Moneyweb (Johannesburg)

South Africa: Can Ecolabelling Pay?

Johannesburg — Forr years European campaigners railed unsuccessfully against genetically modified (GM) foods, asking that companies like Monsanto and Novartis' label foods that contained modified ingredients. When their efforts were met with implacable refusals by the big multinationals they changed their tactics.

They broadened their battlefield drawing consumer attention not just to the corporations that produced the food but the supermarkets that sold it.

Greenpeace campaigners invited shoppers to join them in "gene food tours" through the aisles of the supermarkets, and eventually shoppers were demanding to know which were the "Frankenfoods". The result was a wide scale change in policy amongst major retailers. In Britain, several large supermarket chains removed GM foods from their 'own label' brands and one retailer, Marks and Spencer, went so far as to ban it from their stores.

Significant milestones in Africa In South Africa GM foods are just beginning to make the news. An extremely contentious subject at the World Summit on Sustainable Development, it made

headlines when African countries stricken with famine refused boatloads of the stuff. Their argument was simple, they could not accept the GM grains in unmilled form because they then ran the risk that subsistence farmers would plant it and thereby contaminate the country's original crop stocks. If, argued countries, such as Zambia, GM crops cross-pollinated with their existing crops they would lose access to their valuable European markets, a blow their economy would not be able to survive.

The anti-GM delegates who attended the Summit hoped to generate international support for their labelling campaign and while this was not forthcoming, there was one victory on the labelling front. This was the undertaking to give shoppers informative ecolabels.

Internationally, ecolabelling is not a new concept. Its roots can be found in the growing global concern for the protection of the environment, concerns that may be translated into a market advantage for certain products and services.

Although there is no current South African certification for the 'ecolabel' products, except in the case of organic produce, large retailers are making various environmental declarations, and label differentiators such as natural, recyclable, recycled content, have emerged on products and with respect to services in the marketplace.

Taking action Karen Lundbo, chief technical advisor for Denmark's environmental unit DANCED, has been working on an ecolabel project for South African cotton: "In absence of a South African ecolabel our project decided to ascertain if some South African companies qualified to use an international ecolabel, the Euro Flower, and I am pleased to see that factories in this country have the necessary environmental performance." However, Lundbo, acknowledges that although, "it is a great advantage for export, it is difficult to know when it will be demanded by the SA consumers." National retailer, Pick 'n Pay has been testing consumer interest for over a decade now. Its early 'green' product explorations coincided with the increased environmental awareness generated by the Rio Earth Summit ten years ago.

Ten distinct product lines were launched, from tea to toilet paper. The products all had strict environmental standards; recycled packaging, lead-free labels, organic ingredients, etc. "The range failed, within two years almost everything had disappeared," says Pick 'n Pay's corporate brand buyer, Vered Milner.

"Consumers were not prepared to spend the premium and have to compromise on look and taste." Now as the environment becomes topical once more the company has relaunched some of the brands and is cautiously growing the range. The products carry the Pick 'n Pay Earthcare logo and only a limited amount of supporting information (a Type II label). Milner says they won't go much further than what they are claiming now. "You have to be careful not to frighten the consumer." Moreover, the company has decided not to promote the products beyond using them in various corporate social responsibility initiatives. In the end they want to keep the lines on the shelves but the consumer base is so small that there is little incentive to market the products. "You always have to balance it with economic realities. You can't do it for profit you have to do it out of commitment, to the environment and the consumer."

Translating into profit Profit was an unexpected boon for Woolworth's when it launched its Badger Friendly Honey range. This successful commercial and environmental venture was started, as is so often the case, by a personal interest from senior management. After reading a magazine article which revealed the destructive methods of beekeeping in South Africa, which threatened the already endangered Honey Badger, Woolworths' CEO Simon Susman's requested an investigation into the situation.

Woolworths then established a protocol, which ensured that its own label honey and food ranges that include honey were not contributing to the problem. The result was a complete refocusing of the R3.2-billion beekeeping industry, with the Association of Beekeepers adopting a Badger friendly code of practice to ensure the protection of the honey badgers and promoting responsible beekeeping practices. Johan Ferreira, head of food technology at Woolworths, says: "The project quickly gained momentum. Although it has cost us both time and money it also brought about a change in the industry, an entirely unexpected 50 percent increase in the sale of Woolworths' honey and significant media interest." The Body Shop provides a good example of a company that has made a profit by positioning itself as a socially and environmentally preferential brand.

The company has just opened it eleventh store in South Africa and general manager, Gerald Oosterhuizen, says that although they initially struggled to get the consumer to understand their ethics, things are beginning to change. "The recycle bins stood embarrassingly empty month after month, now we're seeing that our efforts to inform and educate are paying off. The bins are filling rapidly." For the Body Shop it's about relationship building, in-store environments, branding not advertising, and educating to push the boundaries of consumer understanding. Says Oosterhuizen, "We are spoilt and lazy in this country, we just dump things. People need to understand the repercussions of their actions.

We are on a drive to make the South African Body Shop customer aware of the need to protect the planet. It would be great if we could get the big retailers doing the same thing. At this stage 80 percent of the major retailers don't care, it's just another product on the shelf to them. If we all worked together imagine the difference we could make?"

South African apathy If ecolabelling is to become a reality, working together will have to be part of the challenge marketers accept. Turning around the notoriously apathetic

South African consumer, to support environmentally sensitive initiatives and sustainably manufactured products, will take a concerted effort. It will require a massive education programme and even this won't guarantee a change in consumption habits. Consumers expressed interests rarely translate into real purchases according to the findings of the Global Consumer Class Study, a regular international study conducted by the United Nations Environmental Programme (UNEP).

UNEP's findings suggest that only a small proportion of consumers internationally are truly committed to sustainable products and to making the necessary lifestyle changes. The same study did find that more prosperous consumers were increasingly aware of the impacts of their buying habits, and although this is true in South Africa there is no discernable trend towards consumer purchases based on altruism, particularly when there is a cost implication. Milner says of the Pick 'n Pay experience: "Consumers like to participate as long as it doesn't require anything of them."

Only what's good for you Just as companies have been slow to embrace green concepts that do not make a profit, so consumers are unlikely to spend more on a product simply because it is good for the environment. Pure economics suggests that just as business responds with self-interest so consumer support will be achieved by appealing to an aspect of individual gain, rather than the collective good. Organic food, a sustainable farming practice that is set to rival conventional agribusiness in Europe, is marketed chiefly from its human health aspects with the environment as an additional benefit. This stance has paid off ? according to a study conducted by European based research company Datamonitor, organic spending in the UK will experience a 40 percent growth by 2005.

Organic foods and all earth-friendly products are currently considered luxury items, for the consumer not for the planet, and priced at a premium.

Therese Brinkcate, manager of Nedbank's Green Trust at the World Wide Fund for Nature (WWF-SA), who assisted Woolworths in launching its Badger Friendly Honey range, stresses, "Ecolabelling must not be seen to be an excuse to put the price up, particularly in this country where you have such a small affluent market, with the rest of the consumers shopping with their pocket." Of the Woolworths honey range she says, "It is very expensive and we would like to see it extend beyond Woolworths and at a price that is in the reach of most South Africans."

Commitment to triple bottom line But while corporates grapple with how to get more mileage from their earth-friendly initiatives, the environmental costs of industry are increasing and few corporates have found a way of closing the implementation gap for sustainable products. "There is no time like the present," says Brinkcate, "for corporates to pursue the issue of ecolabelling. It has huge potential, particularly in light of the King Commission's King II report, and its emphasis on the triple bottom line." Brinkcate predicts that corporates will be keen to uphold the King report and ecolabelling is one way to visibly show their commitment to the triple bottom line (social, environmental and economic).

The introduction of ecolabelling will also ensure that those companies that do take the lead in launching sustainable products and services will be able to compete more fairly with the cheaper mass-produced items. It will be one means of creating a more level playing field, says Themba Mpocoge, of Planet Agricultural Concepts, a sustainable agriculture initiative. "Ecolabelling, to my understanding, is a prerequisite for transparency and consumer protection, but also to ensure ethics in food and medicinal biomass and animal production.

For us, such labelling will cut costs at primary production level: to take an example, the costs of organic certification which are prohibitive to most farmers (including commercial farmers), represent an unfair competitive edge for the non-organic agriculture practitioners, as their methods require no certification. In the case of an organic agricultural practice, all the organic products are to be certified annually at a cost, often in foreign currency.

Labels will put everyone on par, the consumer shall be informed on who is who in the zoo." South African retailers, however, question how successful ecolabels are elsewhere in the world. Who sets the standard, they ask, and counter with the argument that South African shops still have good credibility with their customers and therefore don't need an external labelling programme. And certainly it has been the issue of credibility, which has caused other ecolabelling initiatives to falter. It is evident that a successful programme would require clear guiding standards and investigation by an independent third party, to assure consumers that each labelled product or service is an environmentally preferable alternative.

Beware of greenwashing Mpocoge comments further that, "ecolabelling can become a green wash ? I therefore strongly endorse the need for ecolabelling certification to be provided by an impartial third party, such as with the Forest Stewardship Council (FSC) and the Marine Stewardship Council (MSC). The FSC and MSC are

international accreditation NGOs that were linked initially to WWF but have now gone on their own. Their strength is their multi stakeholder approach, and any similar initiative in South Africa will have to have buy-in from government and civil society. It is something that we could consider facilitating, as WWF did internationally with MSC and FSC." A national accreditation programme for ecolabelling and related value-adding concepts in food would require coordinated effort, particularly if the market transformation necessary to create demand for such products is to occur.

Mpocoge argues that, "Market transformation is the responsibility of the total spectrum of socioeconomic role players. All of whom have to realise that policies which only serve the tenants of the current economic system, based on a single bottom line item, financial profit, are unsustainable. These trends will continue, until such a time that corporations and government, include civil society groups in their decision-making." If the WSSD didn't achieve all that the anti-GM campaigners and other environmentalists hoped, it did at least serve to push hard questions about the planet's future into open. For the average South African, says Brinkate, the Summit was not as successful as the WWF-SA would have liked in terms of raising general awareness, "but it did help raise corporate awareness and propel them to start looking at issues of ecological sustainability."

Now for those who wish to be ahead of the pack it may mean making a short-term economic cost-benefit trade-off in order to ensure long-term sustainability. And in the long-term tackling the issue, with comparatively simple measures like ecolabelling, might prove cheaper than ignoring it.


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