Private Governance and Legal Scholarship:
The Emergence of Private Environmental Governance
Private Governance Workshop
December 13, 2013
Center for the Study of Democratic Institutions
Energy, Environment and Land Use Program
Michael P. Vandenbergh
David Daniels Allen Distinguished Chair of Law
Director, Climate Change Research Network
Co-Director, Energy, Environment and Land Use Program
Environmental Governance
(Vandenbergh 2013)

Environmental Law – Is “the effort to fashion pollution control laws” to address
challenges arising from “our nation’s varied processes for lawmaking and the ways
those processes relate to important cultural norms.” RICHARD J. LAZARUS, THE MAKING OF
ENVIRONMENTAL LAW 125, xv (2004).

Environmental Policy -- “Human uses of the environment are matters of governance,
not merely of individual choice or economic markets[,]” and “[f]or at least seven
reasons … government involvement in environmental issues is both necessary and
inevitable.” RICHARD N. L. ANDREWS, MANAGING THE ENVIRONMENT, MANAGING OURSELVES: A HISTORY OF AMERICAN
ENVIRONMENTAL POLICY 1–2 (1999).

Options to Address Climate Change – “Domestic policy design faces one central
question: Where should government intervene?” Michael Levi, The Hidden Risks of Energy Innovation,
ISSUES IN SCI. & TECH. Winter 2013, at 73.
“Toward Sustainability: The Roles and
Limitations of Certification”
A State-of-Knowledge Assessment of
Standards and Certification
Available at http://www.resolv.org/site-assessment/towardsustainability/
Issued June 2012
Mike Barry – Marks & Spencer
 Ben Cashore – Yale University
 Jason Clay – World Wildlife Fund
 Michael Fernandez – Mars, Inc.
 Louis Lebel – Chiang Mai University
 Tom Lyon – University of Michigan
 Patrick Mallet – ISEAL Alliance

Matus – London School of
Economics
 Peter Melchett – Soil Association
 Michael Vandenbergh – Vanderbilt
University
 Jan Kees Vis – Unilever
 Tensie Whelan – Rainforest
Alliance
Kira
Private Environmental Governance
Papers available on Social Science Research Network at http://ssrn.com/author=426704:

Energy and Climate Change: A Climate Prediction Market, 61 UCLA L. REV. (forthcoming 2014)
(M. Vandenbergh, K. Toner & J. Gilligan)

Private Environmental Governance, 99 CORNELL L. REV. 129 (2013)

The Potential Role of Carbon Labeling in a Green Economy, 34 ENERGY ECONOMICS S53-S63 (2012)
(M. Cohen & M. Vandenbergh)

The Behavioral Response to Voluntary Provision of an Environmental Public Good: Evidence from Residential
Electricity Demand, 56 EUROPEAN ECON. REV. 946-960 (2012) (G. Jacobsen, M. Kotchen & M. Vandenbergh)

Time to Try Carbon Labelling, 1 NATURE CLIMATE CHANGE 4-6 (2011) (M. Vandenbergh, T. Dietz & P. Stern)

Climate Change Governance: Boundaries and Leakage, 18 N.Y.U. ENVTL. L.J. 221-292 (2010)
(M. Vandenbergh & M. Cohen)

Household Actions Can Provide a Behavioral Wedge to Rapidly Reduce U.S. Carbon Emissions,
106 PROC. NAT’L ACAD. SCI. 18452-18456 (2009)(T. Dietz, G. Gardner, J. Gilligan, P. Stern & M. Vandenbergh)

Climate Change: The China Problem, 81 S. CAL L. REV. 905 (2008)

The New Wal-Mart Effect: The Role of Private Contracting in Global Governance, 54 UCLA L. REV. 913-970 (2007)
4

The Private Life of Public Law, 105 COLUM. L. REV. 2029-2076 (2005)
Major Pollution Control Statutes 1970-2013
Included:
1970
1972
1974
1976
1977
Excluded:
National Environmental Policy Act
1986 SDWA Amendments
Clean Air Act
1987
Federal Water Pollution Control Act
1988
Coastal Zone Management Act
1996
Safe Drinking Water Act
2002
Resource Conservation and Recovery Act
Toxic Substances Control Act
Clean Air Act Amendments
Clean Water Act
Comprehensive Environmental Response, Compensation and Liability Act
1980
1984 Hazardous and Solid Waste Amendments
1986 Emergency Planning and Community Right-to-Know Act
Superfund Amendments and Reauthorization Act
1990 Oil Pollution Act
Clean Air Act Amendments
CWA Amendments
FIFRA Amendments
Food Quality Protection Act
CERCLA Amendments
What Has Filled the Gap?
(STEERING COMMITTEE OF THE STATE-OF-KNOWLEDGE ASSESSMENT OF STANDARDS AND CERTIFICATION, TOWARD
SUSTAINABILITY: THE ROLES AND LIMITATIONS OF CERTIFICATION (2012))
What Has Filled the Gap?

Fish --
McDonald's USA first national restaurant chain to
serve MSC certified sustainable fish at all U.S.
locations

Toxics -- “ ‘The loss of public confidence [means] we’re
going to increasingly have retailers that are regulators, like
Wal-Mart and Target.’ ” (Inside EPA, 4/1/11)(quoting
Ernie Rosenberg of the American Cleaning Institute)
Private Environmental Governance

Context




Significance




What is it?
What types have emerged?
Why is it not on the radar screen?
Environmental behavior?
Environmental quality?
Counterfactuals and spillover effects?
Implications


Open questions?
New applications?
What Do We Mean by Private Governance?
(Vandenbergh 2005, 2007, 2013; Roberts 2010)



Private governance occurs when non-governmental actors
engage in activities that are designed to achieve
traditionally governmental ends
These ends include overcoming collective action problems
to reduce externalities, provide public goods, manage the
exploitation of common pool resources, or shift the
distribution of environmental goods
Involves traditional regulatory functions:





Agenda- and standard-setting (collective and unilateral)
Implementation
Monitoring
Enforcement
Funding (Abbott & Snidal 2009)
What Types of Private Governance Have Emerged?
Standard-Setting
(Vandenbergh 2005, 2007, 2013)
Collective Standard-Setting
- ISEAL
- GRI, ISO, FSC, SFI, MSC, CDP
- LEED, etc.
- Responsible Care
- Equator Principles, Carbon Principles
 Bilateral Standard-Setting
- Supply Chain Agreements
- Acquisition Agreements
- Credit Agreements
- Insurance Agreements
- Real Estate Agreements
- Good Neighbor Agreements

10
What Types of Private Governance
Have Emerged?
(Vandenbergh 2013; Roberts 2010; Assessment Committee 2012)
Why is Private Governance
Not on the Radar Screen?
(Vandenbergh 2005, 2007; 2013; Roberts 2010)

Off the Radar Screen





Barrier: Public Law Model & Language



Not in most casebooks
Less than ¼ of top law schools
Limited environmental law scholarship
Policy debates: “what can government do?”
Actor is Policymaker, Government, Nation, UN
Action is Treaty, Statute, Regulation, Enforcement, Adjudication
Barrier: Standard Metrics




Statutes
Major Regulations, Pages in the Federal Register
Costs and Benefits of Regulations
Enforcement Actions and Reported Decisions
Does Private Governance Matter?
Effects on Environmental Behavior
(TOWARD SUSTAINABILITY 2012; Vandenbergh 2013)
Forests. 9% of global forests are managed to FSC or PEFC standards (14% of
temperate forests).

Fisheries. 7% of global wild fish landings for human consumption are from
fisheries that are certified sustainable, and roughly 60% of US landings are from
fisheries that are certified sustainable or are under assessment. 2.6% of global
aquaculture is certified, and far more of U.S. aquaculture is certified.

Coffee. 8% of global coffee sales were sold as certified in 2010. 17% of
global coffee is produced as compliant with these standards. Between 2005 and
2010 global coffee certification grew by 433%.


Bananas. 20% of global bananas are sold under a certification scheme.
Cocoa. Only 1.2% of the global cocoa trade is compliant with UTZ Certified,
Fairtrade, organic, or Rainforest Alliance standards, but certified cocoa
expanded by 248% between 2005 and 2010.

Does Private Governance Matter?:
Effects on Environmental Behavior
(Vandenbergh 2005, 2007, 2008)

Widespread Private Monitoring & Enforcement
 More spent on Phase I’s (~$500 million) than the EPA
enforcement budget (~$400 million)(Gerrard 2005)

Widespread Impact on Legal Practice
 90% of the top 50 law firms by profits per partner

Proliferation of Private Standards
 Hundreds of domestic and global labeling systems
 Private procurement standards common

Large Potential Cross-Border Impact
(e.g., Wal-Mart: ~10,000 Chinese suppliers/~$18B yr)14
Does Private Governance Matter?
Effects on Environmental Behavior
The New Wal-Mart Effect
(Vandenbergh 2007)
Public Disclosure in 8 Sectors, 74 Firms
 Discount & Variety Retail
 Home Improvement & Hardware
 Office Products Retail & Dist.
 Auto Manufacturing
 Personal Computers
 Lumber & Wood Production
 Aluminum Production
 Industrial Mach. & Equip. Mfring
 Frequency
 54% of Firms Impose Requirements (40/74)
 76% of Firms by Total Sales ($2.183/$2.825)
 Types
 Law Compliance (29%)
 Environmental Performance (28%)
 Environmental Management Systems (15%)

15
Effects on Environmental Behavior
The Private Life of Public Law
(Vandenbergh 2005)
Table 3
Type of Agreement
Total
Agreements with Environmental Provisions
Acquisition Agreement
314
227
72%
Credit Agreement
514
357
69%
Table 4
Type of Agreement
Environmental
Performance
Requirement
Law
Compliance
Requirement
Environmental Management
System Requirement
Acquisition
Agreement
1%
2%
1%
Credit Agreement
15%
88%
10%
16
Does Private Governance Matter?
Effects on Environmental Quality
(TOWARD SUSTAINABILITY 2012)
Substantial evidence exists of improvement in
practices
 Limited evidence of longer term outcomes or impacts
 Difficult to attribute outcomes to certification
 Methodological challenges
 Identifying an appropriate counterfactual
 Dynamic nature of ecosystems and communities
 Financial costs and complexity
 Challenges not unique to private governance

Does Private Governance Matter?
Conceptual Hurdles – One Percent Problem
(Stack & Vandenbergh 2011)(data from CAIT 2010)
CO2 Emissions
Does Private Governance Matter?
Conceptual Hurdles – One Percent Problem
(Stack & Vandenbergh 2011)
CO2 Emissions
Does Private Governance Matter?
Conceptual Hurdles -- Counterfactual
(Vandenbergh 2013)
•
Counterfactual
• Expectations of solving problems
• Comprehensive v. incremental options
• First-best and second-best solutions
• As compared to what?
• How do the costs and benefits compare with viable
alternatives?
• How have political opportunity costs (e.g., time) been
accounted for?
Does Private Governance Matter?
Conceptual Hurdles – Spillover Effects
•
Spillover Effects
• Individual – How does one pro-environmental behavior
affect other pro-environmental behaviors and policy
support?
•
•
•
Economics: Rebound, take-back, buy-in, Jevons effect
Psychology: Gateway, identity, foot-in-the-door, consistency
Institutional -- How does private governance affect the
development of other governance options?
•
•
•
•
Gap-filling?
Complementary?
Competitive?
Displacing?
Does Private Governance Matter?
•
Public Law v. Private Law
• Accountability
• Is the lack of democratic accountability a concern?
• Does market accountability substitute for democratic
accountability?
• Is cross-border market accountability desirable?
• Legitimacy
• To what extent are private governance initiatives perceived to be
legitimate?
• What are the drivers of legitimacy for private governance?
• Equity
• What is the balance of interests between employees in developing
countries and consumers in developed countries?
Does Private Governance Matter?
•
Private Ordering
• Is private market behavior less costly to individuals
than political behavior?
• Does private governance require less collective action?
• Is information collection and distribution less costly for
NGOs than government lobbying?
• Are firms more responsive to small shifts in consumer
and other market behavior than the government is to
shifts in public opinion?
• Do small-group, iterative settings arise among NGO
and corporate leaders at a global level?
New Applications: Beyond Gridlock
Decade ~ 1 Degree F
(Vandenbergh, in progress)
New Applications: Beyond Gridlock
(Vandenbergh, in progress)

Private Climate Governance Strategy
 Private Actors
 Private Actions
 Criteria for Initiatives
 Buy Time – Timing & Magnitude
 Neutral or Positive Spillover
 Complement
25
New Applications: Beyond Gridlock
(Vandenbergh, in progress)

A Private Governance Wedge
 Public Support
 Climate Prediction Market
 Climate Legacy Registry
 Corporate Emissions
 Corporate Carbon Disclosure
 Product Carbon Disclosure
 Supply Chains and China
 Household Emissions
 Myth Busting
 Energy MLS Disclosure
26
IPCC Conclusions and Poli cal Beliefs on Human Caused
Climate Change
100%
90%
95-100%
(extremely likely)
66-90%
(likely)
> 90%
(very likely)
80%
70%
60%
50%
40%
30%
50%+
(balance of evidence)
IPCC
Democrat
?
(observed warming)
Republican
20%
Sources: IPCC, McCright 2013
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0%
1990
10%
kg of C02e per kg of product
Carbon Footprints by Food Product
18
16
14
12
10
8
6
4
2
0
Source: Shewmake, Okrent, Thabrew, & Vandenbergh, Predicting Consumer Demand Responses to Carbon Labels (under review)
Potential Impact of Supply Chains
The China Problem
TVEs produce ½ of Exports
 Exports ½ of China’s CO2 emissions
 US and Europe 41% of Exports
 US and Europe 14-28% of CO2 Emissions
 Wal-Mart: 10,000 suppliers/$18B

29
Conclusion
Open Questions







What are the other areas of opportunity?
Why do individuals, NGOs, and firms participate (consumer demand v.
consumer influence and other factors)?
What unintended consequences may result (label fatigue, green washing,
inconsistent standards, etc.)?
To what extent is private governance a reaction to the threat of government
regulation or liability?
Will private funding be adequate without co-opting private governance
organizations?
Should government encourage or discourage private governance
(procurement, antitrust, trade, consumer protection)?
How do private governance regimes interact with one another and with
public governance regimes?