The EU Ecolabel is Unlikely to be the Best Tool for Sustainable Fashion Companies
Author: David Leys
Publication date: 10 January 2022
While the EU Ecolabel looks appealing for fashion companies as it may enhance their public profile[1] and serve potential customers’ green demands [2] - there are significant challenges to the program.
Created in 1992, the EU Ecolabel is considered as an “environmental label of excellence.”[3] Every garment supplied for distribution, consumption or use in the European Economic Area market[4] is eligible for the EU Ecolabel if certain specific criteria (textile fiber, component and accessories, chemicals and process, fitness for use and social responsibility)[5] are fulfilled. However, none of the major fashion companies use the EU Ecolabel even in 2020.[6] Only 58 license holders use the EU Ecolabel for 1,556 textile products. This lack of interest from fashion companies is probably due to the fact that “only 40% of EU citizens recognize the EU Ecolabel and only 19% of the EU citizens purchased labelled product despite the fact that 80% think environmental impact of product is important.”[7]
Further, the application and use of the EU Ecolabel can be quite costly for small and medium enterprises (SMEs). They must pay a one-time fee at the time of the application but also in case of amendments or renewal of a certification for the EU-Ecolabel. The size of the application fee depends on both the size and location of the producer of the garments. The location is where the garment is made, located, marketed or placed within the European Economic Area. The normal fee[8] may range from EUR 200[9] to EUR 2,000[10] depending on the country. For small and medium-sized companies, the application fee may range between EUR 200 to EUR 600. For fashion companies located in developing countries, the application fee ranges from EUR 200 to EUR 350. It is interesting to note that the application fee may be reduced by 30% or 15% if the company is either EMAS[11] or ISO 14001[12] certified.
Fashion companies must also pay a fee for an inspection visit in certain countries.[13] The fee is generally a reimbursement of travel and living expenses plus hours worked, which can amount up to EUR 1,000 per day of inspection in Denmark.
Fashion companies will then need to pay an annual usage fee in order to have a certification for the EU-Ecolabel. Sustainable companies must pay the annual usage fee even if the EU Ecolabel is not actively used in marketing. The usage fee is calculated based on the annual revenue from the garment that carries the EU Ecolabel. Fashion companies must report where they are selling their garments and the estimated annual revenue per country. Generally, the usage fee is 0.15 % of the revenue of the fashion company in the European Economic Area. A minimum amount of standard fee is generally around EUR 500. It cannot exceed EUR 25,000 per year in Italy, Germany, Finland and Denmark. The usage fee may be reduced by 25% when the applicant and producer are classified as micro companies, small and medium-sized companies or located in a developing country.
When a fashion company wants to add or remove products on its certification or change the composition or production of its products, it must apply for an extension, reduction or change to its certification and pay a fee. The fee may be calculated on the basis of an hourly price or a fixed price up to EUR 2,000 in the Netherlands.
Finally, although the certification is valid as long as the eligible criteria of the garments for the EU Ecolabel are valid, the EU-Ecolabel's criteria are generally revised every 5 years. The fashion company must renew its certification when new criteria apply to a product covered by the EU Ecolabel. If the fashion company does not renew the certification, it will not be possible to continue to use the EU-Ecolabel on the garment. The size of the renewal fee depends on the company's size and location.
[1] European Commission, Environment, Success stories, available at https://ec.europa.eu/environment/ecolabel/green-week-2.html.
[2] European Commission, EU Ecolabel for Consumers, available at https://ec.europa.eu/environment/ecolabel/eu-ecolabel-for-consumers.html.
[3] European Commission, Environment, available at https://ec.europa.eu/environment/ecolabel/.
[4] European Union plus Iceland, Lichtenstein and Norway.
[5] Consolidated text: Commission Decision of 5 June 2014 establishing the ecological criteria for the award of the EU Ecolabel for textile products (notified under document C(2014) 3677) (Text with EEA relevance) (2014/350/EU)Text with EEA relevance, Available at https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:02014D0350-20201201&from=EN.
[6] See list of license holders, available at http://ec.europa.eu/ecat/category/en/14/textile-products.
[7] Communicating the Ecolabel, EU Ecolabel Helpdesk, Communications Masterclass, September 23, 2009, at 31, available at https://ec.europa.eu/environment/ecolabel/about_ecolabel/reports/futerra_pres_230909.pdf.
[8] EU Ecolabel fees chart, available at https://ec.europa.eu/environment/ecolabel/documents/eu-ecolabel_fees.pdf.
[9] In Slovenia and Romania.
[10] In Belgium, the Netherlands and Denmark.
[11] Website of the EU Eco-Management and Audit Scheme (EMAS), available at https://ec.europa.eu/environment/emas/index_en.htm. The EU Eco-Management and Audit Scheme (EMAS) is a premium management instrument developed by the European Commission for companies and other organizations to evaluate, report, and improve their environmental performance. EMAS is open to every type of organization eager to improve its environmental performance. It spans all economic and service sectors and is applicable worldwide.
[12] Website of ISO, available at https://www.iso.org/iso-14001-environmental-management.html. ISO 14001 is the international standard that specifies requirements for an effective environmental management system (EMS). It provides a framework that an organization can follow, rather than establishing environmental performance requirements.
[13] Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Hungary, Ireland, Italy, Malta, Netherlands, Norway, Poland, Portugal, Sweden and United Kingdom.
David Leys, Winter Policy Analyst
David is a qualified lawyer of the Brussels Bar and an applicant for California as well as New York Bars. With experience at Sidley Austin LLP, the European Commission, and the Embassy of Belgium in Tokyo, he brings an international perspective towards trade, competition and intellectual property.
Having twice attended the Marché du Film at the Festival of Cannes, David has considerable experience in licensing, partnerships and NDAs for SMEs in the cultural and creative sectors. He has recovered up to 200,000 USD for SMEs by pleading before trial and appeal courts in commercial and IP laws.
David’s other notable projects, which include dealing with an EU merger for Fortune 500 company and conducting due diligence for an IPO reflect his interest in new technologies, energy, and the Arts. He has advised and represented governments, Fortune Global 500 companies, and associations on international trade and agro-food matters.
He is extending his previous experience in trade law in the solar panel, clothing, and food industries at Unbuilt Labs, where he will be conducting legal and policy research on sustainable fashion.
His articles on diplomatic protection, trade and customs law consequences of Brexit, and trademark royalties in customs, were published in the Harvard International Law Journal Online and the Global Trade and Customs Journal.
Columbia Law School, New York City, Master in Laws (LL.M.) ‘20
College of Europe, Bruges, Master in European Law (LL.M.) ‘12
Université Catholique de Louvain, Master in Law (J.D. equivalent) ‘11
Université Saint-Louis, Brussels, Bachelor in Law ‘09