How European policy instruments could radically change with EPDs

European Commission Consultation on Deliveringmore Sustainable Consumption and ProductionSubmission by InterfaceFlor EuropeFebruary 2012This is InterfaceFLOR Europe’s response to the European Commission consultation on the possibleintroduction of EU-wide measures related to sustainable consumption and production (entitled:Consultation on Delivering more Sustainable Consumption and Production).The consultation looks at green public procurement, the environmental footprint of products (PEFs)and the environmental footprint of organisations (OEF).At InterfaceFLOR Europe (http://www.interfaceflor.eu) we are particularly interested in PEFs.We make and sell the world’s largest and most diverse range of modular carpet flooring. We have anannual turnover of around $1bn and 5,000 employees.Our founder, Ray Anderson, who died in 2011, was a leading proponent of sustainable consumptionand production, and in 1996 set Interface a ‘Mission Zero’ goal of delivering zero negative impactsby 2020 while maintaining and even improving profitability. We are well on the way to achievingthat goal, having, for instance, reduced our water use by 75% since 1996, cut greenhouse gasemissions by 44%, and lowered energy use by 43%.The European Commission is beginning to understand the power of full product transparency, as isevident in this latest consultation document.At InterfaceFLOR we very much welcome this development, as we believe that environmentalpolicies across Europe lack co-ordination.Our view is that the coordination of all environmental policy instruments is best served by startingfrom the central point of Environmental Product Declarations (EPDs), which the EC is calling ProductEnvironmental Footprints (PEFs).An EPD reveals the ingredients of a product, its methods of production, and the full environmentalimpact of each stage of its life cycle, measured in several impact categories including impact onclimate change (grammes of CO 2 ), water use (litres), and other air emissions (grammes of SO 2 ).EPDs are becoming more prevalent in Europe. They are already widely used in the constructionsector. The new EN15804 standard for EPDs will be published in 2012, and we will therefore seemore new products with EPDs that have been developed to a European harmonised standard.At Interface we are producing EPDs for all our carpet tiles. We believe the way forward forcorporate sustainability is to use the information gleaned from EPDs to substantially reduce theoverall environmental impacts of the products we make, rather than just focusing on cutting theimpacts of our own operations. By concentrating on EPDs, we will automatically cut the impacts ofour operations anyway as these are represented in the manufacturing stage of the product life cycle.Using EPDs as a starting point, we have managed to garner information that has helped us tosubstantially reduce the environmental impacts of many of our products. A typical carpet tile ofvirgin nylon yarn has an embodied carbon footprint (from the well to the factory gate) of around10kgCO 2 /m2. But our latest tile, Biosfera Micro, is made of recycled nylon from old carpet and

fishing nets - and has a footprint of just 5.8kgCO 2 /m2. We think we can take this close to4kgCO 2 /m2 soon.So these low yarn carpet tiles, which we call Microtuft, have almost half the embodiedenvironmental impact of a typical carpet tile. We launched Microtuft in 2000 and they account foraround 13% of our sales. But does the market really reward products such as these? Are there anyincentives that support products with less environmental impact? The answer is no. We believethere should be such incentives, and that they should be based around EPDs.Here are some of the ways in which we believe EPDs can be used to reward those who begin toreduce the environmental impacts of their products:EPDs as a guarantee against greenwashDespite the prevalence of greenwash, there is no European-wide agreement on the making ofenvironmental claims. Companies are very fond of making extravagant claims, such as that theirfactories use ‘100% green electricity’ or that they are ‘carbon neutral’. But the main impacts ofproducts are usually outside company boundaries. EPDs are the only things that show these impactsexactly as they are, across the life cycle.We therefore advocate a European-wide regulation which stipulates that companies can only makeenvironmental marketing claims that are based on third party certified EPDs. That way greenwash iseffectively banished - and companies also have an incentive to carry out EPDs. The Frenchgovernment is exploring this avenue already. Governments should stop wasting money on anti-greenwash guides and awareness-raising, and make sure that companies are only allowed to makeclaims that can be prove through an EPD.EPDs as an alternative to dubious green labelsThere are too many ‘green labels’ in Europe, and a good deal of them are inadequate or highlydubious. Some companies have labels on their products that are issued by private firms that offerconsulting and certification services simultaneously. Many labels are far too easy to obtain, or justfocus on a narrow range of issues. Others lack independent certification methods or may even beadministered by the manufacturers themselves. Many labels duplicate each other, confusing clientsand obliging manufacturers to certify the same product several times. Unfortunately, some of thelabels that are best marketed are the least robust.EPDs are a much better alternative. The concept of full product transparency (producing an EPDwhere you state your ingredients, production methods and environmental impacts) will give greaterre-assurance to buyers and will eventually lead to the demise of bad labels. If every product had anEPD, then there would be no need for any other ‘green’ labelling.EPDs as a basis for EcolabelsThe consultation paper suggests increasing the marketing budget for the EU’s voluntary Ecolabel.This might be a good idea, but we should fix the Ecolabel criteria first. At the moment there is nocredibility in the criteria required to achieve the Ecolabel. Powerful industry lobbies - and countriesprotecting their industries - manage to impose criteria that are favourable to themselves. In manycases, the criteria for Ecolabels do not take into account the full environmental impacts of aproduct because they do not include the rigour of a life cycle analysis.Again, EPDs can provide the solution. There should be an overarching European rule which says thatEcolabels are only awarded to products that have 50% less impact than the typical generic productin their category. For example, a typical carpet tile has 10kgCO 2 /m2, so Ecolabels should only beawarded for carpets with less than 5kgCO 2 /m2.

In order to drive radical innovation there should be a ‘golden’ Ecolabel (at a higher level than thenormal Ecolabel) which is only awarded to products with 80% less impact than the generic product.That way you create an incentive for companies to go the extra mile.Once these rules have been introduced to add credibility to the Ecolabel, then we can considerincreasing the marketing budget.EPDs as the foundation for green public procurementIf you had EPDs for all products, it would be easy to know which products have more or less impacts.That would be good news for public procurers, who are struggling to establish which of the productsthey need to buy is better for the environment. Today everybody is talking about the power ofgreen public procurement, but what’s the point if nobody knows how to buy green?The EU’s guidelines on green public procurement provide advice based either on complicatedcriteria and ideas or on generalities such as ‘take into account energy consumption and emissions’.What public procurers really want is clear guidelines and targets. For instance, that they should buycars with less than 120gCO 2 /km or rent buildings with heating/cooling requirements of 50kWh/m².With EPDs, we could provide very simple guidance to public procurers on many things. We couldprovide real data per product, instead of vague advice that is of very little help in makingsustainable purchasing decisions.EPDs as a way to decide on tax incentivesIf EPDs were universally adopted, we would have a clear and simple basis for assigning tax benefitsto products that have a lower environmental impact. For example, products awarded the GoldenEcolabel on the grounds that they have 80% less environmental impact could also qualify for lowerproduct taxes (eg VAT) over a period of time.If we don’t provide such tax incentives, who will re-design products with 80% less embodied carbon,apart from a handful of companies with a higher purpose? Business needs clear signals thatenvironmental innovation will be rewarded.EPDs as the bedrock for voluntary standardsAt present, various industries have to cope with different national voluntary green standardsaccording to the country they are dealing with. In the construction sector, for instance, there arevarious national green building standards competing against each other, including DGNB in Germany,HQE in France, BREEAM in the UK, and Verde in Spain – with only the DGNB standard being based onEPDs. This is a problem for suppliers of building products such as Interface, who have to pay invarious countries to certify their products.If we were to have a harmonised European standard for each sector based on EPDs, this wouldimmediately become valid in all countries and so would do away with the confusion, extra cost andadministration that the current piecemeal system of standards entails.Some lessons from EPD-based regulation of the car industryOne of the best ways to appreciate the transformative power of EPDs is to look at the progressmade by the European car industry since a 2009 EU regulation introduced EPDs as the basis forrequirements on tailpipe emissions.The regulation required car manufactures to decrease average tailpipe emissions across theirportfolio to 130gCO 2 /km by 2015 and 95gCO 2 /km by 2020. This forced each manufacturer to createan EPD for each of its cars based on gCO 2 /km.From 2010, if the average CO 2 emissions of a manufacturer’s fleet exceed its limit in any one year,the company has to pay an excess emissions premium for each car registered. This premium

amounts to €5 for the first g/km it exceeds the target, €15 for the second g/km, €25 for the thirdg/km, and €95 for each subsequent g/km. From 2019, the exceeding the limit will become evenmore expensive, with the cost of even the first g/km rising to €95.With such significant financial implications, the impact of this approach was almost immediate. In2009 the decrease in average EU emissions was 5% against the previous year, with a further 4% cutin 2010.In 2008 the average gCO 2 /km for car emissions in the UK alone was 158, but by the end of 2009 thiswas down to 149.5. Within just one year of the regulation coming into force, the UK car industryhad achieved a reduction in tailpipe emissions of more than 5%, compared with just 2.2 per cent inthe eight years up to 2006.This suggests a way ahead for other products: 1. Develop a common ‘magic metric’, to be measured by an EPD, based on the full product life cycle impact or at least on the main area of impact. 2. Set a target for the product, based on that metric, at EU level. Reinforce this with penalties if the target is not met. 3. Make it mandatory to have the magic EPD metric visible on all promotional materials and at point of sale. This could be through an easy to understand colour-coded A-G label based on absolute figures. 4. Create tax regimes and incentives that reinforce the signals given at EU level. 5. Encourage civil society intermediaries to raise awareness of the issue based on the magic metric. 6. Release the power of public procurement by providing easy guidance based on the magic metric.Warning: EPDs are not the answer to everything!At Interface, as you can see, we are firmly of the opinion that EPDs are the way ahead on a numberof fronts. But we recognise that they are not a panacea for all ills.Although EPDs can pinpoint the most critical environmental impacts of a product, and provide magicmetrics for many product categories, they cannot measure some things. They cannot, for example,provide a measure of product durability or show how recyclable it is.There is little that governments can do to mandate durability at product level, apart from requiringmanufacturers to guarantee the products they sell for a number of years and obliging them todisclose product durability information at point of sale.The encouragement of recycling requires further policy instruments than those enabled by EPDs.EPDs will create a strong support for recycling because products with high post-consumer recycledmaterials are very likely to have substantially smaller footprints than those from virgin materials.But that might not give manufacturers an incentive to re-design products for better disassembly andrecycling. This means there should be extra incentives for companies to design products that areeasier to disassemble and recycle. At the regulatory level, high landfill tax rates encouragerecyclability.ConclusionIf the EC wants to deliver more sustainable consumption and production, then it must harness thepower of full product transparency.EPDs provide a full picture of a product’s impact throughout its life, rather than a snapshot as thatproduct passes through one business. Companies that focus on EPDs very quickly discover what theyneed to do to reduce their footprint – whereas those that don’t can spend many years pursuingpolicies that make little difference, mainly because they don’t have the true picture of where theirmain impacts are.

The EC should encourage a shift towards EPDs as the main driver of environmental progress atcorporate level. The strides made in the car industry show the value of this approach.Because EPDs present a precise and verifiable measure of a product’s impact, not least through theuse of a ‘magic metric’, they provide a clear and simple way of measuring progress.If the EC were to insist that environmental claims can only be made only in relation to EPDs, thengreenwashing may become a distant memory. If every product has an EPD, then there will be littleor no need for other ‘green’ labelling. EPDs can be the basis for voluntary industry standards, doingaway with the geographical variations across Europe that cause confusion and duplication of effort.They can offer a solid foundation for green public procurement, providing real data per productinstead of vague advice. They can be the foundation stone for a more robust Ecolabel regime, andthey can be the markers for tax incentive regimes that reward manufacturers of products that areless harmful to the environment.We strongly urge the EC to embrace the value of EPDs and to harness their power now.

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How European policy instruments could radically change with EPDs

by Ramon Arratia

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