“A great book which should wake up humankind!” –Klaus Schwab, World Economic Forum
Chapter 12. Building a New Economy: Ecolabeling: Voting With Our Wallets
Yet another instrument for environmental restructuring of the economy is ecolabeling. Labeling products that are produced with environmentally sound practices lets consumers vote with their wallets. Ecolabeling is now used to enable consumers to identify energy-efficient household appliances, forest products from sustainably managed forests, fishery products from sustainably managed fisheries, and “green” electricity from renewable sources.
Among these ecolabels are those awarded by the Marine Stewardship Council (MSC) for seafood. In March 2000, the MSC launched its fisheries certification program when it approved the Western Australia Rock Lobster fishery. Also earning approval that day was the West Thames Herring fishery. In September 2000, the Alaska salmon fishery became the first American fishery to be certified. Among the key players in the seafood processing and retail sectors supporting the MSC initiative were European-based Unilever, Youngs-Bluecrest, and Sainsbury’s. 28
To be certified, a fishery must demonstrate that it is being managed sustainably. Specifically, according to the MSC: “First, the fishery must be conducted in a way that does not take more fish than can be replenished naturally or [that] kills other species through harmful fishing practices. Secondly, the fishery must operate in a manner that ensures the health and diversity of the marine ecosystem on which it depends. Finally, the fishery must respect local, national, and international laws and regulations for responsible and sustainable fishing.” By mid-2005 there were over 46 certified fisheries worldwide supplying some 2 million tons of seafood. 29
The MSC’s counterpart for forest products is the Forest Stewardship Council (FSC), which was founded in 1993 by the World Wide Fund for Nature (WWF) and other groups. It provides information on forest management practices within the forest products industry. Some of the world’s forests are managed to sustain a steady harvest in perpetuity; others are clearcut, decimated overnight in the quest for quick profits. The FSC issues labels only for products from the former, whether it be lumber sold at a hardware store, furniture in a furniture store, or paper in a stationery store. 30
Headquartered in Oaxaca, Mexico, the FSC accredits national organizations that verify that forests are being sustainably managed. In addition to this on-the-ground monitoring, the accredited organizations must also be able to trace the raw product through the various stages of processing to the consumer. The FSC sets the standards and provides the FSC label, the stamp of approval, but the actual work is done by national organizations. 31
The FSC has established nine principles that must be satisfied if forests are to qualify for its label. The central requirement is that the forest be managed in a way that ensures that its yield can be sustained indefinitely. This means careful selective cutting, in effect mimicking nature’s management of a forest by removing the more mature, older trees over time. 32
The FSC label provides consumers with the information they need to support responsible forestry through their purchases of forest products. By identifying timber companies and retailers that are participating in the certification program, socially minded investors also have the information they need for responsible investing.
In March 1996, the first certified wood products were introduced into the United Kingdom. Since then, the certification process has grown worldwide. As of August 2005, some 57 million hectares of forests in 65 countries had been certified under the auspices of the FSC. 33
To support this certification program, forest and trade networks have been set up in some 35 countries, including Austria, Brazil, Canada, France, Germany, the Nordic countries, Russia, Spain, Switzerland, the United Kingdom, and the United States. These networks are part of the vast support group of companies that adhere to the FSC standards in their marketing. The world’s three largest wood buyers—Home Depot, Lowe’s, and Ikea—all preferentially buy FSC-certified wood. 34
In June 2001, the Natural Resources Ministry in Moscow announced that it was introducing national mandatory certification of wood. Although a small portion of its timber harvest was already certified, buyers’ discrimination against the rest of the harvest costs Russia $1 billion in export revenues. The ministry estimates that its uncertified wood sells for 20–30 percent less than certified wood from competing countries. 35
Another commodity that is getting an environmental label is electricity. In the United States, many state utility commissions are requiring utilities to offer consumers a green power option. This is defined as power from renewable sources other than hydroelectric, and it includes wind power, solar cells, solar thermal energy, geothermal energy, and biomass. Utilities simply enclose a return card with the monthly bill, giving consumers the option of checking a box if they would prefer to get green power. The offer specifies the additional cost of the green power, which typically is from 3 to 15 percent. 36
Utility officials are often surprised by how many consumers sign up for green power. Many are apparently prepared to pay more for their electricity in order to help stabilize the climate for future generations. Local governments, including, for example, those in Santa Monica, Oakland, and Santa Barbara in California, have signed up to use green power exclusively. This includes the power they use for municipal buildings as well as that required to operate various municipal services, such as street lights and traffic signals. Other city and state governments committed to purchasing a portion of their electricity from green sources include Chicago, Portland, New Jersey, and New York. 37
Many corporations are signing up as well. Johnson & Johnson, Whole Foods Market, and Staples all rank among the top 25 green power purchasers, according to the Environmental Protection Agency’s Green Power Partnership. Literally scores of companies in California and Texas are subscribing. 38
The net effect of these growing numbers of green power proponents is a tidal wave of demand that is forcing many utilities to scramble for an adequate supply of green electricity. One reason wind farms are springing up in so many states is that this is one of the fastest ways to bring new green power online. While green power marketing is now quite advanced in the United States, it is now also well established in Japan, where the rapidly growing purchases of green power threatened to outrun the supply in 2004, forcing utilities to quickly invest in more wind turbines. 39
Other types of ecolabeling include the efficiency labels put on household appliances that achieve a certain electricity efficiency standard. These have been in effect in many countries since the energy crisis of the late 1970s. There are also green labels provided by environmental or governmental groups at the national level. Among the better-known environmental seal of approval programs are Germany’s Blue Angel, Canada’s Environmental Choice, and the U.S. Environmental Protection Agency’s Energy Star. 40
28. Marine Stewardship Council, “World’s First Sustainable Seafood Products Launched,” press release (London: 3 March 2000); Marine Stewardship Council, “Marine Stewardship Council Awards Sustainability Label to Alaska Salmon,” press release (London: 5 September 2000).
29. Marine Stewardship Council, “Sustainability Label to Alaska Salmon,” op. cit. note 28; Marine Stewardship Council, “Certified Fisheries,” at www.msc.org, viewed 15 August 2005.
30. World Wide Fund for Nature (WWF), The Forest Industry in the 21st Century (Surrey, U.K.: 2001).
33. WWF, Certification: A Future for the World’s Forests (Surrey, U.K.: WWF Forests for Life Campaign, 2000), p. 4; Forest Stewardship Council, FSC Certified Forests (Bonn, Germany: 2005), p. 53.
34. WWF, op. cit. note 30; Natural Resources Defense Council (NRDC), “Good Wood: How Forest Certification Helps the Environment,” at www.nrdc.org/land/forests/qcert.asp, viewed 15 August 2005; Rainforest Alliance, “Profiles in Sustainable Forestry: IKEA—Furniture for Better Forestry,” at www.rainforest-alliance.org/programs/profiles/documents/IKEAProfile.pdf, viewed 24 August 2005; Rainforests.net, “The Forest Industry in the 21st Century: Top 5 Wood Buyers,” factsheet, at www.rainforests.net/top5woodbuyers.htm, viewed 27 September 2005.
35. “Russia Set to Begin Certification of Forests,” and “Russia Works Out System for Mandatory Wood Certification,” Interfax, 5 June 2001; Russia now has 4 million hectares of FSC certified forest and another 10–15 million hectares are actively seeking accreditation, according to Forest Stewardship Council, “FSC takes off in Russia,” FSC News, 30 June 2005.
36. National Renewable Energy Laboratory, Summary of Green Pricing Programs (Golden, CO: updated 12 July 2001).
37. Global Green USA, “Santa Monica Unanimously Approves RFP Process to Switch All City Facilities to Green Power,” press release (Los Angeles: 14 October 1998); Oakland from Peter Asmus, Reaping the Wind (Washington, DC: Island Press, 2000); New American Dream, “Institutional Purchasing Program: What’s Happening Around the Country,” at www.newdream.org/procure/categories.php, updated January 2004.
38. Environmental Protection Agency (EPA), Green Power Partnership, “Top 25 Partners,” factsheet, at www.epa.gov/greenpower/partners/ top25.htm, viewed 28 June 2005; EPA, Green Power Partnership, “Our Partners,” factsheet, at www.epa.gov/greenpower/partners/gpp_partners.htm, viewed 19 September 2005.
39. Junko Edahiro, e-mail to author, 8 October 2005.
40. Consumers Union, “In Time for Earth Day, Consumers Union Launches www.eco-labels.org,” press release (Yonkers, NY: 10 April 2001); Federal Environmental Agency (Germany), “Information Sheet for Submission of New Proposals for the ‘Blue Angel’ Environmental Label” (Berlin: Federal Environmental Agency, 2001); Canada Environmental Choice from www.environmentalchoice.com; U.S. Energy Star program information from www.energystar.gov.
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