Linking sustainable consumption and production: The government role

Linking sustainable consumption and production:The government role

Candice Stevens

Abstract

Achieving sustainable development depends on comprehensive approaches which integrate consumption and productioninitiatives. At present, sustainable consumption is being overemphasized to the neglect of the more important production side.This paper examines the role of governments in promoting sustainable consumption and production to identify gaps innational schemes which reduce their overall effectiveness. Public policy tools promoting sustainable consumption andproduction are discussed in terms of whether they are aimed at correcting: 1) market failures (regulations, taxes, subsidies);or 2) systems failures (labels, communications, education, public procurement). The challenge for governments is to linksustainable consumption initiatives to policies aimed at increasing the sustainability of production in the private sector inboth their national and international dimensions. In this way, governments can enlist the aid of consumers in pushingproducers towards sustainability and to achieve the ultimate goal of sustainable development.narf_1273 16..23

Keywords: Sustainable consumption; Sustainable production; Public policies.

1. Introduction

Sustainable consumption and production (SCP) wasadopted as a priority during the World Summit onSustainable Development (WSSD) in Johannesburg in2002 and has since become one of the main paths forpromoting sustainability. However, the SCP concept hasfallen short owing to its overemphasis on consumptionand neglect of production as well as its stress on voluntaryaction rather than mandatory government programmes andpolicies. The UN Marrakech Process on SustainableConsumption and Production and the related UNGuidelines for National Programmes on SustainableConsumption and Production are almost exclusivelyconcerned with voluntary schemes aimed at consumers(UNEP, 2008a). The EC Sustainable Consumption andProduction Action Plan focuses on eco-labelling andfostering uptake of sustainable products by consumers(EC, 2008). Even those calling for fundamental systemchanges to current models of economic growth in theinterest of preserving the planet underline the role ofconsumers but offer few prescriptions for governmentalaction in moderating production (Jackson, 2009).

Because consumers can help drive sustainableproduction, they are important to achieving sustainabledevelopment. But progress towards sustainability is slowdue to difficulties in promoting corporate responsibility andindustrial production which is environmentally and sociallysustainable. The recent economic and financial crises aredue to a failure of both public and corporate governance andhave underlined the lack of corporate responsibility in theprivate sector worldwide. We are now entering a period ofgovernmental incentives and re-regulation in the attempt toaddress the simultaneous economic, food and climatecrises. The sustainable consumption and productionmovement should be redirected and proceed within thiscontext.

The government role in linking sustainable consumptionand production is still poorly understood. Governments canindirectly promote sustainable production by motivatingconsumers and encouraging sustainable consumption.Through their purchases and behaviour, consumers candemand more sustainable approaches from companies interms of both their products and processes. They can createmarkets for sustainable products and stimulate enterprisesto innovate and develop new technologies to addressenvironmental and social challenges. But governments candirectly invoke sustainable production through regulatingand taxing companies. Sustainable consumption is aninefficient route to sustainable production and, ultimately,

Candice Stevens is the former OECD Sustainable Development Advisorand a consultant on the economics of sustainable development in Paris,France. E-mail: [email protected]

Natural Resources Forum 34 (2010) 16–23

© 2010 The Author. Journal compilation © 2010 United Nations

sustainable development. The need for integratedgovernment approaches which simultaneously addressconsumption and production is discussed here in terms ofcorrecting market and systems failures which impedeprogress on sustainability.

2. Correcting market failures

Sustainable development starts with economics and theneed for markets to internalize environmental and socialcosts. Most government policies, including in theenvironmental and social realms, are premised on the needto correct the failures of markets to take into account public,rather than just private, welfare. Effective sustainabilitystrategies will address market failures in terms of bothconsumption — primarily through taxes on and subsidies toconsumers — and production — primarily throughregulating producers.

2.1. The consumption side

Governments can intervene in markets to address the failureof consumers to account for the environmental and socialcosts of their consumption, usually through taxes andsubsidies which raise or reduce the costs of consumerpurchases and behaviours depending on their relativesustainability. For example, consumption taxes can bedirected towards the reduction of polluting emissions fromvehicles (e.g., fuel taxes, vehicle taxes, congestion charges);household resource consumption (e.g., electricity taxes,water charges, waste disposal fees); and health damages(e.g., tobacco and alcohol taxes). But these policyinstruments influence consumers only if the financialstimulus is strong enough to enter their decision-makingprocesses (OECD, 2006b). Too often, political constraintsand industry lobbying prevent taxes and charges from beingset at a sufficiently high level to have significant effects onconsumption patterns.

For example, high taxes on motor fuels can leadconsumers to demand and purchase more fuel-efficientvehicles. In Europe, taxes on motor fuels are 40–60% of thesales price as compared to 20–25% in the United States. Asa result, the European car fleet is more energy efficient, withup to 2–3 times lower unit emissions of CO2 from transportthan that in the US (EEA, 2006). Similarly, the bulk ofpetrol now sold in developed countries is unleaded becausereduced taxes on low sulphur and unleaded fuels make it thecheaper consumer choice.

Taxes on vehicles themselves can be effective inpromoting sustainable consumer purchases if the chargesare sufficiently high and inclusive. For example, thecomposition of Canada’s motor vehicle fleet has changeddue to an excise tax on fuel inefficient vehicles calculatedon the basis of weighted average fuel consumption.Although the United States introduced a similar tax as part

of the Energy Tax Act in 1978, it was not levied on SUVs orother semi-large vehicles that qualify as light trucks,leaving these gas-guzzling models in high demand.

Consumption taxes can discourage the use of pollutingproducts and promote the production of recyclablealternatives. Examples include taxes on batteries (Belgium,Denmark, Italy and Sweden); plastic bags (Ireland,Denmark and Italy); tyres (Denmark and Sweden); anddisposable cameras (Belgium). Deposit refund schemes area type of tax which is refunded when the product is returnedfor recycling or reuse. These are most common for beveragecontainers, but are also in place for products such as tyres(e.g., Finland).

Levels of consumption, in addition to the productsthemselves, can be taxed to encourage sustainability bymaking some types of consumer behaviour more expensive.For example, congestion or road charges to discouragedriving which are in place in most of the largest cities(London, Stockholm, Milan, etc.) are based on a vehicle’semitted pollutants, with the fee waived for alternative fuelvehicles. In London, the original tax, which has since beenraised, was found to reduce traffic entering the chargingzone by 18% and to yield marked improvements in theambient air quality (ERG, 2007).

Household consumption of electricity, water andwastewater is taxed in many countries to promote betterconsumer conservation habits. In the Nordic countries(Denmark, Finland, Norway and Sweden), electricity istaxed upon delivery to the end user. Countries put levies onwater use based on levels of consumption, the size of thehouse or the number of occupants. Taxing wastewaterpromotes recycling and is a main feature of Japan’s 3RProgramme to “reduce, reuse and recycle”. These chargesencourage consumers to be less wasteful, while alsoincreasing demand for and the production of more resource-efficient consumer goods such as refrigerators, washingmachines and toilets.

While taxes are “sticks” to discourage use ofunsustainable products, government subsidies are “carrots”to encourage more sustainable goods and service selections.Like taxes, these financial incentives only work if theyaffect the price gap between more and less sustainableproducts. Limited subsidies (such as incremental taxreductions or small grants) and those which are complicatedto apply for or have a long payoff period have provenrelatively unsuccessful in influencing consumer behaviour(OECD, 2006b).

Monetary incentives can prompt consumers to buy loweremission, hybrid or alternative fuel vehicles. Suchpurchases increased to a significant extent in theNetherlands, which offered up to € 1,000 for the purchase ofenergy-efficient cars; in Canada where the ecoAUTO Rebateprogramme offered refunds of up to C$ 2,000 for thepurchase of fuel-efficient vehicles; and in Italy, where thegovernment gave a € 1,000 rebate for upgrading cars and €

250 for swapping Vespas for bicycles. The US government’s

17Candice Stevens / Natural Resources Forum 34 (2010) 16–23


2008 Car Allowance Rebate System (CARS), also termed“Cash for Clunkers”, vastly boosted demand for fuel-efficient and hybrid vehicles. Providing free bicycles is alsoa type of subsidy which can promote more sustainabletransport behaviour, an approach pioneered in Amsterdamand taken up in other cities such as the Parisian Velibscheme.

Countries which offer financial incentives for sustainablehousehold energy investments include France (equipmentsuch as boilers); Denmark (energy-efficient windows); theUnited Kingdom (insulation, water and space heaters);Sweden (energy-efficient systems for heating, water andelectricity); and Germany (solar heating). Solar and thermalwater heaters are subsidized by countries such as Germany,Denmark and Spain (UNDSD, 2007).

The most comprehensive attempt to correct marketfailures through targeting consumers was the Nu Spaarpasscheme launched in Rotterdam, the Netherlands, in 2002.Consumers earned green points for recycling, using publictransport and purchasing locally-produced, Fair Trade, orgreen products. The points could be redeemed for publictransport tickets or discounts on sustainable goods. By thepilot’s end in late 2003, 10,000 households had earnedgreen points and over 100 retail outlets were participating.Through this programme, the government rewardedconsumers by subsidizing their purchases of sustainablegoods and services and motivated producers to offer suchgoods and services (OECD, 2008).

2.2. The production side

Moving consumers towards more sustainable behaviour —e.g., less energy use, more recycling — contributes toenvironmental protection and overall sustainability.However, the negative environmental externalitiesassociated with personal consumption are generally minorcompared to those linked to production. In developedcountries, the largest emitters of greenhouse gases areelectric utilities and industry. Sustainable consumptioninitiatives only achieve their aims if they drive sustainableproduction in the private sector. A more direct and effectiveroute to ensuring sustainable production is to regulate, taxor subsidize producers and to make corporate responsibilitymandatory rather than voluntary.

Regulations are the most common public policyinstruments for getting markets — mainly producers — topay for the public costs of harmful “externalities” such aspollution. For example, the most powerful incentive forlow-carbon production and innovation are government ruleswhich mandate a reduction in the carbon content of goods,processes and services. Government limits on air pollutionand carbon emissions lead directly to cleaner productionprocesses. Public mandates on industry to reduce wasteand polluting emissions have been strengthened overthe years in almost all countries in response to growingenvironmental concerns.

In Europe, the European Commission (EC) initiates anddefines new environmental legislation for industry andensures that the agreed measures are implemented in themember states. EC Directives started with that on themigration of wild birds in the 1970s. From this earlybeginning, the European Union countries have now agreedon a cap-and-trade system for greenhouse gas emissionsfrom industrial plants and utilities with the goal of cuttinglevels 20% below 1990 levels by 2020 and by 30% if aninternational agreement is reached.

In the United States, the Clean Air Act (1963) and theClean Water Act (1972) were introduced in response todeteriorating air and water quality as a result of energygeneration and industrial development. These regulationshave been weakened and strengthened as industrylobbying has grown and political commitment haswavered over the years. In September 2009, the ObamaAdministration proposed rules under the Clean Air Act toregulate greenhouse gas emissions from stationary sourceswhich emit large volumes of these gases, including powerplants and refineries, for the first time. Given difficulties inthe US of introducing carbon taxes and implementing aneffective cap-and-trade system, the government hasselected the regulatory option to correct market failures onthe production side which are contributing to climatechange.

Other sustainable production tools aimed at marketfailures are product standards, e.g., for energy efficiency, orcomplete product bans, e.g., on lead-based paint. Here, thegovernment forces producers to remove unsustainable orless sustainable products from the market and directlyaffects consumer choices. For example, countries haveimposed energy efficiency standards on a variety ofhousehold appliances, most commonly refrigerators, airconditioners, washers and dryers, ovens, heating andlighting. Canada amended its Energy Efficiency Act in 2006so that 80% of the energy used in homes will soon beregulated. Many countries are bypassing consumers andtraditional lighting efficiency standards and instead banninginefficient incandescent light bulbs. Energy standards andproduct bans can lead directly to innovative heating, coolingand lighting systems.

Fuel-economy and emission standards for motorvehicles, while common in Europe, are now beingstrengthened in the United States. The ObamaAdministration, choosing to directly regulate producersrather than tax consumer purchases, has imposed fueleconomy standards and lower emission levels on newvehicles. All automakers will be required to increase fleetfuel efficiency by 5% per year starting in 2012 and to reacha standard of 35.5 miles per gallon by model year 2016, alarge increase from the current requirement of 25 miles pergallon. This regulation will have the effect of removing 900million metric tons of carbon dioxide from the air andtaking 177 million cars off the road. And as part of the USgovernment bailout of the large US vehicle producers, they

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are now required to produce fuel-efficient and hybrid cars,with the aim of having a million electric vehicles on theroad by 2015.

Governments also tax industry in the framework ofsustainable production. These economic instruments areused to promote efficient use of resources and to penalizebusiness practices that are damaging to the environment.For example, carbon taxes are intended to get firms toreduce their energy consumption and to purchase energyfrom renewable sources. Electricity generating stations,particularly coal-fired power plants, are taxed to curbharmful emissions. In this approach, businesses whichchange their energy consumption patterns for the better payless tax, while those which fail to do so face a fiscal penalty.However, in many countries, regulations are often easier toimplement than taxes particularly when producer costs arepassed on to consumers.

Government subsidies — for environmental upgrading,research and development, and infrastructure — are anothereconomic instrument used to promote sustainableproduction. For example, industrial investments in energy-saving or water-conserving plant and machinery oftenreceive tax deductions. Governments may subsidize eco-investments by industry but must take care not to prolongenvironmentally-harmful subsidies such as many countrieshave in place for fossil fuels. Public funding of research anddevelopment has led to the major innovations of the pastcentury — from railroads to nuclear power to the Internet.Government research subsidies can push industrialinnovation to address major environmental and socialchallenges. Public research in government labs and inpartnership with industry has the economic scale needed todevelop alternatives to carbon-based energy. In addition,government spending on infrastructure — from broadbandto mass transport to smart electricity grids — is needed tomake low-carbon and environmental technologies viable.

In their own procurement practices, governments haveenormous power to influence producers and marketstowards sustainability. Governments are often the largestsingle purchasers of goods and services with publicprocurement accounting for an average 16% of GDP in theEuropean Union and similar shares in other regions. Mostdeveloped countries have adopted green procurementpractices which emphasize the environmentalcharacteristics of products and services. The EuropeanCommission identified seven countries in Europe as ‘deepgreen’ in terms of public procurement — Austria, Denmark,Finland, Germany, the Netherlands, Sweden and the UnitedKingdom (EC, 2007).

The main product categories for green procurement arepaper products (recycled, chlorine-free), heatingappliances, information technology equipment, cleaningproducts, packaging, furniture, motor vehicles, and energyand waste services. A few countries are actively committedto sustainable procurement which also takes socialconsiderations into account (e.g., Fair Trade, human rights,

labour conditions). Governments in Austria, Belgium,France and Italy procure Fair Trade goods as stipulated intheir guidelines and legislation. Belgium has proposedprocurement based on a social label indicating conformancewith ILO conventions concerning work conditions, salaries,the freedom to form unions, and non-discrimination.Sustainable procurement by governments can be influentialin promoting production of environmentally and sociallyviable goods and services.

3. Correcting systems failures

Proper market functioning assumes that all agents haveperfect information, that consumers will choose the bestproducts, and that producers will be rewarded with highersales. The introduction of incomplete and imperfectinformation is a systems failure that prevents the perfectoperation of markets and their ability to take externalitiesinto account. The lack of transparency, competition andinformed choices is a barrier to sustainable consumptionand production. Effective sustainability strategies demandthat governments fill information gaps on both theconsumption side — through supporting voluntarylabelling schemes and mounting general education andcommunications programmes— and the production side—through mandatory labelling, corporate reportingrequirements, and certifying the reliability of companyclaims.

3.1. The consumption side

Consumers need to be informed and educated about theenvironmental and social impacts of their purchases andconsumption levels. Voluntary labelling schemes toencourage sustainable consumption are now widespread.These can be multi-criteria, which compare products withothers in the same category on a number of impactsthroughout their lifecycle, or single issue, which refer to aspecific environmental or social characteristic of a product,such as dolphin-safe tuna. Governments can add to theviability of voluntary labels through direct and indirectsupports, particularly financing and increasing consumerawareness.

The best-known environmental labels, in terms of highlevels of consumer recognition and number of products, arethe German Blue Angel (introduced in 1977) and the NordicSwan (introduced in 1989). Other government-endorsedeco-label schemes include Environmental Choice inCanada, NF Environnement in France, Eco Mark in Japanand Korea, and the Green Seal and Energy Star in theUnited States. In the last decade, voluntary labelling hasspread to earmark social and ethical goods and services,reflecting the shift from purely environmental concerns to amore holistic approach to sustainability. Examples are theFair Trade label on products which provide an adequate



livelihood and quality of life to small producers indeveloping countries; the Rainforest Alliance and ForestStewardship Council which label products (and operations)as sustainable in terms of forestry practices and ensuringsustainable livelihoods; and the Marine StewardshipCouncil which certifies sustainable fish products andcommunities.

Voluntary labels now extend to many service sectors. TheVoluntary Initiative for Sustainability in Tourism (VISIT)awards certificates to endeavours which meet certaineconomic, environmental and social criteria. Airlines suchas Flybe give passengers information on the fuelconsumption, emissions and noise patterns of its airplanesso that customers can assess the environmental effects oftheir travel. And there is a booming business in voluntaryoffsets of greenhouse gas emissions offered to consumersby airlines and other travel companies. However,governments are struggling to define their appropriate rolein terms of the more complex labelling initiatives includingcarbon footprints.

Public communications campaigns are another means tocorrect systems failures or information gaps on the part ofconsumers. The more successful environmental campaignsinclude those in France — Let us Reduce our Garbage:We’re Overflowing targeting single-use throwawayproducts, excessive paper printing, and bottled water; theUnited States — Water: Use it Wisely with the tagline“There are a number of ways to save water and they all startwith you. You are water-saving device No. 1”; New Zealand— The Big Clean-Up focusing on waste reduction; andDenmark — One Tonne Less based on a calculator ofpersonal carbon emissions and suggestions for changingdaily behaviour to reduce greenhouse gases.

Governments also mount communications campaigns toget people to stop smoking and eat correctly, which can helpsave on health care costs. The anti-obesity campaigns in theUnited States, United Kingdom and Germany are mostlyaimed at reducing consumption of junk foods by children.Another target is cancer. Australia’s anti-skin cancerSlip!Slop!Slap! multi-media campaign, which exhortedpeople to “slip on a shirt, slop on sunscreen, and slap on ahat and sunglasses”, was later copied by other countries.

Governments can teach sustainable consumption habitsas part of formal and informal education, a topic which isgaining more prominence during the special United NationsDecade of Education for Sustainable Development (2005–2014). UNEP and the UN Marrakech Task Force onEducation for Sustainable Consumption led by Italy havedeveloped guidelines and recommendations (UNEP,2008b). Several countries, including Italy and the CzechRepublic, are developing Action Plans for Education forSustainable Consumption to teach children how to assessthe effects of their own consumption on the environment, tochoose nutritious food, and to practice sustainability athome. The Sustainable Development Commission(COMHAR) Schools Pilot Project in Ireland incorporates

key principles of sustainable development such asconsumption into existing school curricula.

Practical lessons in sustainable consumption have longbeen taught in “eco-schools” where institutions adoptenvironmental approaches in areas including recycling,waste management, and energy and materials consumption.The international Eco-Schools Programme was founded in1994 as a way to involve young people in addressingsustainable development challenges at local level. TheUnited Kingdom has broadened this to “sustainableschools” which also teach approaches to socialsustainability such as preventing obesity, fighting globalpoverty, and increasing community involvement.

3.2. The production side

While informing and educating consumers is important forpromoting sustainable purchases and behaviour,governments must also act on the production side to ensurethat systems failures relating to information gaps arecorrected. Mandatory product labels, corporate reportingand certification of claims are government policies whichback up and validate more voluntary consumer approaches.

Mandatory labels required by governments for certaincategories of products are far more effective than voluntarylabels in promoting sustainable choices. By requiringproducers to provide label information on theenvironmental and social characteristics of their products,governments can influence relative levels of demand andgive incentives to the production of more sustainable goods.For example, labels indicating the relative energy-efficiencyof goods are now mandated in many countries. TheEuropean Union has issued directives for labelling theenergy consumption of refrigerators, washing machines,tumble dryers, dishwashers, lamps, air conditioners, andelectric ovens. Such labels are being extended to electronicequipment such as televisions, home entertainmentproducts, computers and printers as well as all types oflighting.

Mandatory labels can also be aimed at correcting socialexternalities. Studies show that, due to the more personalnature, compulsory food labelling has a greater influence onconsumer behaviour than environmental labels (SCR,2006). Examples are health warnings on cigarettes andlabels listing the nutritional values of food products,genetically-modified contents of food, and thecharacteristics of organic food. Nutritional labelling, now inplace in Australia, New Zealand, Canada and the UnitedStates, is aimed at preventing unhealthy diets and reducingobesity. The United States and some other countries nowrequire manufacturers to list trans-fats on the nutrition factspanel required for pre-packaged food.

Many countries, following intense consumer demands,require labelling of foods containing genetically-modifiedorganisms (GMOs). This applies in all European Unioncountries, as well as Norway, Switzerland, Iceland, Korea,



Japan, Australia and New Zealand. Similarly, growingdemand for organic food, coupled with consumer confusionand deceptive claims, has prompted countries to require thatonly government-certified producers can use the term“organic”. For example, the US government organic labelcertifies that dairy, wine, produce, grains, and processedand frozen foods have been produced and processedconsistently with national organic standards, i.e., nohormones, antibiotics, genetic engineering, radiation,synthetic pesticides or fertilizers.

Beyond individual products or services, governmentsmay require or encourage disclosure of information byproducers on their overall social and environmental valuesand practices. Corporate reporting — on topics includingcorporate governance, environmental performance, healthand safety of employees, community contributions, andsupply chain management — is growing for goodsmanufacturers as well as service providers. But it remainslargely voluntary rather than mandatory.

In some countries, led by Belgium, Denmark, France, theNetherlands and Norway, corporate sustainability reportingis a legal obligation, mostly linked to annual financialreports. Some countries require sustainability reportingfrom certain sectors, such as pension schemes. For example,several European countries and Australia require pensioncompanies to state the extent to which they consider social,environmental or ethical issues in their investmentstrategies.

Governments can verify the sustainability claims whichcompanies attach to products and services to ensure thatvalid information is reaching consumers. Regulationsgoverning truth in advertising are a basic consumerprotection tool, usually contained in fair trading legislationand policed by consumer protection agencies. Theseregulations generally cover advertising claims maderegarding the environmental, social or ethical attributes ofproducts and services.

In the Nordic countries, the Ombudsman system fordealing with consumer complaints has developed acommon set of guidelines for advertisers on environmentaland social claims in marketing. Legal advice is given toenterprises on proper marketing with regard tosustainability issues, and manufacturers and distributorscan be prosecuted if their ads are demonstrated to be illegalor misleading. These rules influence the definition of whatis sustainable. For example, the term “environment-friendly” cannot be used unless a study has been made ofthe eco-impacts during the entire life-cycle of a product. Incertain cases, the environmental and social merits of aproduct must be judged in relation to all similar articles.

The US Federal Trade Commission (FTC) issued “greenguides” for environmental marketing claims, specificallythose pertaining to degradability, compostability,recyclability, recycled content and ozone safety. TheEuropean Commission has issued unofficial “Guidelines forMaking and Assessing Environmental Claims”, which set

out requirements and specifications for self-declaredecological dimensions. The Australian government can takelegal action if corporations engage in misleading anddeceptive conduct and misrepresentations in environmentaladvertising claims. Countries are now reviewing possiblenorms and standards for carbon offset schemes anddeclarations to ensure that consumers are offered certifiablepurchases.

4. Sustainable consumption and production (SCP)strategies

Without strategies which integrate consumption andproduction policies to achieve stated sustainability goals,sustainable consumption initiatives are likely to be wastefuland ineffective. Governments need integrated approacheswhere efforts to steer consumers towards environmentallyand socially responsible choices are reinforced by policieswhich demand that producers internalize environmental andsocial costs. In this way, informed and educated consumerswill provide the demand and markets for more sustainablegoods and services.

In the absence of complementary production policies,promotion of sustainable consumption will achieve onlylimited objectives. Most consumers base their purchasingdecisions on the price and quality of goods and services.Many have a positive but passive view of sustainabilityattributes, with only a very small segment of consumersgiving priority to sustainable goods. Consumer surveys findthat only about 5% of the public puts environmental orsocial considerations above all others in purchasingdecisions. Most rank quality first, then price, followed bylook and design, brand, and environmental-friendliness. Ifthe marketing mix and price of products are within theexpected norms of the relevant market, then attributes likesustainability may become more attractive but theperformance and quality of goods and services are equallyimportant (Jackson, 2005).

Sustainable consumption and production strategiesshould combine soft tools such as labelling and reportingwith hard tools including regulations and taxes.Consumption and production should be targeted together.Mandatory and voluntary initiatives are usefully employedin tandem. In this way, correcting market and systemsfailures is mutually reinforcing.

For example, energy efficiency labels often fall short inpromoting sustainable consumption. In many countries,providing information failed to get more than a minority ofpeople to buy energy-efficient dishwashers, refrigeratorsand washing machines, even when labels highlightedsavings on operating costs. However, reinforcing the labelwith residential electricity charges encouraged householdsto pay more attention to labels indicating the energy-efficiency of appliances, to change heating and coolingsystems, and to invest in insulation. The imposition of



mandatory labels meant that all products were comparedand led to profound changes in corporate product linestowards energy efficiency.

A mix of measures is needed to develop sustainabletransport systems. Differential fuel and vehicle taxes paidby consumers can be combined with energy efficiency andpollution standards for producers and investments inpublic transport. For example, countries can add chargesto car prices based on the level of vehicle CO2 emissions,give tax deductions to cars running on alternative fuelswhile also demanding that vehicle producers meetminimum standards. These policies are more likely toenhance the sustainability of transport systems whenaccompanied by efficient and reasonably priced publictransport alternatives.

Promoting healthy diets requires a combination ofstandards, labelling and communications campaigns.Where significant price differences remain, labelling andeducation are generally not sufficient to change consumereating habits and government standards on food contentsmay be warranted. Countries are experimenting withsimplified “traffic lights” nutrient labelling, which indicatesthe fat, sugar and salt content of food, while also banningingredients such as trans-fats.

The United Kingdom has been the most successful indevising coherent strategies for phasing out unsustainableproducts through combining consumer and produceractions (SCR, 2006). “Road maps” were drawn for certainproduct categories using a mix of policy interventions in theareas of energy efficiency, waste and recycling, water usage,personal transport, and food. In the case of improving theenergy efficiency of household appliances (e.g., waterheaters), labels were accompanied by minimum energyperformance standards. Driven by these standards andconsumer demand, manufacturers moved towards eco-designs and efficiency gains. The less efficient machines,although often cheaper, were taken off the market and pricedifferentials were reduced.

In terms of process, sustainable consumption andproduction strategies should follow the guidelinesdeveloped for national sustainable development strategies(NSDS) as enumerated by, among others, the UN andOECD (OECD, 2006a). Short and long-term designconsiderations are important as are lessons from thepolitical economy of reform which emphasize transparency,inclusiveness and trade-offs. Priorities for action should beidentified based on national circumstances. Top governmentcommitment is essential, particularly given the politicalsensitivity of responding to citizen demands whileincreasing economic pressures on producers. More than justEnvironment Ministries should be involved. Consumeragencies are essential and on the production side, sectorMinistries for energy, industry, transport and agriculture.Stakeholders, including consumers and business, should bepartners in developing consumption and productionpolicies.

Given the international dimensions of consumer concernabout the environmental and social characteristics ofproducts and production processes and the implications fortrade and foreign investment, SCP strategies shouldincorporate an international dimension with Trade andForeign Affairs Ministries playing a role. Raising consumerawareness of the environmental and social dimensions ofimported products can lead to difficult international tradeand investment issues. Although many governmentspromote and procure eco-labelled and Fair Trade goods,international rules regarding limitations on or preferencesfor imports based on their processes and productionmethods (PPMs) have not been agreed.

Similarly, corporate responsibility and reporting on thepart of multinational enterprises is largely voluntary ratherthan mandatory. Governments can encourage their firms tocomply with international guidelines promoting sustainableinvestments such as the OECD Guidelines forMultinational Enterprises and the UN Global Compact andto report the environmental and social impacts of theiractivities to the Global Reporting Initiative (GRI). But thesound environmental and social practices and sustainablelivelihoods for local populations which consumers promotethrough their Fair Trade purchases are not required forglobal producers. Most bilateral, regional and internationalinvestment agreements lack adequate environmental andsocial provisions mandating responsible behaviour byinternational corporations and their supply chains ofsmaller firms. SCP strategies should extend their reach topromote sustainable consumption and production at theinternational level.

5. Conclusions

As its history shows, sustainable development is aconsumer-driven and bottom-up movement. Governmentsmight ignore unsustainable trends if there are no demandsfrom the grass-roots for significant changes, which tend tobe voiced in voting booths. As consumer consciousness anddemand grows, enlightened governments will shift fromconsumer-oriented programmes to tools aimed atproducers. Typically, the government path to sustainableproducts and processes starts with a public communicationscampaign or support for a voluntary label, includesrecommendations for public procurement, moves to amandatory label or minimum standards, and ends with theremoval or modification of the unsustainable product orpractice through taxing and regulating producers.

But this is a very roundabout route to sustainabledevelopment. More effective sustainable consumption andproduction strategies are needed but these requireleadership, smarter policy approaches and all stakeholdersto be engaged (Charter et al., 2008). One challenge is toactualize sustainable consumption initiatives through fullerunderstanding of the ends (sustainable production) and the



means (government action). Good governance is the key tosustainable development as governments must provide theframework conditions and mandates for sustainableproduction and the corresponding incentives for sustainableconsumption. Market and systems failures must becorrected on both the consumption and production sides toremove harmful environmental and social externalities inthe interest of the public good.

References

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Linking sustainable consumption and production: The government role

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