Communicating Carbon Footprints: Product Labelling

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Communicating Carbon Footprints: Product Labelling

  1. 1. WSQ Graduate Diploma in Process Technology ( Sustainable Manufacturing ) Unit 1 : Session 10 : 10 th August, 2010 Dean Stanton Course Instructor | BrandGreen Carbon Footprint Measurement and Reduction Strategies for Products and Manufacturing Operations Communicating the Results of Carbon Footprinting; Setting Reduction Targets and Continuous Improvement
  2. 2. Unit 1: Develop Carbon Footprint Measurement and Reduction Strategies for Products and Manufacturing Operations This unit covers the knowledge and issues relating to carbon footprint measurement across operations and the value chain. The course involves demonstration of practical quantifying methodologies and standards, and discussions on how carbon footprint assessment can increase manufacturing efficiency. Key carbon reduction strategies such as life cycle thinking, resources management and 3Rs will be taught together with practical examples and applications. Participants will be able to take away practical knowledge and apply that in their work environments for quantification of carbon footprints and continuous improvement towards sustainable manufacturing. RECAP
  3. 3. <ul><li>Session 10: </li></ul><ul><li>Communicating the Results of Carbon Footprinting; </li></ul><ul><li>Setting Reduction Targets and Continuous Improvement </li></ul><ul><li>In this session, course participants will learn: </li></ul><ul><li>How to communicate the results of carbon footprinting internally and externally ( Lecture Format ) </li></ul><ul><li>Labelling and product declarations approaches , methods and standards ( Lecture Format ) </li></ul><ul><li>How to set reduction targets and plan for continuous improvement ( Lecture Format ) </li></ul>
  4. 4. <ul><li>Session 10: </li></ul><ul><li>Contents and Structure (timings approximate) </li></ul><ul><li>Communicating the results of carbon footprinting Lecture 1.5 hours </li></ul><ul><ul><li>Internally (developing the business case) </li></ul></ul><ul><ul><li>Externally (developing the benefits case) </li></ul></ul><ul><li>Approaches to labelling Lecture 1 hour </li></ul><ul><li>Reduction targets and continuous improvement Lecture 0.5 hours </li></ul><ul><li>Resources </li></ul><ul><li>Appendix </li></ul>
  5. 5. Session 10 Pre-amble : Review of learnings from previous sessions
  6. 6. <ul><li>What’s been covered to date (not exhaustive) : </li></ul><ul><li>Corporate and product carbon footprints </li></ul><ul><ul><li>ISO 14064 and other GHG protocols </li></ul></ul><ul><li>Principles and methodologies </li></ul><ul><ul><li>ISO 14040 </li></ul></ul><ul><ul><li>PAS 2050 </li></ul></ul><ul><li>System boundaries and product category rules </li></ul><ul><li>Carbon footprint calculation </li></ul><ul><ul><li>Hands on use of carbon footprint software tool </li></ul></ul><ul><li>Reporting practices ISO 14064, 14044 </li></ul><ul><li>Interpreting the results of carbon footprinting analysis (last week, 3 Aug) </li></ul>How do we communicate the insights and learnings ?
  7. 7. <ul><li>CAVEAT : </li></ul><ul><li>Communication is crucial ! ... but how – and why ? </li></ul><ul><li>Identifying and delivering the value is not enough . </li></ul><ul><li>For reductions to stick, for mindsets and behaviours to change, it’s essential to communicate the value. </li></ul><ul><li>Communication starts internally , inside your organisation. Change is a journey. You need buy-in and a sense of ownership from people at all levels: </li></ul><ul><ul><li>At the top, developing and communicating the business case – both financial and non-financial – will be crucial to success. </li></ul></ul><ul><ul><li>On the ground floor, individuals and teams need to know what it means for them, how they can contribute, and what they’ll get out of it. </li></ul></ul><ul><li>Externally , stakeholders need to join you on the journey. From customers and suppliers to government and the media, communicating the benefits will secure support, recognition and competitive advantage. </li></ul>
  8. 8. Session 10 Section 1. Communicating the results Building the business case internally Articulating the benefits case externally
  9. 9. Communicating the Results Outline <ul><li>Overview </li></ul><ul><ul><li>Why do this? </li></ul></ul><ul><ul><li>How labelling meets the business case? </li></ul></ul><ul><ul><li>External trends that support sustainable manufacturing and product labelling. </li></ul></ul><ul><li>Internal communications </li></ul><ul><ul><li>The business case </li></ul></ul><ul><ul><li>Carrying people with you on the journey </li></ul></ul><ul><li>External communications </li></ul>
  10. 10. Session 10 Section 1. Communicating the Results 1. Overview
  11. 11. Overview Communicating the results <ul><li>Let’s take a step back : </li></ul><ul><li>Going back to first principles, why do this in the first place ? </li></ul><ul><li>… what are the pressures ? … </li></ul><ul><li>… the challenges and opportunities ? … </li></ul><ul><li>… and the supporting trends ? </li></ul><ul><li> The role of labelling. </li></ul>
  12. 12. Why do this in the first place? Climate change is happening Warming of the climate system is unequivocal IPCC, 2007 For 650,000 years, atmospheric CO2 has never been above this line… until now 2007 Little doubt remains.
  13. 13. What are the pressures? Businesses are under pressures from all directions to act… However bumpy the ride, we are moving to a low carbon economy, smart businesses will bend with the wind, others will be swept away. (Financial Times) The science is clear. The challenge is now for the business community…to decide how to respond. This poses a challenge for business, but it also presents significant opportunities (AP) Investors are owners who want the companies to stop being laggards when it comes to minimising risk and taking advantage of opportunities (TODAY) Business leaders need to do much more to incorporate environmental concerns into their thinking (Jamie Murdoch, Star TV / News Corporation) We simply will not succeed in cutting carbon until the business community, which has been part of the problem, is part of the solution Swiss RE has recently told its customers that failure to take their carbon footprint seriously could result in the renewal of their policy being declined (Singapore Straits Times) Business leaders Media Representative groups Insurance sector Investors Politicians
  14. 14. What are the opportunities? Senior managers are waking up to the challenges and opportunities… I’m looking to increase returns to shareholders relative to my peers CEO Our company has a responsibility to fight climate change Group Head of CSR We need to be actively managing risk Head of Compliance My department’s looking to increase market share and enhance loyalty Marketing Director I’m charged with growing the top line Sales Director I want our people motivated and receptive to change HR Director We need to reduce our cost base to compete Finance Director I want the company to be seen to take the lead Non-exec Chairman Source : BrandGreen research, interviews with Singapore based company executives, Jan-Mar 2010
  15. 15. What are the opportunities? … but the range of available options is confusing Shouldn’t we be investing in major PR and marketing? Would it make sense to upgrade our fleet? Should we change where our energy comes from? Should we be helping our customers go green? Should we be exerting influence over our supply chain? Should we refurbish our buildings? Shouldn’t we be lobbying government? Should we focus on driving down our electricity usage? Source : BrandGreen research, interviews with Singapore based company executives, Jan-Mar 2010
  16. 16. Labelling tackles these issues head on and hits all of the business case sweet spots… Cost reduction Reduced direct impacts Revenue growth Reduced risk Reduced indirect impacts Enhanced brand Business case
  17. 17. Customer trends support this. Singapore consumers are waking up to the need to reduce the impacts of the products they buy… ( Sources : MORI, Datamonitor, Gallup: 2009/2010) <ul><li>Singapore consumers are increasingly interested in making responsible purchases and are starting to vote with their wallets… </li></ul><ul><ul><li>39 per cent of the Singapore public say they have actively chosen a product or service because of its responsible reputation </li></ul></ul><ul><ul><li>66 per cent of consumers bought organic products and 22% Fairtrade products during 2009 </li></ul></ul><ul><li>… and climate change is increasingly on their agenda </li></ul><ul><ul><li>18 per cent of Singapore consumers are very concerned about climate change, while another 56 per cent think it is important </li></ul></ul><ul><li>Currently it is not easy for consumers to make choices of lower carbon products </li></ul><ul><ul><li>“ Customers find it difficult to work out what the right answers are and they need help” </li></ul></ul><ul><ul><li>“ Consumers want business and government to make ethical purchases easier for them. To be successful, ethical or green products need to have a straightforward message and be widely available” </li></ul></ul><ul><ul><li>“ Supermarkets should be making it easier for shoppers to make green choices everyday” </li></ul></ul><ul><li>Companies are looking to help customers in order to reduce brand risk… </li></ul><ul><ul><li>10 per cent of global food and beverage manufacturers’ brand value is at risk from climate change (The Carbon Trust) </li></ul></ul><ul><ul><li>… and remain competitive </li></ul></ul><ul><ul><li>Those companies that are able to respond rapidly…to consumers preference for low carbon…are likely to derive some degree of competitive advantage by doing so </li></ul></ul><ul><ul><li>The food industry is very competitive. We are therefore always looking at ways of being more cost effective and that joins up with the green agenda (FMCG Manufacturer) </li></ul></ul><ul><ul><li>“ We need to be seen to be greener to have competitive advantage - people look at company ethics, not just cost and it is getting more and more important.” (Utilities Company) </li></ul></ul>Needs Sources where not specified: Combination of Nielsen, Gallup and Mintel data: CONFIDENTIAL
  18. 18. … and are doing so at an accelerating rate. <ul><li>Media coverage and public awareness of climate change and carbon is increasing exponentially </li></ul><ul><ul><ul><ul><li>Number of [print] articles in the Singapore press relating to climate change has risen from 45 per quarter in 2008 to 230 in 2009, with a significant upward trend spike in the fourth quarter of 2009, that has continued into 2010 (Source: BrandGreen research, Nielsen) </li></ul></ul></ul></ul><ul><ul><ul><li>Increased demand for environmentally friendly products and ethical production processes </li></ul></ul></ul><ul><ul><ul><ul><li>44 per cent of Singaporeans believe climate change is an important or very important issue for companies to focus on (Source: Datamonitor, 2009, up from 18 per cent in 2008) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>There are now more than 120 Fairtrade products and over 900 Organic products available from retail outlets in Singapore </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Energy efficiency ratings of consumer products are increasingly driving purchasing decisions and are promoted more heavily by retailers and brands </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Increased spend on ‘greener’ goods </li></ul></ul></ul></ul><ul><ul><ul><ul><li>In 2009 Singapore consumers spent over S$150m on ‘greener’ purchases, an increase of more than 40 per cent on the previous year (Source: Prudential Insurance) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The Singapore market for Organic food and drink looks set to more than treble by 2010, from S$6.1m in 2007 to more than S$22m (Source: The Government of the State of Victoria, Australia) </li></ul></ul></ul></ul>Trends Sources where not specified: Combination of Nielsen, Gallup and Mintel data: CONFIDENTIAL
  19. 19. B2B customers are increasingly pushing environmental challenges upstream…. ( Sources : XXX) <ul><li>Many international B2B customers are pushing environmental responsibilities upstream in the supply chain, and significantly pressuring their suppliers to comply with ever more stringent standards </li></ul><ul><ul><li>“ Buyers and procurement professionals have more power than ever to exert pressure on suppliers to provide green products” (Stanford Graduate School of Business, 2010) </li></ul></ul><ul><ul><li>“ We will continue to pressure our suppliers to eliminate any sources of palm oil which are related to rainforest destruction and to provide valid guarantees of traceability as quickly as possible” (Nestlé, 2009, on terminating all supply agreements with oil palm producer Sinar Mas from Indonesia) </li></ul></ul><ul><li>… with increasingly visible impacts for Singaporean businesses </li></ul><ul><ul><li>“ We’re not just getting pressured on costs and quality anymore. Some of our bigger customers from the USA and Europe are really squeezing us with their environmental concerns and we don’t always know how to respond to this. I’m sure there are opportunities, but right now we’re in danger of losing business and faced with spending more money in the short term” (CEO, Singapore Manufacturer, January 2010) </li></ul></ul><ul><ul><li>“ 25 per cent of the Singapore economy, or thereabouts, is still based on manufacturing, much of it for export. As a result, Singapore is prey to escalating international trends. North American and Continental European companies are leading the way on the environment, in many cases well ahead of their own governments. Buyers from these companies are expecting their suppliers to do substantially more to manage their carbon footprints, but Singapore exporters are ill-prepared and at significant risk” (Dr Arlo Brady, Judge Business School) </li></ul></ul>Trends
  20. 20. … at the same time, presenting real opportunities for leaders to gain competitive advantage. <ul><li>Through closer collaboration with international b2b customers, Singapore industry can tap into significant open innovation opportunities and access shared learning / best practice insights… </li></ul><ul><ul><ul><ul><li>“ There other initiatives in green that could be done, that could foster a different level of relationship between … (Singapore) industry and retailers such as M&S and H&M” (Lee Hoi Leong, IE Singapore) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ Green products present a unique innovation challenge - namely how to most effectively and efficiently address the call by larger customers for new and innovative &quot;green solutions&quot; from their suppliers. The fact is that the quest to develop green products and services introduces a whole host of new requirements beyond form, fit and function” (The Aberdeen Report, 2009) </li></ul></ul></ul></ul><ul><li>… as well as access the co-funding opportunities available from leading customers to reduce the carbon intensity of their products and services </li></ul><ul><ul><ul><ul><li>“ One of Sri Lanka's largest exporters, MAS Intimates, has built a new eco-friendly plant in the town of Thulhiriya with a [S$9m] investment coming from UK retailer M&S. The factory will ultimately create 1,300 new jobs and will be operationally carbon neutral” (Joint Apparel Association, 2008) </li></ul></ul></ul></ul>Trends
  21. 21. Session 10 Section 1. Communicating the Results 2. Internal Communications
  22. 22. Internal communications Developing the business case <ul><li>Internally within your organisation there’s a need to : </li></ul><ul><li>Develop clear, well supported recommendations </li></ul><ul><li>Define the value proposition </li></ul><ul><li>Communicate the business case (financial and non-financial): “why should we do this?” </li></ul><ul><li>Provide something for everyone: “what’s in it for me, my department, the company?” (in that order) </li></ul><ul><li>Socialise the initiatives with the board, senior management, department heads, your line manager(s), staff </li></ul>
  23. 23. Developing the business case Understanding motives Chairman / independent directors <ul><li>Enhanced corporate reputation </li></ul><ul><li>Enhanced personal reputation </li></ul><ul><li>Enhanced returns to investors relative to peers </li></ul><ul><li>Improved governance and transparency </li></ul>Title Appeal CEO / President / COO / major business unit Head Chief Financial Officer Chief Marketing Officer / Sales Director HR Director Head of Sustainability / CSR / etc. <ul><li>As above, plus: </li></ul><ul><li>Cost savings </li></ul><ul><li>Carbon savings (possibly) </li></ul><ul><li>Enhanced returns to investors </li></ul><ul><li>Cost savings </li></ul><ul><li>Efficiency improvements </li></ul><ul><li>Improved governance and transparency </li></ul><ul><li>Brand equity uplift </li></ul><ul><li>Differentiation in non-price based competition </li></ul><ul><li>Potential for premium pricing </li></ul><ul><li>New product innovation opportunities </li></ul><ul><li>Employee satisfaction </li></ul><ul><li>Reduced recruitment costs and staff churn </li></ul><ul><li>Carbon savings </li></ul><ul><li>Differentiation from peers with respect to CSR </li></ul><ul><li>Reputation </li></ul><ul><li>Cost savings / positive project NPV </li></ul>
  24. 24. Developing the business case What needs to be in it? <ul><li>Description of the initiative (e.g. replacing grid electricity in whole or in part with renewable energy sources); overall project and implementation plan </li></ul><ul><li>Upfront cost of the initiative(s) </li></ul><ul><li>Potential cost savings and timeline </li></ul><ul><li>Payback period; for major CAPEX investments, NPV, IRR or other measure(s) required </li></ul><ul><li>How this and related initiatives fit with overall company strategy and operational considerations </li></ul><ul><li>Who will be affected / who needs to be involved </li></ul><ul><li>Other system impacts / interdependencies </li></ul><ul><li>Description of the likely non-financial, non-operational benefits </li></ul>
  25. 25. Developing the business case What formats are appropriate? <ul><li>To a large extent, this depends on custom and accepted procedures within your organisation, but could include: </li></ul><ul><li>A written report in Word format </li></ul><ul><li>An overall high level PowerPoint presentation for each of the key audiences (Board / Senior Management; directly affected parties crucial to successful rollout; staff) </li></ul><ul><li>An Excel workbook setting out investment, timeline, cost impacts, any project valuations </li></ul><ul><li>Detailed project plan </li></ul><ul><li>Supporting technical specifications where relevant </li></ul>
  26. 26. Developing the business case Key considerations Manage the initiative as a discrete project , and think about the whole end to end process: Align initiative(s) with overall strategy and operational needs Opportunity elaboration Build business case and obtain buy in Develop balanced scorecard of objectives and obtain sign off Develop detailed implementation plan; obtain sign off Implement individual streams of activity End-to-end programme management Embed change across people/ process / technology
  27. 27. Developing the business case Communicating across your organisation <ul><li>Communicating internally </li></ul><ul><li>Communicating the carbon footprint of your </li></ul><ul><li>product or service to your company as a whole </li></ul><ul><li>can have several benefits. </li></ul><ul><li>Lower energy costs. Using less energy to enable a reduction in your product footprint can help improve your bottom line. </li></ul><ul><li>Engaging with employees. Communicating a product’s footprint to your employees shows them your commitment to reducing climate change. It can also help to gain their buy-in to emissions reduction. </li></ul><ul><li>Optimising processes. The information you’ve gained about the processes used in manufacturing your product or creating your service can help identify inefficiencies. </li></ul>
  28. 28. Developing the business case Communicating across your organisation <ul><li>Your internal communications strategy could include: </li></ul><ul><li>Where you are now </li></ul><ul><li>Where you want to get to – key priorities and clear aims and objectives, including targets, benefits </li></ul><ul><li>Who your key stakeholders are, for example staff, managers, shareholders, customers, suppliers </li></ul><ul><li>Key messages </li></ul><ul><li>Milestones </li></ul><ul><li>‘ Quick wins' </li></ul><ul><li>Resources available – budgets and staff </li></ul><ul><li>The communications tools you will use, for example, poster campaigns, staff roadshows, managers’ seminars, team briefings, newsletters </li></ul><ul><li>Evaluation – how you will measure success. </li></ul><ul><li>Your strategy should involve plenty of two-way communications. Make sure that a pledge to ‘listen to staff’ is backed up by visible action. Otherwise your improved communications are likely to be met with cynicism rather than trust. </li></ul>
  29. 29. Session 10 Section 1. Communicating the Results 3. External Communications
  30. 30. External communications Articulating the benefits case <ul><li>Overview : </li></ul><ul><li>A product carbon footprint can help to differentiate your product or service and enhance your brand image. </li></ul><ul><li>Committing to or demonstrating carbon reductions can help you attract new customers. </li></ul><ul><li>You may also consider using third party endorsement of the footprint – e.g. through the upcoming Singapore Carbon Label – to increase the power of your claims. </li></ul><ul><li>You can communicate your carbon footprint in a number of ways, such as labelling your products, or providing information on your company’s website or marketing campaigns. </li></ul><ul><li>The method of communication will depend on what sort of business you have, how you want to communicate your footprint and who you want to tell. </li></ul>
  31. 31. External communications B2B <ul><li>B2B companies can realise significant benefits by communicating their product carbon footprints : </li></ul><ul><li>Engaging up the supply chain </li></ul><ul><li>The information you’ve gathered during the process can also help your suppliers reduce their emissions, thereby reducing the footprint of your product. </li></ul><ul><li>Engaging down the supply chain </li></ul><ul><li>You can provide your customers with valuable information about the carbon footprint of goods or services they purchase. This allows your customers to make an informed decision about what they buy and makes it easier for them to calculate their own carbon footprint. </li></ul><ul><li>It also differentiates your product or service. As a B2B supplier you can provide your business customers with certified product carbon footprint data up to their gate, thereby reducing the time and cost they need to footprint their own products. </li></ul>
  32. 32. External communications B2C <ul><li>B2C organisations can distinguish themselves from other companies by communicating their product or service carbon footprints and reduction commitments. This can be done through : </li></ul><ul><li>Point of sale </li></ul><ul><li>Reporting </li></ul><ul><li>Advertising </li></ul><ul><li>Labelling (more on this later) </li></ul><ul><li>Communicating your footprint to consumers by all or any of these methods, and then committing to reducing it, can help you realise </li></ul><ul><li>further benefits, including: </li></ul><ul><li>Increased cost and emissions savings </li></ul><ul><li>Product differentiation – and increased sales </li></ul><ul><li>Enhanced brand reputation. </li></ul>
  33. 33. External communications Examples (UK experience)
  34. 34. External communications Examples (UK experience)
  35. 35. External communications Examples (UK experience)
  36. 36. External communications Examples (UK experience)
  37. 37. External communications Examples (UK experience)
  38. 38. External communications Examples (UK experience)
  39. 39. Session 10 Section 2. Approaches to Labelling
  40. 40. Approaches to Labelling Outline <ul><li>Overview </li></ul><ul><ul><li>Now you’ve measured your product footprints and are taking action, do you go for third party labels? </li></ul></ul><ul><li>Labelling and product declarations </li></ul><ul><ul><li>Various Types (I through III) and specifically ISO 14025 </li></ul></ul><ul><li>Range of labelling schemes </li></ul><ul><ul><li>Surveying the field and comparisons </li></ul></ul>
  41. 41. Session 10 Section 2. Approaches to Labelling 1. Overview
  42. 42. Overview Approaches to Labelling <ul><li>To label or not to label : </li></ul><ul><li>Do you want the data you’ve compiled to be available externally – how transparent do you want to be? </li></ul><ul><li>Arguably if you’re b2b , this need not enter the public domain and can remain confidential to your direct customers only. </li></ul><ul><li>If you’re b2c , by definition, any labelling communications will be available to the public and your competition. </li></ul><ul><li>Food for thought!  There’s no one right answer. </li></ul>
  43. 43. Overview Approaches to Labelling <ul><li>Self certification and comms or third party ? </li></ul><ul><li>How credible is only internally generated data likely to be with your key audiences? (Customers, employees, government, civil society, etc.) </li></ul><ul><li>If you’re a b2b player, basic provision of product related carbon emissions compiled in-line with internationally accepted standards may be enough… </li></ul><ul><li>… but not sufficient, potentially, for some big names – from Sony and Canon to Nike and Gap. </li></ul><ul><li>If you’re in the b2c space, independent third party validation is probably crucial. </li></ul><ul><li>If you go the third party label route, what are the considerations: simply communicating the footprint or additionally a commitment to reduce? (see section 3) </li></ul>
  44. 44. Session 10 Section 2. Approaches to Labelling 2. Labelling and product declarations (including ISO 14025)
  45. 45. Labelling and product declarations Overview
  46. 46. Labelling and product declarations Type I Ecolabels (ISO 14024:1999) <ul><li>Only independent and reliable labels that consider the life-cycle impact of products and services are called “ecolabels”, even if this term is commonly used in a broad and not always correct way. </li></ul><ul><li>Ecolabels are based on ambitious criteria of environmental quality, and they guarantee that the awarded products respect the highest environmental standard in that market segment. The criteria are usually developed through the involvement of a large number of stakeholders and awarded after an independent process of verification. </li></ul><ul><li>Ecolabels labels take into account all adverse environmental impacts of a product throughout its life cycle, for example energy and water consumption, emissions, disposal, etc. </li></ul>
  47. 47. Type II Self-declared environmental claims (ISO 14021:1999) <ul><li>The labels belonging to this group do not share some of the usual characteristics of environmental labels, the main difference being that they are not awarded by an independent authority. These labels are developed internally by companies, and they can take the form of a declaration, a logo, a commercial, etc. referring to one of the company products. </li></ul><ul><li>For what reason do companies develop their own environmental label or claim? Consumers and procurement practitioners are increasingly attentive to the environmental impact of what they purchase. For this reason, providing information on the environmental performance of products and services is becoming a commercially interesting option for many firms. </li></ul><ul><li>Not always are green claims as accurate and true as they should be. If the information conveyed in claims is vague, misleading or inaccurate, the consequence can be loss of trust in claims and labels in general </li></ul>
  48. 48. Type III Environmental impact labels (ISO 14025:2006) <ul><li>Type III labels consist in qualified product information based on life cycle impacts. Environmental parameters are fixed by a qualified third party, then companies compile environmental information into the reporting format and these data are independently verified. The environmental impacts are expressed in a way that makes it very easy to compare different products and sets of parameters, for example for public procurement purposes. </li></ul><ul><li>Type III labels do not assess or weight the environmental performance of the products they describe. This type of environmental label only shows the objective data, and their evaluation is left to the buyer. </li></ul><ul><li>Type III labels are found in nine countries and require exhaustive life-cycle data sheets called “environmental product declarations” (EPD). </li></ul>
  49. 49. Labelling and product declarations ISO 14025 <ul><li>Businesses can contribute to a more sustainable planet by purchasing goods and services that cause less stress on the environment. However over the last two decades, an increasing number of environmental labels have not always communicated verifiable and accurate information about their products. </li></ul><ul><li>In order to address this problem, ISO has published ISO 14025:2006, Environmental labels and declarations – Type III environmental declarations – Principles and procedures , which will benefit business to business communication, by enabling purchasers to make comparisons between products fulfilling the same function, and encourage improvement of environmental performance. </li></ul>
  50. 50. Labelling and product declarations ISO 14025 <ul><li>“ ISO 14025 is expected to play a role in national and regional eco-label programmes, such as the European Union Integrated Product Policy and provides benchmarks to further develop environment product declarations (EPD). It will also serve as a building block and enable all-sized businesses to construct EPD information modules providing life cycle information “ (Stig Hirsbak, ISO 14025 Working Group). </li></ul><ul><li>ISO 14025 Type III environmental declarations provide quantified environmental information about products, using predetermined parameters based on the ISO life-cycle assessment series of standards. Additional environmental information, such as the impact on biodiversity, instructions and limits for efficient use, or hazard and risk assessment on human health and the environment, among others, is given where relevant. </li></ul>
  51. 51. Session 10 Section 2. Approaches to Labelling 3. Range of labelling schemes
  52. 52. Range of labelling schemes <ul><li>For companies looking to get their products carbon labelled, three carbon labels are currently up and running. But which are the most credible and what do you get for your money? </li></ul><ul><li>If carrying out a carbon product footprinting exercise wasn’t already complex, choosing a label simply adds to the mix. Three countries, including Canada, the United States and the United Kingdom each boast their own version of a carbon label – with a Singapore Carbon Label coming soon! (see Appendix) </li></ul><ul><li>Both the UK and US labels require a separate, processed-based life-cycle analysis (LCA) to be carried out, usually in the price range of $20,000-$40,000 depending on the product. </li></ul><ul><li>The LCA tallies up the CO2 emitted during the lifecycle of a product, from material extraction, through to the disposal or recycling of the product and is more rigorous (and costly) than the cheaper option of plugging economic data into an input-output model. </li></ul><ul><li>All three labels also require independent verification. </li></ul>
  53. 53. United Kingdom: Carbon Reduction Label (The Carbon Trust) <ul><li>To gain use of the UK Carbon Trust’s Carbon Reduction Label, companies must register with the Carbon Trust who can recommend a consultant or directly assist companies to carry out in-house product LCAs. These LCAs can take from 2 weeks to 3 months, depending on data availability. </li></ul><ul><li>Once carried out, the product LCA is independently verified to ensure it meets the PAS2050 standard, (which is based on the IS0 LCA and greenhouse gas accounting standards and is consistent with GHG Protocol). The company then purchases a licence to use the Carbon Reduction Label. </li></ul><ul><li>By purchasing a licence, the company commits to reducing the carbon footprint of the product over a 2-year period. To avoid penalising strong performers, no fixed reduction requirement has been established. Instead, targets are agreed and set on a product-by-product basis. </li></ul>
  54. 54. United Kingdom: Carbon Reduction Label (The Carbon Trust) <ul><li>Calculated on the percentage revenue of the product itself, the licence fee starts at around £5,000 (S$10,000). Some have complained the licence fee is unaffordable for small and medium-sized enterprises. </li></ul><ul><li>Despite the initial outlay, the process has so far proven to be a cost saving exercise for those who undertake it. Walker’s Crisps, the first company to complete and achieve its two-year carbon reduction target of 7%, realised a net savings of close to S$1m on its bottom line as a direct result of its carbon footprinting and carbon reduction exercises. </li></ul><ul><li>The Carbon Trust is currently assessing other pricing models, and it is expected that costs will diminish as LCA models become more refined. </li></ul><ul><li>At present, proceeds from the licence fees finance both the Carbon Reduction Label’s global communications campaign, as well as consultation on a PCF communications strategy for licence holders. </li></ul>
  55. 55. United States: Certified Carbon Free (CarbonFund.org Foundation) <ul><li>Washington-based non-profit organisation, CarbonFund.org’s labelling process takes roughly 4-6 months. Interested parties are referred to the CarbonFund.org’s list of preferred life cycle assessment (LCA) providers, who calculate a per product carbon footprint. </li></ul><ul><li>Any recognised processed-based standards can be used for the LCA, including the GHG Protocol, PAS2050 or ISO1400. Upon completion, the product LCA is then reviewed by CarbonFund.org, to ensure it has meets its recommended protocols. </li></ul><ul><li>Once approved, the company pays a registration fee of $2,500 and in return is provided with the CertifiedCarbonFree label and marketing kit. The label may or may not quantify the carbon content, depending on preference. Subsequent products can be registered for $500 per product. </li></ul>
  56. 56. United States: Certified Carbon Free (CarbonFund.org Foundation) <ul><li>The CarbonFund.org monitors the carbon emissions for each product on a quarterly basis and offsets (usually within a year) what the company hasn’t reduced, rendering the product ‘carbon neutral’. Emily Pugliese, CarbonFund.org, says her organisation goes ones step further than the UK’s Carbon Reduction Label by rendering a product carbon neutral while creating dynamic incentives for further CO2 reduction. </li></ul><ul><li>“ If a product carbon footprint (PCF) is reduced by 10%, the following year’s registration fee is waived. There is also an inherent incentive to reduce the PCF in that the cost of offsetting is lowered if there is less carbon to offset,” she explains. </li></ul>
  57. 57. Canada: CarbonConnect (CarbonCounted) <ul><li>Canadian non-profit organisation, CarbonCounted, provides an open, web-based tool, called ‘CarbonConnect’, designed for use by businesses and consultants to track, quantify and manage carbon content throughout the supply chain. The model is designed to engage all suppliers, rather than engaging a singular point of the supply chain. </li></ul><ul><li>Of the three models, CarbonCounted is the cheapest, demanding a registration fee of only US $100. Lifecycle analysis is not a prerequisite and most companies have opted to follow the GHG Protocol method to measure emissions, which uses national level economic and environmental impact data to estimate the amount of carbon embedded in a given product. This method relies on national averages and does not draw on company specific processes or practices. Andrew Conway, co-founder, estimates that the time investment for inputting first and second-tier supplier information takes 4-6 months. </li></ul><ul><li>The CarbonConnect standard must be independently verified at a separate cost of $100-$5000. Once the methodology has been verified, the user can download the CarbonCounted label and marketing materials. As yet, the label does not provide contextual information; only the carbon content. Conway explained that the label is likely to display carbon content context in the future when PCF has gained greater traction. </li></ul>
  58. 58. Summary Comparisons Carbon Label UK: Carbon Reduction Label United States: Certified Carbon Free Canada: CarbonCounted Registration/licence fee US$ Starting from S$10,000 –upwards S$3,500 registration. S$750 per subsequent product. S$150 per company in supply chain Separate LCA required Yes. Cost: SS$20,000 upwards Yes. Cost: S$15,000 upwards Optional Standard specific Yes. PAS2050 No No Independent verification required Yes Yes Yes Marketing support Included Included Not included Offsets No Yes No Carbon Label Contents Carbon content. Context. Recommendations on how consumers can lower the ‘after sales’ carbon impact of the product. Content: Optional. No context. No recommendation. Claims product is carbon neutral? Content: Optional. No context. No recommendation. Number of companies using label 40 (with a further 30 projects underway), including Cadburys, Pepsi Co. and Coca-Cola 11 in total, including Motorola and Florida Crystals 40 including Standard Chartered Bank and investment bank UBS
  59. 59. Session 10 Section 3. Reductions Targets and Continuous Improvement
  60. 60. Reduction Targets and Continuous Improvement Outline <ul><li>Overview </li></ul><ul><li>Setting reduction targets </li></ul><ul><li>Planning for continuous improvement </li></ul>
  61. 61. Session 8 Appendices: The Singapore Carbon Label
  62. 62. The Singapore Carbon Label: Vision and Mission Measuring and communicating the carbon content of the products and services we consume, raising the carbon consciousness of governments, businesses and consumers. Vision Mission What is it? The Singapore Carbon Label is a bottom up, industry led strategic initiative, developed by the SEC , SMa and SIMTech . Support Singapore’s transition to a recognised low carbon economy A Singapore initiative to… By…
  63. 63. The Singapore Carbon Label: Benefits and Supporting Mechanisms Stringent methodology and standards Localized “Singapore solution” that builds on international standards Ready made tools delivering both immediate impacts and long term reductions Benefits Supporting Mechanisms <ul><li>A differentiated Singapore brand </li></ul><ul><li>Competitive advantage to industry and economy </li></ul>
  64. 64. Meeting the needs of industry, government and the community Industry Consumers / Community <ul><li>Driving significant cost and carbon savings from both manufacturing processes and operations </li></ul><ul><li>Opening up new product / service revenue opportunities </li></ul><ul><li>Differentiating products [and potentially services] for both b2b and b2c customers </li></ul><ul><li>Meeting the escalating disclosure requirements of companies’ international customers, helping industry maintain and extend its competitive position </li></ul>Sharply focused on the needs of industry… …government… … and the community… <ul><li>Raising public awareness of the carbon and climate change impacts of products and services they consume </li></ul><ul><li>Enabling the public to make informed choices of the products and services they buy </li></ul><ul><li>Empowering communities to support those companies making the biggest difference </li></ul><ul><li>Encouraging reduced and / or more discriminating patterns of consumption </li></ul>Government <ul><li>Consistent with government objectives on climate change and emissions reduction </li></ul><ul><li>Positions Singapore as a leader </li></ul><ul><li>Speeds the transition to a low carbon economy </li></ul><ul><li>Enhances competitiveness of Singapore industry </li></ul><ul><li>Creates a differentiating, truly “ made in Singapore ” solution set and suite of tools </li></ul>

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