Intensified Product-orientated Environmental Initiative

1 Summary

This discussion paper presents the Danish Environmental Protection Agency's proposal for an intensified product-orientated environmental initiative.

The paper has materialised as the outcome of a series of round-table discussions and ongoing contact with the organisations of trade and industry as well as with relevant authorities.

Discussion paper
The purpose of this paper is to contribute to public debate on the organisation of initiatives in the product field in years to come - in particular, this paper should be discussed by and with the stakeholders affected by such action. One of the proposals includes discussing the overall objectives, components of the effort and proposals for concrete initiatives. The groundwork is also being laid down for discussions on possible ways of collaborating on such intensified efforts.

The paper has been widely circulated for comments and, in addition, will be presented at a series of events in the next six months. The components and initiatives proposed will be deliberated in the light of this debate and comments received so that the product-orientated environmental initiative can be presented for political decision-making.

This approach involves viewing the problems in a long-term, holistic perspective. Efforts can thus not be realised only by initiating a series of concrete initiatives. The process is continuous and must, in a number of years, turn development and consumption in a more environmentally sound direction - in continuous and close co-operation with the stakeholders.

The global challenge
The UN estimates that the world's present population will have doubled in the next 35 years. Many countries of Eastern Europe, Asia and South America are undergoing rapid economic growth. The poorest countries are justified in their hopes of - and at the same time their entitlement to - improving their living standard in the years ahead. This development will entail a marked increase in global consumption. If the depletion of the world's resources and the permanent destruction of the environment for future generations caused by an explosion in consumption are to be avoided, intensified environmental initiatives will be needed, aiming at all aspects of our product consumption.

Product, market and stakeholders
In other words, the environmental impact associated with the production, use and disposal of products needs to be reduced. These efforts must ensure that products are developed with far better environmental properties than those we know today. But these efforts must also ensure that more environmentally sound products can compete with environmentally inferior products - and in sufficient volumes to bring about environmental improvements. The focus therefore needs to be on the market in which the products are competing as well as on the stakeholders influencing that market.

The national challenge
It is a challenge for environmental policy to intensify product-orientated environmental initiatives in such a way that they can contribute to solving some of the Danish environmental problems and hence result in specific environmental improvements.

This initiative will prove a great challenge to Danish trade and industry at the same time as it affords crucial economic and industrial policy opportunities. If it is to succeed, an intensified product-orientated environmental initiative can only be implemented by active interaction between the public sector and trade and industry. In return, such interaction will consolidate the competitiveness of the Danish trade and industry in future years.

The product initiative
The paper examines the general framework needed to promote the availability and sale of less environmentally degrading products on the market. It surveys ways in which such framework conditions can be established, suggesting initiatives to intensify efforts within both existing and new intersectorial areas of action. It is proposed to conduct pilot projects in three product areas where the conceptual basis of an intensified product-orientated environmental effort can be tested and developed in a hands-on context.

Continuous process and dialogue
Action in the product field should take the form of a continuous process involving ongoing dialogue between the parties. Together, they must identify new initiatives and obstacles in order to develop, manufacture, market and sell new and less environmentally degrading products.

Refining environmental initiatives
Part of the environmental initiative is already targeted at such products. Compared to the all-round effort described in the paper, the present initiative is, however, aimed mainly at specific elements of importance for the environmental impact caused by products. The intention is not to suggest that the former environmental effort should be superseded by a new one. An intensified product effort must be a supplement.

1.1 The great challenge

Former regulation
Over the past 25 years, environmental regulations have resulted in substantially less pollution from industry, power stations, wastewater treatment plants and other so-called point sources.

Product use is an environmental problem
But there are still a number of environmental problems which have proved difficult to handle. They are typically associated with the environmental impact from more diffuse sources and with society's consumption of resources in general. A considerable part of these environmental problems are linked to the widespread use of the products in all functions of society.

A particular product may seem harmless enough on the face of it, viewed in a larger environmental perspective. But however harmless it may look, an individual product may assume great environmental importance owing to the volumes in which it is manufactured or the substances it contains.

For these reasons in particular, increased focus on products is needed if the environment is to enjoy greater protection.

Local and global environmental problems
We see local environmental problems such as pesticides in the groundwater, environmentally hazardous substances in sewage sludge and oxygen depletion in our local waters. We see regional and global problems such as the depletion of the ozone layer, the spread of non-degradable substances hazardous to health and the environment, and the degradation of nature through e.g. desertification and eradication of the rain forest. We are also witnessing various new problems of which we do not yet know the full extent and consequences, e.g. the spread of oestrogen-like substances, the reduction of biological diversity and contributions to the greenhouse effect.

Sources
A source-orientated approach - in which efforts are aimed at reducing the discharges from the various sources impacting on the environment. Sources include e.g. industrial enterprises, wastewater treatment plants, waste incineration plants, farming, power stations and cars. Efforts include stipulations regarding purification or the use of cleaner technology.

Medium
The medium-orientated approach - aiming to ensure an acceptable quality of soil, air, sea, groundwater and fresh surface water. Among other things, the approach ensures that a policy stance is taken on the need, if any, for actions against discharges to the environment for reasons of environmental quality.

Substances
The substance-orientated approach - in which the properties and fate of chemical substances, resources or residual products in the environment underlie all action. These efforts also include hazard and risk assessment.

Products
The product-orientated approach - which is based on the concept that the overall environmental impact can only be understood - and efforts properly prioritised - if products are contemplated throughout their entire life-cycle from cradle to grave.

The present product-orientated efforts has mainly included the development of tools for analysing and assessing the environmental impact of products and the development of a public green procurement policy. Furthermore, efforts have been directed towards individual, selected components of the product life-cycles with a view to solving specific environmental problems.

What is the underlying idea of the product initiative?
The purpose of an intensified product-orientated environmental initiative is an increased development, manufacturing and marketing of environmentally sound products on the market in replacement of existing, more environmentally degrading products.

Sale
The present paper particularly focuses on the sale of more environmentally sound products. A product-orientated environmental initiative must stimulate the market to increase its marketing and sale of products with good environmental properties. A product-orientated environmental initiative therefore takes as its basis the highly complex interaction between products, stakeholders and market. Concrete supportive initiatives must ensure that, to a greater extent, this interaction results in the development and marketing of environmentally sound products.

Working on an intensified product initiative
A long-term holistic process
An intensified product initiative is a framework intended to unite existing and new actions. It is an attempt to treat environmental problems in a holistically oriented fashion. Such action cannot be implemented merely by starting a series of concrete initiatives; nor do the results of such action become quickly visible.

It is a continuous process which, in a number of years, must turn product development and consumption in a more environmentally sound direction - a never-ending process but a process in which stakeholders continuously improve products in close co-operation.

Stakeholder dialogue
A dialogue among the stakeholders is a key concept in this process. The dialogue is not just a means adopted as part of a product initiative - to a major extent, the dialogue is the product-orientated environmental initiative. It requires the participation and commitment of many parties with highly diverging interests.

Cyclical process
The process can be conceived as a cycle in which the different phases are repeatedly traversed. Efforts must constantly be improved on the basis of the results and experiences achieved. A product-orientated environmental initiative can be described as a process in five phases:

More can be read about the product initiative as a process and dialogue in Section 3.1.

What are the overall objectives of the product initiative?
Despite being an environmental initiative, commercial targets are largely in focus. The working premise is that more environmentally sound products will only be developed and sold if this policy agrees with business economics interests of the companies and with the other stakeholders' interests - if not on the altogether short view, then in any case on the slightly longer view.

Environmental objective
The environmental objective of such efforts is to contribute to the development, production and marketing of products with improved environmental properties in order to allow a reduction in the total impact from the production, use and disposal of products.

More specifically, the aim is to restrict the spread of environmentally and health hazardous substances, the increasing use of fossil fuels, the overexploitation of biological resources and the consumption of mineral resources that cannot be renewed.

Commercial objective
The commercial objective behind the initiative is to strengthen the competitiveness of the Danish business community by establishing a basis for the development, production and marketing of products with improved environmental properties.

Process objective
The overall objective of the product initiative is to involve all stakeholders in realising the environmental and commercial goals. At the same time, the aim of the work is for Denmark to influence its international business partners to take similar action.

More can be read about the overall objectives in Section 3.2.

1.3 Framework and conditions for product initiatives

If consumers and purchasers do not demand environmentally sound products, these products will never find their way onto the market. If environmentally sound products do not exist, the market will not be able to make them available to the consumers. If the market does not inform consumers of the environmental properties of the products, consumers will have no way of knowing whether they are buying the environmentally sound products, etc., etc.

The analysis in this paper can only be general, owing to the great variation in conditions prevailing from one product to another. Any concrete action with regard to selected product groups must therefore analyse the conditions and interaction on a more product-specific basis.

The nature of the product-related framework and conditions
In principle, the product-orientated environmental initiative is directed towards all products manufactured or consumed in Denmark. The initiative therefore includes both import and export products.

What are products?
Products should be taken to mean both physical products and services which in some way generate an environmental impact - for example, cleaning and transport. In addition, products means both the products utilised by the end-user and the semimanufactures forming part of further manufacturing.

15,000 product groups
The Danish market boasts a very large number of products. The foreign statistics record trade in approx. 15,000 different product groups. Within these groups there are many different articles. To these must be added the services.

The product-orientated environmental initiative is especially directed towards the products that will be developed and marketed in the next few years. Since one generation of products is superseding the next one at an ever increasing rate, efforts must be expected to penetrate quickly.

Action priorities
It is proposed that action is targeted primarily at products which have a substantial impact on the environment and where such action stand a reasonable chance of bearing fruit. Specifically, this means that work on the product initiative should include prioritising products and the environmental properties calling most urgently for action will be selected in each individual case.

Overview of the environmental properties of products
Any effort to reduce the overall environmental impact of a product requires an overview of the environmental conditions governing all phases of the life-cycle of a product, from the extraction of raw materials to production, distribution, use and disposal. Such a precise overview of environmental properties is, however, only necessary in certain cases. Often, a more general evaluation will be sufficient and efforts to improve the environmental properties of the product will often focus on selected environmental properties or on selected parts of the life-cycle of the product.

More can be read about product conditions in Chapter 4.

The nature of market framework and conditions
Competing on price and quality
On the market, competition is based primarily on product price and quality and, only to a limited extent, on the environmental properties of products. If the product initiative is to succeed, the products developed and marketed must be able to compete on price and quality as well as on the environmental score. Therefore, it is vital, both nationally and internationally, to attach greater importance to an improvement of the competitive situation for products with good environmental properties.

Light-green consumers
On the Danish market, various surveys show that between 1/3 and 1/4 of consumers would be ready to show consideration for the environment in their choice of consumption.

Options and information in the shops
However, there are a number of conditions that have to be fulfilled before consumers can show such considerations. The more environmentally sound articles must be available in all shops, and they must be easy to find. There must be easy access to simple information on the environmental properties of the goods - primarily in the shops. In addition, the environmentally sound goods must not be appreciably more expensive than the alternatives.

A central aspect of the product-orientated environmental initiative is to ensure consumers easy access to adequate and simple product information.

The domestic market is important
For most Danish companies, the domestic market is essential to sales and earnings. In a number of cases, the domestic market via i.a. statutory environmental requirements also gauge of future environmental requirements on products on the international market.

For certain product groups, e.g. pesticides, there is great international awareness of the Danish regulation as new Danish environmental requirements are expected to rub off on the control measures in other countries.

A series of international surveys show that there is a positive correlation between a high level of protection and large-scale environmental initiative on the one hand, and the competitiveness of trade and industry on the other. But a balance is needed to ensure that the environmental requirements are devised to retain the international competitiveness of companies while the Danish market remains of interest to foreign companies.

Approx. 60% of Danish goods production are exported and, similarly, some 60% of the goods sold on the Danish market are imported. Denmark is thus strongly integrated in the global market - primarily with highly industrialised countries where the markets resemble the Danish market in many ways.

Action within the framework of international agreements
Intergovernmental control and international agreements governing trade relations, products and the environment are assuming ever greater importance for environmental efforts. On the one hand, the agreements provide a framework stipulating the extent of independent national environment policy. On the other hand, they allow the individual country to influence environmental considerations extending beyond its national frontiers. This primarily involves EU regulation and global trading controls within the framework of the WTO. Furthermore, the European and international standardisation work is of great practical importance for the requirements made of the design and manufacture of a product.

Active international control for the benefit of the environment
A Danish product initiative must be developed in accordance with the principles of the free movement of goods, as defined in the EU and WTO. The development of international regulations will assume great importance both for international and national environmental efforts, including the framework for a product-orientated initiative. Therefore, it is of great importance to work actively to ensure that environmental requirements are given greater clout in international agreements.

Compared to a Danish initiative, an EU regulation in the product field will, however, have a much wider impact.

There is need and scope for a Danish initiative
Both a need for and possibilities of an independent Danish product initiative are present. A Danish initiative must exploit all the possibilities afforded by international regulation and be capable of improving marketing conditions for more environmentally sound products on the Danish market. At the same time, Danish efforts must take place in active co-operation between public authorities and Danish companies in order to consolidate the competitiveness of the companies.

More can be read about the market conditions in Chapter 5.

The stakeholders’ conditions
The stakeholders' active participation in the product-orientated environmental initiative is of vital importance for the achievement of the desired effect of the initiative. Individually and as a team, the stakeholders make absolutely vital decisions that are of importance to design, materials, production, transport, supply, demand, consumption conditions and waste management. Finally, these decisions determine the environmental impact caused by the individual product as well as by overall consumption.

Product development/design
The product developer's and designer's choice determines factors such as materials, product life, resource consumption during use and potential for recycling.

Production
The manufacturer engineers the production process and thus influence the environmental impact. The manufacturer should not be taken to mean solely the maker of the final product but also the maker of energy and raw materials, semimanufactures and consumables used in the manufacture of the end-product.

Distribution - transport and trade
Distributors like the importer, the forwarding agents, the conveyers, the wholesaler and the retailer are intermediaries in the product chain from manufacturer to consumer. Among other things, they thus influence what products can be bought and how the products are transported.

Consumption
The consumers' choice of products is, of course, the basis of the actual demand and is thus vital in the choice of products to be developed, manufactured and supplied on the market. Major public enterprises are a very important type of consumer in this context.

Other stakeholders
A number of stakeholders have only indirect bearing on the underlying conditions for products:

The financial sector furnishes financing and may in its own interest demand environmental information as well as eco-conscious behaviour.

Researchers and others who develop know-how on environmental conditions influence which environmental problems are discovered and for which solutions are found.

Those disseminating knowledge have a great bearing on the know-how available to other stakeholders.

Parliament, authorities, and national and international organisations establish the regulations and the "climate" that define the framework conditions of the environmental and industrial policy for the stakeholders. State and municipal regulations of waste handling are an example of this.

Special focus on product developers, dealers and consumers
There are three groups of stakeholders in particular who should be brought into sharper focus than they have been in the existing environmental efforts. They are the consumers, the dealers and the product developers. Product development is often, but not always, undertaken by the manufacturer. There was formerly a greater focus on the authorities and the manufacturers. Consumers, dealers and product developers are, however, essential to a product strategy since they largely determine the supply and demand openings for products with improved environmental properties. The paper therefore contains detailed descriptions of the three groups of stakeholders.

The stakeholders' conditions
It is necessary to understand the conditions on which the various stakeholders are willing and able to participate - including especially their motivation, their resources and the legal aspects of importance to the product initiative.

Motivation
Stakeholders' motivation is determined primarily by their ethics, their resources and the competitive situation entailed by any change in behaviour. Efforts in the product field must support the pioneers as well as increasing motivation among the more cautious stakeholders - i.a. by concentrating efforts on external constraints such as resource and competition factors.

Resources - know-how, time and money
It takes know-how, time and money to get started. Acquiring the knowledge needed as a basis for the various stakeholders' behavioural decisions is generally a problem. This applies to knowing what the essential environmental problems are, which environmental problems are associated with individual products, and what the individual stakeholder can do to help solve those problems.

All conversion processes cost resources to begin with, and any gains in the form of savings come only on the slightly longer view. Products with improved environmental properties will generally be more expensive and will remain so until a stable and reasonable demand for these products arise. Similarly, limited demand is a barrier to development and launching of more products with improved environmental properties onto the market. It is thus pivotal to consider the use of economically stimulating instruments as part of the product initiative.

Legal aspects
The legal aspects are important when the rules play a significant part in ensuring that products are not hazardous to health or the environment, or where such rules must ensure the availability of essential information.

More can be read about the conditions for the stakeholders in Chapter 6.

1.4 Proposals for specific initiatives

The proposal for an intensified product initiative invites action in a number of new areas while, at the same time, changes or reinforcements are made to efforts in various existing fields. This is reflected in the proposals for specific initiatives and areas of action.

The paper has been widely circulated for comments. No new overall paper will be drawn up on the basis of the hearing but the Danish Environmental Protection Agency will deliberate the proposals for specific initiatives in the light of the comments received and the debate before any initiatives are submitted for political consideration. The proposals are thus up for debate. The proposals are described in detail in Chapter 7.