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Can sustainable fashion be affordable

if you take true pricing into account?

Deze paper werd geschreven door Saartje Boutsen en Charlotte Vandierendonck en gepresenteerd tijdens de Responsable Fashion Series Antwerp 2021. 

 

Intro 

Do you think a new pair of jeans bought in your local highstreet or from your favorite clothing app is expensive? Probably they are too cheap. It is well known that the fashion sector does not score well when it comes to living wages in production countries. Also the ecological footprint of the sector is enormous, due to the extensive use of pesticides, chemicals, transports, energy and water. If you include the actual social and environmental cost of a pair of jeans, it would cost you a lot more. Does this mean that sustainable fashion is by definition more expensive? And therefore reserved for the wealthier among us?  Fashion retailers that offer clothing in the lower price segment are also launching sustainable collections today. In this paper we want to find out to what extent true pricing in fashion production can also be economically reconciled with consumer prices that are affordable for all layers of the population. After all, sustainable fashion should be accessible to everyone (and by that we don't just mean the second-hand market).       

The true cost  

Based on existing studies, researchers at ABN Amro have calculated what the "true" price should be for indigo blue, unbleached, 600 gram pair of jeans. That is the most popular type of jeans in the world. The trousers are made of cotton and denim from India and assembled in Bangladesh.     

The purchase price of such pants - the price that the retailer pays - should actually be almost 33 euros higher than it is now, the researchers conclude. Textile workers are often paid poorly. The cultivation of cotton and the production of denim cause a lot of environmental pollution. Jeans would be significantly more expensive if textile workers were paid a living wage and if the cost of environmental pollution were included in the price of a pair of jeans.     

Of those 33 euros in hidden costs, 8,40 euros is accounted for by cotton cultivation, which is water-intensive and uses a lot of fertilizers and pesticides, polluting rivers, lakes and seas. Cotton farmers and workers often receive too little wages, and child labor and forced labor also occur. Most hidden costs - 21,15 euros per pair of jeans - are in the production of denim textiles: de-stoning, spinning, weaving, wet processing and finishing. In the Indian state of Tamil Nadu, India's largest raw cotton processor, 200 000 to 400 000 people, often young women, work long days in spinning mills for low wages over three to five years. They often only receive that wage when they have completed their entire employment contract. If they were not forced to work and would work for a living wage, jeans would be 10,85 euros more expensive. If the environmental damage caused by denim production is includedin the price of the pants, it would be an additional 5,85 euros more expensive.[1] 

So far, this gives only an insight in the extra costs of pre-consumer externalities. In the post-consumer phase, there’s also a hidden ecological cost.  Overall, it is estimated that the amount of garments produced annually has doubled since the early 2000s reaching more than 100 billion pieces per year.  Today, only 1% of all textile waste is recycled, 73% end up in landfill.[2] Additionally, there’s a major microplastics problem. According to the International Union for Conservation of Nature, 35 % of microplastics that enter the ocean come from synthetic fibres, like polyester, acrylicand nylon. Every time we wash clothing made of these fibres, they shred. Up to 728000 fibres can come off at once, spilling into waterways and contributing to the pollution of our ocean and environment. This ecological cost is also not included in the price of a garment.       

‘Sustainable’ means ‘expensive’ means ‘not democratic’?    

The actual cost of a pair of jeans, or the cost of a"sustainable" pair of jeans that does take into account the environmental and social aspects, is therefore significantly higher. The same logic can be followed for other types of garments in the fashion industry as well as shoes. Nevertheless, fashion discount retailers state that sustainable clothing is possible at equally competitive prices.    

Even though it seems like a contradiction in terminis, for example the Irish retailer Primark is convinced that the combination is possible. “We believe that sustainability shouldn’t be priced at a premium that only a minority can afford. Because of who we are, we believe we have the opportunity to make more sustainable fashion choices affordable to all”, Primark says. The retailer has the ambition to halve carbon emissions across its value chain by 2030, and to create financial resilience by pursuing a living wage for workers in the supply chain and supporting them with financial literacy training and access to social protection by 2030. On the other hand, they want to continue to offer the same sharpest competitive prices.[3]   

The Dutch discount retailer Zeeman, for example, is also ambitiously going for more sustainability: they are fully committed to more sustainable materials, the reduction of plastic packaging, the circular economy, and the impact of clothing production on the environment and on the living of local factory workers. It is also the intention that the employees of Zeeman manufacturers earn a living wage. Their suppliers sign for this in their Code of Conduct. A living wage is a wage that is sufficient to meet all basic needs, such as housing, transport, food and care. After all, the statutory minimum wages set by the government in countries such as India, Pakistan and Bangladesh are often not sufficient to meet these basic needs.[4]   

Retailer Lidl, that calls itself a 'smart' discounter, is also committed to sustainability and they recently launched a campaign named ‘able’ to connect a sustainable product with a low price. The intention is to make consumers aware that a sustainable product does not necessarily have to be expensive. The supermarket chain indicates that it will continue to raise the bar and that it wants to increase the sale of sustainable products by 10% every year.   

All these claims make it seem plausible that sustainability doesn't have to be expensive nor undemocratic, but how far do these retailers live up to their claims, and are we sure it's not about greenwashing?   

Let’s go back to our three examples: Both Primark, Zeeman and Lidl have published far-reaching annual sustainability reports, in which they document their sustainability policy, strategy, roadmap, actions and results. When we have a look for example to the social aspect of fair working conditions and living wages for textile workers, Primark is giving the most transparent information: they have a code of conduct for suppliers, which is the backbone of their Ethical Trade and Environmental Sustainability Programme. It is a robust set of requirements that forms a key part of the terms and conditions of a supplier’s contract. Suppliers are regularly audited, and thereafter rated by the internal Ethical Trade team. If they meet Primarks minimum standards they get approved for production. In 2019, more than 3000 factory audits were conducted. According to a rating categorization with three groups, it turns out that only 3% of the audited factories have good systems in place to ensure ethical compliance. For those only a limited number of minor issues is recorded by the auditor.  67% have evidence of some good systems in place, however, did not achieve full ethical compliance, whereas 30% did not meet ethical compliance, with significant and numerous issues.  Primark also reports that living wages and working hours, including excessive overtime, remain a challenge.[5] With this data, Primark itself indicates how serious this problem is. It seems impossible to tackle such problems on an international scale without also adjusting something to the pricing scheme. The price that a brand pays to their suppliers should absorb all the elements that fall under ILO conventions and as such respecting the workers’ rights. Only with giant leaps and a real commitment to pay its share for workers living wages, Primark can reach the ambition set forward in its recentpress release.   

Also Zeeman reports on its efforts on living wages. On the basis of their roadmap, they give concrete substance to this theme, which concretely means that they currently want to gain more insight into the situation at their manufacturers with regard to a living wage. In this way they can better determine what a living wage is and whether the workers in the factory actually receive a living wage, because that is a catalyst, preventing other risks inthe supply chain, such as excessive overtime and child labor. In recent years, during social audits they have gained insight into the difference between the legal minimum wage, the actual wage and the living wage.[6] No information is given on the percentage of factories in which a living wage is already paid. A pilot project on living wages will be set up in a factory in India in 2021. Obviously a step in the right direction, but Zeeman has clothingproduced in 17 countries and 348 factories, so there is clearly still a long way to go to make living wages the norm in their supply chains.   

In Lidl Belgium's sustainability report, you can very clearly find the objectives, associated measurement indicators and information about their progress. It is for example a strong point that they work through the Sciences Based Targets Initiative. However, if we look at the sustainability targets for textiles, this is a disappointing ambition. At the social level, the goal of having 100% of frontline suppliers audited by BSCI (Business Social Compliance Initiative) by 2018 was achieved, but no clear ambition is mentioned regarding specific human rights such as contributing to a living wage.[7] The sustainability strategy of the German Schwarz Group, to which Lidl belongs, considers “it is our duty, together with our business partners in the countries concerned, to make decent employment possible through good working conditions and fair wages. As a result, the business activities of the Schwarz Group will positively impact the people who work in its supply chain as well as their families and local communities.”[8] However, no explanation follows on implementation or measures. It remains a statement without evidence.    

So it is difficult to hold to the claim that cheap clothing can be really sustainable. There will always be a hidden true cost, ranging from the loss of quality of the fabric, to the inferior quality of finishing, the lack of living wages throughout the supply chain and the large environmental impact of the pre- and post-consumer life cycle.    

On the other hand, the industry is looking to keep sustainable products accessible to consumers with a lower family budget to be spent on clothing. Today, an average Belgian family spend 900€ per year on clothing and shoes. More than 30% of the current Belgian population has an average income that is less than 60 to 80% lower than the median net equivalent household income. So, if discount retailers want their audiences to continue to buy clothes in the same volumes, they need to continue to work at an extremely low price point.  This statement isreinforced by the knowledge that over the past few years the share of the family budget that went to clothing and shoes has always decreased.[9]   

The responsability to act against the negative impact of the fast fashion treadmill is threefold. First, there is a particularly large role for the fashion companies themselves. Secondly, governments and the international community have to play an important role in setting rules and standards and assuring compliance with these.  Thirdly, it is also the consumer who can make better choices even with a limited budget.      

Responsibility of fashion companies  

A large part of our clothing remains made in misery. Modern slavery, child labor, serious environmental damage, they remain major challenges in the fashion industry today. A good thing is that – compared to ten to five years ago – more and more fashion brands are recognizing these challenges and are actually working on it, step by step. The notion is growing that this will also mean adjustments to their current business model.   

From quantity to quality, from linear to circular   

The ecological cost of a garment in the true pricing model can be lowered by producing more environmentally friendly. This does not only mean the switch from conventional cotton to organic cotton, from conventional polyester to recycled polyester, or from viscose to lyocell. This switch to more environmentally friendly materials is absolutely necessary, but still insufficient. Organic cotton remains water-intensive during production and recycled polyester continues to release microplastics during the washing process. The problem also lies in the enormous amount of waste that the sector generates: while the production volume has doubled over the last 15 years, more than 50 percent of fast fashion becomes waste within a year. So the challenge is to limit the use of new raw materials and to reduce the enormous volumes of waste, both in the pre- and postconsumer phase. The sector needs a transformation from a linear to a circular system.    

To keep fibers longer in the loop, you have to give clothes a longer life, and that you can do in the first place by focusing on quality. A garment made of a high-quality fabric will last longer, it can possibly be reused by a next owner, and even if it will be recycled at the end of its life, it will yield higher-quality new yarns. Today, a lot of fast fashion clothes are made of low quality fabrics, and do not survive 10 washes. Quality has a price, but isn't it cheaper and more sustainable to buy 1 shirt of a better quality than 3 shirts of a low quality? A switch from quantity to quality. Towards customers it is an important message to convey: cherish your clothes, buy only what you really like to wear, so that it lasts longer, and so that no more clothes with price hangtags end up in the trash.  

Preventing waste and overproduction is clearly the responsibility of a fashion company, and can be an important KPI in a sustainability strategy. Also production on demand, good collection planning and efficient stock management can play a significant key role in this. It prevents large quantities of new items ending up on the waste mountain. Moreover, such an efficiency exercise can also save a company significant costs.   

Furthermore, fashion brands can also focus on more circular design. Afterall, 80 percent of the impact of a product is determined in the design phase. In addition to the use of more sustainable and quality materials, the environmental cost of a garment can be reduced in the design phase by creating a design that is timeless, that minimizes fabric waste and that is made of mono-material – the more different sorts of fibers a clothing contains, the more difficult it is to recycle.      

Real commitment to living wages in the supply chain 

A fair living wage is an income earned during normal working hours that meets the basic needs of workers and their families, with some left over for extra expenses or savings. Making sure garment workers are paid fairly is a big challenge for fashion companies. Most fashion companies don’t own any factories and don’t make their own clothes – they outsource production to independent manufacturers. This means they don’t pay garment workers’ salaries, nor do they decide how much they are paid.  

But there are many things that fashion brands can do to have a positive impact on wages and wage development to give workers and their families better livelihoods, good working conditions and more power in the workplace. They can take responsibility and be an actor of change by setting clear standards and expectations for every supplier – mostly done by a Code of Conduct – and, moreover, also taking action if the standards are not met. They can help suppliers to improve working conditions and implement effective wage management systems. They can provide worker education programs that empower workers to negotiate their own wages and conditions. They can ensure that purchasing practices – the way orders are places and prices are paid – enables the payment of correct wages. They can engage in dialogues with partners, peers, experts and governments to improve wages at both industry and country level. They can constantly monitor the level of wages paid in the factories. The Covid-19 pandemic highlighted the relevance of doing this, as a lot of garment workers lost income while social security safety nets were absent in several production countries.    

Transparency, honest communication and measurement 

Companies should set clear objectives in this regard, measure the progress and report on this. In that way they will become really transparent about the true cost of labour.  

H&M Group is one of the fashion retailers who is taking steps in the right direction. As their production contributes to the employment of 1,56 million people, they have a responsibility to uphold the rights and wages of workers in their supply chain. According to H&M, they drive fair wage increases through a global approach, that feeds into country-specific strategies while considering national contexts and legal settings. In the past year, they engaged with experts to identify what had worked well in driving wage increases between 2013 and 2019. They learned from the evidence and have refocused efforts. H&M monitors the level of wages paid in their factories constantly and this data is a key dimension in the group’s Sustainability Index. For each production country, H&M refers on its website to the average wage paid by their suppliers, and the percentage above legal minimum wage. In most countries the average wages in H&M manufacturer’s factories are around 5 to 35 percent higher than the legal minimum wage. But in a country like Bangladesh, living wages are 3 times or 300 percent higher than the legal minimum wage, which are too low to have a decent income. Given the significant difference between legal minimum wages and living wages inproduction countries such as Indonesia, Bangladesh, Cambodia, Myan Mar or India, The H&M case shows that there remain a huge challenge to obtain a living wage for all garment workers.    

Nevertheless, H&M clearly indicates that consumers do not have to fear price increases. After all, a single factory often produces clothing for several brands, and workers are paid the same amount to make a €200 garment as they are paid to make a €20 garment. That's why increased prices in stores don't lead to increased wages for factory workers, according to H&M. The Group is confident that they can offer sustainable fashion at affordable prices because they are a large company, that buys large volumes, that has efficient logistics, their own designers, their own stores, strong market knowledge, long-term relationships with their suppliers, and no middlemen. “Wages are just one of many factors when it comes to pricing products”, H&M says. One could indeed assume that the group can compensate the margin loss caused by a certain sustainability choice by the margin profit on another focus (e.g. higher quality vs wage of the worker). However, it cannot be deduced from the reporting which volumes represent the different price structure models of the clothing. Such information could provide even more understanding whether the claim of cheap sustainable fashion is correct for those who claim it to be.    

Also other retailers seem convinced that ecologically and socially sustainable clothing is possible at the current low-threshold prices. They are taking steps, but there is still a long way to go. Launching a collection made from more sustainable fabrics is not enough to claim sustainability. Transparent evidence is necessary. Some retailers are doing this better than others. However, completely relying on the voluntary approach of companies does not work, according to a study by the European Commission, which showed that only 37 percent of companies engage in chain care.[10] Governments will also have to play a role in encouraging companies to focus on sustainable, affordable fashion.     

Responsibility of policy makers   

At local, national or within the European or international playfield, governments can use various levers to both accelerate the impact that focus on respecting workers’ rights and focus on environment enhancing initiatives can have. The simultaneous use of these levers could have a reinforcing effect. Reference may be made to the following instruments:    

Supply chain due diligence   

At Flemish, national and European level, legislation for supply chain due diligence is under research and in phase of proposal development. But this is far from an easy exercise. To what extent does the responsibility of European-based companies go if they are responsible for a substantial share of the orders placed with a factory in the Far East and what is the responsibility of local policy makers and suppliers themselves? Today, it is clear that only voluntary initiatives of multinationals to improve working conditions are not sufficient. It is certain that a legal framework for supply chain due diligence can reduce the negative impact in the sector, but the framework must be clear. The different decision-making levels must prepare the proposals and their implementation in a well-streamlined and tailor-made manner for the targeted companies.  

Our neighbours have already set a good example. France adopted a 'loi relative au devoir de vigilance' in 2017. In 2019, the Netherlands introduced a child labour duty of care act and a few months ago, the German parliament passed legislation on mandatory chain care. We are also seeing progress at European level. In 2020, Didier Reynders (MR), European Commissioner for Justice, promised to work on legislation on mandatory chain care.    

Extended Producer Responsibility (EPR)    

Extended Producer Responsibility is a policy approach under which producers are given asignificant responsibility   financial and/or physical – for the treatment or disposal of post-consumer products. Assigning such responsibility could in principle provide incentives to prevent wastes at the source, promote product design for the environment and support the achievement of public recycling and materials management goals.[11]   

When applying this to the fashion sector, this imposes several practical challenges. How should these principles be implemented for the European fashion industry, how to streamline these principles among countries and how to assure that the implementation of the processes and new industry practices are managed in short term as part of the European Green deal? Still a lot of research, financial support but moreover a cross-over of innovation and specific industry knowledge is needed to make this possible and to avoid negative spill-over effects. Whether it be tax regulations on fabrics or the obligation for take back systems, or any other measure, in the widely spread Belgian SME sector where the pressure on margins is already very challenging, a correct and realistic solution must be sought.    

Reporting    

Today, large listed companies are subject to the obligation to report on their sustainability efforts. From 2024, a larger group of companies will also fall under this obligation. As a result, more retail groups will also fall under the reporting obligation, and will have to apply a fixed reporting standard, in which both the impact on climate-related topics will have to be highlighted as well as the efforts to mitigate them. But human rights-related issues will also have to be included. As a result, the European Commission hopes to achieve more transparency and comparability. The call is on companies to take the associated double materiality obligation at heart in all seriousness and depth and to strive for maximum transparency. It is only with clear facts, analysis and actions, supported by strong data and clear objectives, that more and more stakeholders will pull on the same sail. It will become harder not to be transparent if a large group communicates about their practices. In the current regulations in preparation, most SME’s are not subject to a reporting obligation, but are encouraged to do so anyway. Given the many SME’s in the fashion sector, having a major impact on employment in East and Central Asia, and the Mediterranean regions, it is also called upon to push for a reporting obligation, based on a clear and limited set of standards and KPI’s such as supply chain transparency, the use of sustainable materials and waste and end-of-life initiatives.    

Regardless of whether regulations are initiated at European, national or regional level, one cannot ignore the macroeconomic trends that play on world level either. If Europe is going to impose stricter rules on companies based in Europe and impose sanctions on them, one must also look at the actors who also trade on European soil but who escape from taking up any responsibility. The influence of digital sales in the European market is gigantic but the transparency of some major fashion-oriented ecommerce providers, their sourcing practices and their carbon footprint is often lacking. The knowledge of the consumer about this is often very limited, not being aware of where their parcels are actually being sent from and which true cost is actually behind the story of the parcel and garments inside. Therefore, Europe has and will have an important role in balancing its trade policies and not drop the topic of respect for human rights in economic and political negotiations. No matter how challenging this may be in the current economic and political circumstances, it remains one of the pillars that forms a common ground fur us people within the fashion industry to strive for.   

Consumer responsibility    

In circles where there is a high awareness of sustainability, there is a strong voice that consumers should take up their responsibility. It is believed that the community has the knowledge and budgets to buy the clothing sold at a true price. This assumption is wrongful and is patronizing lower income consumer groups. It's not that the intention to buy sustainably isn't there. A consumer who buys a T-shirt at 2€ on which the label says it’s made of organic cotton will be confident that this is a good choice based on the given label info. However, also consumers have to take up part of the responsibility.   

Less is more   

Buyingless is a very simple rule if you are a brick and mortar shopper. Do you need a big bag of clothes, or will you focus on buying a selection of high quality items of which you are sure you’ll be able to wear them. However, a parent of 2 young children may be forced to buy new shoes or pants just because worn clothes simply become unwearable after a season of use. This has nothing to do with the quality of the items, but simply with the intense use of the garments. The offer of high quality second hand shoes and trousers for young children is rather low. This challenge illustrates that it is very important to combine the ‘buy less’ strategy with a strong ‘take back and recycle’ strategy. Although less could be consumed, the need for new clothing remains a reality. However, the better the quality of the clothing offered, the longer the lifecycle of a garment and the better the end-of-life possibilities.    

However, there is an extra challenge to this. E-commerce sales continue to rise and as a consumer it becomes much more difficult to check the fabric quality and finishing of an item. This leads to bad buys and high return rates anyway. An item may be made of organic cotton, it says nothing about the firmness and thickness of the fabric and you do not see this on a packshot photo of an item. The ‘buy less’ rule therefore applies in particular to e-commerce items. One should combine the choice for an item with a good reading of the additional product information and a research of the sustainability commitments of the brand you’re buying from.    

Understanding labels and product descriptions   

Brands use multiple ways to communicate about the sustainability aspects of a garment. Hang tags are used to emphasize specific sustainability features (mostly about climate related topics, seldomly about respect for human rights), to add certificate logos, to clarify washing instructions or to ask for certain customer engagements. In addition, in Europe, brands are forced to add the product compositions in the labels. However, the sustainable levels of a certain substance are not mandatory and there is no European regulation for this yet. If a more sustainable fiber is being used, brands often add this information nearby the official product composition. However, as there is only limited regulation on this today, it remains very hard for a customer to interpret the labels.    

Asking questions makes the ball roll   

It remains a major challenge for a consumer to build up knowledge aboutsustainable clothing and shoes. Numerous claims and information are communicated to customers, without a coherent frame and consumers are pointed the finger at for not making sustainable choices. Who's to blame and how to deal with it? Here you can especially advise to keep asking questions, using the chat tools of the online players, and by approaching sales advisors in physical stores. It is obvious that clear and complete answers will not always be available, but it is precisely the continuing questioning of current practices that is part of the process of change that has been set in motion in the long term. Be it on the shop floor or from an institutional angle, the more voices are raised and questions asked, the more players will further move.      

Conclusion   

It is not an easy exercise to determine the true cost of a garment – but for sure someone pays the cost if it is not produced in a sustainable way. A garment can be called ‘sustainable’ if it is produced with respect for human rights and for the environment. But technology and scalability of innovations are today not yet where they need to be, and the current status of respect for good working conditions and decent living wages remains too low, based on data shared in the reports of some well-known retailers.  

Supported by responsible choices of consumers and supporting measures of political leaders, fashion retailers can play an important role in making sustainable fashion more mainstreamand democratic. It is crucial that they take up their responsibility in the transition from fast fashion to accessible and affordable circular and sustainable fashion. They are part of the solution, given their strong commitments in researching, supporting and financing innovations, their commitment to improve the working conditions in low-wage countries. But these efforts need to be strenghtened and sustained, made more measurable and transparent so that a better and clearer distinction can be made between those for whom the commitments are authentic and those who, despite the claims, continue to lag behind. They need to set an example for the rest of the industry, to pick up the lessons of it and help realize the standard of the future.    

About the authors  

Saartje Boutsen & Charlotte Vandierendonck are the co-founders of Studio D. Studio D inspires, advises and supports companies and organizations that want to do business sustainably (www.studiodee.be). 

Charlotte Vandierendonck previously worked as an international sales and wholesale manager for fashion brand CKS and as a senior consultant at Capgemini Consulting.  

Both have an academic background in international relations, economics and human rights.  

 

[1] Impact Institute & ABN Amro, True Price of Jeans, https://trueprice.org/wp-content/uploads/2019/06/Impact-Institute-Report-True-Price-of-Jeans.pdf, 2019.     

[2] Grammen C., Y. Vanbaelen, e.a.(UCLL – Expertisecentrum Sustainable Ressources), Circulaire economie in detextielsector, Wanderful.Stream, 2020, p. 19.   

[3] Primark pledges to make moresustainable choices affordable for all as it unveils extensive programme of newcommitments, https://corporate.primark.com/en/newsroom/primark-cares/primark-pledges-to-make-more-sustainable-choices-affordable-for-all-as-it-unveils-extensive-programme-of-new-commitments/n/a6a53c03-d486-4ce1-ae55-5795e2b8fa6c, Sept 2021.   

[4] Zeeman, CSR Report for 2020, https://www.zeeman.com/media/wysiwyg/pdf/csr_2020.pdf, 2021.   

[5] Primark, Our performance 2019, https://primark.a.bigcontent.io/v1/static/Our-Performance-2019    

[8] Schwarz Group, https://gruppe.schwarz/en/responsibility/people    

[9] CoeneJ., P. Raeymaeckers, B. Hubeau, S. Marchal, R. Remmen & A. Van Haarlem, Armoedeen sociale uitsluiting, jaarboek 2021, Acco Leuven/Den Haag, p. 92-93.   

[10] EC, Study on due diligencerequirements through the supply chain, Part I, Synthesis report, Feb 2020.    

[11] OECD, Extended ProducerResponsibility, https://www.oecd.org/env/tools-evaluation/extendedproducerresponsibility.htm