Sustainability labelling and certification: toward an integrated legal, economic, ecological and social aproach. (SUSTAINABILITY LABELLING)

Deliverables

In the long term, public authorities may be in the best position to provide an enabling environment for discussing and defining sustainability policy frameworks and guidelines and criteria for good governance, for providing legal frameworks to enable multinationals to operate and for dealing with the tensions generated by the asymmetrical outcomes between the North and South. In the short term, though, it does not seem the most obvious answer. As an instrument, sustainability labelling and certification may fulfil several positive functions in the time period before legal and policy solutions are found. Therefore, it seems appropriate that in the short term all stakeholders will take action to strengthen the legitimacy and effectiveness of sustainability schemes, and that at the same time governments will work on longer-term legal solutions Following from this, the overarching challenge is how to enhance the legitimacy and effectiveness of sustainability labelling and certification in the short and in the longer term. In the longer term, the focus needs to be on the development of sustainability law and policy at the international and national levels in line with basic democratic principles. Such law and policy should provide a framework including definitions of sustainable management practices and production methods and indicate objectives and means. Furthermore, it should establish clear rights and responsibilities for those involved. In the short term, the focus should be on improving the quality of sustainability labelling and certification by stimulating multi-stakeholder approaches, harmonisation initiatives, and sector-specific accreditation programs, preferably at the international level. Multi-stakeholder approaches may enhance the legitimacy of private standards, because such processes of developing and implementing standards are shared endeavours among business, social and environmental NGOs, and other stakeholders involved. Harmonisation initiatives are in fact overarching programs that provide basic definitions and requirements to function as a bottom-line for national and regional certification and labelling schemes. These initiatives may provide several benefits, such as enhanced credibility with producers and consumers, the use of common certificates and logos, and the facilitation of international trade by providing a mechanism for mutual recognition. Sector-specific accreditation programs contain procedures by which an authoritative body verifies whether a certification body is competent to operate in a certain sector. This is in fact a model of "certifying the certifier" that has the potential to enhance accountability for the stakeholders involved. In this respect, the recent initiative of ISEAL Alliance to develop a Code of Good Practice for Setting Social and Environmental Standards is worth mentioning. The consequences for the EU of the longer and short term approaches sketched above are as follows. First, the EU could consider making an extra effort to ensure that environmental and social issues are adequately dealt with in international fora. This could be inter alia undertaken by a process of seeking to legalise labelling and certification schemes under the WTO rules, subject to strict conditions that indeed protect the interests of developing countries such as ensuring a preferential treatment for developing countries (by establishing flexible conditions for the mutual recognition of their own eco-labelling schemes, and effectively promoting mechanisms for the transfer of technology). Second, the EU could consider prioritising the definition of the fundamentals of sustainable production, consumption, and trade in the EU context. In addition, the EU should translate these fundamentals at the level of specific sectors. Many steps further, this could ultimately lead to the launching of a EU sustainability label that incorporates an integrated approach to environmental and social issues. As a first step, we have compiled a list of international and EU law and policy documents that could provide a basis for defining sustainability standards. Third, the EU could consider promoting and facilitating multi-stakeholder approaches, harmonisation initiatives and sector-specific accreditation programs. Fourth, the EU could consider stimulating consumer awareness and education about environmental and social issues with the aim of stimulating informed consumer choice. In this respect, the application of misleading advertising law may be useful to avert some evident market failures in the last resort, yet it cannot by itself guarantee the smooth functioning of the market for sustainable products. Fifth, the EU could consider assisting developing countries in establishing an infrastructure that helps them cope with the requirements in labelling and certification schemes.

The international legal and institutional context for sustainability labelling and certification is being determined by a number of international governmental and non-governmental organisations. In this context, the UN performs a prominent role, as far as it has adopted a large number of principles, norms, and recommendations in the field of sustainable development, environmental protection, labour conditions, human rights and development. These standards constitute a global framework addressed to Member States, but also indirectly to other international actors. In the environmental field, the UN has promoted the establishment of several international agreements, inter alia including the Convention on International Trade in Endangered Species of Wild Fauna and Flora, the UN Convention on the Law of the Sea, the Vienna Convention for the Protection of the Ozone Layer, the Convention on Biological Diversity and the UN Framework Convention on Climate Change. The 1948 Universal Declaration of Human Rights, the conventions produced by the UN (International Covenant on Civil and Political Rights 1966 and International Covenant on Economic, Social and Cultural Rights 1966), and the core conventions of the ILO (forced labour, freedom of association and right to organise, collective bargaining, equal remuneration, abolition of forced labour, discrimination, minimum age and worst forms of child labour) represent the most widely accepted codification of human rights standards in international law. Of direct relevance for sustainability labelling and certification within the WTO are the GATT 1947/94, the GATS, and the TBT Agreement. From the perspective of the WTO trade rules, the development of sustainability labelling and certification schemes is mainly conditioned by the persistent legal uncertainties regarding the legality of schemes based on non-product related process and production methods. It seems that this product/process distinction does not properly fit into the concept of sustainable development, since this concept adopts an integrated approach as regards to economic development, environmental protection, and improvement of the populations social conditions. Contrary to this integrated perspective, the product/process distinction implies a separate consideration of the product and the social and environmental conditions within which it was produced. Keeping the product/process distinction within the multilateral trading system and ignoring the PPMs non-reflected in the final product may constitute a relevant concern for those that are in favour of the integrated approach of sustainable development. For the EU, sustainable development has become an operative goal since 1997, when the Treaty of Amsterdam introduced the concept of sustainable development into EC law. The Unions political and legal commitment to sustainable development has consequences for almost all policy fields under EU authority and also influences the legal and institutional context for labelling and certification. Apparently, social and environmental labelling and certification play a significant role in the sustainable development strategy of the EU. The EU, however, is faced with both internal and external challenges that make sustainability labelling and certification quite difficult to handle as a policy tool. On the external front, developing countries are the main opponents of these schemes, which they consider illegal and economically unsound trade barriers. As regards the internal front, the business community stands against any kind of regulation of commercial practices that refers to the concept of sustainable development. On the opposite side, other actors invoke an intervention of public powers aimed at safeguarding the integrity and the viability of certain labelling and certification schemes, threatened by the proliferation of sustainability claims made by powerful economic actors. Several major organisations from the business community and civil society are also contributing to environmental and social governance. Some of these organisations are actually seeking corporate commitment to sustainable development through the creation of procedures for endorsement and participation. These initiatives differ in their level of detail and the need for further interpretation. Furthermore, they may be competing, parallel, or complementary to each other, largely depending on the circumstances under which they are applied. Ultimately, these initiatives may offer a contribution to the tapestry of actions that is needed to stimulate social responsibility by companies, and that consists of several instruments, one of which is sustainability labelling and certification.

We have explored the field of research by making an inventory of the environmental and social schemes in operation, focusing on voluntary schemes that are verified by a third party. Furthermore, we distinguished multi-sector and sector-specific schemes. Multi-sector schemes potentially cover a range of different products and/or services, and include the categories of environmental schemes, fair trade schemes, organic schemes and integrated production schemes. Sector-specific schemes are specifically targeted at only one product or service group. In this group, we especially focused on the sectors of: clothing, textiles, and footwear; fisheries and marine life; food and beverages; forest management and wood products, and tourism. Concerning governmental and non-governmental involvement, we concluded that most environmental schemes are public or semi-public operations, while fair trade schemes are, up to now, a fully private affair. In the organic sector, most schemes have a private origin, but the number of public schemes is on the rise. The schemes for integrated production that we identified had mixed origins. Using a sectoral point of view, it appeared that most sector-specific schemes could be characterised as private undertakings. As regards product and service coverage, fair trade schemes, organic schemes, and schemes for integrated production all cover agricultural products and some of them also apply to processed agricultural products. Environmental schemes usually include a wide variety of products, with paper products and paints as the most common ones. It is remarkable, though, that some product categories are not covered at all by any schemes, such as cameras and toys. With regard to geographical scope, it can be concluded that environmental and social labelling and certification schemes are not yet established in all countries and regions. It seems that the member States of the EU and the countries in North America have by far the majority of such schemes in operation and that Africa and South-America are the least involved. Asia and Australia, both, are in-between cases. Concerning the sustainability aspects that are covered by the different types of multi-sector and sector-specific schemes, our inventory showed that environmental impacts are in principle covered by all types of multi-sector schemes, although this counts to a lesser extent for fair trade schemes. Social aspects are less broadly covered by the different schemes. Fair trade schemes are here the exception, with their primary orientation on trade relations and labour conditions. When considering the inclusion of social and environmental criteria from a sectoral perspective, the dominance of environmental aspects in labelling and certification schemes is striking, as well as the non-inclusion of fair trade criteria. With regard to North-South relations, it is worth noticing that fair trade schemes are radically different from all other schemes, because they have as a primary objective the improvement of North-South trade relations by creating more equitable supply chain arrangements. Other social and environmental schemes may provide opportunities to some Southern producers, but may also hinder market access for others. The most common complaints of Southern producers are related to the costs of complying with the requirements, the multitude of different schemes based on different criteria, the costs of inspection and certification, and the fact that criteria are in most cases developed and imposed by Northern countries. In addition to that, one of the objectives of our inventory was to create a sound basis for the selection process of case studies. First, we identified criteria for selecting relevant product or service sectors: The sectors should be relevant from an economic point of view; they should be relevant from a developing country perspective; the stakeholders in these sectors should actively seek to address social and/or environmental problems, and these efforts should take the form of labelling and/or certification schemes. Second, we decided to choose for each case study sector one or more specific schemes as a basis for the analysis.

The EU policy is facing both internal and external challenges in the field of sustainability labelling and certification. Outside the EU, the developing countries consider these schemes as illegal and economically unsound trade barriers. For its part, the EU had been threading on the issue of the WTO-legality of sustainability labelling and certification schemes. It is exerting a continuous pressure in order to make them accepted as measures that are both legal and politically sensible. However, while the EU constantly repeats that developing countries should be fully involved in the definition and operation of those schemes, developing countries and development NGOs are in fact excluded from the EUEB in the field of eco-labelling, and, the doors of the EU multi-stakeholder forum on corporate social responsibility remains half-shut for them. In the EU, the business community stands against any kind of "regulation" of commercial practices that refers to the concept of sustainable development. Other actors evoke an intervention of public powers aimed at safeguarding the integrity and the viability of certain labelling and certification schemes, threatened by the proliferation of sustainability claims boasted by powerful economic actors. It is nonetheless clear that the EU is wary of the "allergy" to standardisation that seems to affect the business community. The EU is persuaded that some form of public intervention is needed to prevent "communication failures" that may bring the functioning of the market of true sustainable products to a halt. With this objective in mind, the EU institutions have by now identified, at the political level, the labour standards that should act as a benchmark for sustainability claims. The ILO "core conventions" are also one of the hinges of the positive conditionality device embodied in the GSP system of the EU, a mechanism that may be regarded as a sustainability certification scheme sui generis. On the other hand, the identification of environmental standards is, for technical reasons, more complicated, and proceeds on a case-by-case basis, mostly within the framework of the EU eco-labelling scheme. The early establishment of a public, voluntary, EU-wide eco-labelling scheme, and the political will to strengthen its influence, by improving is hitherto limited to market penetration, may indicate the course the EU policy on sustainability labelling and certification is taking, or might take in the future. Even though the conditions are not yet in place for the establishment of an EU social label modelled on the EU eco-label, the EU has recently spoken in favour of a social labelling scheme set up by Belgium. The EU did not limit itself to assert the WTO-legality of the Belgian scheme; it also defended it as a sensible arrangement in political terms. It seems, thus, that the EU appreciates the advantages of a uniform system, indistinctly applicable to all enterprises, and guaranteed by public authorities. As regards uniformity, the policy of coordination between the EU eco-labelling schemes and its national counterparts has been weak, but nevertheless set on track through the provision of incentives to design these schemes in accordance with ISO standards. Moreover, the case of Austria shows that Member States may spontaneously decide to "peg" to the EU eco-labelling system. However, setting up an EU sustainability labelling and certification scheme means also creating a reference point for consumers in the midst of a proliferation of sustainability claims. From this standpoint, the EU policy may appear contradictory: it treats the average consumer as someone who risks being overwhelmed by the increasing multitude of sustainability claims, and therefore needs protection and reference points, yet it elects them as the self-confident agent of sustainable development, perfectly able to sort out serious political messages from mere advertising, once they are given all the relevant information. While free movement rules and competition law should ensure that sustainability products could be sold across the internal market, and that competition survives between sustainable products, as well as between providers of sustainability certification services, misleading advertising law may instead be used to thin out the competitors and make the EU "public system" prevail gradually over all others, in practice if not in law. Even if the EU describes sustainability labelling and certification schemes as market-based instruments, when the issue involved are of such purport and complexity, it appears almost unavoidable, but also desirable, that public intervention creeps ahead and that the political institutions regain control of the situation.

From the WTO rules perspective, the development of sustainability labelling and certification schemes is mainly conditioned by the persistent legal uncertainties regarding the legitimacy of schemes based on NPR-PPMs. For the moment, this question can hardly be solved in general or absolute terms, and the procedural and substantive characteristics of each peculiar scheme must be taken into account when carrying out a case-by-case analysis. Even though the principles of the GATT disallow, in principle, discriminations based on NPR-PPMs, the general exceptions of Article XX could justify such measures. In this sense, although the principle of non-discrimination to like products remains a basic element of the multilateral trade system, it is not an absolute principle and certain trade measures concerning NPR-PPMs can be accepted if the requirements established for general exceptions are met. The most recent jurisprudence of the WTO Appellate Body on this provision tends to enlarge the scope of the application of these exceptions (by interpreting them on the basis of the objective of sustainable development, contained in the Preamble of the WTO Agreement). Schemes based on NPR-PPMs that comply with the requirements established by this jurisprudence could be deemed to be legitimate schemes. In this respect, designing the scheme in accordance with the requirements established by the TBT Agreement appears to be quite a relevant aspect. For these purposes, the TBT rules may indirectly serve as a parameter for assessing the legitimacy of the scheme (i.e. it is not intended to apply the Agreement as such, but rather to use it as a guideline that allows evaluating the limits that the jurisprudence has established regarding the application of the general exceptions of the GATT 1994). In doing so, the calls to cooperation made by the Appellate Body as a requirement for the application of the general exceptions of the GATT should be particularly taken into consideration. In the same sense, it can be noted that cooperation is also reflected in the TBT Agreement, which contains provisions on Information and assistance (Art. 10) and on a Special and Differential Treatment of Developing Country Members (Art. 12). That way, by reconciling the WTO law structural principles with a wider perspective of its general exceptions, some alternative solutions may vary within the limits provided by the following positions: - To remain in the current situation of legal uncertainty. This favours the proliferation of multiple sustainability labelling and certification schemes that, in the absence of guidelines regarding the requirements that they should meet, might be used either for arbitrary or protectionist purposes; or - To expressly legitimise the use of certain schemes based on NPR-PPMs. In doing so, such schemes should be subjected to strict conditions, as well as a preferential treatment for the developing countries should be ensured. On the other hand, even though the TBT Agreement refers to the conduct of non-governmental bodies in the preparation, adoption, and application of technical regulations and standards, the provisions of the GATT 1994 basically address to the WTO Members. So, it could be difficult to argue that a sustainability labelling and certification scheme of strictly private management violates, for instance, Articles I or III of the GATT 1994, since individuals are not addressed by these provisions. In these cases, such claims would be only brought as far as the government were involved in the management of the scheme to a greater or lesser extent. So, if it is considered that the schemes based on NPR-PPMs are not covered by the TBT Agreement, its consideration in the light of the GATT 1994 will vary on the basis of whether the scheme is managed by public authorities or by non-governmental bodies. The conduct of the latter will not be assessed in accordance with the GATT rules. In relation to the countries reluctant to consider that schemes based on NPR-PPMs are covered by the TBT Agreement, it could be interesting to insist on the advantages of all labelling schemes being covered by the TBT Agreement, provided that it applies to both public and private entities. To exemplify, it can be said that, in the absence of a desirable consensus that could clarify the legal aspects of this question by considering the different interests present, a voluntary scheme based on a life-cycle approach, consistent with international standards and whose management fits the procedural requirements of the TBT Agreement (including its Code of Good Practice) and the conditions required in the light of the current interpretation of general exceptions provided in Art. XX of GATT 1994 (taking account of the special development, financial, and trade needs of developing country Members) would hardly be questioned in the light of the WTO law.

The case study results of the SUSTAINABILITY LABEL project have been integrated by analysing the crosscutting issues. The overall conclusion is that sustainability refers to both content and procedure. It is not only the balanced inclusion of environmental, social, and economic aspects, but it also calls for: consistency with international law; conformity with overarching international programmes; the possibility to adjust standards to local circumstances; reasonable requirements concerning infrastructure and costs; not excluding specific producers, and adherence to democratic principles, such as transparency, participation, coherency, flexibility, and accountability. Based on these criteria, a list was elaborated of indicators for evaluating specific sustainability labelling and certification schemes in relation to sustainability content and impact (environmental and social justice), interaction with public international and national law (legality), implementation in practice (coherence, flexibility, proportionality), trade impacts on producers (equity), and good governance (legitimacy). This list is meant as a tool for all stakeholders who are interested in raising the quality of sustainability labelling and certification schemes. It can be used for ex ante as well as ex post evaluation, and allows for making a rough assessment of the potential of a certain certification or labelling scheme to provide a positive contribution to sustainable development, and helps to identify its weak and strong points: - Interaction with public international and national law(Legality): Sustainability is consistency with international and national law. Indicators: -- Are the standards in line with international environmental and social law? -- Are the standards compatible with international trade law? -- If relevant: Are the standards in the scheme in line with EU law and policy? -- If relevant: Are the standards in the scheme in line with national law and policy? - Implementation in practice(Coherence, flexibility, proportionality): Sustainability is conformity with overarching international programmes. Indicators: -- Possibility to adjust standards to local circumstancesReasonable requirements concerning infrastructure and costs? -- Is the sector the object of an international overarching programme of standards providing bottom line definitions and requirements about a sustainable alternative? If yes, is the specific scheme in conformity with the international programme? -- Does the international overarching programme allow for the adjustment of standards to local circumstances? -- Are the general requirements for participation in the scheme, such as infrastructure (e.g. certification bodies, laboratories) and costs of certification, reasonable? - Trade impacts on producers (Equity): Sustainability is not excluding specific suppliers. Indicators: -- Are special provisions in place that take into account the interests of producers? -- Are arrangements in place for meaningful participation of all interested producers and their representatives in the standard setting process? -- Is there the possibility of appeal for all producers when the certification of their products is refused? - Good Governance(Legitimacy): Sustainability is adherence to democratic principles. Indicators: -- Do the key decision making processes, such as standard setting, certification and accreditation. -- Provide sufficient transparency concerning decision-making procedures including the availability of all relevant information. -- Guarantee meaningful participation to all stakeholders concerned. -- Increase coherency by drawing on international standards and agreements where they exist and taking into account the aims of international harmonization and mutual recognition of similar standards. -- Stimulate flexibility by not discriminating like products on the basis of origin and prescribing regular revisions of standards and general rules procedures. -- Foster accountability by avoiding conflicts of interests and to provide for an appeal procedure against decisions taken during the certification process.

Coffee: The coffee case study focused FLO scheme. Coffee was the first product for which fair trade criteria were developed. The first certified fair trade coffee was launched by Max Havelaar in 1989. Since then, the market for certified coffee has progressively developed with several national schemes in operation. In market terms, coffee is the most important fair trade product. Nearly two thirds of all FLO certified producer organisations are involved in coffee production with most of these cooperatives located in Central America and South America. The jeans case study focused on the Kuyichi scheme. It combines adherence to fair trade principles with social certification, as well as environmental certification. Concerning market access, the initiative has been very small thus far, involving producers from developing countries. An obstacle for further market penetration may be the fact that the blue jeans industry is dominated by big "brands", and that competition is based on the image of "trendynes". A matter of concern is that certification of the multiple processes of product chain could lead to significant changes in the structure of the industry, as the relocation of parts of the industry from less to more advanced countries where production processes can be better monitored, and to a shift from the informal to the formal sector, where processes and people can be better monitored and managed. Capture fisheries: The capture fisheries case study focused on the Marine Stewardship Council. Concerning sustainability aspects, the MSC scheme is primarily focused on environmental impacts. The certification and labelling of fish products represents both opportunities and concerns for fisheries in developing countries. The main concern is that developing country fisheries will struggle to gain certification due to the costs, informational requirements, and the relevance of certification standards. They may be disadvantaged in export markets where they compete directly with certified products from developed countries. Analysis of trade flows in fish products suggests, however, that developing and developed country fisheries rarely compete directly on the same types of fish products. Developing countries may further be unaffected by labelling as their output is generally not targeted at the export market. Forestry: The forestry case study focused on the Forest Stewardship Council, the Sustainable Forest Initiative, and the Pan-European Forest Certification. One of the conclusions is that trade is not a major direct cause of tropical forest degradation, and that trade actions alone cannot ensure sustainable management of forests. In developing countries, much of timber demand is domestic and tropical deforestation is not primary due to international forest products trade. Estimates suggest that nearly two-thirds of tropical deforestation is due to farmers clearing land for agriculture. In addition, the influence of buyer groups, in exercising a preference for certified timber, has been instrumental in the development of markets for certified timber products in developed countries. Food and beverages: The case study on food and beverages focused on the IFOAM basic standards for organic production, the EUREPGAP protocol for fruit and vegetables, and the Global Food Safety Initiative. The tomato has been used as an example to explain how the current programmes work out in practice, and how they affect trade and market access. With regard to sustainability content, these programmes have different orientations and none of them covers all relevant sustainability aspects. In relation to market access, it was impossible to assess if the three programmes had important restrictive effects, because the present trade situation for tomatoes is already distorted. Spain and Morocco have actually the best circumstances for tomato production, but are not able to take the full benefit of their advantages because the Dutch horticultural sector pays a special low tariff for its energy use, and the EU has set quantitative trade quota for tomatoes from Morocco. Eco-tourism: The case study on eco-tourism gives an overview of recent developments in the field, with special attention to the Certificate for Sustainable Tourism (Costa Rica) and the Nature Ecotourism Accreditation Programme (Australia). The case study showed large differences in the priority that labelling and certification schemes give to the various aspects of sustainability. Many schemes have primarily an environmental eco-efficiency focus. However, most specific eco-tourism schemes have broader sustainability ambitions, focusing on protection of biodiversity and the rights of indigenous people. Despite the recent proliferation of such schemes, these have not achieved a significant market share. One of the major trade issues for developing countries is the leakage of tourism income from developing countries to developed countries. Therefore, several of the present eco-tourism schemes aim to promote a better deal.

We used a pragmatic approach to the concept of sustainability, distinguishing environmental, social and economic dimensions and using seven categories of potentially relevant aspects: environmental impact, biodiversity, human health, human rights, labour conditions, animal welfare -although contested-, and trade relations. For each of these categories, we identified relevant issues at a lower level of abstraction that represent "ills" and "ideals" that might be considered relevant by stakeholders in a certain sector. Obviously, the specific "ills" and "ideals" that are at stake in a particular sector affect the degree to which it is feasible and attractive for an initiator of a labelling and/or certification scheme to incorporate them into a set of sustainability standards. The claim that a certain product or service has an advantage over a conventional one from the perspective of sustainability is more than just a marketing tool. It refers to ills that can be avoided or ideals that can be achieved in relation to the present production and consumption patterns. By its nature, it is closely connected with the pressure that is generated by all kinds of actors in society to change these patterns in a more sustainable direction. Because this pressure is not the same in all sectors and industries, it is not feasible to draw generalising conclusions on the effectiveness of labelling and certification schemes. What labelling might produce, at the very least, is that it helps to learn more about the arguments used to substantiate or to challenge a claim. This learning process requires a transparent organisation of labelling schemes with enough opportunities for stakeholders to participate in the design of sustainability standards. A more effective change might be produced through the interaction between societal pressure and market forces. Many companies will need improved control over all the relevant aspects of product quality, including the way the product has been produced. This will often require more functional co-ordination of widely dispersed activities and more disclosure of information across the whole supply chain. Improved control is particularly necessary for those companies that want to supply to increasingly discriminating (niche) markets. Sustainability issues may be incorporated into their quality management and quality assurance programmes, but that will depend on the ripeness of the issue involved (i.e. innovations and "hot topics"). Moreover, a companys strategy to improve its sustainability performance may show a mixture of competitive and collaborative approaches. Whether it will disclose its sustainability performance by a distinctive label or by some other means is a matter of benefits and costs in view of its marketing opportunities. Producers and consumers are still learning how to communicate about sustainability issues in the context of the marketplace. Actually, both of them have to cope with mixed motives, which include other considerations than the environmental and moral advantage of a product. Consumers can learn, but this takes time and also positive experiences instead of lingering doubts about deceptive commercial practices. Similarly, in order to pursue the diffusion of ecologically or ethically sound products from small niche markets to mass markets producers will need time to find out what kind of "green and good" products consumers really want. As a result of new marketing strategies, it can be expected that the role of environmental and social labels in the communication between companies and consumers will become more differentiated, varying from direct shopping aids to background quality assurances. The new strategies may also involve that the information the labelling is intended to convey to consumers will increasingly refer to the overall corporate image of a store chain or a line of products. In that case, a retailer or producer can claim the distinctive environmental and moral advantage with regard to an assortment of products. This development might increase the probability that consumers come into contact with a labelled product and that they include it in their set of choice alternatives. The potential change in the information environment for products and services may give rise to additional questions about whether and how claims should be regulated. Government interventions in labelling will often be a complement to or a substitute for other policy tools to improve consumer protection or to achieve sustainability objectives. The links with other tools and broader issues have important consequences for the design and the evaluation of an intervention, because labelling will be insufficient to achieve these goals if it is merely an isolated action. Moreover, if policymakers want to optimise the design of this tool, they should adapt the intervention carefully to the developments in the market and these may require both standardisation and differentiation of claims.

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