Can Non-State Governance “Ratchet-up” Global Standards?
Assessing their Indirect Effects and Evolutionary Potential
Graeme Auld1
Laura Bozzi2
Benjamin Cashore3
Kelly Levin4
Stefan Renckens5
Paper prepared for Conference on NEW GOVERNANCE AND THE BUSINESS
ORGANIZATION
UNIVERSITY OF BRITISH COLUMBIA, VANCOUVER, BC, MAY 25TH – H TH
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Can Non-State Governance “Ratchet-up” Global Standards?
Assessing their Indirect Effects and Evolutionary Potential
Graeme Auld, Laura Bozzi, Benjamin Cashore, Kelly Levin and Stefan Renckens
Abstract
In the past decade and a half, interest in non-state market driven (NSMD) governance has grown
so that it is now championed to cover virtually every major global problem including forest
deterioration, fisheries depletion, mining destruction, tourism, industrial factory conditions in
developing countries, e-waste, and climate change. Existing research has revealed a troubling
puzzle: support has either been strongest among firms and within regions where regulations are
relatively high or it has emerged in niche markets that, by definition, cannot generate global
standards to which all production must adhere. What is evolutionary potential of NSMD to move
beyond market separation to “ratchet up” global standards?
Answering this question requires that the next generation of research focus on three potentially
more powerful indirect effects that current support for NSMD systems may trigger: support from
less regulated firms as market uptake occurs; learning and norm generation of NSMD systems
that may influence more authoritative domestic and intergovernmental policy arenas; and the
impacts that standards in one sector may influence regulations in others, such as occurs between
forestry and agriculture. We draw on cases from developing and developed countries to
illustrates and assess our argument.
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1. Introduction
As the introduction to this volume reveals, in the last decade and a half innovative forms
of environmental and social regulation have emerged as alternatives to traditional “command and
control” “top down” approaches common in the 1970s and 1980s. The function, features, and
approaches of these new forms of governance are as diverse as they are wide ranging (Auld,
Bernstein, and Cashore 2008), serving to create interdisciplinary interest among legal scholars,
economics, political science, management, sociology and anthropology. And in so far as they
regulate environmental problems, there has been strong interest on the part of natural science
scholars regarding their problem solving potential. As a result, these new forms of authority cut
across, and are relevant to, students of corporate governance, corporate social responsibility, firm
level behaviors, international environmental governance, and public policy. While it is the case
that each of these particular initiatives are united, for the most part, under Ford’s definition of
“New Governance”, the widely ranging differences that have emerged within, and across sectors,
requires careful attention to the potential of particular interventions over others, since, as Wood
has articulate, some seem more likely to result in “green washing” with limited potential for
significant change; while others are more purposeful, and, if widely supported, are more likely to
result in enduring and effective change.
This chapter focuses on the evolutionary potential of a particular form of authority within
these broad trends: Non-state Market Driven (NSMD) global governance, commonly known as
global certification systems, that are the furthest away from government control of any New
Governance institution, while also creating some of the most purposeful behavioral requirements
of those firms who support it, and whose behavior it steers.
In the last ten years a rich conceptual, theoretical and empirical literature has emerged to
understand better how NSMD global governance emerges in different sectors, and its existing
and potential for businesses to support these initiatives either as an alternative, or complement to,
existing governmental regulatory approaches. Much of the literature has focused on the “direct
effects” of certification systems that come with understanding and explaining support for
particular certification systems, their behavioral requirements/impacts, and, as a result, whether
or not the program addresses the problem for which it was created. The purpose of this chapter,
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drawing on Bernstein and Cashore (2007) and Cashore et al (2007) is to focus on three
understudied “indirect” impacts on: a) non-supporters; 2) government regulations; 3) other
sectors. We argue that such an approach is a key next step to addressing a troubling puzzle that
has emerged from existing research: support has either been strongest among firms and within
regions where regulations are relatively high or it has emerged in niche markets that, by
definition, cannot generate global standards to which all production must adhere. Focusing on
indirect effects, we argue, allows us to assess the evolutionary potential of NSMD to move
beyond market separation to “ratchet up” global standards.
Such an approach also illustrates that it is a conceptual mistake for theoretical and
empirical research to conflate very different forms of authority within the New Governance,
since their potential ability to address critical environmental and social challenges on the one
hand, and related, reasons why firms might support them, vary significantly. Failure to unpack
these differences could result in overly negative or positive generalizations regarding New
Governance, in general, and inadequate attention to specific interventions, in particular.
The remainder of this chapter proceeds in the following analytical steps. Following this
introduction a section identifies the key features of NSMD governance. The third section
identifies our analytical framework for assessing indirect effects. A fourth section applies this
framework to key global certification efforts: fisheries; forestry; climate, and ewaste.
2. Characteristics of NSMD governance6
Beginning in the early 1990s, a number of NGOs, frustrated with their efforts to influence
governmental or intergovernmental processes, began to develop their own sets of socially and
environmentally responsible business practices. They developed systems to reward firms that
accepted these standards, often by creating a social or environmental “label.” The intention was
to provide companies with an economic “carrot” by providing recognition in the marketplace for
their responsible business practices, with a corresponding promise of market access and/or a
price premium.7
Buoyed in part by strong interest in the forest sector,8 NSMD certification programs are
now proliferating to address some of the most critically important problems facing the planet,
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including fisheries depletion, food production, mining, construction, rural and community
poverty, inhumane working conditions, human rights abuses, and sustainable tourism (see
Appendix A). Their potential impact is far from trivial – if completely successful, current efforts
alone would govern 20 percent of products traded globally.9 (Cashore 2002; Cashore, Auld, and
Newsom 2004a) and (Bernstein and Cashore 2007) have discerned five key features that, taken
together, render NSMD systems distinct from other forms of public and private authority. The
most critical feature is that governments do not create or require adherence to the rules. That is,
the sovereign authority that governments possess to develop rules and to which society more or
less adheres does not apply. No one can be incarcerated or fined for failing to comply. A second
feature of NSMD governance is that its institutions constitute governing arenas in which
adaptation, inclusion, and learning occur over time and across a wide range of stakeholders. The
founders of NSMD approaches justify these on the grounds that they are more democratic, open,
and transparent than the domestic public policy networks and intergovernmental efforts seek to
replace. A third key feature is that these systems govern the ‘social domain’ (Ruggie 2004) –
requiring profit-maximizing firms to undertake costly reforms that they otherwise would not
pursue. That is, they pursue prescriptive ‘hard law’, albeit in the private sphere (Meidinger
2006). This distinguishes NSMD systems from other arenas of private authority, such as business
coordination over technological coordination (the original reason for the creation of the
International Organization for Standardization), which can be explained by profit seeking
behavior through which reduction of business costs is the ultimate objective. This also
distinguishes NSMD systems from voluntary environmental management system (EMS)
approaches in which firms are certified for developing internal procedures, but which develop no
prescriptions about “on the ground” behavior (Clapp 2000; Delmas 2003; 2005). EMS systems in
general, and ISO in particular, that give firms complete discretion in deciding what they want to
do to ameliorate environmental or social problem are important phenomenon, but very different
from NSMD institutions that develop prescriptive rules to which firms must adhere. The fourth
key feature is that authority is granted through the market’s supply chain. To increase economic
incentives, environmental organizations may act through boycotts and other direct action
initiatives to convince large retailers to adopt purchasing policies favoring NSMD certification
systems. The fifth key feature is the existence of verification procedures designed to ensure that
the regulated entity actually meets the stated standards. Verification is important because it
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provides the validation necessary for a certification programme to achieve legitimacy, as
certified products are then demanded and consumed along the market’s supply chain. This
distinguishes NSMD systems from many forms of corporate social responsibility initiatives that
require limited or no outside monitoring (Gunningham, Grabosky, and Sinclair 1998). The
market’s supply chain is the institutional arena in which evaluations over support occur; they
contain verification procedures to ensure regulatory compliance.
Table 1: Key Features of NSMD governance
Role of the state
State does not use its sovereign authority to directly require
adherence to rules
Institutionalized
Procedures in place design to created adaptation, inclusion, and
governance mechanism
learning over time across wide range of stakeholders
The social domain
Development of prescriptive rules governing environmental and
social problems to which firms must adhere
Role of the market
Support emanates from producers and consumers along the supply
chain who evaluate the costs and benefits of joining
Enforcement
Compliance must be verified
Source: Adapted from Cashore (2002), Cashore, Auld and Newsom (2004) and Bernstein and
Cashore (2007)
At the heart of the struggle to build NSMD governance are the efforts to address the
negative consequences of neoliberal globalization, which frees mobile multinational firms from
inconvenient national regulation and discourages countries desperate for foreign investment and
trade from setting social or environmental standards (Braithwaite and Drahos 2000). NSMD
systems aim to reverse global neoliberalism’s impact on policy and regulatory development by
targeting multinational companies with market incentives (price premiums, market access,
“social licenses” to operate) or disincentives (boycott campaigns, shaming), which in turn should
put pressure along the market’s supply chain to encourage compliance to a governing system’s
rules and procedures. The logic is not simply rooted in material incentives, however, since the
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ultimate goal of such systems is to establish governing mechanisms with sufficient legitimacy to
be recognized as authoritative in the sector or policy domain in question.
Like activist critics of economic globalization, NSMD supporters view neoliberalism as a
culprit in states’ failure to address serious ecological and social problems. However, instead of
rejecting the market, NSMD systems attempt to harness arenas of private authority to achieve
their aims. These efforts can be likened to what Ruggie (2004b) has called “taking embedded
liberalism global”; that is, finding a way to socially embed globalizing markets. While a variety
of mechanisms are emerging to fill this governance gap, NSMD systems are arguably the most
promising because they create governing authority directly in the global marketplace. Thus, they
must be classified according not only to their use of markets, but also to whether they contain
purposeful social steering efforts.
3. Analytic framework: Direct and Indirect Effects understanding
importance of “indirect effects”
Our analytical framework begins with the premise that to fully understand whether
NSMD global governance is ‘ratcheting up’, or ‘ratcheting down’ regulatory standards, existing
research must expand beyond assessing empirical support for certification systems among firms,
stakeholders, sectors and countries. These direct effects, while important, do not adequately
capture two important indirect effects of NSMD governance: ‘internal indirect” in which NSMD
systems influence strategic calculations of non-supporters at Time 1; and ‘external indirect’ in
which NSMD systems influence government regulations. These indirect effects, we argue, are
more important to assess for understanding whether, and when NSMD systems will ratchet up or
down standards because initial support for NSMD systems either occurs on the part of firms that
were already practicing at relatively high level, and hence had little impact “on the ground”; or
were supported by firms operating in niche markets, which, by definition, are not large enough to
address global environmental and social challenges.
‘Internal indirect’ refers to the signals that direct support gives firms that did not join at
time 1. Is there evidence such firms may eventually join such systems? Or do such firms support
other, less purposeful, forms of corporate social responsibility (see, Auld, Bernstein, and Cashore
2008, and Appendix I). Or, in the case of e-waste below, do non-joiners, anticipating a potential
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NSMD model, create other forms of self regulation in anticipation? Such questions are critically
important to answer, yet very difficult to empirically measure. For the purposes of this chapter,
we simply review cases or instances of non-joiners to reflect on what we know, and what future
research questions might be employed, to better understand the answer to these questions.
‘External indirect’ refers to the impact that support for NSMD systems has on
governmental regulations. Critics assert that NSMD systems reduce pressure for more purposeful
government regulations, leading to a ‘ratcheting down’ of government standards. Others assert
that certification systems can help governments promote policy objectives that keep getting
blocked through the domestic political system. Despite these debates, there is little systematic
empirical evidence for either of these competing hypotheses. Below, we reflect on what the
overall trends seems to be on public policy development following the initiation of NSMD
systems, as well as identifying key areas for future research. We argue that this framework, while
theoretically and empirically challenging to conduct provides a more complete assessment of the
evolutionary and problem-solving potential of NSMD global governance.
4. Case studies
a. Agriculture
Agriculture is one of the furthest reaching sectors of the world economy. Although
certain countries dominate the production and trade of one or more crops – for instance, the US
held a 35% share of world cereal exports in 2004, Brazil dominated sugar (35%) and Ecuador
dominated bananas (33%) – crops are grown around the world (FAO 2007a). For 2008, global
trade is projected to reach $1.035 trillion, 26% up from 2007 (FAO 2008). While only
comprising around 5% of total global trade (approximately $19.5 trillion in 2008), for many
countries, agriculture exports contribute more than a quarter of total annual export earnings
(FAO 2007a; WTO 2004).10
Within the agricultural sector, coffee production has been a vibrant testing ground for
NSMD programs. We focus on coffee to illustrate some broader trends while taking care not to
generalize coffee-specific dynamics.
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i. Existing Support
Preliminary assessments of the various coffee certification programs shed light on the
proposition that support is greatest in regions/countries with high regulations. Although, it is not
always regulations per se that are doing the work; sometimes informal institutions at the
community level shape participation patterns as do the biophysical conditions of the region as
they relate to the requirements of certification standards. And, relative to other sectors, coffee
initiatives have been able to direct attention to producers in the developing countries.
With fair trade, in December 2008, 279 coffee producer organizations spread across 27
countries had been certified, with 229 in Latin America (82%), 33 in Africa (12%), and 17 in
Asia (6%).11 Other than organics, FLO has the widest cross-national spread, and has certified
growers in a number of least developed countries (LDCs), including Ethiopia (40,325 farmers),
Haiti (28,968 farmers), Rwanda (10,916 farmers), Tanzania (3,321 farmers), and Uganda (2,950
farmers), among others (Giovannucci, Lui, and Byers 2008). In spite of diligent efforts to focus
on small cooperatives as opposed to coffee plantations (Renard 2003), questions have still be
raised as to whether FLO helps those growers in the most need of assistance (Taylor 2005; Nigh
1997). That said, while there may be selection occurring at the farm / cooperative level, one can
still see that these programs are helping coffee producers in some of the most impoverished
countries.
With organics and shade-grown coffee, similar farm-level selection concerns have also be
raised. Bary et al (2008), for instance, suggest that Mexico has gained its now-dominant position
in the organic market because of, “pre-existing ‘social capital accumulation’ in the Mexican
countryside (p.238).” (See also, Martínez-Torres 2008.) Mas and Dietsch (2004) also explain
how Mexican growers are in a unique position to be market-leaders in shade grown coffee due to
the more limited conversion to full-sun production than key competitors such as Brazil and
Colombia (see also, Rice and Ward 1996; Dicum and Luttinger 1999). Overall, by 2005, an
estimated 324,000 ha of coffee farms around the world were grown as organic, with nearly half
of this area in Mexico (~150,000 ha) (Baraibar 2006). In terms of exports, Latin America in
general dominates, with Peru ranking number one (in 2006 it exported 26,400 metric tons); even
still, organic coffee is grown in 38 countries, the greatest geographic spread of any of the
certification initiatives to date (Giovannucci, Lui, and Byers 2008). Much like FLO, many
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growers in LDCs are involved; for instance, 18,135 ha of Ugandan organic coffee production had
been certified as of 2004 (Baraibar 2006).
Growers from Latin America are also the mainstay for Utz Kapeh and the Rainforest
Alliance. Of the 383 producer groups certified with Utz Kapeh by 2008, 294 (or 77%) were
based in Latin America, 54 (or 14%) in Africa, and 35 (or 9%) in Asia.12 With the Rainforest
Alliance (RA), 504 out of a total of 520 producers (or 97%) were based in Latin America;
another 11 (or 2%) were Asian and just 5 (1%) were African.13 Although Brazil only has 34
producers RA certified, these are relatively large operations, and as of 2006, they comprised the
largest supplier of the program’s certified coffee (Giovannucci, Lui, and Byers 2008). Utz Kapeh
is one of the only programs to certify larger areas of robusta production (Giovannucci, Lui, and
Byers 2008).
These trends paint a more complicated picture than would be expected if regulations were
the only driver of where certification took hold. In the case of small farmer cooperatives, for
instance, capacities at the community level and links to international information structures
matter in determining whether growers will be able to participate in private certification (Nigh
1997; Bray, Sanchez, and Murphy 2008). Still, the standards can create entry barriers that tend to
exclude the poorest growers; those that face the steepest learning curve, lack financial resources,
and support from a state extension service (Giovannucci and Ponte 2005). Finally, just looking at
the cross-section does not unlock when different regions became involved in different programs.
We turn to these issues in the next section.
ii. Indirect effects: internal
With organics and fair trade, early on, there was less competition among cooperatives.
Indeed, Indígenas de la Sierra Madra de Motozntla (ISMAN), a cooperative in Mexico, when
seeking certification, benefited from the technical assistance of a cooperative and plantation that
had previously undergone organic certification (Nigh 1997). This began to change with
increasing participation in the certified market, not only with more entrants within organic and
fair trade, but also with the development of new programs. According to most analysts,
throughout the developments in the coffee sector, fair trade and organics have served as the lead
programs, creating upward pressure on late-developing programs (Bacon et al. 2008).
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Creation of Utz Kapeh, in part, illustrates an upward pressure on standards created by fair
trade. Utz Kapeh, initiated in 1997, was the product of a collaboration between Ahold and a
Guatemalan coffee producer (Ponte 2004; Linton 2004; Giovannucci and Ponte 2005; Dicum and
Luttinger 1999).14 Two years later, in 1999, Utz Kapeh officially formed, creating an office in
Guatemala and using the EUREP-GAP code as a benchmark for its own coffee-production code
of conduct (Rosenberg 2003).15
One reason for its emergence was fair trade’s choice to remain focused on the challenges
facing small coffee farmers. Producers that felt they met high social standards but were too large
to apply for fair trade had to seek other options. One Guatemalan producer acted on this dilemma
and helped form Utz Kapeh, hoping it would differentiate his “responsible” practices from his
neighbors, which he felt were not meeting existing government regulations. Being excluded from
fair trade led him to seek alternatives, and hence he helped launch Utz Kapeh.16
Although there is great debate over the value of increasing participation of mainstream
players in organics (Guthman 2004; Raynolds 2000) and in fair trade (Bacon et al. 2008; Fridell
2007; Raynolds 2000), the extent to which the industry has embraced sustainable coffee is
notable. From the Common Code for the Coffee Community (4C) that seeks to raise standards
industry wide to the individual initiatives of companies such as Starbucks and other roasters,
pressure to address sustainability in coffee production is palpable (Bitzer, Francken, and
Glasbergen 2008).
iii. Indirect effects: public regulations
It is critically important to remember the broader liberalization trends when evaluating
the indirect effects of certification on government policies and programs. Before the advent of
certification and labeling, the public sector was a larger force in many countries heavy reliant on
agriculture. According to a 1988-89 FAO survey conducted in 113 countries, 81% of agriculture
extension work was government run. NGOs accounted for 7%; private firms only 5%; parastatals
only 3%; and universities and other providers 2% each (Swanson, Farmer, and Bahal 1990, cited
by; Umali-Deininger 1997). Much of this changed over the course of the 1990s as structural
adjustment programs and the Washington consensus pushed for liberalization.
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This had implications across the agricultural sector as a whole, particularly as it eroded
government-led extension services and other support available for farmers. With coffee, indeed,
many government functions were left unaddressed and underfunded. Brazil and Mexico initially
reduced attention to agricultural extension (a move that was later reversed) (Akiyama 2001), and
public sector agencies in general suffered due to more restricted funds given reforms to coffee
levies (Varangis et al. 2003). Although there were strong arguments for the privatization of
certain types of agricultural extension services (Umali-Deininger 1997), the parts reliant on
public support were often neglected.
In this light, the development of certification might be seen as a substitute for
government intervention. Certification initiatives and supporting organizations are offering
finance and technical assistance, while also assessing performance against varying standards of
good practice. The limited reach of existing programs serves as a check on this optimism,
however (Bacon et al. 2008). Yet the initiation of the Common Code for the Coffee Community
(4C) and the signing of the 2007 International Coffee Agreement (ICA) speak to a greater
synergy between public and private action. For the first time, the ICA specifically mentions the
importance of coffee sustainability (Potts 2008). At the same time, the Sustainable Coffee
Partnership (SCP), whose steering committee comprises coffee trade and producer associations,
international organizations, NGOs, and the 4C Association, has been engaged in dialogue with
International Coffee Organization to determine what role it might play in implementing the 2007
ICA (International Coffee Council 2008). The SCP has also been facilitating the development of
the Sustainable Commodity Assistance Network (SCAN), which seeks to provide a framework
for international cooperation around training and support for commodity producers and
cooperatives, recognizing this as a key gap in the existing efforts of governments and
certification initiatives (Sustainable Commodities Initiative and Commodity Support Network
2008).
These processes indicate a much tighter link between certification and the public sector,
domestically and internationally, a link that is receiving broader support within the literature.
Most research focused on coffee that is concerned about the problems certification sought to
address are advocating a broader agenda that considers how various efforts, public and private,
can work in concert to address key challenges facing the sector (Fridell 2007; Giovannucci and
Ponte 2005; Bitzer, Francken, and Glasbergen 2008).
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b. Fisheries
The fisheries sector is the marine analog to agriculture both due to the wide-spread scope
of the sector and its importance to so many countries and peoples around the world. In 2004,
global trade in fish and fish products topped $71.5 billion (FAO 2007b), and in aggregate, they
are the most valuable agro-food export for developing countries (Ponte 2008). Much like
agriculture, certain countries dominate production and trade – for instance, China – yet fishing is
a mainstay of numerous coastal and inland countries, and it represents a vital sector for the
livelihoods of many millions of people (FAO 2007b; Delgado et al. 2003).
With fisheries, the development of certification split between the capture and aquaculture
branches of the sector. The following reviews these different programs with a focus on indirect
effects.
i. Existing Support
Preliminary assessments of the MSC indicate that developing world fisheries have
generally struggled to participate. As of 2007, Ponte (2008) notes how only three fisheries in
developing countries had received MSC certification, with another two under review; all of these
fisheries are based out of upper-middle income countries. Key barriers were the data
requirements and financial costs of an assessment (Ponte 2008).
In an earlier assessment, Kaiser and Edward-Jones (2006) highlighted similar concerns.
They examined the 11 operations certified as of 2005, noting how they all, with few exceptions,
were “highly selective for their target species”, had “stocks that occur within known areas for
which there are exclusive national access rights”, had “limited access”, were “well regulated and
enforced”, and “often [involved] co-management between government, scientists, and fishers”
(Kaiser and Edwards-Jones 2006). They were also either large operations or very small. Based
on these characteristics, the authors concluded pessimistically that MSC had limited potential, if
not modified, as very few of the world’s fisheries are like these early adopters (see also,
Gulbrandsen 2009).
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With aquaculture, the initial push came from Europe. Some organic farmers that also had
carp ponds, sought to have these productions certified against organic standards. Activism
against standard salmon farming practices in Scandinavia and the UK also pushed along the
development of organic standards and certification procedures (Bergleiter 2008). Centers of
production are in Europe, Latin America, Asia and Oceania; no aquaculture operations in North
America have yet been certified (Bergleiter 2008). Reports from 2005 estimate global organic
aquaculture production at 25,000 metric tons: around 14,000 metric tons of which is produced in
Europe; 8,000 in Asia; and the remaining 3,000 tons in the Americas (Hilge 2005).
ii. Indirect effects: internal
Competition within the fisheries sector has created interest in certification in a number of
different ways. First, there are competitive dynamics between the marine-capture and
aquaculture programs. As European-based organic certifiers, such as Soil Association and
Naturland, began certifying salmon farms as organic, marine-capture salmon fisheries began to
worry their market share might erode (Auld 2009). Indeed, at the time, organic farmed salmon
was being sold in UK supermarkets (Harris 1999; Kennedy 1999). For this reason, Alaskan
salmon fishers lobbied to have marine-capture operations covered by the United States
Department of Agriculture’s (USDA) organic program. In 1999, two pilot projects occurred in
Alaska to judge whether this was appropriate (Joling 1999). In the end, the decision was against
the Alaskan producers. Without the ability to ensure that no prohibited substances were ingested
during a salmon’s ocean life, the US National Organic Standards Board concluded that wildcaught salmon should not be considered organic (Wessells et al. 2001).
With this green seal closed off, the Alaskan salmon fishery sought another option. They
became one of the first large-scale operations to seek endorsement from the MSC, and in
September 2000, they became the first North American fishery to receive a certificate (Marine
Stewardship Council 2000). Being unable to access the organic program, the MSC served as a
logical second-best.
Working in the other direction, the aquaculture industry also responded to general
increasing interest in certification. In this case, it was not reacting to the MSC or organic
aquaculture audits so much as general pressure from a network of NGOs working against
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industrial shrimp farming (Auld 2009). In March 2007, the Global Aquaculture Alliance formed
at a meeting of the World Aquaculture Society (an international association representing
aquaculture industry and scientists)17 that was held in Seattle, Washington. A newspaper article
covering the event explained how the shrimp industry players saw the development as a way “to
do what environmental groups are doing, but in our own name (Christensen 1997).”18
Second, there were competitive dynamics within marine capture and aquaculture
separately. For instance, Alaska’s move to MSC certify had sector-specific repercussions. It led
the BC industry to begin assessing MSC certification (Egan 2001), although it would take
several more years before they embarked on a formal assessment (Marine stewardship Council
2008). Even still, the competitive pressure from Alaska was clear. In a question and answer
section of the BC Salmon Marketing Council’s web site, the organization offered this response to
the question: why does the MSC matter to BC?
In September, 2000, the State of Alaska was successful in getting its entire salmon
fishery certified under the MSC principles and criteria, giving it a tremendous
competitive edge in some important markets. Major buyers of Canadian salmon are
telling us that we must get certified or they will stop buying from us. At least C$20
million of canned salmon exports to Australia and New Zealand are directly at risk in
2001; even more in the UK. Loss of these markets would immediately impact the landed
price for salmon in 2001, as well as the market price of fresh and frozen salmon (BC
Salmon Marketing Council no date).
Similar competitive dynamics have also been at play in motivating other fisheries to seek
MSC certification. Given demand from European buyers, particularly Unilever, the South
African hake fishery (MSC certified in April 2004) was motivated to participate, in part, by
competition from the New Zealand hoki fishery that had certified in 2001 (Marine Stewardship
Council 2001) and by a desire to stay ahead of competitors in Namibia and Argentina (Ponte
2008).
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iii. Indirect effects: public policy
A number of authors suggest that the tight synergy between public and private action is
especially strong and important in the fisheries sector. Kaiser and Edwards-Jones (2006) write:
“… it is apparent that property rights over the fishery seem to be an essential prerequisite for
engagement in MSC, and this is one major impediment to wider uptake of the scheme in current
marine fisheries, which tend to be open access.” Without government to establish and protect
property rights, in other words, certification programs cannot function. Governments also serve a
critical function in providing the baseline data off which fisheries management practices can be
assesses.
Unlike coffee, where certification never developed as a direct counter point to intergovernmental efforts, or with forestry, where certification was a reaction to stalled intergovernmental processes, fisheries certification was seen, early on, as a complement to and means
for implementing intergovernmental agreements (Auld 2009). Fisheries certification has also had
to fit within guidelines developed by the FAO in order to remain a legitimate player in the
fisheries sector (Auld 2007; Gulbrandsen 2009). On the other hand, what is less clear, at the
moment, is the ways in which certification initiatives have shaped public policy. There are
examples of operations attempting to use certification to fend off or shape regulations (Ponte
2008; Auld 2009); however, the broader patterns of how certification is interacting with public
policy require further examination.
c. Forestry
A host of scientific evidence and research has revealed significant and widespread
deterioration of the world’s forests. Scientific data collected on biodiversity, species decline,
deforestation, and global climate change reveal a troubling picture: forest dependent species
continue to be lost - part of what some refer to as the sixth major mass extinction in the earth’s
history (Leakey and Lewin 1995; Pimm and Brooks 2000). Nearly 100 million hectares of
tropical forest were lost in Africa and Latin America between 1990-2000 (UNEP 2002).
Conservation biologists studying protected areas have found that the exiting effort to preserve
12% of the world’s forests from industrial extraction will not be able to address declining
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biodiversity and that not only preservation, but rehabilitation of degraded lands is required
(Sinclair et al. 1995).
An array of governmental, intergovernmental, and non-governmental efforts to address
global environmental deterioration had been attempted in the years leading up to the emergence
of forest certification. These included the creation of the International Tropical Timber
Organization (ITTO) to improve forest management practices in the tropics (Gale 1998); efforts
to sign a global forest convention at the 1992 Rio Summit (UNCED) (Humphreys 1996;
Bernstein and Cashore 2004); and tropical timber boycott campaigns.
Failure of the ITTO to make a dent in deforestation efforts, the inability of the world’s
governments to agree on a binding global forest convention, and the perverse incentives that
tropical timber boycotts gave forest owners to convert “unproductive” forest land to other uses
(Cashore, Auld and Newsom, 2004; FAO 1993), created considerable frustration on the part of
environmental groups who had devoted most of the 1980s to these efforts.
A variety of meetings about the problem gradually focused on the idea of eco-labeling
(Cashore et al. 2006), and eventually forest certification. Efforts included, the Rainforest
Alliance’s SmartWood Program formed in 1989 to certify timber from well-managed forests,
Friends of the Earth-UK’s “Good Wood” scheme formed in 1987 (Bartley 2003), and Hubert
Kwisthout’s “Ecological Trading Company” that incorporated to source sustainable timber
directly (Viana et al. 1996, 144).
The combination of these efforts resulted in a wide coalition spearheaded by the World
Wide Fund for Nature (WWF) and allies that decided to avoid what they deemed futile efforts to
achieve a meaningful and binding global forest convention and instead develop and promote a
market-based approach. In 1990, the WWF together with a variety of NGOs, European retailers
and US foundations, held a meeting in California to explore the possibility of developing an
independent global certification organization. Three years later, they held a founding meeting in
Toronto for a global “forest certification” system, known as the Forest Stewardship Council.
Their approach contained a relatively simple idea: develop a set of environmental and socially
responsible rules governing sustainable forest management, and recognize companies who
adhere to such practices by providing them a market advantage – which would come in the form
of a “boycott shield”, an important but difficult to measure reputation as being responsible
17
stewards and, it was hoped, a label that could be used to market eco-friendly forest products to
concerned customers. It was a relatively simple solution that would have complex and enormous
impacts.
To accomplish its objectives, the FSC created nine “principles” (later expanded to 10)
and more detailed “criteria” that are performance-based, broad in scope and that address tenure
and resource use rights, community relations, workers’ rights, environmental impact,
management plans, monitoring and conservation of old growth forests, and plantation
management (See Moffat 1998: 44; Forest Stewardship Council 1999). The FSC program also
mandated the creation of national or regional working groups to develop specific standards for
their regions based on the broad principles and criteria.19
Perhaps more important than the rules themselves is the FSC “tripartite” conception of
governance in which a three chamber format of environmental, social, and economic actors --every chamber with equal voting rights--- has emerged.20 Every chamber is internally divided
equally between North and South representation (Domask 2003). Two ideas were behind this
institutional design. The first was to eliminate business dominance in policy-making processes in
the belief that this would encourage the development of relatively stringent standards, and
facilitate on-the-ground implementation. The second was to ensure that the North could not
dominate at the expense of the South – a strong criticism of the failed efforts at the Rio Earth
Summit to achieving a binding global forest convention (Lipschutz and Fogel 2002; Domask
2003; Meidinger 1997; Meidinger 2000).21
i. Existing Support
When forest certification first emerged, the vast majority of industrial forest companies
around the world fended off such pressures, asserting, as they had during initial efforts to
increase domestic and international policy processes, that there was no need for such an effort
and that, if anything, forestry problems occurred elsewhere. Forestry-focused governmental
agencies in Europe and North America reflected and supported this approach and with their
industrial forest companies pointed to tropical forest degradation as the real culprit, while they
18
already practiced responsible forestry. However, after select forest companies and forest owners
began to express interest in the FSC, and as retailer giants such as Britain’s B&Q (later to be
followed by Home Depot) came to support the FSC, a growing number of industrial forest
companies, including those in Canada, began to express interest in the idea of forest certification.
Poland was quick to have most of its forest lands FSC certified, followed by Sweden, with all of
its industrial companies supporting the FSC, an option however that Swedish private forest
owners --- who constituted 50% of the commercial land base --- rejected (Cashore, Auld and
Newsom, 2004).
As support for the FSC began to grow, the idea of forest certification became embraced
by most of the industrial forest sector in the Europe and North America, though mostly by the
establishment of FSC competitors, who gave forest owners and or industrial companies the
dominant role in the certification policy process (Sasser 2002; Vlosky 2000; Rametsteiner 1999)
In the US, the American Forest and Paper Association created the Sustainable Forestry Initiative
(SFI) certification program. In Canada, the Canadian Standards Association (CSA) program was
initiated by the Canadian Sustainable Forestry Certification Coalition, a group of 23 industry
associations from across Canada (Lapointe 1998). And in Europe, following the Swedish and
Finnish experiences with FSC-style forest certification, an “umbrella” Pan European Forest
Certification (PEFC) system (renamed the Program for the Endorsement of Forest Certification
in 2003) was created in 1999 by European landowner associations that felt especially excluded
from the FSC processes.
At this juncture there is strong support for the idea of forest certification in the developed
north, but strong disagreement about which program is most appropriate. The top regions
globally in terms of area certified under all schemes—North America and Western Europe—
encompass most of the developed North including the United States, Canada, Sweden, the UK
and Germany. Of the almost 60 million hectares of FSC certified forests in 2005, over 31 million
(85%) were in developed countries or eastern European emerging.
19
ii. Indirect effects: internal
Support is thus far limited support in the global south (Cashore, Gale, Meidinger and
Newsom 2006). The FSC has only 15% of its certified forests in developing countries while
PEFC support stands at just over 7 million hectares or 3.6% of its certified base. There is irony
here. Forest certification was supported by some to promote good forest management in tropical
developing countries, but has been adopted by developed-country operators seeking a market
advantage from their comparatively lower cost of compliance (See Table 1)
Hence, despite forest deterioration being a major reason for advancing the cause of forest
certification, it has thus far received the least support in developing countries where some of the
most enduring challenges exist. As Cashore, Gale, Meidinger and Newsom summarized in the
introduction to their edited volume that explored the emergence of certification in developing
and countries in transition:
Put simply, the economic, political, and social context in these regions renders the task of
sustainable forest management much more challenging. While some success stories exist,
certification’s progress in these regions has been slow and uneven, reflecting, in various
cases, a lack of resources, poor infrastructure, corrupt institutions, and environmentally
insensitive domestic and foreign markets.
As Table 1 reveals, these differences have resulted in certification programs making
much few inroads in developing countries. As they point out:
In Gabon, Uganda, and Zambia, forest certification has a tentative status. South Africa is
the big exception in this region, with strong support for certification from large, privately
owned plantation companies producing for EU and U.S. markets.…While more research
needs to be done to assess whether a direct relationship exists between the shifting
markets of export dependent countries in Africa and Eastern Europe, the case studies
illustrate the need to assess the impacts of certification in a global and comparative
context.
They also note that
20
Certification has received some support in Latin America and Asia. It is more strongly
institutionalized in Latin America, with the exception of Brazil (FSC certification has had
difficulty becoming institutionalized there, and industry resistance has led to the
development of a competitor scheme, Certificação Florestal (literally, “Forest
Certification”; CERFLOR), although this may indicate that the institutional practice of
certification is taking root.) In the Asia-Pacific region, a tremendous amount of energy
has been devoted to certification, but resulting in limited support
iii. Indirect effects: public policy
What has the impact of forest certification been on governmental policies? Those who
assert that it relieves pressure on governments argue that it has taken away pressure to address
more purposeful intergovernmental standards, and likewise has been used by governments in the
North to fend off pressure to increase government regulations. On the other side of the ledger we
note that certification has placed international pressure on governments in South east Asia to
justify or modify their forest management regimes. More careful research would need to be
undertaken to fully assess these hypotheses, but we do note, in the last six years, developing
countries, especially in Southeast Asia have supported two related efforts: promotion of domestic
“Forest Law Enforcement and Governance” efforts in which attention is focused on developing
adequate capacity to implement and enforce domestic management regimes; and strong efforts to
reduce trade of “illegally harvested” forest products. Both these efforts have been supported by
countries in Europe and North America. The FLEG processes, while part of broader global forest
governance efforts, have been most certainly impacted by certification debates, and have been
used by governments in these countries in response to external pressures for assurances of some
level of forest stewardship. The illegal logging efforts are even more tied to the ideas behind
certification because they require some type of labeling, and tracking system of legally harvested
forest products. While many argue this is an example of ratcheting down – since legality is not
sustainability – others argue that a focus on tracking legally harvested products provides the
building blocks for increased standards over time (Cashore et al. 2007).
21
d. Climate
In response to a frustration with government-led climate change mitigation, a different
carbon market – one in which participation is voluntary – has been growing alongside the
government-run regulatory systems. In these markets, businesses wanting to be ‘green’ for
branding or reputational reasons, or individuals wanting to offset their carbon footprints, can
enter the market and purchase offset credits from projects all over the world. These projects are
thus compensated for having taken steps, like planting trees or installing solar power, to reduce
their emissions.
The voluntary carbon market has changed rapidly in the last few years as it has grown
and matured. Initially, onlookers coined the market for voluntary carbon offsets as the “Wild
West”, since project developers sold their offsets with little validation of quality; consumers had
minimal information from which to conclude that the intangible commodity, carbon avoidance or
sequestration, had actually occurred (CACP 2006). Some projects disastrously did not fulfill
their offset commitments, and their consumers discovered that unverified credits were a liability.
In an attempt to regain credibility for the market, NGOs, the private sector, and governments
have developed over a dozen quality standards programs (Kollmuss et al. 2008). Like other
NSMDs, they signal to consumers that a project and its carbon credits have fulfilled certain
criteria. The standards vary in the stringency of their rules, with variation in factors including:
verification requirements, inclusion of co-benefits like biodiversity protection or sustainable
development, and the kinds of offset activities that are eligible. Standards like the Gold Standard
are intended push for higher quality in the offset projects, while at the other end are standards
that are more basic so as to allow for lower costs and higher participation (Kollmuss et al. 2008).
The NSMD under review here, therefore, is the set of standards programs to which
project developers accredit their projects and so earn a label on their carbon offsets to be sold in
the voluntary market. To a greater extent than other cases in this paper, the good itself under
production – carbon – is very closely linked to the NSMD for its creation and intelligibility.
While forest certification, for example, certifies that a company’s forestry practices are
sustainable, the carbon standards certify that a production process or management practice in one
sector (e.g. livestock rearing or landfill management) has been changed in a way that reduces
22
greenhouse gas emissions or sequesters carbon dioxide in addition to what was happening under
the status quo.
i. Existing Support
Verification by a standards organization, and thus participation in the NSMD, is
increasingly expected within the voluntary marketplace. As such, while Hamilton et al. (2008)
conjecture that as much as 50 percent of transacted credits in 2007 were accredited, the
proportion is likely to be higher today. The many standards overlap in their characteristics and
compete against one another for market share. One way in which they differ is in the kinds of
projects they will accredit; for example, Gold Standard only accredits renewable energy and enduse efficient projects while the Climate, Community and Biodiversity Standards evaluate only
land-based carbon mitigation projects. A second key distinction is between ‘charismatic’ and
‘commodity’ standards (Hamilton 2009). While the first require projects to meet strict criteria
that assure co-benefits like biodiversity protection, sustainable development, or poverty
alleviation, the second is concerned primarily with producing the carbon good only.
Information about the offset projects, unfortunately, is not yet disaggregated in terms of
participation in the NSMD or not. Overall, the voluntary market is small: it contributes only an
additional 2 percent in traded emissions credits on top of the compliance markets, making its
direct impact on greenhouse gas emissions reductions nearly negligible (Hamilton et al. 2008).
Still, it is growing rapidly: from 2006 to 2007, the value of transactions in the ‘over the counter’
voluntary market quintupled, and its volume tripled (Hamilton et al. 2008). These credits come
from projects across the globe, though located primarily in Asia (39%) and North America
(27%). The remaining projects are found in Russia/Europe (13%), Latin America (7%),
Australia/New Zealand (7%), and Africa (2%) (Hamilton et al. 2008). For profit companies
dominate the supply of voluntary credits, with 90 percent of all transactions supplied by for
profits in 2007. A question for further research is to determine whether for-profit project
developers differ from non-profit developers in whether they choose verification by a standard,
and if so which standard and associated stringency.
23
ii. Indirect effects: internal
The emergence of standards organizations is a direct response to the lack of confidence in
the voluntary offsets. Those that did produce quality offsets were penalized by the negative
press that bad projects generated for the market as a whole. The standards in essence ameliorate
the market failure of the reputation externality. Without adherence by all projects to higher
standards, the reputation externality remains. Thus in this case, the internal indirect effect is not
a consequence of participating firms wanting to level the playing field, but instead because of
concern for the integrity of the market. All that may be necessary to renew the market’s
credibility may be adherence to the commodity standards, and not the more stringent charismatic
standards. The evolution of this NSMD is likely to be shaped by such concerns about reputation.
In addition to producer interest, the standards are also a result of demand by consumers.
Consumers increasingly demand for the offsets to adhere to a standard and so signal their quality
in a transparent manner. It is not yet clear, however, the level of stringency or provision of cobenefits that will satisfy this public demand, and so how the standards will condense over time.
iii. Indirect effects: public policy
Two ways in which carbon offset standards interact with regulatory structures are
discussed here. First, carbon market actors look to influence the structure of emerging,
regulatory carbon markets through voluntary standards; the voluntary market is operating as a
testing ground in which the multiple standards and approaches are competing to position
themselves as the precompliance standard. Second, one of the standards – the Gold Standard –
offers an example of a hybrid form of private authority in which NSMD governance acts in a
symbiotic relationship with governmental institutions (Levin, Cashore, and Koppell submitted).
Particularly in the United States where no federal climate change regulatory market yet
exists, the voluntary market plays a critical role in testing alternative designs and in coalescing
participants around the various options (VCS brochure). Standards, registries, and protocols are
developed explicitly in effort to become the pre-compliance standards. This is especially the
case for the ‘commodity standards.’ For example, the Climate Action Reserve’s forestry
24
protocols, which specify the procedure through which to quantify the sequestered carbon from a
forestry project, are viewed by some as frontrunners to be the model forest offsets in California
and/or federal climate legislation (Rose 2008). Interestingly, the Climate Action Reserve holds
appeal in Congress at least in part because it has been government-sanctioned (by the state of
California), adding to its credibility (Hamilton 2009). Those preferred at the federal level are
made quite apparent: specific standards and registries are listed by name within some US federal
climate bills now under debate.
Second, Levin et al. (submitted) identify an overlooked, symbiotic, relationship between
public and private authority in which NSMD certification is used to address unforeseen or
undesired externalities of an existing government or intergovernmental agreement. Such an
approach avoids the situation in which hard won intergovernmental or domestic public policy
agreements have to be revisited. They find this to be the case for the Gold Standard: rather than
re-opening the negotiation process, the developers of the Gold Standard used certification as a
means to target environmental and social aspects of carbon reduction targets that had not been
included in the Kyoto Protocol. While the Clean Development Mechanism (CDM) under the
Kyoto Protocol is intended to provide sustainable development benefits to host regions of the
carbon offset projects, critics claim that this has not been the case. The Gold Standard therefore
specifically requires that the CDM projects meet higher social and environmental standards to
achieve their label.
The logic of the symbiotic relationship is different than under most other certification
schemes under review. Many NSMD systems have been developed to fill a void in public
policy. Their creators are attempting to bypass public authority altogether and gain legitimacy to
serve only as non-state authority (Bernstein and Cashore 2007). Yet, the Gold Standard was
developed as a mechanism to promote certain effective impacts of an existing government policy
– rather than to fill a void. At no point does the Gold Standard undermine the legitimacy and
authority of the CDM Executive Board. In fact, the projects must satisfy criteria put forward by
both the public authority, which in this case is the CDM Executive Board, and private authority
established by the Gold Standard. Whereas the traditional NSMD certification programs are not
constrained by public policy, the Gold Standard requires project developers to meet CDM
criteria in advance of certification.
25
e. E-waste
Electronic waste, or e-waste, such as post-consumer computers, mobile phones, and other
electrical and electronic devices, is widely believed to be the fastest growing component of our
waste stream. One of the problems with this waste is that only a tiny fraction is recovered for
recycling. The U.S. Environmental Protection Agency (EPA), for example, estimated that in
2005 2.63 million tons of e-waste was added to the municipal waste stream in the U.S., and
another 3.01 million tons in 2007. The troubling thing is that in 2005 only 13.7% (360,310 tons)
and in 2007 13.6% (409,360 tons) of this e-waste was recovered for recycling (U.S.
Environmental Protection Agency 2008: 71-72). Even then, NGOs have issued critical report
claiming that the fast majority of products are not recycled domestically but are sent to countries
of the global South, such as China, India, Nigeria or Ghana (Basel Action Network 2005a; Basel
Action Network and Silicon Valley Toxics Coalition 2002; Greenpeace 2008; Toxics Link
2003).
The Basel Action Network (BAN), with the support of several NGOs under the umbrella
of the Electronics TakeBack Coalition (ETBC) and in cooperation with a number of electronics
recyclers and asset management companies, is in the process of establishing the e-Stewards
certification program. The program intends to certify companies that deal with e-waste in an
environmentally friendly and socially just way. The program is based on a currently used list of
principles called the Electronic Recyclers’ Pledge of True Stewardship. The Pledge, established
in 2003, contains a set of 8 criteria for environmentally and socially responsible recycling,
including the prohibition to export e-waste, to use prison labor, to landfill, or to incinerate ewaste (Basel Action Network 2005b). Before adding a company to the list of Pledge signatories
BAN performs a ‘desk audit’, which includes examining the company’s internal environmental
management processes and a verification of the chain of custody of toxic materials up until the
final destination (Basel Action Network 2008b). The new standards that are being developed will
be an elaborated version of the Pledge and will be based on the Basel Convention’s definitions of
hazardous wastes (Westervelt). In the course of 2009 BAN will team up with certification
bodies, so that by the second half of 2009 a field testing can take place with companies that were
26
the early signers of the Pledge. The intention is to have the accredited and third party audited
certification program fully in place by very early 2010 (Basel Action Network 2008a).
i. Existing Support
The e-Stewards certification program, potentially the first true NSMD system in the
electronics recycling sector, emerges in a country that is notorious for lagging behind with
regards to e-waste legislation and regulations. Although several countries have established laws
to deal with e-waste recycling (Wright 2007; 2006), of which the European Union is the prime
example that other countries attempt to emulate, the situation in the United States is a
combination of legislation and voluntary action. A federal law on e-waste recycling does not yet
exist and all activities at the federal level have been based on voluntary initiatives (Renckens
2008). Several of the states have stepped in to fill this federal legislative void and promulgated ewaste laws themselves. However, this has created a patchwork of legislation with different
obligations for industry in different states. This situation makes that even industry is demanding
a unified national regulatory framework (St. Denis 2008). Furthermore, the U.S. is one of only
three countries that have signed but not ratified the Basel Convention on the Control of
Transboundary Movements of Hazardous Wastes and Their Disposal, which regulates exports of
hazardous waste.22 Individual U.S. States cannot fill this gap as they do not have the competency
to regulate exports. The little regulation that exists at the federal level (e.g. the EPA’s CRT Rule)
has been criticized for being insufficient and not properly implemented (United States
Government Accountability Office 2008). New e-waste bills have been introduced in the U.S.
Congress in the course of the last few years, focusing on a national recycling system, but they
have been unsuccessful so far.
ii. Indirect effects: internal
The e-Stewards Pledge is currently supported by 32 North-American recycling and asset
management companies in 92 different locations and one company from the West Indies. Sarah
Westervelt, BAN’s e-Steward coordinator, explains that most companies approach BAN to sign
27
up to the Pledge or the new certification program as a response to customer demand. These
customers are not individual purchasers of electronic devices (i.e. citizen-consumers), but rather
governmental agencies or companies that want to get rid of their old electronic devices, and
original equipment manufacturers who are increasingly obliged by State regulations to take back
their old products when individual consumers want to dispose of them (Westervelt 2009).
To what extent companies’ interest in the Pledge or the certification program is also influenced
by competitors signing up for the programs should be further examined.
The certification program as it is envisioned now – and indeed the current Pledge as well
– is limited to North America. The standards that are being developed, however, are intended to
serve as global standards in the future as well (Westervelt). Such a broader global program might
indeed be necessary. Although the EU member states have all ratified the Basel Convention and
the EU has its own regulations on the shipment of waste to non-OECD countries as well, this has
not prevented the illegal exports of e-waste from European ports. In February 2009, for example,
the story broke that the port of Antwerp, Belgium, has been used as a major hub for exporting
used electronics to the global South, mainly African countries such as Ghana or Nigeria
(Lesaffer 2009). Similar stories have been issued about other important European ports as well,
such as Hamburg (Deutsche Umwelthilfe 2007) and Rotterdam (Greenpeace 2008).
iii. Indirect effects: public policy
One of the reasons for the establishment of a new certification program in the electronics
recycling industry is a disappointment with public policy at multiple levels, in which the Basel
Action Network as well as other NGOs have actively participated. This failure has created a
policy gap that the e-Stewards certification program tries to fill.
Although there have been several voluntary initiatives in the U.S. in the past that have
attempted to address the e-waste issue, NGOs have remained dissatisfied with the results. The
first attempt was called the National Electronics Product Stewardship Initiative (NEPSI). This
public-private partnership gathered between 2001 and 2004 with the involvement of 45
28
representatives from government (federal and state environmental agencies), industry (producers
and recyclers, and in the final stages also retailers), and other stakeholders (research institutes
and NGOs). The dialogue was intended to establish a national voluntary program “to maximize
the collection, reuse, and recycling of used electronics, while considering appropriate incentives
to design products that facilitate source reduction, reuse and recycling; reduce toxicity; and
increase recycled content” (National Electronics Product Stewardship Initiative s.d.). The
dialogue failed, however, due to disagreement on the financing system (National Electronics
Product Stewardship Initiative 2004). The EPA’s interim replacement program, the Plug-In to
eCycling program, does not sufficiently tackle several of the most contentious issues either.
Plug-In To eCycling, which was launched in 2003, is an EPA-led public-private partnership,
including local and state governments, consumer electronics manufacturers, retailers and service
providers, aimed at increasing electronic product take-back and recycling. However, the program
is not open to electronics recyclers as the EPA cannot verify whether these actors actually
implement environmentally sound management principles.
Furthermore, the new e-Stewards certification program also directly positions itself in
contrast with other existing standards. The Institute of Scrap Recycling Industries’ (ISRI)
‘Recycling Industry Operating Standard’ (RIOS) is a scrap recycling industry-specific integrated
management system standard that integrates into a single unified standard the relevant aspects of
ISO 9001, ISO 14001 and OHSAS 18001 (Institute of Scrap Recycling Industries 2009). The
EPA has also established standards, called the ‘Responsible Recycling’ (R2) best management
practices, which were negotiated in the context of a multi-stakeholder dialogue with
manufacturers, recyclers, NGOs, trade associations, refurbishers and State representatives. It is
not the intention that the EPA will administer certification on the basis of the R2 standards itself,
but that existing programs, such as RIOS, will include the R2 practices in their certification
process. The R2 practices, however, do not satisfy NGO demands. For a while, BAN was a
partner in the R2 negotiations. While participating, BAN had even put its activities to transform
its Pledge into a third party audited certification system on hold in order to fully support the
public process. However, BAN pulled out of the multi-stakeholder initiative due to continuing
disagreement with industry representatives and the EPA on the use of exports to developing
countries, the use of prison labor, and the possibilities for landfilling and incinerating e-waste
29
(Basel Action Network and Electronics TakeBack Coalition 2008). These issues are also the
main items that distinguish the e-Stewards initiative from the industry initiative.
As mentioned above, a federal e-waste law does not exist yet in the U.S. NGOs are
continually lobbying for such legislation and have participated in congressional hearings as well
(see Smith 2008). However, until now a strict restriction on exports of e-waste has not been
included in the legislative proposals. The currently proposed bill is opposed by BAN as it would
allow exports under a reuse/repair exemption (Basel Action Network 2009). Even in case a
federal law would be promulgated in the near future, BAN is of the opinion that its certification
program would be necessary to overcome gaps in the legislation and also as an important tool of
enforcement to ensure compliance (Basel Action Network 2008c).
Beyond the national U.S. level, voluntary initiatives at the international level remain
contentious as well, especially concerning the issue of exports. In 2002, the Mobile Phone
Partnership Initiative was established as the first public-private partnership under the umbrella of
the Basel Convention. The partnership, bringing together industry, parties to the convention and
NGO/research institutes, discussed between 2003 and 2008 best management practices on five
issues: refurbishment, collection, transboundary movements, recycling and material recovery,
and design issues. At COP 9, in June 2008, the guidelines on all but the transboundary
movements were adopted as voluntary guidelines under the Basel Convention (United Nations
Environment Programme 2008). No agreement was reached on the procedure to use in case of
exports of mobile phones. NGOs – i.c. the Basel Action Network – strongly disagreed with
industry and the U.S. on the interpretation of the Basel Convention regarding exports of
electronic devices labeled for repair purposes. Such repair might include the replacement of a
hazardous component which is then discarded in the importing country, and as such could be
interpreted to be hazardous waste when exported (Wuttke 2006). Industry representatives, on the
other hand, believed this was too strict an interpretation of the Basel Convention and opposed the
inclusion of such a clause.
In sum, the creation of the new e-Stewards certification program is a response to a failure
on the side of BAN to integrate certain policies, such as a ban on exports of e-waste to nonOECD countries, in public policy initiatives. However, the program is still very small and
30
support so far is restricted to only 33 companies. Whether the specific policies that distinguish
the new certification program from existing industry and EPA standards will be adopted widely
in the future, is still uncertain. Given their contentious nature and the fact that the e-waste
recycling industry is a booming sector with large profit opportunities (Taylor 2003), especially
because of the export option, it is well possible that the e-Stewards initiative will remain a niche
phenomenon. On the other hand, exactly because of its contentious nature and the strong
emotional strings that can be struck when pictures and footage of environmentally unfriendly
recycling in countries of the global South become more widespread, it is equally possible that a
norm of no export or no incineration develops in the near future.
5. Conclusion/Analysis / discussion
One of the most challenging questions for students of New Governance in general and the
role of corporations in particular, is to understand the future impact, or evolutionary potential, if
a particular intervention at Time 1. How might support occur over time? To what future might it
be headed? Bernstein and Cashore (2007) have argued that NSMD systems must be analyzed
according to whether they are in an initiation/niche phase, a “widespread support” phase in
which countervailing pressures to lower standards in order to gain broader support, is
countervailed by community generating shared norms surrounding shared responsibility of
environmental stewardship, and a final “political legitimacy” phase in which debates about
stewardship occur within, not about, NSMD systems. Alternatively Auld, Balboa, Bernstein and
Cashore (2009) and Levin, Cashore and Koppell (Forthcoming 2009) have articulated that full
fledged political legitimacy is only one potential future. Other possibilities including government
“taking over” from NSMD systems, “green washing” in which NSMD systems give appearance
of doing well but actually have little impact, and “symbiotic” relationships in which NSMD
systems address externalities of an existing government or intergovernmental agreement without
requiring hard won agreements to be opened (such as the development of the CDM gold standard
certification to improve CDM carbon offset projects) supporting they three phases.
The purpose of this paper was to review a range of potential “indirect” effects that an
initiation phase might have in ratcheting up, or ratcheting down, private or public regulations
31
governing a sector. Our review of a range of important, but also distinct sectors, finds support for
a much stronger empirical efforts into understanding the current impact of these indirect, and
justification for a theoretical orientation regarding the evolutionary track that NSMD systems
might have in shaping, or influencing future problem focused regulatory efforts.23
What is certain is that without such attention, scholars and practitioners will be ill
equipped to understand the overall impact of NSMD global governance, nor the strategic choices
that will help shape their future.
6. References
Akiyama, T. 2001. Coffee market liberalization since 1990. In Commodity market reforms:
lessons of two decades, edited by T. Akiyama, J. Baffes, D. Larson and P. Varangis.
Washington, D.C.: The World Bank.
Auld, G. 2007. The origins and growth of social and environmental certification programs in the
fisheries sector. Paper read at 11th Annual Conference of the International Society for
New Institutional Economics, June 21-23, at Reykjavik, Iceland.
———. 2009. Reversal of Fortune: How Early Choices Can Alter the Logic of Market-based
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1
Lecturer, Department of Political Science, Yale University, Assistant Professor (As of July 1), Carleton University
School of Public Policy and Administration
2
Doctoral student, School of Forestry and Environmental Studies, Yale University
3
Corresponding author and Professor, School of Forestry and Environmental Studies, Yale University
4
Doctoral candidate, School of Forestry and Environmental Studies, Yale University/ (As of July 1st) World
Resources Institute
5
Doctoral student, School of Forestry and Environmental Studies, Yale University
6
This section draws on Auld, Balboa, Bernstein and Cashore, in Young and Delmas volume
7
While often referred to as “certification systems” (Gereffi, Garcia-Johnson, and Sasser 2001), this term conflates
other forms of authority with NSMD governance. For similar reasons we do not address all of the initiatives
identified by scholarly work on political consumerism (Micheletti, FØllesdal, and Stolle 2003).
8
The majority of industrial or commercial forest lands in the United States, Canada, and Western and Eastern
Europe are under some type of third-party certification system. Major retailers in Europe and the United States have
announced a preference for certified forest products. Concerted efforts are underway to expand support for
certification in developing countries (Cashore, Gale, Meidinger and Newsom 2006)
9
This figure was derived from World Trade Organization 2003. We divided the total amount of products traded
under sectors represented in Appendix A with the total amount of all products traded globally.
10
According to the WTO, 2008 total merchandise trade and service trade had a value of $19.5 trillion. (see
<http://www.wto.org/english/news_e/pres09_e/pr554_e.htm>)
11
http://www.flo-cert.net/flo-cert/operators.php?id=10 (accessed Dec 2008)
12
http://www.utzcertified.org/index.php?pageID=141 (accessed Dec 2008)
13
http://sustainablefarmcert.com/findfarms.cfm (accesses May 2009)
14
http://www.ahold.com/page/4214.aspx
15
http://www.utzkapeh.org/index.php?pageID=114
16
Interview, Utz Kapeh, February 2007
17
https://www.was.org/Main/Default.asp
18
This was a quote attributed to Rob Rosenberry, the owner of an industry publication, Shrimp News International.
(See also Hall 1997)
19
The FSC decided to allow national and regional standard-setting to adopt the FSC P&C to incorporate regional
stakeholder concerns and to “ensure the consistency and integrity of standards” in every country or region. In large
federated countries such as the US and Canada this led to the development of sub-national standards, with eleven
such processes established in the US and nine in Canada. The Canadian regional processes are unique among
countries in that they include a fourth chamber in the decision-making structure, known as the Indigenous People’s
Chamber.
42
20
Originally, there were two chambers, an environmental and social chamber with 75% of the votes and an
economic chamber with 25% of the votes. However, the balance has since been changed to three chambers each
carrying equal weight in FSC policy decisions. In addition to the division along interest group lines, the FSC has
also distributed votes evenly between Northern and Southern members in order to ensure more globally equitable
decisions.
21
Originally the FSC created two-chambers – one with social and environmental interests that was given 70 percent
of the voting weight, and an economic chamber with 30 percent of the votes. There are current three equal chambers
among these groups with one third of the votes each. Each chamber is further divided equally between North and
South.
22
The other two countries are Afghanistan and Haiti.
23
We also note that though beyond the scope of this paper, “indirect effects” that certification systems have across
sectors, such as the relationship between forest certification and industrial palm oil plantations, is a key, yet virtually
ignored questions for students of NSMD governance.
43