In 1987, the Environmental Protection Encouragement Agency (EPEA) was founded in Hamburg, Germany by Prof. Dr. Michael Braungart, founder and former leader of the chemical division of Greenpeace. In 1988, EPEA became independent from Greenpeace. The word "encouragement" was used to contrast the term "protection," found in the U.S. Environmental Protection Act. The emphasis on co-operation across every sector, from green organizations to industry and government, was a cornerstone of EPEA's company philosophy; encouragement to improved environmental performance being an important part.

The institute's first contracts reflected this theme. One contract was with Greenpeace to evaluate halogenated hydrocarbons. The other was with the Ciba Geigy Company (now Novartis) to establish a methodology for assessing chemicals. Together, these characterized EPEA's strength: a capacity to work with industry with an independent, critical eye.

Through articles and conferences, EPEA made the case that environmental protection would only succeed if products were designed for their whole life cycle. The methodology for this, the Intelligent Products System (IPS), was developed between 1987 and 1992. It is still evolving through the development of new tools as more companies adopt it.

In the beginning, EPEA focused on waste related issues to demonstrate why IPS was required and how it might be applied. EPEA advised municipalities, companies, and citizen initiatives regarding incinerators, waste dumps, soil restoration, sewage treatment, water, and air pollution. These activities then expanded into consumer product assessment. EPEA analyzed television sets in 1987 and found 4360 different chemicals in a single TV set. This finding led us to ask the question, "Do you as a consumer want to own hazardous waste or watch Larry King Live?" and for asking this simple question about whether consumers wanted to own toxic materials, we were called "eco-communists".

By 1992, EPEA was working in Hamburg, London, New York, Moscow, and Sao Paulo. In 1994, its structure was superseded by EPEA Internationale Umweltforschung GmbH, a new corporate entity with the same ownership. From 1990 to 1994 a subsidiary, EPEA Ltd., operated in New York. Cooperation with William McDonough Architects began in New York and resulted in the creation of McDonough Braungart Design Chemistry (MBDC) in Charlottesville, Virginia, 1995. Michael Braungart also began a professorship at the University of Lüneburg, Germany.