European Commission Consultation on Delivering more Sustainable Consumption and Production

Submission by InterfaceFlor Europe February 2012 This is InterfaceFLOR Europes response to the European Commission consultation on the possible introduction of EU-wide measures related to sustainable consumption and production (entitled: Consultation on Delivering more Sustainable Consumption and Production). The consultation looks at green public procurement, the environmental footprint of products (PEFs) and the environmental footprint of organisations (OEF). At InterfaceFLOR Europe (http://www.interfaceflor.eu) we are particularly interested in PEFs. We make and sell the worlds largest and most diverse range of modular carpet flooring. We have an annual turnover of around $1bn and 5,000 employees. Our founder, Ray Anderson, who died in 2011, was a leading proponent of sustainable consumption and production, and in 1996 set Interface a Mission Zero goal of delivering zero negative impacts by 2020 while maintaining and even improving profitability. We are well on the way to achieving that goal, having, for instance, reduced our water use by 75% since 1996, cut greenhouse gas emissions by 44%, and lowered energy use by 43%.

The European Commission is beginning to understand the power of full product transparency, as is evident in this latest consultation document. At InterfaceFLOR we very much welcome this development, as we believe that environmental policies across Europe lack co-ordination. Our view is that the coordination of all environmental policy instruments is best served by starting from the central point of Environmental Product Declarations (EPDs), which the EC is calling Product Environmental Footprints (PEFs). An EPD reveals the ingredients of a product, its methods of production, and the full environmental impact of each stage of its life cycle, measured in several impact categories including impact on climate change (grammes of CO 2 ), water use (litres), and other air emissions (grammes of SO 2 ). EPDs are becoming more prevalent in Europe. They are already widely used in the construction sector. The new EN15804 standard for EPDs will be published in 2012, and we will therefore see more new products with EPDs that have been developed to a European harmonised standard. At Interface we are producing EPDs for all our carpet tiles. We believe the way forward for corporate sustainability is to use the information gleaned from EPDs to substantially reduce the overall environmental impacts of the products we make, rather than just focusing on cutting the impacts of our own operations. By concentrating on EPDs, we will automatically cut the impacts of our operations anyway as these are represented in the manufacturing stage of the product life cycle. Using EPDs as a starting point, we have managed to garner information that has helped us to substantially reduce the environmental impacts of many of our products. A typical carpet tile of virgin nylon yarn has an embodied carbon footprint (from the well to the factory gate) of around 10kgCO 2 /m2. But our latest tile, Biosfera Micro, is made of recycled nylon from old carpet and

fishing nets - and has a footprint of just 5.8kgCO 2 /m2. We think we can take this close to 4kgCO 2 /m2 soon. So these low yarn carpet tiles, which we call Microtuft, have almost half the embodied environmental impact of a typical carpet tile. We launched Microtuft in 2000 and they account for around 13% of our sales. But does the market really reward products such as these? Are there any incentives that support products with less environmental impact? The answer is no. We believe there should be such incentives, and that they should be based around EPDs. Here are some of the ways in which we believe EPDs can be used to reward those who begin to reduce the environmental impacts of their products: EPDs as a guarantee against greenwash Despite the prevalence of greenwash, there is no European-wide agreement on the making of environmental claims. Companies are very fond of making extravagant claims, such as that their factories use 100% green electricity or that they are carbon neutral. But the main impacts of products are usually outside company boundaries. EPDs are the only things that show these impacts exactly as they are, across the life cycle. We therefore advocate a European-wide regulation which stipulates that companies can only make environmental marketing claims that are based on third party certified EPDs. That way greenwash is effectively banished - and companies also have an incentive to carry out EPDs. The French government is exploring this avenue already. Governments should stop wasting money on antigreenwash guides and awareness-raising, and make sure that companies are only allowed to make claims that can be prove through an EPD.

EPDs as an alternative to dubious green labels There are too many green labels in Europe, and a good deal of them are inadequate or highly dubious. Some companies have labels on their products that are issued by private firms that offer consulting and certification services simultaneously. Many labels are far too easy to obtain, or just focus on a narrow range of issues. Others lack independent certification methods or may even be administered by the manufacturers themselves. Many labels duplicate each other, confusing clients and obliging manufacturers to certify the same product several times. Unfortunately, some of the labels that are best marketed are the least robust. EPDs are a much better alternative. The concept of full product transparency (producing an EPD where you state your ingredients, production methods and environmental impacts) will give greater re-assurance to buyers and will eventually lead to the demise of bad labels. If every product had an EPD, then there would be no need for any other green labelling. EPDs as a basis for Ecolabels The consultation paper suggests increasing the marketing budget for the EUs voluntary Ecolabel. This might be a good idea, but we should fix the Ecolabel criteria first. At the moment there is no credibility in the criteria required to achieve the Ecolabel. Powerful industry lobbies - and countries protecting their industries - manage to impose criteria that are favourable to themselves. In many cases, the criteria for Ecolabels do not take into account the full environmental impacts of a product because they do not include the rigour of a life cycle analysis. Again, EPDs can provide the solution. There should be an overarching European rule which says that Ecolabels are only awarded to products that have 50% less impact than the typical generic product in their category. For example, a typical carpet tile has 10kgCO 2 /m2, so Ecolabels should only be awarded for carpets with less than 5kgCO 2 /m2.

In order to drive radical innovation there should be a golden Ecolabel (at a higher level than the normal Ecolabel) which is only awarded to products with 80% less impact than the generic product. That way you create an incentive for companies to go the extra mile. Once these rules have been introduced to add credibility to the Ecolabel, then we can consider increasing the marketing budget. EPDs as the foundation for green public procurement If you had EPDs for all products, it would be easy to know which products have more or less impacts. That would be good news for public procurers, who are struggling to establish which of the products they need to buy is better for the environment. Today everybody is talking about the power of green public procurement, but whats the point if nobody knows how to buy green? The EUs guidelines on green public procurement provide advice based either on complicated criteria and ideas or on generalities such as take into account energy consumption and emissions. What public procurers really want is clear guidelines and targets. For instance, that they should buy cars with less than 120gCO 2 /km or rent buildings with heating/cooling requirements of 50kWh/m. With EPDs, we could provide very simple guidance to public procurers on many things. We could provide real data per product, instead of vague advice that is of very little help in making sustainable purchasing decisions. EPDs as a way to decide on tax incentives If EPDs were universally adopted, we would have a clear and simple basis for assigning tax benefits to products that have a lower environmental impact. For example, products awarded the Golden Ecolabel on the grounds that they have 80% less environmental impact could also qualify for lower product taxes (eg VAT) over a period of time. If we dont provide such tax incentives, who will re-design products with 80% less embodied carbon, apart from a handful of companies with a higher purpose? Business needs clear signals that environmental innovation will be rewarded. EPDs as the bedrock for voluntary standards At present, various industries have to cope with different national voluntary green standards according to the country they are dealing with. In the construction sector, for instance, there are various national green building standards competing against each other, including DGNB in Germany, HQE in France, BREEAM in the UK, and Verde in Spain with only the DGNB standard being based on EPDs. This is a problem for suppliers of building products such as Interface, who have to pay in various countries to certify their products. If we were to have a harmonised European standard for each sector based on EPDs, this would immediately become valid in all countries and so would do away with the confusion, extra cost and administration that the current piecemeal system of standards entails. Some lessons from EPD-based regulation of the car industry One of the best ways to appreciate the transformative power of EPDs is to look at the progress made by the European car industry since a 2009 EU regulation introduced EPDs as the basis for requirements on tailpipe emissions. The regulation required car manufactures to decrease average tailpipe emissions across their portfolio to 130gCO 2 /km by 2015 and 95gCO 2 /km by 2020. This forced each manufacturer to create an EPD for each of its cars based on gCO 2 /km. From 2010, if the average CO 2 emissions of a manufacturers fleet exceed its limit in any one year, the company has to pay an excess emissions premium for each car registered. This premium

amounts to 5 for the first g/km it exceeds the target, 15 for the second g/km, 25 for the third g/km, and 95 for each subsequent g/km. From 2019, the exceeding the limit will become even more expensive, with the cost of even the first g/km rising to 95. With such significant financial implications, the impact of this approach was almost immediate. In 2009 the decrease in average EU emissions was 5% against the previous year, with a further 4% cut in 2010. In 2008 the average gCO 2 /km for car emissions in the UK alone was 158, but by the end of 2009 this was down to 149.5. Within just one year of the regulation coming into force, the UK car industry had achieved a reduction in tailpipe emissions of more than 5%, compared with just 2.2 per cent in the eight years up to 2006. This suggests a way ahead for other products: 1. Develop a common magic metric, to be measured by an EPD, based on the full product life cycle impact or at least on the main area of impact. 2. Set a target for the product, based on that metric, at EU level. Reinforce this with penalties if the target is not met. 3. Make it mandatory to have the magic EPD metric visible on all promotional materials and at point of sale. This could be through an easy to understand colour-coded A-G label based on absolute figures. 4. Create tax regimes and incentives that reinforce the signals given at EU level. 5. Encourage civil society intermediaries to raise awareness of the issue based on the magic metric. 6. Release the power of public procurement by providing easy guidance based on the magic metric. Warning: EPDs are not the answer to everything! At Interface, as you can see, we are firmly of the opinion that EPDs are the way ahead on a number of fronts. But we recognise that they are not a panacea for all ills. Although EPDs can pinpoint the most critical environmental impacts of a product, and provide magic metrics for many product categories, they cannot measure some things. They cannot, for example, provide a measure of product durability or show how recyclable it is. There is little that governments can do to mandate durability at product level, apart from requiring manufacturers to guarantee the products they sell for a number of years and obliging them to disclose product durability information at point of sale. The encouragement of recycling requires further policy instruments than those enabled by EPDs. EPDs will create a strong support for recycling because products with high post-consumer recycled materials are very likely to have substantially smaller footprints than those from virgin materials. But that might not give manufacturers an incentive to re-design products for better disassembly and recycling. This means there should be extra incentives for companies to design products that are easier to disassemble and recycle. At the regulatory level, high landfill tax rates encourage recyclability. Conclusion If the EC wants to deliver more sustainable consumption and production, then it must harness the power of full product transparency. EPDs provide a full picture of a products impact throughout its life, rather than a snapshot as that product passes through one business. Companies that focus on EPDs very quickly discover what they need to do to reduce their footprint whereas those that dont can spend many years pursuing policies that make little difference, mainly because they dont have the true picture of where their main impacts are.

The EC should encourage a shift towards EPDs as the main driver of environmental progress at corporate level. The strides made in the car industry show the value of this approach. Because EPDs present a precise and verifiable measure of a products impact, not least through the use of a magic metric, they provide a clear and simple way of measuring progress. If the EC were to insist that environmental claims can only be made only in relation to EPDs, then greenwashing may become a distant memory. If every product has an EPD, then there will be little or no need for other green labelling. EPDs can be the basis for voluntary industry standards, doing away with the geographical variations across Europe that cause confusion and duplication of effort. They can offer a solid foundation for green public procurement, providing real data per product instead of vague advice. They can be the foundation stone for a more robust Ecolabel regime, and they can be the markers for tax incentive regimes that reward manufacturers of products that are less harmful to the environment. We strongly urge the EC to embrace the value of EPDs and to harness their power now.