer industries, six of which are directly in line with DG

Environment’s project specifications. These are coffee, olive oil, cheese, dried pasta,

processed meat and bottled water. For some categories (wine, bottled water,

cheese, dried pasta, coffee, processed meat, footwear, televisions, laundry care and

decorative paint), Euromonitor International used its existing certified

environmental/ethical label data; this information was used as the basis for

research and further corroborated during fieldwork.

Stage 2: Desk research

After collating in-house data, Euromonitor International conducted a gap analysis

and initiated a phase of desk research to build a stronger understanding of the most

popular certified environmental/ethical labels in use, and the brands using them. To

achieve this, Euromonitor International consulted manufacturer websites, including

their Corporate Social Responsibility (CSR) pages, annual statements and reports,

trade press, specialist industry press and international sources such as

ecolabelindex.com, sustainable-cleaning.com and naturtextil.com. This helped to

narrow in on the key companies where a list of interview contacts was developed

for our primary research phase.

Stage 3: Store audits

As the first part of our primary research phase, Euromonitor International

conducted a total of 126 store audits across five countries (France: 25; Germany: 25;

Italy: 25; Poland 25; Sweden: 26) in a variety of retail channels including

supermarkets, hypermarkets, discounters, convenience stores, forecourts and

specialist stores in order to capture the diversity of products sold through different

channel types. In order to capture the widest possible breadth of products, audits

were conducted both in physical stores and online stores. This analysis was made

more accurate by marrying this up with information from our Passport database

regarding the top brands per category and per country, using their share data

combined with physical evidence of their use of labels to help build the proportion

In-house dataanalysis

Desk research Store auditsTrade

interviewsValidation and

finalisation



of the market bearing a certified environmental/ethical label. This evidence was

then further validated in the interview phase.

Stage 4: Trade interviews

A total of 54 interviews were conducted with key players active in certified

environmental/ethical labels, averaging around 10 per country. These included

interviews with key market players, trade associations, government bodies and

certification bodies. Analysts used discussion guides (instead of questionnaires) to

frame open-ended conversations with the goal of gathering deeper insights.

Interviews were conducted by local, in-country analysts in each country and focused

on dialogues with brand manufacturers about certified labels, how this impacted

company performance, their rationale for selecting certain certifications and how

they see the market evolving. Euromonitor International also spoke to national and

international associations and advocacy groups on how the market is evolving, and

to retailers on how labels are promoted in-store. The perspectives of all types of

stakeholders gave a unique insight into the market.

Stage 5: Data validation and analysis

Once the labels information in the steps outlined above was collected, this

information was then applied to value sales from our existing data and market sizes

were built from this, taking our validated ratio of products bearing labels. The

resulting data was cross-checked against internal information regarding companies

and brands, and against that uncovered through the primary research phases. The

final output created includes a Word report (this document), the Excel data file and

a PowerPoint presentation. Additional explanations on market size methodology are

below and in the excel data file shared with DG Environment.

Methodology Limitations

The research process faced some structural challenges linked to the limitations of

in-house data and to label definitions:

Euromonitor International holds existing environmental label data for

coffee, olive oil, cheese, dried pasta, processed meat and bottled water; new

research was carried out for the other categories.

Euromonitor International filled these gaps in category coverage through

desk research, store audits and trade interviews, the number of which was

limited by project timing and budget constraints.

Presence ratios for environmental labels were calculated based on 2016

data gathered during store audits, and this same ratio was applied back to

2015 market data.

Products and brands that were identified carrying more than one

environmental label (duplicates) were present across the market. In these

cases, environmental group data was calculated by selecting the label type

with the highest ratio was selected to avoid double counting.



Label spanning across multiple environmental label types pose a challenge

when it comes to categorizing this under the right definition. A qualitative

assessment was made of the predominant features of these labels in order to

allocate them to one label type and avoid double counting.

In line with an additional data request from DG Environment, volume data

was calculated based on applying presence ratios to Euromonitor

International in-house Passport market data. This provided an high level

indicative dataset that was not further substantiated by validations against

detailed pricing analysis due to time and budget constraints.

In terms of category coverage, Euromonitor International already had market size

and brand data in value terms (€ million) for 2015 and 2016 for coffee, olive oil,

cheese, dried pasta, processed meat and bottled water. In the Passport database

Euromonitor International also had certified environmental/ethical label market

size and brand share data in value terms (€ million) for 2015 on wine, bottled

water, cheese, dried pasta, coffee, processed meat, footwear, televisions, laundry

care and decorative paint. These data were extracted from Euromonitor Passport

database and shared with DG Environment without additional research.

Additional data for apples, dog food and non-food and drinks categories were

estimated based on research conducted between December 2016 and March 2017.

2015 was selected as the base year in order to be consistent with existing Passport

data with calculation for new research categories based on research conducted in

2016.

A presence ratio for each category indicating the % presence of each environmental

label type was applied to existing in house market value data in order to estimate

environmental sales per category. This ratio was estimated based on store audit

observations, validated through interviews conducted through the research process

and was applied consistently to both 2015 and 2016 value sales data. The presence

ratio is intended to indicate the proportion of products in any given category

carrying a specific environmental label type (ie: 52% of dog food brands in France

carry recycling labels). This data serves simply as a rough indication of presence

based on 25 store visits and 10-15 interviews per country and should not be viewed

as a definitive statistic. The full calculation process for the presence ration data has

been highlighted in the methodology section of the attached Excel file.

For each product category Euromonitor also calculated environmental group data.

In order to avoid double counting only one ratio per environmental label type was

considered, selecting the highest ratio for each category. As shown in the example

below, the environmental labels ratio selected for laundry care is 95% as this is the

highest % presence ratio when looking at the two types of labels present for this

category, Production/Sourcing requirements and Recycling labels.



Category Label Type % Presence Ratio

Laundry Care Environmental Labels 95%

Laundry Care Production and sourcing

requirement

95%

Laundry Care Recycling Label 85%

Research included some multicriteria labels, such as Svanen, Blue Angel and the EU

Ecolabel, which fall under multiple environmental group types due to their wide

range of qualifying criteria. In these cases, categorisation of the label was based on a

qualitative assessment of their predominant traits with regards to future trends for

environmental labels. For example, Svanen, Blue Angel and the EU Ecolabel are all

categorised as Production/Sourcing Requirements labels.



1.4 RESEARCH FINDINGS

Consumers willing to pay more for credible environmental labels

The growth seen in environmental/sustainability labels, with food and drinks up by

2.6% over 2015 and non-food and drinks up by 0.2%1, is largely led by growing

demand from consumers seeking out environmentally-friendly products and

demanding clear, credible evidence of a product’s eco status which strongly

supports the use of environmental labels. In 2016, 37% of all reviewed categories

sold (29% of reviewed food and drinks products, and 53% of non-food and drinks

products) carried environmental labels: these products evidently have a strong

foothold in both food and non-food sector, with clear room for further growth. It is

further indicated that consumers are willing to pay a higher price for products that

offer trustworthy claims of environmental responsibility.

Evidence from interviews with a range of stakeholders supported the view that

consumers are driving this growth and not the brand manufacturers, led by growing

awareness among the European consumer base regarding environmental and

sustainability issues. According to Euromonitor International’s Global Consumer

Survey, 66% of consumers globally claimed to try to have a positive impact on the

environment every day in 2016, up from 65% in 2015.2 Once a niche area,

environmental awareness is now more widely accepted, with sustainable products

moving into the mainstream, via mass-market retail formats and major

international brands. This movement is at different stages across the region, with

Sweden furthest along in the region’s development in this regard, and Poland at an

early stage of development. With some exceptions, brand manufacturers have

reacted to consumer demand in this area.

Consumers are also more attuned to greenwashing and misleading environmental

claims. The rise of social media has given the consumer the ability to find out about

a company or brand’s environmental record quickly and to disseminate this

information through apps such as Buycott.3 As a result, vague green claims are no

longer enough to influence consumers: a credible certification is needed to convince

consumers that a product is truly environmentally- or ethically-friendly.

Further to this, evidence from interviews indicates that consumers are willing to

pay higher prices for products that are clearly and transparently seen to have

credible and strong environmental records. This is backed up by data from

1 Euromonitor International from Passport/store audits/trade interviews 2 Euromonitor International Global Consumer Survey 2016 3 https://www.buycott.com/ Site accessed 12.04.2017

https://www.buycott.com/



Euromonitor International’s Global Consumer Survey4 which found that, globally,

65% of consumers agreed that they would pay more for natural products, 50%

would pay more for organic products, 34% would pay more for sustainable

products and 30% would pay more for Fairtrade products.

However, while consumers are keen to seek out environmentally-labelled products

and willing to pay more, it was found that they consider the environmental

positioning of a product to be a secondary factor in decision-making, following

quality and price.5 While eco-labels are clearly a strong selling point, a product also

needs to compete effectively on these levels too. Although environmental concerns

are commonplace for the European consumer, many people only choose

environmental products when they are also cost-effective, good quality and

convenient or easily available. In this regard, an environmental label can be an

excellent differentiator when all other purchasing factors are strong, but it is not a

sticking plaster solution for a weak product or brand.

This indicates a clear opportunity for the further development of environmental

labels in Europe. Using a credible environmental label, particularly a Type 1 ISO

label which commands consumer trust, not only helps a manufacturer differentiate

its products from others of similar quality, but can allow for higher pricing and

margins, boosting overall product performance.

Key labels: Food and drinks

In food and drinks, total sales of environmental/sustainability labels reached

EUR45.3 billion in 2016, up by 2.6% on 2015. 29% of all food and drinks in the

surveyed categories were found to carry an environmental label. Across the region,

sales of products incorporating environmental and other ethical labels are boosted

by a broad interest in health and wellness, and in ensuring product quality: these

trends inform growth in labels such as Organics and Origins. However, in the more

environmentally-developed markets, particularly Germany and Sweden, there is

also a more sophisticated approach to environmental issues, which is driving up

interest in environmental labels relating to sustainability, responsible forestry and

footprints, such as carbon and water footprints.

Income levels also factor in here: as disposable incomes rise, consumers are more

able to make choices based on environmental concerns. This is particularly the case

in Poland, where environmental labels are typically a premium product: higher-

income consumers are not only better able to afford these products, but also more

4 Euromonitor International Global Consumer Survey 2016 5 Euromonitor International Global Consumer Survey 2011 (for the multi-answer question, “Which of these factors is important to you in purchasing decisions?” 52.8% selected green or environmentally-friendly, and 50.8% selected Fairtrade. This compares to 91% for quality and 86% for price.)



likely to be more environmentally aware due to higher levels of education and travel

experience. To target Poland, partnering with premium retailers such as food

boutique shops where consumers prioritise factors such as product background

(Organic- or Origin-labelled items) or sophisticated tastes (such as Italian speciality

wine or French cheese) over price is recommended.

In Germany and Sweden, environmentally-labelled products are much more

mainstream and, while carrying a mark-up compared to similar products, are

affordably priced and sold through discounters and supermarkets.

Chart 1 Total value sales of environmentally-labelled food and drinks by label type 2016

Source: Euromonitor International from Passport/store audits/trade interviews Note: Data is the aggregate of the five surveyed countries. Food and drinks is the aggregate of apples, bottled water, cheese, processed meat, coffee, dog food, dried pasta, olive oil and wine sales.

The dominant label in all surveyed markets is that of Recycling, which accounts for

95% of all environmental labels by value. This is a relatively easy label for

manufacturers to implement compared to Carbon Footprint labels, for example.

Other environmental labels are at a relatively early stage of development. While the

Recycling label is showing positive growth, this is primarily derived from the

positive overall growth in products bearing the Recycling label, with little growth in

the penetration of Recycling labels, which are close to saturation point.

As such, this is not a key opportunity: instead, the primary opportunities lie in labels

that are less well developed but are moving into the mainstream, including

Responsible Forestry (up by 3.1% on 2015), notably Rainforest Alliance coffees and

FSC-labelled bag in box wine as well as other FSC-labelled packaging, and

95%

3%2% 0%

Recycling Label Responsible Forestry Sustainable Trade and Farming Carbon Footprint



Sustainable Trade and Farming (up by 2.1% on 2015), such as Fairtrade and UTZ

coffee, wine and cheese. In Sweden and Germany, products bearing these labels are

becoming more mass-market, with discounters gaining strength with Fairtrade

private label coffee, and major brands such as Tchibo (Fairtrade) and Kraft

(Rainforest Alliance) also helping to drive these labels into the mass market.

Although Carbon Footprint labels are currently niche and have only shown slow

growth to date, of 1.5% over 2015 levels, this type of label also offers opportunity

in the medium term, as do other footprint labels, notably water footprint labels.

At present, these labels are best accepted and understood in more environmentally-

developed markets, such as Germany and Sweden, which should be primary focal

areas for companies wishing to launch environmentally-labelled products. In

Germany, total sales of products with environmental labels increased by 2.6% over

2015, while for Sweden growth was a faster 3.5%, both cases outpacing the region

as a whole. In Sweden, Responsible Forestry levels saw the fastest growth at 4.5%,

due to growth in Rainforest Alliance coffee and FSC bag in box wine, but positive

growth was noted in all labels; this is also one of the few markets where the Carbon

Footprint label is emerging.

In Germany, it is Sustainable Trade and Farming leading the way through the

mainstreaming of Fairtrade coffee with growth of 3.6%, followed by Responsible

Forestry at 2.4%, thanks to growth in FSC bag in box wine. Carbon Footprint labels

are not yet evident here although there appears to be potential in this market, given

the high levels of environmental awareness; however, the complexities of carbon

labelling in terms of calculations and ease of consumer understanding have

restricted its emergence to date.

Consumers in these markets are typically aware of environmental issues and well

informed regarding labels; nevertheless, the mass of different labels causes some

confusion. Focus in these markets should be on authentic, credible, authoritative

labelling adhering to clear, measurable targets that look at sustainability throughout

the supply chain. In particular, ISO Type 1 labels offer clarity and credibility based

on lifecycle analysis and should be the key focal point for future label development.

In Italy and France, the consumer push towards reassurance regarding quality,

provenance and health appears stronger than the push towards sustainability,

although the latter is clearly emerging. Consumers in these markets are deeply

invested in supporting local, traditional products, such as cheeses and wines, and

are confident about the production methods and workers’ rights linked to these

products: this limits the drive towards sustainability labels – sustainability is

considered to be implied by guaranteed local production. Here, Organics and Origins

labels stand out as opportunities for further development.



Organics sales are boosted by consumer concerns about food quality and about

natural ingredients and the safety of additives/GMOs, while Origins sales are

boosted by a passionate stance on provenance and on local production of items such

as wine and cheese: origin-certified products such as Prosecco have enjoyed good

growth in the past few years as consumers seek out higher-quality wines. Origins

represents a much more established area than Organics due to its longer history,

and, as such, is showing slower growth, but is benefiting from a broad trend

towards gourmet and specialist foods.

These issues are not limited to France and Italy, however: across the five surveyed

countries, 2016 saw sales of EUR3.3 billion for products bearing Organics labels (up

by 5.8% on 2015 levels) and EUR16.0 billion (up by 3.1% on the previous year) for

products bearing labels indicating the region of origin, signposting this area as

offering high potential across the board.

Origins and Organics labels also offer potential in Poland, although development of

these markets is at a much earlier stage. Nevertheless, local produce, such as apples,

is well regarded and Origins labels on quality wines and cheeses from France and

Italy also play very well here. While Recycling labels are mature in much of the

region, it should also be noted that there is further room for growth for this label

type in Poland, with bottled water the standout growth area here.

The key opportunities for environmental and other ethical labels in food and drinks

are summarised below.

Food and drinks label opportunities

Label type Label examples Key opportunities

Recycling Green Dot

Mobius Triangle

TerraCycle

Poland (bottled water,

cheese, pasta)

However, generally, quite mature

limiting further rapid expansion

Sustainable Trade

and Farming

Fairtrade

UTZ

Sweden (olive oil, wine),

Germany (cheese, coffee)

Coffee is a core area and already

penetrating the mass market in

Germany: it has potential to

become mainstream elsewhere

in the European Unition too



Responsible Forestry Rainforest Alliance

FSC

Sweden (wine, coffee),

Germany (wine, coffee),

Italy (coffee)

Rainforest Alliance is strong in

coffee but partly due to also

taking sustainable trade into

account

FSC is notable in wine for carton

packaging

Carbon Footprint Attiva Per L’Ambiente

Klimatmärkning

Italy (cheese),

Sweden (cheese, coffee)

Emergent label type

Organics EU Biolabel

Bioland (Germany)

AB (France)

KRAV (Sweden)

France (olive oil, pasta, cheese),

Italy (pasta, cheese),

Germany (coffee),

Sweden (coffee, olive oil),

Poland (cheese)

Growth across the board, with

France and Italy leading

Origins AOC/DOC

Svenst Sigill

PDO

PGI

Poland (bottled water, cheese),

France (apples, cheese, wine),

Italy (wine, apples)

Established label type, but

benefiting from a trend towards

authentic and gourmet products

Key labels: Non-food and drinks

In non-food and drinks, total sales of environmental labels reached EUR41.9 billion

in 2016, up by only 0.2% on 2015. However, this weaker performance can be linked

primarily to weak overall sales in several of the categories under review, notably

footwear and televisions, with the use of labels broadly showing a positive, if quite

slow, trajectory.

At present, non-food and drinks products bearing an environmental label account

for more than half of total sales, at 53%. Across the region, usage of environmental

labels is boosted by increased consumer awareness of sustainability issues, more

pragmatic issues such as concerns about safety and allergies, and, in the case of

Energy Efficiency labels, an interest in cost savings. As with food and drinks

categories, evidence from interviews suggests it is largely consumer-led, with many



consumers seeking out reassurances regarding safety and sustainability. However,

manufacturer activity and promotion of their sustainability and safety positioning

has also played a role in further raising awareness, particularly of the availability of

alternatives to non-environmentally-friendly products.

Issues such as workers’ rights, which are covered by labels such as GOTS, are also

close to the hearts of more consumers following high-profile news stories after the

Bangladesh factory collapse in 2013, which killed and injured thousands of garment

factory workers producing clothing for Western consumers in dangerous

conditions.6 These factors combine to make consumers more responsive to

environmental labels and create opportunity for developing this area further. As

with food and drinks, it is consumers in Sweden and Germany that are most closely

aligned with sustainability concerns, while the other markets have a stronger

interest in issues relating to safety and toxicity.

Chart 2 Total value sales of environmentally-labelled non-food and drinks by label type 2016

Source: Euromonitor International from Passport/store audits/trade interviews Note: Data is the aggregate of the five surveyed countries. Non-Food and Drinks is the aggregate of footwear, shirts and blouses, jackets and coats, laundry care, televisions and decorative paint sales. Organic Materials and Footprint take a share of less than 1% and are not visible in the chart.

6 Rana Plaza, Dhaka, 2013 http://www.bbc.co.uk/news/world-asia-22476774 Site accessed 12/04/17

67%

18%

10%

2% 2% 1% 0%

Recycling Energy Efficiency Production/Sourcing

Other Ethical Labels Toxicity/Product Safety Level of Concentration

Hazardous Substances Organic Materials Footprint

http://www.bbc.co.uk/news/world-asia-22476774



Broadly, consumers’ primary concerns centre on their own health and household

environment, with environmental concerns secondary to this. In terms of labels, this

means that consumers are initially drawn to those relating to toxins, allergies and

energy efficiencies, and then, at a later stage of environmental development, start to

seek out those relating to recycling, sustainability, footprint or biodegradability.

This indicates that a “closer to consumer” first approach may work best in the less

developed markets such as Poland, whereas more serious environmental

approaches can be successful in markets such as Sweden and Germany.

The dominant label is Recycling (for packaging), with other environmental labels at

a relatively early stage of development. However, sales of products with Recycling

labels are in decline – as with food and drinks, this is a mature label type and its

ongoing performance is primarily dictated by the overall sales of each category in

which it is used. As such, this does not represent a key opportunity.

Instead, the core opportunities, which vary by country and by product category,

include less developed areas such as Production/Sourcing Requirements, Organic

Materials and Footprint. Most of these labels have shown positive, if limited, growth

in 2016 – Production/Sourcing Requirements was up by 0.4%, and Footprint by

1.7%, while Organic Materials was stable over 2015 levels – although the latter two

remain niche areas.

Production/Sourcing Requirements and Footprint cluster around the product

categories of decorative paint and laundry care, with some crossover.

Production/Sourcing Requirement labels are widespread in Germany, where the

Blue Angel label is widely used and recognised, in Sweden, where the Svanen label is

well developed and in Poland and Italy, but less prominent in France. Sweden is the

leader here, with the Svanen label widely recognised: 80% of decorative paints here

carry a Production/Sourcing Requirements label, as do 85% of laundry care

products. Germany is also strong in this regard: the use of the Blue Angel in

decorative paint accounts for 50% of total value sales due to its use for almost all

products by market leader, Alpina. This has created a competitive environment

where other manufacturers need to use this label in order to be able to compete

with the market leader. Footprint is only present in Sweden, where it takes a share

of 7% due to the presence of the Bra Miljöval label in laundry care.

Interest in these labels is driven by two trends: the first being concern for

personal/household health and safety. These labels can act as a reassurance that

decorative paint will not contain irritating fumes and that laundry care is unlikely to

trigger allergies, for example. These are primary motivations for purchase among

the majority of European consumers.

The second driver is the more environmentally-minded consumers, especially in

Sweden and Germany, provide the second driver, due to wider concerns about



sustainability, including the use of water and other resources in production and the

impact of wastewater (particularly for laundry care) on wildlife. It is in these two

markets where the potential for sustainably focused labels is particularly strong; in

Italy, France, Poland and Germany, the positioning needs to be slanted more

towards personal and household safety in order to trigger interest.

Perhaps the most interesting area is that of Organic Materials, which is primarily

relevant to textiles. Although currently registering low value sales, with the GOTS

label at present mainly limited to specialist organic clothing lines, there is a

significant movement among mainstream high-street fashion retailers towards

Organic cotton, which tends to be viewed by consumers as more environmentally-

friendly than conventional cotton even though there is considerable disagreement

on the subject among experts. There are also other environmental initiatives of note

such as recycling (several retailers offer a recycling scheme for their clothing,

including H&M) and biodegradable materials, with adidas’ ground-breaking launch

of its biodegradable running shoe.

H&M is at the forefront of the push towards Organic Materials with its 100%

Organic label; however, it uses its own proprietary label rather than an established

label such as GOTS. Nevertheless, with leading fashion retailers championing

environmentally-friendly clothing, it is expected to shed its specialist, unfashionable

image and be adopted by more mainstream players. The key barrier here, however,

is the global supply of organic cotton, which is not yet reliable and cannot guarantee

constant and proper quality supply of cotton for manufacturers. While the potential

for clothing using Organic Materials labels is highest at present in Sweden and

Germany, the push towards Organic Materials by mainstream retailers may

encourage more take-up in other markets too, as organics and the brands that use

those labels develop a stronger fashion image.

The key opportunities for environmental and other ethical labels in non-food and

drinks are summarised below:

Non-food and drinks label opportunities

Label type Label examples Key opportunities

Recycling Green Dot

Mobius Triangle

TerraCycle

Poland (decorative paint),

Sweden (decorative paint),

Germany (televisions)

Mature area and, as such,

closely tracks overall

market sales



Energy Efficiency EU Energy Label (A

and higher)

France (televisions),

Germany (televisions)

Performance directly

correlates with overall

televisions market as

Energy Label used on all

products

Production/ Sourcing

Requirements

Charter for

Sustainable

Cleaning

Blue Angel

EU Ecolabel

Svanen

Poland (decorative paint),

Germany, Sweden

(decorative paint, laundry

care)

Well established in laundry

care and decorative paint;

some further growth

expected in Germany and

Poland

Organic Materials GOTS Sweden (apparel)

Organic Materials shows

potential across the board

for clothing, although it is at

an early stage

Footprint Bra Miljöval Sweden (laundry care)

Opportunities and recommendations

Environmental labels are clearly a growth area across the categories under review,

with consumers more ethically and environmentally aware than ever before and

companies keen to differentiate their brands through certification or, in some areas,

keen to compete with the market leaders through matching them in certification.

Labelling can allow manufacturers not only to create a powerful USP (Unique Selling

Point) and image for their brand but also to increase their retail prices.

A key barrier faced by labelling initiatives is consumer confusion and lack of clarity.

There are a large number of environmental labels, and it can be difficult to fully

understand the differences between each label, an issue which can cause some

consumers to simply ignore labels. This needs to be addressed with clear, well-

communicated labelling that is underpinned by a credible authority and is widely

used and distributed to achieve high levels of recognition, familiarity and trust. Type

1 ISO labels are strongly recommended in this regard due to their credibility and



use of multiple criteria and lifecycle analysis, as well as their relative clarity for

consumers.

Organic foods

All five countries under review saw positive growth in Organics in 2016; the

aggregate growth rate for the year stood at 5.8%, which makes this the most

dynamic of all the food and drink labels. Italy is the standout market here with

growth of 13% in 2016, but all markets have strong potential.

At present, the labelling system for Organics is confusing, with most countries using

local and private labelling systems alongside the EU Organics label. In most cases,

consumers readily understand their local label and need stronger education to be

able to understand the EU Organics label. Brand building and investment in brand

awareness is necessary here to improve consumer awareness and to drive

manufacturers and retailers to aspire to the label.

Organic/biodegradable materials in textiles

Although minor at present, there is enormous potential in consumer support for a

more sustainable and ethical textiles and apparel industry. This has proved a high-

profile topic in recent years, with awareness of the impact of fast fashion on the

environment and on workers in developing markets growing.

Big-name fast fashion retailers, including Zara and H&M, have responded to these

concerns by working towards a more sustainable version of fast fashion, with

clothing recycling schemes and the use of organic cotton among several

sustainability initiatives. In footwear, adidas recently launched the world’s first

biodegradable running shoe.

There is clear momentum towards ethical and environmental clothing among big-

name manufacturers, in part led by their target group of the under 30s, being a

particularly eco-minded demographic.

At present, top manufacturers working in this area are not using standardised

labelling, but are instead promoting their own labels or simply supporting their

launches with high-profile marketing regarding their sustainability.

Given the cynicism that goes hand in hand with environmental awareness for

consumers aged under 35, there is opportunity here to underpin this movement

with a greater force of credibility and gravitas through standardised labelling.

Carbon Footprint labels

Carbon Footprint labels have yet to take off in Europe, although there have been

several initiatives in this area, notably in Sweden and Italy. There have also been a

number of failed or withdrawn initiatives in the region, including the UK, where

leading retailer Tesco introduced and then dropped a Carbon label in 2012. The



company blamed the failure firstly on the amount of work needed to calculate the

footprint, and secondly on the refusal of its competitors to join the movement and

create critical mass. Other footprint labels also show potential, such as water

footprint labels, although these too have struggled to emerge to date.

There is rising interest in truly credible labelling that takes into account the entire

supply chain. Many consumers are cynical about manufacturer claims and conscious

that sustainability needs to be taken into account throughout the creation of the

product. However, to date, Carbon Footprint labelling has struggled, due to the

complicated nature of its calculation and compliance, and the difficulty at the

consumer end to understand the data on the label. The Carbon Trust Footprint

Label, used by UK brands such as Kingsmill and Walkers, has cut through this to a

degree and generated trust among consumers. Manufacturers using this label claim

that it has boosted their sales.7 The Carbon Trust also issues labels on Water and

Waste footprints, and Zero Waste to Landfill. Although the Water label is at an early

stage of development, it is used by a number of major international companies,

including Coca Cola Europe and Sainsbury’s, while nPower and PwC

(PriceWaterhouseCoopers) boast the Carbon Trust Standard for Waste.

There is, however, opportunity for a clear, simple-to-understand and credible form

of Carbon Footprint labelling across Europe. Many companies cite targets of carbon

neutrality in areas of their business through CSR statements, which gain greater

credibility if underpinned by official certification. Standardised, EU-level labelling

may serve to reassure consumers of the credibility of an unavoidably complex

certification, where the labelling of a private company may not carry the same

reassurance.

7 https://www.carbontrust.com/client-services/certification/product-footprint/ Site accessed 12/04/17

https://www.carbontrust.com/client-services/certification/product-footprint/

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