Towards a Better World?
A Proposal to Enhance Market Support for Global Certification Systems
(c) Ben Cashore
Professor
Environmental Governance & Political Science
School of Forestry and Environmental Studies
Yale University
New Haven, CT
Comments welcome.
benjamin.cashore@yale.edu
203 432-3009
June 26, 2007 version
Updated October 2008
The Issue
One of the most important and pressing questions facing our planet in the global era, is to
understand whether, and how, enduring policy innovations might be developed to promote
environmentally and socially responsible business practices. In the last 15 years one of the most
innovative experiments in this regard has been run by an unlikely coalition of environmental
groups, social activist communities, and business interests who have banded together to create
environmentally and social responsible “certification systems”. Eschewing what they assert are
slow or ineffective governmental and intergovernmental efforts, these market-based efforts have
been designed to ameliorate key global problems including forest deterioration, fisheries
depletion, mining destruction, global warming, and to encourage sustainable coffee production
and global tourism. Examples now include a dizzying array of initiatives including Forest
Stewardship Council (FSC), the Marine Stewardship Council, the Marine Aquarium Council,
Social Accountability International, Fair Trade, and Rainforest Alliance’s certification program.
Their goal is simple: promote environmentally and socially responsible business
practices. This is accomplished by collectively developing sustainability standards and then
granting an “eco-label” to those firms who are assessed, by a third party, as being in compliance.
Manufacturers, retailers and consumers are encouraged, cajoled and coerced (often following
boycott campaigns) to demand these products. Given that they regulate entire supply chains,
regardless of in which country firms happen to operate, these “private” certification systems
would, if successful, sidestep many challenges that domestic governments face when regulating
their businesses in the global era: i.e. that any environmental and social protections put their own
domestic firms at a competitive disadvantage vis-à-vis their less regulated foreign competitors.
Can these systems succeed in gaining widespread support? The evidence from the global
forest sector, which, for 15 years has been home to the first full fledged global certification
system, the Forest Stewardship Council, is mixed. On the positive side of the ledger, interest
from businesses, including logging companies and retailers, has steadily increased. Indeed, most
commercial forest sectors in North America and Europe now support third party certification,
though many prefer industry initiated programs that gave more discretion to firms in policy
development and implementation. However in developing countries, forest certification has been
slow to take hold, where challenging problems including weak government capacity and rampant
illegal logging, require a stronger consumer demand that has yet to emerge.
Recognition of this raises an issue endemic to all certification systems: the vast majority
of the general public does not even know that they exist. There are two explanations for this.
First, FSC strategists, including funders, have decided that the most cost effective way to achieve
market support is to support environmental groups to launch “shaming” campaign against a large
retailer, such as Home Depot or Victoria’s Secret, in the hopes of having them agree to commit
to purchase products certified according to their system. This “business to business” strategy,
while critical in gaining initial support, has been criticized as severely limiting the potential and
long term impact of such systems by ignoring, or downplaying, the role of individual consumers.
Second, and related, the proliferation of certification systems, including industry competitors that
have emerged as competitors, has led to confusion in the market place.
In recent years Home Depot, Wal-Mart, Whole Foods, Citi-Bank, Victoria’s Secret and
Canadian forestry giant Domtar have all stepped up their efforts to promote eco-labels and
consumer products. While these efforts ought to be commended, there are also worrying trends.
Many of these initiatives promote their own firm, rather than the certification systems- including
IKEA which purchases FSC products but prefers to market its own brand name, and Domtar,
whose forest lands have undergone FSC certification but which has created an in house brand to
market these products. Likewise, Home Depot’s admirable recent announcement that it will
allow consumers to purchase a range of environmentally friendly products, will award its own
environmental seal of approval on products – many of which may not be subject to third party
verification. While each of these individual decisions looks promising by itself, they combine to
create a problem those promoting the status quo would love: there are now so many options to
choose from that environmentally conscious consumers will be confused, and ultimately, left
incapacitated.
Failure to reach the consumer is highly problematic if the certification experiment is to
have a successful outcome. Let us return to the forestry example and China specifically. In the
last decade China has tripled its imports from some of the most critically important tropical
forested countries in the world, including Indonesia and Malaysia, while its exports of
manufactured forest products to the United States and Europe have gone up 1000% and 800 %
respectively, since this time. If US and European consumers are made aware of, and start
demanding certified products, these systems could indeed provide meaningful impacts to curb
forestry problems in ways that 30 years of intergovernmental efforts have been unable. Yet such
impacts have failed to materialize and as a result, deforestation, forest degradation, and illegal
logging run rampant.
Proposal
How might certification systems reach consumers? The answer, I argue, is two fold. First,
strategists and funders must expand their “Phase I” “business to business” campaigns that
ignored the public and consumer to focus directly on them. Second, and as a result, confusion in
the marketplace must be overcome. This is important. No matter how well intended individual
efforts are, and how critical the proliferation of certification is to addressing a range of global
problems, complexity and confusion means that only a small amount of existing demand is
realized and, as important, precludes the possibility of future consumer transformation and
substantially increased demand. How might the confusion be ended while maintaining and
nurturing current efforts?
The answer, I argue, is to create a single label to house leading social and environmental
certification systems. This label should be known as “Better World”. The rationale behind this
idea is that it is very easy, and probably not that expensive, to build public awareness for a single
label. Consumers can remember one label but they cannot remember 50. This proposal is
relatively simple as it does not purport to change anything about any existing certification
program. The idea is simply to house these efforts under a common label to increase recognition.
Hence, there would be “Better World- FSC”, “Better World -Fair Trade”, “Better World –
MSC”. The small number of individuals who actually take the time to know the specifics of each
system could still ask for a particular label, and there would still be healthy competition within
“Better world” about the benefits of each system. But, by uniting around the desire to create a
single label is that any (small) costs associated in being part of a broader effort would be offset
by much greater market penetration. This is important because, as a market-based initiative, the
greater the market uptake the greater the impact in solving environmental and social problems.
If there is agreement or interest in such a proposal, the question remains: what
certification programs would be included, and which ones would be excluded? This is an
important question. The certification standards, especially before consumer demand occurs,
cannot be so high that firms view these programs as providing more costs than benefits. At the
same time the programs cannot be so weak that they reward “green washing”. And because
supply and demand is not static, “Better World” certification programs must have mechanisms in
place to increase standards consistent with any market benefits that would accrue from increased
consumer demand. Drawing lessons from the existing certification experiments, I offer the
following four features as key to a “Better World”:
Key Features of Better World Systems
1) Governance
Governance structures must be well developed to include a range of stakeholders that include
key permit, adaptive learning and democratic participation. While there is no one dominant
model I discern two key requirements
a. Adaptive, dynamic approaches
Rule making cannot be seen as a one time “static” approach to a complex problems, but just like
traditional governmental systems, they must contain procedures that allows for learning across
coalitions, new information, and adaptation over time.
b. Business interests cannot dominate
The logic behind this feature is that while business interests are important, especially
when it comes to learning about “win win” scenarios and “how things work”, a program
designed to ameliorate problems created by business activity risks creating either a perceived or
real conflict of interest by having businesses who may be causing the problem also designing the
standards to which they must be regulated.
Hence, “Better World” certification program must demonstrate the creation of policy
procedures that directly address this point. In the case of the FSC for example, they created a
“tripartite” “three chamber” format of environmental, social and business interests. This gave
business interests as great a role as environmental and groups, but required greater coalition
building than would have been the case if they had dominated the process. Assessment of
whether this requirement is met should look at both dejure rules and defacto practices.
2) “On the Ground” Behavioral Requirements
All “Better World” programs must contain clear requirements about what a firm must do
“on the ground” to be considered an environmentally or socially responsible steward. This is an
important point. As important as it is to develop internal firm procedures or internal management
systems, Better World programs must actually certify firms for undertaking business practices
that are, in accordance with the Program’s pre-established rules, as environmentally and socially
sensitive. Put another way, Better World must contain clear requirements about how to behave,
and not leave it to individual firms to decide what to do.
3) Third Party Verification
Whether firms are in compliance with clear behavioral requirements must be undertaken
by a third party audit. Programs that permit self-declarations of firms, or auditing by associations
will not be eligible.
4) Stamp of Approval/Tracking
All better world systems must provide a mechanism for tracking the certified product
along the supply chain. This is key as it will become a critical component in permitting
consumers to demand products whose are part of a certification effort.
Who Decides Who is In?: Dispute Resolution
This is an important question that should be decided upon by the initial members of
“Better World”. A clear dispute resolution process should be developed so that those who might
fail to enter at Time 1 could revise and seek entry at Time 2. Of course there is no perfect
solution to this challenge, but this proposal should not be measured according to whether it
eliminates problems, and hence perfect, but whether it is better than the status quo.
Rationale/Details
The above requirements are, by design, meant to be simple in nature. Detailing what is
appropriate for each sector has consumed the attention of a great many individuals and
organizations. The hypothesis behind the “Better World” idea is that it must be kept simple –
leaving the details, debates and compromises to the programs and sectors themselves. The logic
is that by keeping it simple it will make banding together more possible. And by banding
together the prerequisites for greater public and consumer recognition will be met. Such an
approach therefore, if successful, will reward all participating systems, creating increased market
demand and hence lead to greater environmental impacts than possible under the current
“business to business” approach.
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