IGD shares key learnings of developing a trusted environmental labelling scheme for the food and drink industry, with five years of research, testing and industry collaboration.
Environmental labelling has become a popular sustainability topic in the food and drink industry. As businesses look for ways to support the transition to net zero, environmental labels are a potential tool to help consumers understand the impact of the products they buy.
We want to move away from an era of misinformation and myths to a more transparent, evidence-backed system. However, developing a credible environmental label is far from straightforward – trade-offs lie behind many decisions.
Since 2021, IGD has been working with industry and academic partners to explore whether a harmonised approach to environmental labelling could be developed for the UK food and drink sector. Over that time, we have reviewed evidence, engaged stakeholders, tested different methodologies and worked with live industry data to better understand what good environmental labelling could look like in practice.
The result? Significant progress has been made, we have published two out of three best practice guides – ‘Communicating environmental labelling to consumers’ and ‘Best practice for displaying environmental labels’. The final best practice guidance we had planned on ‘generating environmental impact scores’ has proved challenging but the learnings are important, beyond just labelling itself and can help evolve the wider food data landscape.
Why environmental labelling matters
Environmental labelling is usually viewed as a way of helping consumers make more informed choices. However, its potential role is much broader.
Environmental labels are one of several tools that support progress towards net zero, helping to create greater transparency across food supply chains and encouraging more sustainable dietary patterns and choices. On the supply side end, it is a way of industry understanding if their product’s environmental impact, creating a positive feedback loop and a collective competitive approach towards reducing their product level impact.
The environmental label accounts for the four key impact areas of GHG emissions, land use, water use and water quality. Currently, this does not factor in health-related metrics but aligning with the health agenda is a key consideration and will be explored as we continue developing the toolkit.
However, for labels to be effective, they must be based on robust evidence and trusted by consumers, industry and policymakers alike. Labelling must be a key lever to promoting the right diet shifts for consumers to reach our net zero and environmental goals, whilst aligning with the health agenda.
That's why, from the beginning, IGD's focus has been on robustness and building supporting evidence to develop an approach for environmental labelling that can be practically used as a key lever.
Four key learnings of work
1. Harmonisation is essential – but harder than it looks
When IGD began this work in response to industry requests, one of the key concerns was the growing proliferation of environmental labelling schemes and methodologies appearing across different markets. Businesses recognised that a fragmented landscape risked creating confusion for consumers whilst adding complexity and cost throughout supply chains.
Our research has consistently highlighted the value of a harmonised approach. However, achieving harmonisation is challenging and relies on a series of methodological decisions.
For environmental labelling, the Product Life Cycle Assessment (LCA) methodology is vital because it determines the environmental impact of each product. Different methodologies can produce different results, which is challenging when trying to establish a scoring methodology – which determines what grade boundary a product sits in, e.g. A to E bands. The scoring methodology is highly sensitive to the particular LCA methodologies and their corresponding results. This can present trade-offs between scientific robustness, practicality and scalability as we want to progress as fast as possible with existing solutions but there currently is a lack of harmonisation.
The good news is that industry alignment on the need for harmonisation is stronger than ever. On a UK level, DEFRA through the Food Data Transparency Partnership (FDTP) and the LED4FOOD initiative, led by WRAP, is exploring a consistent LCA methodology. On an international level, the launch of the Global Sustainable Transition Alliance (GSTA) is looking to create a global standard for LCA methodologies to create international harmonisation. We welcome harmonisation in this key area, which could provide a great example of international cooperation towards achieving our environmental goals.
2. Growing importance of primary data
Another major learning from the programme has been the importance of data collection and quality.
Environmental labelling ultimately relies on product environmental footprint information. If the underlying data is inaccurate, incomplete or inconsistent, any resulting label risks undermining trust and credibility.
Testing carried out as part of the latest phase of work highlighted potential differences between product assessments using only secondary data and those using primary supplier data for key aspects of the assessments. The findings suggest that the type and quality of the underlying data can influence environmental outcomes and therefore influence how products are assessed within a labelling framework. This is something that we are exploring as a potential point of further research.
This is not simply a labelling issue. It has wider implications for sustainability measurement and management across the food system.
As businesses continue to invest in environmental reporting, carbon measurement and sustainability strategies, including rewarding suppliers to provide primary data - Arla is a good example of this. Improving access to high-quality primary data is becoming increasingly important. Our findings reinforce the need to continue incentivising a more robust data collection process and improved the data quality throughout supply chains.
3. Learning through testing
One of the most valuable aspects of the programme has been the opportunity to test potential approaches using real-world industry data.
Rather than relying solely on theoretical modelling or secondary data, IGD and participating industry partners, including retailers and manufacturers, have explored how different methodologies behave when applied to live large product datasets. This has provided important insights into the strengths and limitations of different approaches and highlighted areas where further refinement is needed.
In many cases, the findings have challenged initial assumptions.
Some methodologies appeared promising in theory but proved more difficult to operationalise in practice. Testing has raised questions around how approaches effectively differentiated between product categories or across a range of product categories.
These findings are valuable. Progress is not simply about identifying what works. It is about building the right evidence using real world examples and understanding unintended consequences of each approach.
4. There is no simple answer
Environmental labelling is sometimes presented as a straightforward challenge: develop a score methodology, put it on pack and let consumers make informed choices.
The reality is more complex. Trade-offs are inevitable.
Throughout our testing, we've explored different methodologies and assessed them against a range of success criteria. No approach has emerged as a perfect solution that meets our success criteria.
The testing has demonstrated that environmental labelling involves a series of trade-offs. Certain approaches may provide stronger differentiation between products but risk mis-labelling products and their real-world impacts. Some approaches may require supporting infrastructure that is not yet available, others may raise important questions around consistency and long-term governance.
Rather than seeing this as a setback, we view it as progress. Understanding the limitations of different approaches is a crucial step towards developing something that is both credible and practical. This is one reason why continued collaboration across industry, academia and policymakers will be essential.
The objective should not be to rush towards a solution. Instead, the focus should be on building confidence that any future approach is scientifically credible, practically deliverable and trusted by consumers, industry and policymakers.
What we've learned about the wider challenge
Perhaps the biggest lesson from the programme is that environmental labelling is only partly a labelling challenge.
It is a data challenge. It is a methodology challenge. It is a population diet shift challenge. And it is a governance challenge.
A growing number of initiatives are exploring environmental data, product footprinting methodologies and sustainability reporting frameworks both within the UK and internationally and are looking to address these challenges. These developments create important opportunities for alignment and collaboration.
The label consumers eventually see is only as credible as the evidence, calculations and standards that sit behind it. Before environmental labelling can scale, industry and government need to align around key environmental data actions, including aligned LCA methodology, standardised secondary datasets and clear data collection and quality standards – including for environmental metrics beyond carbon.
This is why collaboration across industry, academia and government remains so important.
Looking ahead
Environmental labelling remains a promising tool in the transition towards a more sustainable food system. However, our experience over the past five years suggests that success will depend on the label itself and, importantly, on the quality of the evidence and data that underpins it. The evidence we are building is ensuring we are creating outputs confidently.
Over the past five years, we have built a stronger understanding of both the opportunities, challenges and trade-offs in developing a harmonised approach to environmental labelling. We have identified areas where approaches show promise, highlighted where further development is needed and the need for evidence that can help inform future decision-making.
Government, industry and other stakeholders will have an increasingly important role to play in determining how environmental labelling evolves in the coming years. The role of government through the Food Data Transparency Partnership and LED4Food initiative is helping drive solutions to the system challenges but there is still work to be done.
The path to environmental labelling was never going to be straightforward. By continuing to build the evidence base, challenge assumptions and work collaboratively across the food system, we can move closer to a future where environmental information is both credible and consistent.
Environmental labelling can play a role in supporting net zero. Before labels can scale, we need to ensure we are building on the right foundations to ensure consistency, robustness and trust.