Signed, Sealed… Delivered? 3 Behind Certiﬁcations and Beyond Labels Signed, Sealed… Delivered? looks ‘behind certiﬁcations and beyond labels’ at howForeword these tools and the performance standards that underpin them create business value. But our decision to explore the experience of business with marks and movements like Energy Star, Fairtrade, Marine Stewardship Council and Rainforest Alliance had a larger purpose, asking: What has been learned about the best ways to improve supply chain performance, increase trust among value chain partners, and change customer and consumer behavior? What lessons can be extrapolated to the challenge of scaling sustainability overall? Signed, Sealed… Delivered? applauds the ways certiﬁcations, labels and standards have advanced more sustainable business practices. They empower customers and consumers, powerfully combine standards-setting and branding, and deliver credibility and transparency via independent assurance. Businesses use them to deﬁne, deliver, demonstrate and create demand for better sustainability outcomes. And they have improved lives and livelihoods in supply chains while helping preserve and regenerate resources. We also conclude we are reaching limits in terms of scale. Certiﬁcation and labeling are time and money intensive; we can’t — we shouldn’t — certify and label everything. The aim behind certiﬁcations and the aspiration beyond labels is the creation of organizations and market systems that are just and sustainable in their entirety. Rather than certiﬁcations and labels driving endless incremental improvement, we anticipate — we hope for — a future built on increasingly rigorous, pre-competitive standards for sustainability performance, above which brands compete to make sustainability intrinsic, where new business models emerge with factors previously requiring certiﬁcation part of their DNA, and where civil society ﬁnds more e ective and e cient ways of holding business accountable. Certiﬁcations and labels have been pioneers in building a more sustainable economy. Some will continue to deﬁne leading edges while others form crucial minimum performance ﬂoors in future markets. Their continued roles are welcome and required, even as we hope overtaken by the emergence of a more sustainable economic model overall. We are endlessly grateful to our sponsors — Starbucks, Mars, Brown-Forman and O ce Depot — and many collaborators. We thank too you, the reader, and invite your reactions and feedback. Mark LeeMark LeeExecutive Director, SustainAbilitylee@sustainability.com
Signed, Sealed… Delivered? 4 Behind Certiﬁcations and Beyond Labels Our warm thanks to all who contributed to this project, including:Acknowledgements — Our lead sponsor Starbucks, sponsors Mars and Brown-Forman, and supporting sponsor O ce Depot. We are grateful not only for their ﬁnancial support but for their many intellectual contributions to the research. Special thanks to Ben Packard and Colleen Chapman at Starbucks, Daniel Vennard at Mars, Rob Kaplan at Brown-Forman, and Yalmaz Siddiqui at O ce Depot. — The many dozens of people from businesses, standards-setters, NGOs, government and others who generously shared their insights with us through interviews, ongoing conversations and their own research. Their contributions are woven throughout this report and their names are listed in the Appendix. We also thank KoAnn Skrzyniarz of Sustainable Life Media and Drummond Lawson of Method for hosting roundtable discussions early in the research. — From the SustainAbility Board and Council: Mark Lee for championing the project from the beginning and for reviewing drafts; John Elkington of Volans, Peter Zollinger of Globalance Bank and Geo Lye for inspiration at key points; and Dorothy MacKenzie of Dragon Rouge and Rob Cameron of Fairtrade International for reviewing draft sections. — And our SustainAbility colleagues, particularly Mohammed Al-Shawaf, Frances Buckingham, Marion Chivot, Tom Cousins, Caren Holzman, Geo Kendall and Kyle Whitaker for invaluable support on research, editorial guidance and launch; and a hat tip to Preetum Shenoy and Mark Lee for the title and subtitle. Finally, we thank Rupert Bassett for the report design. Patrin Watanatada Heather Mak November 2011 Patrin Watanatada Heather Mak Director, SustainAbility Manager, SustainAbility email@example.com firstname.lastname@example.org
Signed, Sealed… Delivered? 5 Behind Certiﬁcations and Beyond Labels30 second Signed, Sealed… Delivered? explores the value and challenges that businesses ﬁnd in using certiﬁcation andsummary labeling as tools to improve economic, environmental and social outcomes across global value chains. Certiﬁcation, labeling and the standards-setting organizations behind them have been pioneers in building a more sustainable economy. For businesses, they provide a credible, consensus-set reference point for collective action, access to expertise and networks, and can spur demand for certiﬁed or labeled goods. But the very traits — governance and inclusiveness — that make consensus-based standards so useful as credible mechanisms for collective action also pose challenges for businesses seeking to move quickly and to di erentiate themselves in the marketplace. And like any tool, certiﬁcation and labeling have limits — including limits to scale. We conclude that there is a need to deconstruct and evolve the old model that combines standards, certiﬁcation and on-pack marks. Instead we urge a shift towards a new model based upon increasingly demanding and pre-competitive standards, above which brands compete, collaborate and partner with civil society to transform supply chains and consumer norms and behavior, and where civil society and government evolve more e ective and e cient ways of holding business accountable.
Signed, Sealed… Delivered? 6 Behind Certiﬁcations and Beyond Labels Certiﬁcation, labeling and the standards-setting organizations behind them haveExecutive been pioneers in building a more sustainable economy. They’ve made what was once invisible visible, changed societal and consumer norms, given producerssummary access to new markets, promoted multi-stakeholder collaboration, and driven operational changes among businesses and other large buyers. They are now in widespread use as operational tools for business to make purchasing decisions, manage supply, market and sell to B2B and B2C customers, guide employees, and respond to stakeholders and regulators. How well are these schemes working for business? With close to four hundred certiﬁcations and labels and counting in the marketplace, have we reached a point of diminishing returns — both for business and for the sustainability agenda? Our key ﬁndings are summarized below. 1 We recommend that businesses think in terms of deﬁning, delivering, demonstrating and creating demand for better sustainability outcomes across the value chain. We identify four key ways in which businesses have relied on certiﬁcation and labeling that we refer to as the 4Ds: to help them deﬁne criteria for processes, performance or measurement that will result in better sustainability outcomes, to contribute to delivering better sustainability outcomes by providing expertise and on-the-ground relationships, to demonstrate to their business and civil society stakeholders that better sustainability outcomes are being achieved through certiﬁcation, veriﬁcation or some other assurance, and to create or respond to demand for better sustainability outcomes from B2B and B2C customers. Thinking in terms of the 4Ds provides a framework for deciding whether standards, certiﬁcation and/or labeling are most appropriate — and when other tools or relationships might be more powerfully deployed. 2 Businesses have realized most value in working with certiﬁcation and labeling to deliver, demonstrate and meet business-to-business (B2B) demand. They experience both beneﬁt and challenges from deﬁne, and least value of all in creating business-to-consumer (B2C) demand. Working with the consensus-based standards and civil society organizationsThis report has been written primarily behind certiﬁcations and labels gives businesses a credible and shared referencefor consumer brands who work point for collective action, as well as access to expertise and networks.with or are considering working Businesses also ﬁnd value in meeting B2B and institutional demand for certiﬁedwith sustainability certiﬁcation and or labeled goods. However, businesses also experience challenges when theylabeling. We also expect it to be of perceive independent standards to be too low or too slow to change. Whereinterest to organizations working in the businesses experience most challenges and see least value is in working withcertiﬁcation and labeling space seeking certiﬁcation and labeling to create demand from B2C consumers.greater insight into the way in whichbusinesses use them and how they canbecome more e ective partners.
Executive summary Signed, Sealed… Delivered? 7 Behind Certiﬁcations and Beyond Labels 3 Consensus-based standards embody inherent tensions. Certiﬁcation and labeling have limits — including limits to scale. The very traits — governance and inclusiveness — that make consensus- based standards so useful as credible mechanisms for collective action also pose challenges for businesses seeking to move quickly and to di erentiate. Certiﬁcation, even when used well, is necessarily a snapshot in time and space, while independent labels invite conﬁdence but pose increasing marketing challenges for brands as they proliferate. These challenges will amplify with scale: certiﬁcation cannot reach every farm and factory in the world, while labels alone will not shift the mainstream consumer. 4 Businesses are moving to separate certiﬁcation use from communication. We looked at retailers seeking to simplify complexity for their customers; brands seeking to address supply chain challenges while di erentiating and growing their own brands; and “100% sustainable brands” such as Method or the UK’s Cafédirect are looking both to continue raising the bar on performance and to communicate their leadership positions. There is a wide variety of approaches to inﬂuencing both suppliers and consumers, but we see two trends increasing: (1) Strategic use of independent certiﬁcations and standards to manage supply alongside other mechanisms, combined with (2) unique brand campaigns that create an emotional connection or speak to a “What’s In It For Me” for the consumer, with sustainability certiﬁcations, labels or attributes used back-of-pack (metaphorically or literally). In both cases, the business or brand embraces, rather than outsources, its relationships with its suppliers and consumers. We welcome both of these trends and believe this will lead to more value for both business and for society. 5 We need to deconstruct and evolve the old model that combines standards, certiﬁcation and on-pack labeling in one system. The “classic” sustainability label (think Fairtrade or Energy Star) combines a set of consensus-based standards with service delivery, independent auditing or veriﬁcation, and a product label. This was an inspired and innovative idea at a time when the need was to raise awareness and to develop a common platform for taking action. But as we seek to scale the impact of voluntary standards in order to transform global production and consumption, recognizing that standards, certiﬁcation and labeling do not have to co-exist — and that they are part of a bigger toolbox for inﬂuencing sustainability outcomes — opens up many more possibilities for how business and the voluntary standards movement can work together more e ectively.
Executive summary Signed, Sealed… Delivered? 8 Behind Certiﬁcations and Beyond Labels 6 The model for the future? Pre-competitive standards, competing (and collaborating) brands and new forms of partnership and accountability. We urge a shift towards a new model based upon increasingly demanding and pre-competitive standards, above which brands compete, collaborate and partner with civil society to embed these standards into business models and to transform supply chains and consumer behavior — and where civil society and government evolve more e ective and e cient ways of holding business accountable. Business will innovate to deliver to outcomes rather than standards, complement certiﬁcation with strong supplier-buyer relationships, and use the power of their brands to delight and mobilize consumers into adopting more sustainable behaviors. In turn, standards will stretch and innovate alongside business, certiﬁcation will be complemented by new mechanisms such as partnerships and national regulation, and labels will fade into a quieter, background role, acting as trust marks for those who seek it and leaving brands — and consumers themselves — to take the lead.
1.0 Signed, Sealed… Delivered? 9 Behind Certiﬁcations and Beyond Labels In the last ﬁfty years, the value of internationally traded goods has increased fromWhy this research? less than a ﬁfth to more than half of world GDP. A couple of years ago, a shipping container followed by the BBC went twice round the world in a year, stopping at Scotland, Shanghai, Brazil and Los Angeles along the way. Whereas a century ago we might have known where, how and who produced the things we eat, wear and use, in so many instances today all we know is what we’re told. And how can we be sure that what we’re told can be trusted? Enter the sustainability certiﬁcation or label: the independently veriﬁed standard accompanied by an on-pack mark that tells the consumer a product was produced (think Fairtrade or organic) or can be consumed (think nutritional labels or Energy Star) in a more sustainable way. It’s a powerful idea that combines sustainability standards-setting and branding, underpinned by the credibility of an independent body. But 33 years after the world’s ﬁrst sustainability label (Germany’s Blue Angel) appeared, we’re in a di erent, noisier world, where seven billion of us and counting are bumping up against the limits of the planet’s natural resources. A number of trends indicate it’s time to examine the model. Certiﬁcations and labels are everywhere. From Italy’s 100% Green Electricity to New Zealand’s Zque natural wool label, the Ecolabel Index lists 426 certiﬁcations and labels in 25 industry sectors and 246 countries as of November 2011. Around two-thirds of these were developed in the last decade alone, and new schemes continue to arrive. From their origins as civil society and policy initiatives, certiﬁcations and labels have now become important tools for businesses. Our informal review found that most of the ten largest publicly held companies in each of the apparel, carpet, electronics, food & beverage, household & personal care and pulp & paper industries employ certiﬁcations and labels. We expect this trend to continue as more and more businesses set sustainability goals for their value chains and need credible ways both to deliver and to demonstrate that these have been met. It’s not only consumers who are confused — it’s businesses. Nowadays it’s stating the obvious that consumers are confused by the sheer number of certiﬁcations and labels: according to the Natural Marketing Institute, 51% of American consumers think “there are too many green seals and certiﬁcations” and 59% wish there were one over-arching universal seal. But businesses are confused as well.1 In the many conversations we’ve had over the past year, a few questions came up repeatedly: — What are they for? Are they minimum standards that stand in for regulation or leadership guidelines to which to aspire? How do we choose between schemes that cover the same commodity, attribute or category? — What’s the value? Are these best used to manage supply or to build our brands? Is it worth developing our own or better to participate in an existing scheme? Where do we use other tools instead? — What’s the future? Will demand for certiﬁcation and labeling increase or diminish? Will their role change? How will these schemes evolve?
1 .0 Signed, Sealed… Delivered? 10Why this research? Behind Certiﬁcations and Beyond Labels Many research initiatives are underway to map the certiﬁcations, labels and standards landscape, understand their impact and develop strategies going forward and many useful tools have been developed to help businesses to navigate this tangle. (See Appendix 1 overview of some of the major research initiatives and tools.) There’s another question, though. As we’ve come to learn, the ﬁrst question to ask isn’t “Which certiﬁcation or label?” Rather, it’s “Why certify or label?” This places the question in the context of other ways available to businesses for improving or communicating sustainability impacts across the value chain. Our intent is to contribute to the debate by exploring the business perspective on certiﬁcation and labels. — How do businesses use these tools to inﬂuence and communicate with their stakeholders? What value and challenges do they experience? — What do businesses need to understand in order to make smarter use of these tools? How can certiﬁcation and labeling initiatives evolve to become more e ective partners and mechanisms? — How should businesses see certiﬁcation and labeling in the context of other ways of inﬂuencing and communicating better economic, environmental and social outcomes? For this report, we have focused on the perspectives of consumer brands and retailers operating in Europe and North America, where certiﬁcation and labeling is relatively advanced. We’ve taken a qualitative approach to our research, undertaking some 85 interviews with businesses, standards-setters, certiﬁers and other expert observers, and supplementing these discussions with desk research and our own point of view. A list of interviewees is included in Appendix 2.
1 .0 Signed, Sealed… Delivered? 11Why this research? Behind Certiﬁcations and Beyond LabelsLabeling is now Examples of companies Labels used in the sector Users of the ten largestcommonplace in many in the sector companies in the sectorconsumer goods industries (Exceptions)Apparel Adidas Organic (cotton) All Nike (Richemont Richemont Rolex) VF CorporationCarpet Beaulieu GreenGuard All Interface NSF 140 Mohawk ShawElectronics Apple Energy Star All LG EPEAT Panasonic SamsungFood & Coca-Cola Fairtrade AllBeverage Kraft Marine Stewardship Council (Anheuser-Busch Nestlé Organic Kirin Holdings) Unilever Rainforest Alliance UTZ CertiﬁedHousehold & Henkel AISE AllPersonal Care Kimberly-Clark Eco-Cert (Procter & Gamble L’Oréal Fairtrade Kao Corporation) Procter & Gamble Nordic Swan OrganicPulp & International Paper Forest Stewardship Council AllPaper Nippon Paper Programme for the (Procter & Gamble) Oji Paper Endorsement of Stora Enso Forest Certiﬁcation Sustainable Forestry Initiative Sustainable Green Ecosystem CouncilSource: SustainAbility research
2.0 Signed, Sealed… Delivered? 12 Behind Certiﬁcations and Beyond Labels The best certiﬁcations and labels are, ﬁrst and foremost, agents of change.How certiﬁcation They’ve made what was once invisible visible. They’ve created a metaphorical lineand labeling work of sight between production and consumers. They’ve shifted societal and consumer norms, built capacity, given producers access to new markets, promoted multi- stakeholder collaboration and cross-industry alliances, driven operational changes among businesses and other large buyers, and empowered consumers with information. How have they done this? We see four ways in which sustainability certiﬁcation and labeling work to achieve better economic, environmental and social outcomes: 1 Deﬁne standards for better sustainability outcomes. Some specify processes (most), others metrics (Bonsucro). 2 Deliver better sustainability outcomes through capacity-building, expertise, relationships, infrastructure and networks. This is a major feature of the agricultural voluntary standards initiatives, for example. 3 Demonstrate intent or delivery of better sustainability outcomes. Certiﬁcation involves independent checking and assessment, while veriﬁcation generally means some form of veriﬁcation of a manufacturer’s or producer’s own assessment. 4 Create Demand by identifying and appealing to a want or need for the better sustainability outcome among buyers. Some engage in highly active marketing (Fairtrade, Energy Star), while others may do very little (Common Code for the Co ee Community).“Fairtrade was the driving force for getting people to want to know more It’s important to note that there are three conceptually separate mechanisms, about who is producing their co ee which often, but don’t always go together. For example, the ISO 26000 corporate and the conditions under which they’re responsibility standard isn’t a certiﬁcation. producing it. The direct trade model, the competing seals, the development — Standards set requirements to be followed by program participants, often taking of Starbucks CAFÉ Practices, all owe a consensus-based approach. their existence in some sense to — Certiﬁcation provides third party assurance that a product, process or service is Fairtrade.” in conformity with certain standards. Matt Warning — Labeling provides on-pack claims, marks or seals that indicate conformance Professor of Economics, with the standard. 2 University of Puget Sound Consider the following programs, which all combine certiﬁcation, labeling and standards: — Fairtrade (1988) Fairtrade deﬁnes standards for producers in developing countries for better trading conditions and to promote sustainability among products such as handicrafts, co ee, cocoa, sugar, tea, bananas, honey and cotton. To help deliver on the goal of alleviating poverty and empowering producers, it provides a premium to producers and asserts higher social and environmental standards. To demonstrate the label’s credibility, external bodies certify products against the Fairtrade standard. It aims to inﬂuence demand by partnering with brands and retailers, and by forming a social movement through events like the Fairtrade Fortnight. A label is displayed on pack.
2.0 Signed, Sealed… Delivered? 13How certiﬁcation and labeling work Behind Certiﬁcations and Beyond Labels“Intel said to us, ‘If you provide us — Energy Star (1992) Launched by the United States Environmental Protection with a credible measuring stick, we Agency (EPA), the Energy Star label deﬁnes energy usage standards for di erent will innovate and compete on that product categories. The standard is adjusted every few years to allow for standard.’” improvement. To help deliver on this goal, the number of product categories has Wayne Rifer been expanded in partnership with the Department of Energy, the standard has EPEAT Director of Standards also been licensed internationally in partnership with governments, and regular and Product Veriﬁcation, educational campaigns are run. To demonstrate product adherence to standards, Green Electronics Council Energy Star uses licensed Quality Assurance Providers. To inﬂuence demand, it has been embedded into government and other institutional purchasing programs and awareness has been raised through many government partnerships with utilities, state agencies and other organizations. A label is displayed. — Marine Stewardship Council (1997) Launched by WWF and Unilever in 1997, the Marine Stewardship Council (MSC) deﬁnes through a consensus basis what sustainable ﬁshing practices are for wild-caught ﬁsh and sets a tiered standard which includes performance indicators for ﬁsheries to meet in order to be classiﬁed as sustainable. To help deliver, the MSC provides technical assistance to ﬁsheries. To demonstrate that ﬁsheries have met the standard, they go through an assessment with an accredited third party and are encouraged to improve their performance. To inﬂuence demand, the MSC works with governments and retailers to increase the number of certiﬁed ﬁsheries and increase the points of distribution for products that carry the label, and also works with other organizations to raise awareness about sustainable seafood for consumers. A label is often, but not always, displayed.How standards, certiﬁcation Deﬁne standards Deliver through Demonstrate Inﬂuence Demandand labeling work to achieve for processes, capacity-building, intent or delivery by identifying andbetter sustainability outcomes performance or expertise, relation- through certiﬁcation, appealing to a want measurement ships, infrastructure veriﬁcation or other or need among and networks assurance buyersStandards Codify requirements, often consensus based.Certiﬁcation Provides third-party assurance that a product, process or service is in conformity with certain standards. Often, support the producer or business being certiﬁed in making improvements.Labeling Provides on-pack claims, marks or seals that indicate conformance with the standard and serve to communicate with the buyer or consumer. Sometimes supported by a marketing or public education campaign.
3.0 Signed, Sealed… Delivered? 14 Behind Certiﬁcations and Beyond Labels If certiﬁcation and labeling started out primarily as ways for NGOs andHow businesses policymakers to deliver change through markets, they’ve now also become widely used by businesses as operational tools: to make purchasing decisions, manageuse certiﬁcation supply, market and sell to B2B and B2C customers, guide employees, and respond to stakeholders and regulators. Consider the following examples.and labeling Suppliers and producers — To make purchasing decisions. Sodexo’s seafood sourcing speciﬁcations includes a commitment to increase its use of standards or labels. — To inﬂuence changes in producer and supplier practices. As a founding member of the Better Cotton Initiative (BCI), IKEA has committed to transitioning all of its cotton to BCI guidelines by 2015. Customers: B2B and institutional — To meet B2B buyer speciﬁcations or reporting requirements. Walmart’s supplier sustainability scorecard asks suppliers to specify any 3rd party labels or certiﬁcations. Other buyers may ask for more general environmental impact reporting, for which a certiﬁcation can serve as a proxy or guide to responding. — To meet government or institutional purchasing speciﬁcations. The London Organising Committee of the Olympic Games’ Sustainable Sourcing Code requires purchases of Fairtrade and Soil Association-certiﬁed goods. Meanwhile, the Responsible Purchasing Network, whose members include major universities, municipal governments, and non-proﬁt organizations, speciﬁes the usage of various standards and certiﬁcations in the purchase of product categories such as paper, cleaning products and electronics. Customers: B2C — To meet consumer expectations in a particular category. Just about every high street fast food chain in the UK now o ers a certiﬁed co ee. — To support or enhance the brand story. Although it has been working with the Marine Stewardship Council for over ﬁve years, McDonald’s Europe has just begun placing the mark on its ﬁsh sandwich wrappers in part to raise awareness among its consumers, in part to support its shift in brand positioning from ‘fast food’ towards ‘good food, fast.’” Civil society and regulators — To respond to stakeholder pressure. Kimberly-Clark and Mattel both committed to increasing purchases of Forest Stewardship Council-certiﬁed pulp and paper following Greenpeace campaigns. — To report or to respond to regulatory disclosure requirements. The Global Reporting Initiative Food Processing Sector Supplement asks food & beverage companies to report on the percentage of raw materials sourced under third-party standards or certiﬁcation. The French government is piloting a program to require all consumer products and services sold in France to display information about their environmental impacts.
3.0 Signed, Sealed… Delivered? 15How businesses use Behind Certiﬁcations and Beyond Labelscertiﬁcation and labeling Employees — To engage and guide employees. The narrative behind the Cradle to Cradle certiﬁcation has inspired the designers at Steelcase’s Designtex. — To set goals for the business to work towards. Apple designs its MacBook Pro to meet EPEAT Gold environmental criteria.How businesses use sustainabilitycertiﬁcations and labels Civil Gov’ment / Society & Institutional Regulators Customer Respond to Meet purchasing pressure and speciﬁcations disclosure requirementsInﬂuence changes Inﬂuence changes Supportin practices in practices brand storyProducer Supplier Brand Consumers Make purchasing Meet consumer decisions expectations Engage and Meet purchasing guide expectations Employees B2B Customer
1975 Timeline 1 1980 Interest in Ethical Co ee Other initiatives and events Certiﬁcations, labels, and standards 1985 Rainforest Alliance incorporated First Fairtrade label launched / First Fairtrade co ee sold Pricing mechanism of ICA falls apart 1990 National Organic Program established by the USDA1962 International Co ee Agreement created by the UN Association of Co ee Producing Countries formed / Volatility in co ee market due to increased speculation 1995 First Rainforest Alliance co ee farms certiﬁed Signed, Sealed… Delivered? First Sustainable Co ee Congress Fairtrade Labelling Organizations International (FLO) established Bird friendly Co ee from the Smithsonian released / Starbucks CAFÉ Practices Behind Certiﬁcations and Beyond Labels 2000 Rumour of collapse of ACPC / Introduction of Fair trade at Starbucks Co ee crisis UTZ Certiﬁed / International Fairtrade Certiﬁcation / USDA organic / EU organic 4C project set up / Nespresso AAA Programme / Kraft-Rainforest Alliance partnership FLO separation into FLO International and FLO-CERT / Sara Lee-UTZ commitment 2005 4C association o cially set up Sainsburys all own label roast and ground co ee converts to Fairtrade 2010 Nestlé launches Nescafé Plan Fair Trade, UTZ, Rainforest Alliance joint statement / Fair Trade USA innovation strategy 16
1975 Clean Water Act in the US / Formation of many marine non-proﬁt organizations Timeline 2 1980 Other initiatives and events Interest in Sustainable Seafood Certiﬁcations, labels, and standards 19851959 Purse seine nets allowed for yellowﬁn tuna 1990 US dolphin safe label / US Dolphin Protection Consumer Information Act World Oceans Day / collapse of Newfoundland cod ﬁshery 1995 Signed, Sealed… Delivered? Seafood Choices Alliance formed; Unilever sustainable ﬁsh commitment1972 Stockholm Conference / US Marine Mammal Protection Act (MMPA) Marine Stewardship Council (MSC) created / Global Aquaculture Alliance formed Marks & Spencer works with MSC / Monterey Bay Aquarium develops Seafood Watch program MSC label released / Naturland creates standard on organic shrimp Behind Certiﬁcations and Beyond Labels 2000 Whole Foods introduces certiﬁed seafood carrying Fish Forever label Best Aquaculture Practices standard created WWF Aquaculture Dialogues to form performance based standards 2005 Ocean Wise label created / Greenpeace start sustainable seafood campaigns Walmart commitment to 100% MSC certiﬁed Mainstreaming of sustainable seafood among large retailers Creation of the Aquaculture Stewardship Council (ASC) 2010 Mars makes sustainable seafood commitment for pet food Launch of ASC label / WTO says Dolphin safe label is trade restrictive 17
1975 US Congress passes Energy Policy and Conservation Act Timeline 31980 Other initiatives and events Interest in Greener Electronics Certiﬁcations, labels, and standards19851990 EPA starts Energy Star program / TCO launched in Sweden1995 Signed, Sealed… Delivered? EPA-DOE partnership begins for increased Energy Star product categories Behind Certiﬁcations and Beyond Labels2000 EPA funds the start of Green Electronics Council / WEEE becomes European law Release of Electronic Industry Code of Conduct2005 Green Electronics Council founded EPEAT system released based on IEEE-1680 Sustainable ICT Forum / GeSI created2010 Shortcomings of Energy Star revealed 18
1975 Timeline 4 1980 Concern grows over chemicals and ﬂame retardants in fabrics Interest in Ethical Apparel Other initiatives and events Certiﬁcations, labels, and standards 19851974 Multi Fibre Agreement created 1990 Levi Strauss & Co ﬁrst code of conduct / Nike child labor news story Beginning of Nike boycotts and campaigning Maquila Solidarity Network formed 1995 Signed, Sealed… Delivered? SA8000 standard created by SAI / Nike code of conduct Ethical Trade Initiative Base Code Saipan sweatshop lawsuit / Fair Labour Association incorporated Behind Certiﬁcations and Beyond Labels 2000 “No Logo” brand backlash / WRAP established Peopletree founded Multi Fibre Agreement dismantled / Saipan lawsuit settled / SEDEX, FFC, Madeby formed 2005 BCI, Fairtrade cotton, Cotton Made in Africa (CMiA) created / Nike, Levi’s disclose factory list Walmart makes commitment to organic cotton Gap child labour scandal and announcement of remediation measures Oxfam-Marks & Spencer partnership 2010 Levi’s revises Terms of Engagement / Sustainable Apparel Coalition launch 19
4.0 Signed, Sealed… Delivered? 20 Behind Certiﬁcations and Beyond Labels We’ve seen that certiﬁcations and labels work to deﬁne, to deliver, to demonstrate Value, challenges and to create or respond to demand for better sustainability outcomes. How e ective are these four Ds from the perspective of business? To ﬁnd out, we asked and implications dozens of brands and retailers: “What value and what challenges do you experience in working with certiﬁcations, labels and standards?”“We’re seeking a sectoral 4.1 Deﬁne standards for processes, performance or measurement transformation — certiﬁcation is a mechanism for that. Big components of Value Challenge this are pre-competitive, and we need “Saves us from re-inventing the wheel.” “The standard’s not the right one.” the rest of the industry to do it too.” “Enables us to raise standards across “The standard doesn’t work for us.” Interviewee the industry.”“One of the problems with developing Working with external standards not only saves work and draws on the expertise labeling criteria based on current of many, but gives businesses a common reference point for collective action. “We technologies is that it could stiﬂe can’t do it unless the rest of the industry comes along as well” was a common innovation. A new technology might statement. actually be better for the environment but not comply with the standards set And as more businesses sign on to a standard, it creates a movement. “I follow — and so not be eligible for a label.” retailers like Marks & Spencer, Sainsbury’s and Waitrose closely,” says Paul Uys, Julia Hailes vice-president of sustainable seafood at Loblaw, Canada’s largest food retailer. Author of The New Green “Why paddle up a di erent creek?” Consumer Guide But working with external standards poses challenges as well — as almost by deﬁnition, compromise is required. Businesses expressed frustrations with the soundness of criteria (“based on perception or politics, not science”, “popular only because it was the ﬁrst”), the level at which requirements are set (“too low — we can’t di erentiate ourselves”), the ﬁt for the business (“requires us to change our processes for no reason”), or the failure of the standard to adapt to new knowledge or processes (“hampers innovation”).“There is a role for rigorous, prescriptive 4.2 Deliver through capacity-building, expertise, infrastructure and networks certiﬁcation, but not everything needs to be certiﬁed. It depends on the scale Value Challenge of the issues. Certiﬁcations matter “Gives us access to services, expertise “Limits ﬂexibility.” where everyone needs to get behind and a built-in stakeholder network.” the same actions and where there’s signiﬁcant incentive not to get behind Many certiﬁcation and labeling organizations provide access to valuable services, those actions.” experts and local networks. “You’re talking to the world’s best people working on Patrick Laine sustainable agriculture, labor, and so on. We have a lot of expertise on cocoa, but Director of Corporate Relationships, we don’t have it all,” says Alastair Child, global cocoa sustainability director at Mars. WWF-UK But committing to a single standard can limit sourcing ﬂexibility in the case of raw materials standards. It also ties the business to the reputation and viability of the standards-setting organization.
4.0 Signed, Sealed… Delivered? 21Value, challenges and implications Behind Certiﬁcations and Beyond Labels“We look to agricultural certiﬁcations 4.3 Demonstrate intent or delivery through certiﬁcation, veriﬁcation and roundtables to provide value in a or other assurance number of ways, and ﬁrst is through governance and transparency on the Value Challenge standard-setting process.” “Credibility and convenience.” “Not enough evidence of impact.” Jan Kees Vis “We can’t get or don’t trust the Global Supply Chain Director, information.” Sustainable Agriculture, Unilever Credibility was the most frequently cited beneﬁt amongst the businesses we spoke“We encourage our top suppliers to get with — a beneﬁt of the involvement of a trusted third party. According to the Natural [EPA] SmartWay certiﬁcation — it’s a Marketing Institute, almost three-quarters of U.S. consumers “admit that it is hard great program, and it helps me in my to know who is telling the truth” about sustainability claims, and over half said “I like reporting.” to see someone else endorse what a company says it does for the environment or Mark Bueltmann society.” 3 Manager of Sustainable Supplier Development, American Electric Power Not only does working with certiﬁcation or labels reduce the risk of making claims, it provides a convenient and fast way of assessing sustainability for those with little time or resource. Retailers with hundreds of products will rely on labels to select their green product sets, and to communicate their beneﬁts quickly to customers. But getting the information can be a challenge — particularly for retailers or manufacturers with little visibility into their supply chains beyond the ﬁrst tier. In other cases, the information may not be reliable. And as more and more businesses report on impacts beyond their operational footprint, they rely on certiﬁcations and labels to serve as a proxy for supply chain impacts. But while measuring outputs such as GHG emissions, acres of FSC-certiﬁed land or volumes of certiﬁed co ee is straightforward, it is far more di cult to measure outcomes — and this is what most are seeking.“There are certain business segments 4.4 Create Demand by identifying and appealing to a want that actively seek out speciﬁc ecolabels or need among buyers in certain product categories.” Yalmaz Siddiqui Value Challenge Senior Director, Environmental “Our consumers and customers expect “It’s just not easy to engage our Strategy, O ce Depot it, and some of them reward it.” consumers on sustainability, and labels don’t di erentiate anymore.”“People are logo’d out.” Drew Tremblay Businesses cited B2B value from the use of certiﬁcations and labels. Many Business Development Manager, governmental, institutional and corporate buyers now have ‘green’ purchasing policies Domtar which reference certiﬁcations and labels. Some businesses are proactively selling on such claims: one manufacturer noted that its raw ingredient suppliers would promote their sustainability certiﬁcations and awards, even without being asked.
4.0 Signed, Sealed… Delivered? 22 Value, challenges and implications Behind Certiﬁcations and Beyond Labels But B2C value was harder to ﬁnd. The biggest challenges: “Sustainability is not a top purchase driver, so we don’t have a return on our investment,” “Our customers don’t understand the issues, so they don’t respond to the label,” and “Every brand has a mark — it’s no longer a di erentiator.” Simpler frustrations exist as well: we heard comments such as “Our designers don’t want to use the labels in their design” or “It’s hard to ﬁnd the room to put both required and voluntary information on-pack.” (One person we spoke with noted wryly that cereal companies were at an advantage, with their larger packaging!)“I think these certiﬁcations would like to 4.5 Implications be more dynamic, but they ﬁnd it really hard. These are systems set up ten or What have we learned from these conversations and from past experience? We twenty years ago that are struggling make four general observations: to change due to their governance systems.” 1 Consensus-based standards are good for collaboration, not so good for Scott Poynton di erentiation. Executive Director, The Forest Trust The great strengths of consensus-based standards are governance and“We started the Marine Stewardship inclusiveness, making them valuable to businesses as credible reference points Council not to create a few perfect for moving entire industries. However, these strengths also pose challenges for boutique ﬁsheries, but to create anyone seeking to innovate swiftly or for businesses seeking to di erentiate powerful incentives to move the themselves in the market. entire industry. We set the bar at an intermediate level that will be a stretch By their nature, standards embody tensions. It’s not easy both to be inclusive — but not a holy grail.” and to adapt quickly to new knowledge. And it’s not easy both to meet the needs Michael Sutton of leaders at the same time as drawing in their mainstream counterparts. Vice-President, Monterey Bay Aquarium As Kellie McElhaney of the Center for Responsible Business at the University of California, Berkeley says, “Sustainability is a team sport — you really do have to have everyone in the room. [But] sometimes you drop to the lowest common denominator, and it’s below where some companies are in their programs. This can slow things down for the most sustainability-minded folks.” 2 Certiﬁcation is necessarily a snapshot in time and in space — and the solution is not more or better inspections. Certiﬁcation inspections and auditing, if done well in a spirit of supplier capacity- building and sharing responsibility for problems between supplier and buyer, can be important tools for uncovering challenges and supporting suppliers in instituting better practices. But too many audits place burdens on producers and suppliers, and if used at arms-length are at best a blunt instrument and at worst a way for brands to outsource responsibility. Said one social auditing expert we spoke with, “The amount of time and e ort spent on monitoring doesn’t seem to result in enough return on investment. It’s not that brands don’t want to drive change. But there are just too many factories and not enough resources.”
4.0 Signed, Sealed… Delivered? 23Value, challenges and implications Behind Certiﬁcations and Beyond Labels Nor is the solution more or better audits. There’s a deeper limitation related to the systemic nature of social and environmental challenges. Take agricultural certiﬁcation. “Certiﬁcation by deﬁnition is at farm-level,” says Andrew Bovarnick, global head of the United Nations Development Programme’s Green Commodities Initiative. “The farm might have the best forest stewardship and water management practices, but if that farm is surrounded by a landscape with deforestation and water contamination, there will be minimal environmental sustainability. It’s a di cult one for certiﬁcation schemes to deal with.”“Everyone wants a label — but very few 3 Labels preach to the converted — but are limited in what they do for the rest. people can point to hard evidence that shows that this is making an impact Labels work (and are often required and regulated) where people are motivated on consumer purchasing above and to look for them: consider the plethora of on-pack labels that address nutritional beyond that niche group who will content, allergens, alcohol content, safety, and so on. But how well do they work always seek it out.” to sell more distant concerns that are rarely the ﬁrst purchase driver for all but a Luke Upchurch niche few? Head of Communications & External A airs, Consumers International For the less converted majority — or even the converted but busy — labels won’t make much of a dent. One person told us that eye-tracking technology show that“Labels don’t work so well anymore. consumers spend mere seconds looking at any label, let alone a sustainability You need a softer, more open label. And recognition for most seals remains relatively low — although in relationship that connects the some cases, that is changing. For example, according to the Natural Marketing consumer to our story.” Institute’s 2011 data, 42% of American consumers recognize Rainforest Alliance, Jean-Marie Shields 26% LEED and 19% Forest Stewardship Council, although 95% recognize Global Brand Director, Energy Star and 76% recognize USDA Certiﬁed Organic 4 — both of which are Starbucks associated with strong “What’s In It for Me?” factors. The biggest opportunity now is to shift the behavior of “light- or mid-green consumers” — those who care about sustainability, but who also place a high premium on price and convenience. And for this, we’ll need something more than a label. As Dara O’Rourke of GoodGuide says, “Our data shows that there is a much greater market for sustainable products than is currently being captured — but the current system of four hundred logos is not a winning strategy for capturing that market potential. People need to connect to this information in an almost emotional way, the way they do with some brands and retailers.” Retailers are well-placed to step in. According to an October 2011 GlobeScan/ SustainAbility survey, three-quarters of experts surveyed ranked “retailer’s brand or reputation” as having a “high” or “very high” inﬂuence on their purchase decisions — almost as high as “independently veriﬁed sustainability labels.” 5
4.0 Signed, Sealed… Delivered? 24Value, challenges and implications Behind Certiﬁcations and Beyond Labels“We’ve created a model that has 4 And ﬁnally, certiﬁcation and labeling face limits to scale. delivered real results in the market and in the ﬁeld — but the coupling of We cannot certify every factory and farm in the world. standards-setting with labeling might not be sustainable into the future. Agricultural certiﬁcation illustrates this challenge emphatically. “At the moment, The standards-setting process should certiﬁcation is the only process we have, but at some point we’ll have to jump stand the test of time, but labeling to a completely di erent mechanism,” states Jan Kees Vis, global director of and certiﬁcation might be replaced by sustainable agriculture at Unilever. “We’re not going to certify every farmer better models.” in the world, we can’t create a roundtable for every raw material.” Andrew Dr. Alan Knight Bovarnick of the UNDP’s Green Commodities Facility shares this view, Founder, Single Planet Living noting that another “massive challenge is maintaining the rigor of auditing as certiﬁcation schemes become more popular and the numbers of farmers getting“For consumers, trust marks have certiﬁed increases.” run a course where they now lack di erentiation in a sea of competition. Nor can we label everything in the world. The onus is on marketers to ﬁgure out how to engage, inspire, and delight — Understandably, the goal of certiﬁcation and labeling organizations is to see beyond slapping a label on-pack. The widespread take-up of the label. Yet, the more brands carry these marks, the [packaging] real estate is so limited, less the consumer is likely to notice, and the less of a di erentiator they become and the consumer impact is so in for any one brand. This makes the investment much harder to justify for a doubt.” business if the expectation is to di erentiate, to increase sales or to secure a Rob Kaplan price premium from the consumer. Manager of Corporate Responsibility, Brown-Forman And there’s another, perhaps less obvious, cost to labeling. In order to ensure that product claims match product practices you need traceability: connecting the product to actual practices at origin and along the supply chain. Traceability can have many beneﬁts from food safety to more e cient supply chains, but segregating certiﬁed product — especially a commodity that is processed and mixed along the chain — all the way through the supply chain is hugely expensive. Is it worth the cost of communicating what the consumer may not reward? “Traceability can add value, especially when communicating to consumers, but we must recognize that resources spent on traceability can limit those available for farm level programs,” observes sustainability strategy and supply chain consultant Liz Muller. “Why not just fund the change?”
5.0 Signed, Sealed… Delivered? 25 Behind Certiﬁcations and Beyond Labels How will certiﬁcation and labeling need to evolve to accelerate more sustainableRecommendations modes of production and consumption as seven billion of us and counting bump up against the limits of the planet’s natural resources? This is a question that some standards-setters are looking at. The International Social and Environmental Accreditation and Labeling (ISEAL) Alliance, the global association for social and environmental standards which includes Fairtrade Labelling Organizations International, Forest Stewardship Council, Marine Stewardship Council, Rainforest Alliance and Social Accountability International among its 19-strong membership, has just launched the recommendations of its “Scaling Up Strategy,” which includes leveraging the support of key external actors, increasing producer and enterprise access to standards, and increasing the e ectiveness and e ciency of standards systems. Businesses, too, will need to evolve their approach to certiﬁcation and labeling. We o er three proposals. 5.1 De-construct the classic model — and rebuild The “classic” sustainability label (think Fairtrade or Energy Star) combines a set of consensus-based standards with services delivery, independent auditing or veriﬁcation, and a product label. This was an inspired and innovative idea at a time when the need was to raise awareness and to develop a common platform for taking action. But as we seek to scale their impact in order to transform global production and consumption, thinking in terms of a more ﬂexible model where standards, certiﬁcation and labeling do not have to co-exist — and are instead seen as part of a bigger toolbox for inﬂuencing sustainability outcomes — opens up many more possibilities for how business and the voluntary standards movement can work together more e ectively.How do we scale?Green consumers How do we reach the rest?17–19% 5Certiﬁed world supply ofvarious commodities<20% 6
5.0 Signed, Sealed… Delivered? 26 Recommendations Behind Certiﬁcations and Beyond Labels 5.2 Know the value, manage expectations — and partner Know the value. There is signiﬁcant value, but it will come from managing supply, managing risk, supporting brand value and reputation, engaging employees or access to B2B markets. For many categories, the value is unlikely to come from brand di erentiation, increased B2C sales or price premiums. Many people we spoke — from both businesses and standards-setters — acknowledged that from a B2C perspective, the window of di erentiation has closed in many categories. Manage expectations. “I do think managing expectations is critical,” says Patrick Mallet, credibility director at ISEAL Alliance. “Certiﬁcation can be an e ective tool to deliver sustainability but it needs to be applied in coordination with other tools like regulation and ﬁnancial incentives.” One area where managing expectations is especially important is measurement. Linking certiﬁcation or labeling and improvements in social and environmental outcomes “is di cult because it requires the researcher to unwind the speciﬁc impacts of the certiﬁcation from an uncontrolled, dynamic environment with complex feedback loops.” 8 We may need to do more with directional and qualitative forms of impact measurement. Happily, stories are e ective in engaging not only consumers, but also employees and others working in the ﬁeld. Partner. The relationship needs to be a partnership, not a transaction — on both sides. Businesses must not outsource their responsibilities and relationships to a certiﬁcation or label. Indeed, increasingly businesses are seeing certiﬁcations as delivery partners. “Companies are asking us, ‘How can you help us to deliver on the ground? How do we dig in with you to look at our productivity and quality concerns, and how does this align with your agenda to improve farmer incomes?’” says Rob Cameron of Fairtrade International.“We know that the big challenges 5.3 Join forces to create demand are around making more signiﬁcant changes in how we do things on a Finally, brands and voluntary standards will need to ﬁgure out how best to work systemic level. This creates an agenda together to create demand. for brands that is about empowering citizen-consumers — helping us to “Labels have done a lot to increase issue salience and awareness, but they don’t live in the right way overall rather than necessarily do a lot to change consumer behavior,” says Michael Sutton, who co- just making speciﬁc decisions about founded the Marine Stewardship Council and now runs Monterey Bay Aquarium’s speciﬁc products.” Seafood Watch. “Our extensive consumer research shows there isn’t a strong Dorothy MacKenzie correlation between awareness and behavior change.” Chairman, Dragon Rouge Brands, who hold the relationship with consumers, will need to do much more“Our biggest ‘competitor’ is to deploy their insight into consumer behavior and marketing know-how, while misinformation and greenwashing — certiﬁcations will need to continue to establish trust and raise awareness of their this erodes trust in all labels. I’ve seen issues while recognizing the challenges that too much focus on labels poses for enough green leaves in the past few brands. years to ﬁll a forest.” Josh Jacobs Director of Marketing, GreenGuard
6.0 Signed, Sealed… Delivered? 27 Behind Certiﬁcations and Beyond Labels We see a shift towards a new model, based on the essential foundation set byEmerging good certiﬁcation, standards and labeling.practice Business will innovate to deliver to outcomes rather than standards, complement certiﬁcation with strong supplier-buyer relationships, and use the power of their brands to delight and mobilize consumers into adopting more sustainable behaviors. In turn, standards will stretch and innovate alongside business, certiﬁcation will be complemented by new mechanisms such as partnerships and national regulation, and labels will fade into a quieter, background role, acting as trust marks for those who seek it and leaving brands — and consumers themselves — to take the lead. In moving in this direction, the businesses we looked at are using certiﬁcation, labeling and standards increasingly strategically based on what works for them, their supply chain and their customers. And notably, many are moving towards communicating sustainability through their brands. Below we highlight some ways in which businesses are making more e ective use of these tools to deﬁne, deliver, demonstrate and inﬂuence demand for better sustainability outcomes.When to use a certiﬁcation, label or We saw earlier that businesses use Is it any wonder that no single tool canstandard? It depends... certiﬁcation, labeling and standards do it all? Instead of going straight to the as tools to engage with suppliers, B2B certify or label route, businesses must customers, B2C consumers, regulators, consider each of their key stakeholder NGOs and employees. Consider how groups (as outlined in section 3) and di erent the motivations and needs of ask, “For this stakeholder, what is the these di erent stakeholders are: best way to deﬁne, deliver, demonstrate — Suppliers need a business case, and/or inﬂuence demand for better capacity-building and the ability to sustainability outcomes?” make gradual changes. — B2B customers seek credible but easy Sometimes the answer will be a ways to make purchasing decisions. standard, certiﬁcation or label — and — B2C consumers respond to “what’s in sometimes, it won’t be. We ﬁnd it for me” (WIIFM) and an engaging, that the value of using a standard, memorable story. certiﬁcation or label versus another — Regulators may be responding to approach (be it an industry forum, constituent perception or political bespoke standard, NGO partnership, winds. direct sourcing relationship or a brand — NGOs want to see participatory campaign) di ers widely depending governance and evidence of impact. on the business, the product category, — Employees need actionable guidance the supply chain and the competitive and an inspiring narrative. landscape.