Eco-labelling is increasingly considered as a market instrument to bring about greater sustainability of human consumption and production patterns. At the same time, however, the application of labelling is controversial. Concerns have been raised on its actual environmental effectiveness and on its impact on growth and poverty alleviation in developing countries. The fear is that eco-labels act as barriers to trade. Government agencies operating in the field of environmental management and poverty alleviation need to take a position in the debate on �eco-labelling; to be or not to be?�. This report aims to help defining this position. A theoretical framework with key indicators of labelling impacts is developed. Subsequently, two existing labelling schemes are evaluated: the Forest Stewardship Council (FSC) and Marine Stewardship Council (MSC) label. The main conclusion is that the desirability of eco-labelling is limited at the moment. When eco-labels grow to be successful, they are likely to become undesirable from a poverty perspective, whereas their ability to solve environmental problems remains uncertain. Therefore, the government is advised to solely support eco-labelling in its role as market participant. As a regulator it should not be heavily involved in eco-labelling; leave these initiatives to the markets.