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Carbon Confusion


To help shoppers make green choices, companies are slapping carbon labels on products. But even if the public can interpret the information, will it help reduce greenhouse gas emissions?

Next time you're in a shoe store, pick up a pair of clogs or leather walking shoes from Timberland (TBL). Inside, right by the heel, you'll find a single number that tells you how "green" the shoe is. This number is explained in a card in the shoe box that provides a 0-to-10 carbon rating. A zero means less than 2.5 kilograms of carbon and other greenhouse gases were emitted when the shoe was produced and shipped. And a 10? That's a whopping 100 kg, roughly equal to the carbon released if you drive a car 240 miles.

There's a simple premise behind the new label. Our everyday activities, whether making pancakes or jetting across the sky, are linked to the combustion of fuel, which releases gases that contribute to global warming. Timberland believes climate-conscious shoppers will buy shoes that help them cut their carbon count. And those same customers will feel more loyal to the brand because Timberland respects their wishes.

Sixty different Timberland products sport such numbers. They reflect both the "carbon footprint" of the shoes and other factors, such as the quantities of harmful chemicals used to make them. By 2010, Timberland plans to put the labels on all its shoes and clothing, and others companies are set to follow its lead. The goal, says Timberland CEO Jeffrey Swartz, is "to arm consumers with as much information as we can."

But will shoppers really be able to interpret such information? And even if the tags catch on, will they make a difference in reducing greenhouse gases?

Experts are divided on these questions. Climate scholars point out that it's almost impossible to distill into a single number the intricacies of carbon chemistry, manufacturing processes, supply chains—and how they all affect global warming. And the very idea of doing so is controversial. Last spring, Britain-based Tesco, the world's third-largest retailer, announced plans to make public how much carbon is released in the production, transport, and consumption of all 70,000 products on its supermarket shelves. The plan immediately drew howls of protests from manufacturers, who thought the burden of measuring emissions would land on their shoulders. Global environmental groups declared labels a distraction from more important corporate efforts to improve energy efficiency. Shoppers, meanwhile, seemed confused by the first such tags that appeared on store shelves, except when they were part of a larger education campaign. "It requires leadership, commitment, and pressure to make something like this happen," says Edgar Blanco, a research associate at the Massachusetts Institute of Technology who has studied carbon labels. "The truth is, no one knows how to educate consumers about this, or how it will work."

The skeptics certainly have a point. Yet many shoppers are eager to understand how their own activities affect the environment. In a survey last summer by AccountAbility, a nonprofit that advises corporations and governments on sustainable business practices, nearly half of 2,734 U.S. and British consumers polled said they wanted to know which products caused the least harm.

A BEWILDERING MAZE

Tesco CEO Sir Terry Leahy pushed carbon labels into the public spotlight in January, 2007, when he talked about labeling everything sold in its Wal-Mart (WMT)-like stores, from bags of parsley to flat-panel TVs. "Customers tell us they want our help to do more in the fight against climate change," Leahy said in a speech announcing the plan. The idea was that the solitary numbers on the labels would make it easy for shoppers to compare products. In fact, each number represents a bewildering maze of "inputs," such as how much fertilizer must be produced and spread to grow a bunch of parsley, how much gasoline is used to transport it from the farm, and the electricity required to make the plastic packages. Companies have different ideas about how to present this information. Walkers, a unit of PepsiCo (PEP), took an approach similar to Tesco's. Acting on its own, it put a simple label on its 35-gram bags of cheese and onion potato chips that says "75 grams of CO2." Boots, Britain's largest pharmacy chain, took a different tack last summer. Experimenting with labels on its Botanics shampoo, it used signs in its stores to provide the explanation—much as Timberland relies on fact sheets in the shoe box.

Pioneers like Tesco and Boots understand they're in the midst of a Europewide crackdown on greenhouse gas emissions, and that if they don't act on reducing carbon, they could get slammed with punitive regulations. Since 2005 major carbon emitters such as power plants and oil refineries within the European Union have been forced to curtail greenhouse gases. This summer a climate change bill is expected to be signed into law, making Britain the first country in the world to introduce legally binding CO2 reduction targets. The new law, aimed at lowering Britain's emissions 20% by 2010, will extend the cap on carbon to large, non-energy-intensive businesses such as retailers, hotel chains, and banks. Retailer Marks & Spencer, for one, has an ambitious plan to become carbon-neutral and send zero waste to landfills by 2012.

Carbon labels were a logical outgrowth of the crackdown on greenhouse gases, which is also playing out in Washington and many state capitals. Timberland, for example, is pushing other shoemakers to agree on an industry standard. But companies heading down this path might learn from the challenges encountered by the pioneers.

The highest hurdle is simply obtaining an accurate carbon count on different goods, a laborious process that may initially cost $10,000 or more per item. In most countries, each manufacturer figures out for itself how to gather the data that become the number on the label. Britain is trying to hash out a national standard for measuring the greenhouse gas associated with each product and service, working with the Carbon Trust, a government-funded nonprofit. That should bring down the cost of counting carbon over time; the standard should be ready by June.

Even with a standard, counting can involve mind-boggling complexity. Unilever, a top supplier of household products to Tesco, operates 260 factories in 70 countries and works with more than 10,000 subcontractors. With a supply chain like that, even labeling a line of packaged noodles is a chore. Say Unilever decides to shift production of the noodles from Poland to South Wales to save money. Because of fuel consumption and other factors, that change has a big impact on the carbon tally, even though the same recipe is used. Unilever worries that Tesco may ask it to recalculate the carbon footprint for such products each time it moves production, which might be as often as once a week. If asked, "we couldn't do it," says Gavin Neath, Unilever's senior vice-president for global corporate responsibility. "Our supply chain is constantly changing." Tesco admits there are difficulties to work out. Says David North, Tesco's director of government affairs: "We have to bring suppliers with us on this journey. It is early days."

Once the labels are in place, companies find, it's hard to tell if consumers get the point. In a survey PepsiCo's Walkers commissioned from researchers Populus, half of the 1,000 people interviewed said they were more likely to buy a product with a carbon label. But such numbers, while well-intended, may not convey much. "What does it mean to say a bag of chips contains 75 grams of carbon?" asks Steve Howard, CEO of the Climate Group in London. "I have a PhD in environmental physics, and it doesn't mean a thing to me."

There's another complication in labeling products: By focusing consumers' attention on this one issue, the retailer risks undercutting other store programs that are also socially responsible. When Tesco unveiled its carbon program, as an interim step it put little airplane stickers on products that were air-freighted, to alert shoppers that more fuel was burned in transport than for goods shipped by boat or truck. CEO Leahy's announcement prompted protests from governments of developing countries, including Uganda and Kenya, which felt Tesco's plans unfairly punished producers there. "The moment consumers looked at this sticker, they would stigmatize those products," says Abraham Barno, agricultural attaché at Kenya's embassy in Britain. Tesco has promised to work with developing countries to promote their products.

Demonizing imports while favoring locally grown food is, in any case, overly simplistic, argues Hilary Benn, Britain's environment minister. Studies have shown that Britain's local produce has a large carbon footprint because of the country's heavy reliance on fertilizer. Manufacturing that fertilizer takes far more energy than what's consumed on a small African farm. And the disparity persists even when you factor in the jet fuel burned to bring the vegetables to Britain. One study estimated that a consumer boycott of air-freighted African produce would reduce Britain's total emissions by less than 0.1%. "We need to cut our huge carbon footprint, not force Africa to cut its tiny one," says Benn.

Despite the controversy surrounding labeling, and the challenges in counting the carbon, defenders, including PepsiCo, say there are big side benefits. In times of $100-per-barrel oil, most companies want to be more energy-efficient, and calculating a carbon footprint is one of the best ways to find "hot spots" where energy is wasted in the production and distribution network.

Retailers such as Tesco and Boots say they'll continue to experiment with carbon labels and reap whatever rewards they bring. Some are unexpected. Last year, Boots ran a detailed, two-month analysis on the carbon footprint of its shampoos, including the carbon emitted during both production and use of the shampoo. Boots found it could reduce the production footprint by 20% when it bottled the soap in recycled plastic and made a few other packaging and transportation tweaks. But the biggest component in the overall carbon count, Boots discovered, was the amount of hot water people used during their showers. Last summer it posted signs in 250 of its stores. If you really care about your carbon footprint, the message said, use cooler water when you wash your hair.


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