Consumers: Buying green?

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This article is part of our special report Products for a greener planet.

Environmentally-friendly goods are often overpriced for many consumers – and as the economic crisis continues to bite, policymakers are mulling tax incentives to make green shopping more affordable.

Background

When it comes to buying environmentally-friendly goods, consumers may not always match words with deeds.

According to a recent survey on Europeans' attitudes towards sustainable consumption and production, 83% of consumers say they worry about the environmental impact of the products they buy.

However, consumers do not always opt for the most sustainable products, because quality and prices are also of great concern to them. Virtually all survey respondents (97%) said that quality is an important element in making purchase decisions. But an almost equally high proportion (89%) also stressed price as a priority.

As the economic crisis continues to bite, the European Commission believes that consumers will become even more price-aware in the future.

Issues

Efficiency gains offset by growing consumption

The continuous rise in household consumption is putting the environment under increased pressure as efficiency gains in production processes are quickly offset by consumption growth.

Meanwhile, the trend towards smaller households "contributes to higher consumption of energy and water and more waste per person," according to the European Environment Agency (EEA).

Efficiency gains offset by growing consumption

The continuous rise in household consumption is putting the environment under increased pressure as efficiency gains in production processes are quickly offset by consumption growth.

Meanwhile, the trend towards smaller households "contributes to higher consumption of energy and water and more waste per person," according to the European Environment Agency (EEA).

In this context, the way goods and services are advertised has a major influence in consumption patterns, the EEA said in a study on environmental pressures caused by European consumption and production.

Two reports by the EEA on the environmental effects of household consumption in Europe (2005 and 2009) identify food and drink, housing and mobility as the categories responsible for the majority of Europeans' total expenditure, the environmental effects of which are either already large or growing rapidly.

The most pressure on the environment is identified as coming from agricultural production, heating and hot water use in buildings and private cars.

The agency also notes that the negative environmental effects of EU citizens' consumption do not just occur in Europe, but also in other parts of the world as a result of production, processing and transportation to Europe.

Food and drink industry under spotlight

The agency singles out the environmental effects of food consumption in Europe as being "large compared with those of other consumption activities".

This is particularly the case when taking into account the indirect effects of food production, processing and transport, the agency says. These include for example the impact of farming and industry on water, air and soil as well as livestock emissions, over-fishing and packaging waste.

It stresses that "consumer diet choices can significantly influence use of resources and environmental effects of production, retail and distribution phases," and encourages consumers to opt for organic food, adopt a less meat-intensive diet or choose local and seasonal fruit and vegetables.

The first ever guidelines for environmentally-friendly food choices, jointly drafted by the Swedish National Food Administration and the country's Environmental Protection Agency, feature various facts on the environmental impact of different foods.

As top priority, they recommend citizens to reduce their meat consumption as a way of slashing greenhouse gas emissions (EURACTIV 06/07/09; EURACTIV 22/06/09).

A UN report, backed by the European Commission, ranks agricultural goods and particularly animal products on top of a list of "materials most responsible for environmental harm around the globe" (EURACTIV 04/06/10).

Other "priority offenders" include fossil fuel users, "especially electrical utilities and other energy-intensive industries, residential heating and transportation," the document notes.

Policy measures to green consumption

A growing number of products are covered by EU environmental legislation, such as the Integrated Product Policy (IPP) and its related directive on Eco-design for Energy-using Products (EuP). 

In addition to legal instruments, a wide range of tools, such as footprint calculation schemes and eco-labels, have been developed to inform consumers of the environmental credentials of a product or service – with a view to helping them opt for greener purchases.

The EU's Eco-label scheme is currently open to all products and services, except for food, drink, pharmaceutical products and medical devices. Information on the products and services that carry the label and where to find them across Europe can be found in the European Eco-label Catalogue.

The EU has also put in place an online consumer education website, Dolceta, with 27 country versions including a module dedicated to sustainable consumption.

According to the European Commission, other potentially effective policy measures to address the environmental effects of household consumption include market-based instruments, such as taxes, tradable permits and subsidy removal. Examples include CO2 taxes, bonus-malus schemes, white certificates and eco-loans.

EU Environment Commissioner Janez Poto?nik said in June that taxation schemes are needed to change consumers' habits and move towards a more resource-efficient society (EURACTIV 04/06/10).

Greener consumption can also be achieved through technological improvements regarding, for example, energy and water efficiency or the recyclability of products and materials, according to the EU executive.

The Commission also stresses that it is important to assess individual products' environmental pressure throughout their life cycle to understand the stage at which they have the greatest impact and allow for comparisons of products. 

National initiatives

In July 2008, the European Commission adopted an action plan on sustainable consumption and production (SCP). The aim is to improve the environmental performance of products throughout their life cycle by imposing stricter standards on production and stimulate consumer demand by simplifying labelling.

But the EU environment agency notes that "only a handful of member states" are actively promoting SCP at national level while most are yet to begin setting up full-scale policies.

The European Topic Centre on Sustainable Consumption and Production (ETC/SCP) has compiled country fact sheets on SCP policies for Austria, the Czech Republic, Denmark, France, Germany and the United Kingdom.

Examples of national policies to promote sustainable household consumption include various information campaigns on greening citizens' behaviour towards food, waste and energy as well as national eco-label schemes and ecological footprint calculators.

National initiatives include a French ecological 'bonus-malus' scheme for purchasing private cars and eco-loans at zero rates to finance thermal renovation. In Germany, a scheme was put in place to promote ecological fair trade products and public rental systems for bicycles. In Austria, the authorities provide guidance on how to cook with leftovers and prevent food waste.

Other examples include the UK, which has set up a low-carbon buildings programme, the Czech Republic, which has incorporated organic food into school catering facilities and Denmark, which has launched a tax exemption scheme for electric cars as well as duties for packaging waste.

Industry initiatives

There are currently two industry-led initiatives at EU level which are pooling expertise on sustainable consumption in the food and retail sectors.

The European Food Sustainable Consumption and Production (SCP) roundtable brings together all food-chain actors to develop coherent environmental assessment methodologies for products and means for effective consumer communication, while claiming to avoid 'greenwashing' (EURACTIV 07/05/09).  

A Retailers' Environmental Action Plan (REAP) brings together retailers who wish to reduce the environmental footprint of what and how they - and their supply chain - sell and promote more sustainable products to consumers (EURACTIV 03/03/09).

Positions

EU Environment Commissioner Janez Poto?nik has suggested that taxation schemes were needed to change consumer habits and move towards a more resource-efficient society (EURACTIV 04/06/10). "We need to change our behaviour, as consumers and as producers. And to do that we need to make our markets work in ways which put a proper value on the resources we use," Poto?nik said (EURACTIV 24/03/10).

Stress on natural resources can only be reduced if the relative prices of different inputs into the economy are changed to reflect the real value of those resources, he argued. He also stressed that changing price signals is a more efficient means of changing behaviour than "the heavy hand of regulation".

"We need to inform consumers about the lifecycle environmental impacts of their choices and one of the best ways to do that is through prices. Prices should reflect the real costs and consequences of our actions, in the short, medium and long terms," Poto?nik added.

Former EU Consumer Commissioner Meglena Kuneva said consumers were clearly playing a role in the environmental sustainability challenges that Europe's economies face. Therefore, she suggested that the decision-making process of consumers needs to be better understood in order to find ways to promote "green" choices and recycling.

McKinsey & Company consultants Sheila Bonini and Jeremy Oppenheim argue that the main barriers for greening consumption are lack of awareness, negative perceptions of green goods' performance, distrust in government and business' green claims, high prices and low availability of sustainable choices.

To increase sales of environmentally sensitive products, they note that companies must therefore remove these five barriers. "In other words, they must increase consumers' awareness of green products, improve consumers' perceptions of eco-products' quality, strengthen consumers' trust, lower the prices of green products, and increase these products' availability," they write in an article entitled 'Cultivating the green consumer'.

According to the Greendex 2010, an annual survey monitoring consumer behaviour, the top-scoring consumers of 2010, like in 2008, are in the developing economies of India, Brazil and China, in descending order. "American consumers' behaviour still ranks as the least sustainable of all countries surveyed since the inception of the survey three years ago, followed by Canadian, French and British consumers."

The survey, conducted by the National Geographic Society and international polling firm GlobeScan, also showed that "suspicion of so-called 'greenwashing' – companies making false claims about the environmental impact of their products – is the most significant barrier to further improvement. Out of a list of ten obstacles to doing more for the environment, the perception of 'greenwashing' emerged as the most frequently cited factor, followed closely by governments and industries failing to take action".

The United Nations Environment Programme (UNEP) noted that government messages making people feel guilty about their lifestyles and purchasing habits are having only limited success. Psychologists are concerned that many of these messages are too "guilt-laden" and disapproving. Instead of "turning people on" to the environment, these messages have tended to "switch them off," they argue.

Therefore, the UN thinks that sustainable lifestyles need to be made fashionable and "cool", while explaining to people the real personal benefits of living in harmony with the planet.

The European Environmental Bureau (EEB), a group of NGOs, argues that traditional environmental policy approaches are not sufficient to deal with the challenges posed by modern production and consumption patterns, and that 'Ecological Product Policy' is required.

"An essential challenge for the EEB is to move beyond the energy use aspect of products. Environmental requirements for implementing measures are, so far, almost exclusively limited to the energy performances in use stages. Whilst being relevant to an energy using product, the environmental requirements must also include stipulations for: energy and global warming potential; chemical contents; and resources efficiency."

European consumer organisation BEUC notes that energy and sustainability are becoming increasingly relevant for consumers, who are "willing and encouraged to save energy and protect the environment".

But it argues that consumers are unfortunately still not provided with the right tools to reduce their energy consumption or buy ever more efficient products, because "green" products are either unavailable or barely identifiable. At the same time, confusing information and a great variety of industry self-claims regarding energy-efficient products or sustainable supply make buying sustainable products hard, it says.

According to BEUC, unsustainable products should gradually be taken off the market. In addition, it says clear labelling information must be provided to consumers in a reliable way that is not misleading and allows for comparisons between similar products.

The Ecologic Institute, an environmental think-tank, stresses that when designing policy to influence consumer purchases, "you must take into account the way in which people make choices".

"Contrary to the belief of many economists, consumers very rarely weigh-up the full costs and benefits of their purchasing decisions. Instead, they are strongly influenced by emotional factors, the behaviour of other people, by habits, and by the use of mental short-cuts, which all help to speed up decision-making," it notes.

"Rather than being consistent, consumer preferences have also been shown to be inconsistent, changing over time and according to the situation and the way in which information is presented. In turn, while information provision and choice are important, neither necessarily leads to improved consumer decision-making or changes in consumer behaviour," it adds.

Erik Assadourian, senior researcher at the Worldwatch Institute, a think-tank, argues in The Rise and Fall of Consumer Cultures that a cultural shift from consumption to valuing sustainable living is needed because government targets and new technology are not enough to rescue humanity from ecological and social threats.

"It's no longer enough to change our light bulbs; we must change our very cultures," he writes, suggesting that unless we change our unsustainable habits and move beyond "the cult of consumption," civilisation will be washed over by ecological crises.

According to the Worldwatch Institute, consumption of goods and services has risen by 28% over the past decade, with the world digging up the equivalent of 112 Empire State Buildings of material every day.

Timeline

Further Reading

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