ENERGY STAR Program Requirements:Product Labeling

July 22, 2003

Ann Bailey, Director

ENERGY STAR Product Labeling

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Why Label Your Products?

• More than 50% of the general population considers energy efficiency to be a very important product attribute when purchasing electronics (The Natural Marketing Institute, 2003)

• ENERGY STAR awareness is 40% nationally and exceeds 50% in many major markets

• 50-60% say the presence of the ENERGY STAR influenced their purchase decision

• 71% are likely to recommend ENERGY STAR to a friend

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Why Label Your Products?

• ENERGY STAR offers the attributes of a strong ingredient brand– immediate point of differentiation – added value (saves energy, money and the

environment)– reduced effort and perceived risk for consumers

• Plus objective third-party credibility– products that earn the ENERGY STAR meet strict

energy efficiency guidelines set by the Environmental Protection Agency

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Why Label Your Products?

• Print articles mentioning ENERGY STAR have reached a combined circulation of more than 700 million people over the past year

• As of May, 850 companies run ads each month for ENERGY STAR products

• ENERGY STAR product ads have risen 25% over the past year -- exceeding 10,000 per month

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Partnership Agreement

• Goal: standardized format capturing fundamental program requirements – comply with product eligibility criteria– comply with logo use guidelines– qualify a product within a set time– provide shipment data– keep product lists up-to-date– label products, product literature and web site

• Transition began in 2000 and takes place as product specs are revised - only OE remains

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Product Category

# of signed PAs

Product Category

# of signed PAs

Appliances 36 Ceiling Fans 22 Consumer Electronics

67 Comm. Refrig. 11

HVAC 81 Dehumidifiers 9 Roofs 207 Traffic Signals 8

Windows 559 Vent. Fans 5 CFLs 121 Water Coolers 8

Exit Signs 35 RLF 95

As of April 1, 2003

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Labeling of Qualified Product

• Interior fixtures 96% (78%)• Portable fixtures 100% (100%)• CFLs 81% (67%)• Programmable Thermostats 75%• Clothes Washers 86%• Refrigerators 94%• Dishwashers 75%• DVDs 47% (TVs 25%)• Ceiling fans 35% Source: EPA Retail Store Level Assessments

September 2001June 2002

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Provide clear and consistent labeling of ENERGY STAR qualified computer monitors. The ENERGY STAR label must be clearly displayed on the top/front of the product, on the product packaging, in product literature (i.e. user manuals, spec sheets, etc.), and on the manufacturer’s Internet site where information about ENERGY STAR qualified models is displayed.

Labeling Language

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Purpose of Labeling Requirement

• Make it simple for buyers (consumers and businesses) to easily identify energy-efficient models

• Clearly differentiate between models• Allow retailers and manufacturers to leverage

significant outreach • Ensure partners are recognized for their high

efficiency products• Increase awareness of ENERGY STAR among

purchasers

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Chronology of Labeling Discussion

• Early 2001 - Initiated discussion with ITI concerning the new PA

• March, 2002 - Letter to monitor manufacturers– explained rationale for PA requirements– indicated our willingness to consider labeling options– included laundry list of proposals we had heard so

far

• April, 2002 - Monitor industry meeting – further discussion of labeling requirement and

sharing of concerns/suggestions

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Chronology of Labeling Discussion

• May, 2002 - Letter to monitor manufacturers– announced decision not to accept labels on back

panel– stated intention to issue approved set of labeling

options as official interpretations of PA– final call for suggestions

• June, 2002 - Additional industry input received– ITI, IBM, Viewsonic, Dell, Apple

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Chronology of Labeling Discussion

• December, 2002 - Partner meeting– reviewed the new PA requirements– status report on PA phase-in

• July 22, 2003 - Today’s meeting– presentation of proposal allowing four options for

labeling of monitors

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Partner Concerns

• Desire not to include brands other than their own on the product

• Preference for a transparent, seamless design• Costs to produce and apply the label • Contamination of recycling process• Consumers don’t look/ask for the label• Label does not add value for buyer• Label does not increase sales for partner

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Options Considered

• Temporary label• Electronic label

– Folder similar to control panel folder– On screen display

• Label on monitor base or stand• Removable label for power cord, similar to safety

labels on consumer products• Label incorporated into boot up process (initial

boot up or all boot ups)

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Options Considered (cont.)

• Consumer outreach/advertising in lieu of labeling

• Label on promotional piece in the shipping box

• Label on plastic protective covering for monitor

• Label on accessories, e.g., mouse pad• Label on point-of-purchase promotional item,

e.g., shelf-talker, and work with retail staff

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Where We Ended Up

• Four options

• Balance partner concerns with labeling objectives

• Demonstrate flexibility while providing options that have roughly equal merit

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Monitor Labeling Options

1 - Permanent label on top/front2 - Temporary label on top/front3 - Electronic label4 - Label used in advertising

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Permanent Labeling

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Temporary Labeling

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Temporary Labeling

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Electronic Labeling

• Certification mark appears on monitor screen through software driven by the computer such as: – Desktop folder similar to control panel folder– On screen display– Boot up screen– Navigation screen

• Allows flexibility in implementation, depending on operating system, but requires failsafe to ensure only qualified monitors are labeled

• Will be handled case-by-case

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Electronic Label

• Maximum 2 clicks to get to ENERGY STAR

• Icon should be on a screen with few others

• ENERGY STAR folder to contain information in .pdf files– What is ENERGY STAR– Energy and environmental benefits of ENERGY STAR

qualified product– Information on ENERGY STAR products (OE and others)– Power management

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Electronic Label - Example

ENERGY STAR

From Desktop

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Electronic Label - Example

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Electronic Label - Example

ENERGY STAR

Two clicks down:ENERGY STAR icon

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Labeling via Advertising

• Incorporate the logo into advertising such that the number of impressions that result are roughly equivalent to the impressions that would have resulted from consumer exposure to the label on their qualified product

• Provide partners flexibility while guaranteeing approximate equivalency of impact as measured by the number of impressions achieved– impressions = reach (# of people) X frequency (# of times)

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Labeling via Advertising

A = 52(S)

Where: – A = # of impressions that would need to

be achieved from the advertising and

– S = # of ENERGY STAR qualified units shipped by the partner in the previous calendar year

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Labeling via Advertising

Assumptions -- very conservative, derived in consultation with PR/Ad experts

• Temporary labels– 75% of temporary labels removed immediately – 25% remain on for the life of the monitor

• A monitor is used an average of 208 days/yr – 60% are in offices, used 5 days/week– 40% are in homes, used 3 days/week– combined total average is a little over 4 days/week

• One impression per day

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Labeling via Advertising

• To determine shipments, partner may use– actual shipments of qualified monitors

in the previous year OR

– an estimate of shipments calculated by multiplying its total monitor shipments by a national ENERGY STAR market share percentage provided by EPA

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Labeling via Advertising

• At a minimum, ads must properly display the “Ask About ENERGY STAR” or “We Sell ENERGY STAR” logo with a statement conveying the meaning/value of ENERGY STAR

• Partners also are encouraged to prominently display the certification or promotional logo in ads that feature qualified products and offer more explanation of ENERGY STAR along with a call to action

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Labeling via Advertising

• Appropriate ad media:– TV, radio, print, Internet

• Ads must be targeted to consumers outside partner’s company

• The following may not be used to fulfill this requirement:– Employee education– Use of logo on company web site

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Labeling via Advertising

• Reporting on ad activities– shipment numbers used to determine #

of impressions needed

– copies of ads in which the logo was included to fulfill this requirement

– dates/period ads were placed

– total # of impressions achieved

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Real World Example

• Company D sold 4.3 million monitors in 2000, Assume 50% were ENERGY STAR qualified

• At 52 impressions/qualified monitor, Co. D needs to achieve 112 million impressions

Translated into dollars:

• At an average of $14/thousand impressions, Co. D would need to spend $1.5 million on advertising that includes ENERGY STAR

• Co. D’s ad budget was $431 million in 2001

• Co. D would be spending less than 1% of its ad budget on ads that include ENERGY STAR

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Timing

• Partners are free to pursue any of the 4 labeling options beginning at any time

• Official labeling requirement will be deferred until OE partners transition to the new logo

• Transition to the new logo will be coordinated with changes to the EU agreement and is expected to occur in 2005