Description of Selected Policy Instruments

This section describes and discusses nine selected policy options amongst the numerous options presented under "A structured overview of policy options for promoting SCP through retail action".

These nine policy options are divided into those that are cross-cutting and those that have specific focus upstream, in-shop or downstream. The nine policy options were selected based partly on expert priorities raised at a Nordic expert Workshop on Sustainanble Consumption and Green Lifestyles held in Copenhagen on November 24-25th, 2010, and partly on suggestions from the Danish EPA.

Environmental Benchmarking System for Nordic Retailers

A common environmental benchmarking system for retailers would enable consumers to choose retailers with high environmental performance.

There is no commonly agreed system for comparing the environmental performance of retail chains or retail stores in the Nordic countries. The basic principle of such an environmental benchmarking system would be to award retailers with points for a wide variety of categories. The ambition level should be high and could in principle be developed by the public authorities or independent experts.

The system should be based on active involvement of the retail sector and could be developed at national level or at Nordic level as a stand-alone activity or as a key element of the work programme for a Nordic retail forum.

Promotion of an Eco-Label for Retail Stores

The concept of an eco-label for stores allows consumers to choose retail stores with good environmental performance and allows shops which fulfil the criteria to market themselves as environmentally sound.

An example of such an eco-label for stores is the Nordic Swan eco-label which is mostly used on specific products but more than 1000 companies including more than 500 retail stores have also been awarded the Nordic Swan eco-label.

A possible policy goal could be to promote such existing labels in individual Nordic countries in the Nordic region and/or to promote the concept as such and push for a development of an eco-label for retail stores at the EU-level.

The difference between this initiative and that of environmental benchmarking is that the eco-label for retail stores would normally be an either/or option. Once the eco-label is obtained retailers might not have the incentive to further improving their environmental performance, whereas the system of environmental benchmarking would award gradual improvements, thus being more dynamic.

Annual "Green Retailer" Awards

Awards can be used as a tool to create a "race-to-the-top" amongst businesses, to raise awareness on a certain subject and can further create marketing value for ambitious businesses.
The introduction of a "green retailer of the year" award either at the Nordic or the national level may thus be a useful tool in triggering retail action and raising the awareness on retailer’s sustainability initiatives.

Public-Private Partnership on Developing Common Standards for Sustainable Supply Chain Management

Several retailers in the Nordic region and elsewhere are today engaging in sustainable supply-chain management, i.e. evaluating suppliers according to their environmental performance.

One of the key challenges retailers are facing related to supply-chain management is the costs involved in evaluating and auditing the vast number of suppliers. Public-private partnerships may play a role to overcome this challenge and contribute to developing common codes of conduct that can be shared across the Industry, bringing together companies that are competing within the same sector.

A Nordic public-private partnership on sustainable supply-chain management for the retail sector could be a strong tool in making sustainable supply-chain management efforts more cost-effective and facilitating more sustainable products on the shelves in Nordic Retail and could come in the form of a stand-alone initiative or be established as a key element of the work programme for a Nordic retail forum.

Substance/Product Bans, Phase-Out and Substitution Programmes

Regulation banning certain substances or products can provide a very effective way of bringing to an end the use of particularly unsustainable substances or products.

Examples of existing bans range from incandescent light bulbs to phtalates in toys. Such regulation often does not directly involve the retail sector, but can strongly influence the availability of products on the shelves.

Education and Information on Sustainable Management of Stores for Staff

Raising the awareness and knowledge of environmental impacts and potentials for improvements related to the operation of retail stores amongst retail staff may contribute to enhanced environmental performance of retail stores.

The role for policy in this regard could be to help develop common industry-wide training material in partnership with the retail sector, i.e. in the form of a public-private partnership and to organise workshops. Elements of such training could include waste handling, energy management and general housekeeping.

The initiative could be carried out as a stand-alone initiative or as part of the work under a retail forum.

Voluntary Agreements with Food Retailers on Limiting Food Waste

Voluntary agreements with retailers can take many forms and address numerous different challenges.
The strengths of voluntary agreements include the potential to bring the sector together committing to specific targets and actions. For food retailers the issue of food waste makes up one of the key environmental challenges and the issue is not easily dealt with. Establishment of voluntary agreements with food retailers on limiting food waste would be a potentially appealing policy option.

Specific elements of such voluntary agreements could be retailers agreeing to refrain from using offers like “two for the price of one” for perishable goods and addressing food waste arising in the retail part of the product chain e.g. through establishing or supporting initiatives such as food banks etc.

Differentiated VAT Based on Environmental Performance of Products

High prices of eco-labelled, organic and other green products as compared to conventional products are often highlighted as the key barrier for increasing the take-up of green products.
The price difference is partly caused by the lack of full internalisation of the external costs associated with the product into the market price. One mean to overcome this incentive to buy less sustainable products is to use taxation and specifically VAT to influence the price structure by differentiating VAT depending on the environmental performance of products.

A pragmatic first step might be to apply reduced VAT rates on products carrying the Nordic Swan label and the European eco-label, and/or to reduce VAT for fruit and vegetables.

Tax/Fee Exemptions for Eco-Labelled Products

Greener products are often more costly to produce and measures to help reduce the price of green products include VAT relief for more sustainable goods.
A measure to help reduce the price of green products, such as VAT relief, could potentially assist retailers in increasing the market share of sustainable products and services significantly and have been suggested by retailers.

Through increased demand, such measure would potentially accelerate manufacturing of organic and eco-labelled products and could thus dramatically influence the market for green products.

For further information about the above-mentioned policy options, including opinions from Nordic retailers as well as pros and cons. Download the background document: Potential policies to promote SCP via the food retail sector in Nordic Countries (PDF, 400KB)