Signed, Sealed... Delivered? Behind Certifications and Beyond Labels

Signed, Sealed... Delivered?
Behind Certiﬁcations
and Beyond Labels

Signed, Sealed… Delivered? 2
Behind Certifications and Beyond Labels

Foreword 3
Contents
Acknowledgements 4

30 second summary 5

Executive summary 6

1 Why this research? 9

2 How certification and labeling work 12

3 How businesses use certification and labeling 14
© 2011 SustainAbility
All Rights Reserved. No part of this Timelines Co ee 16
publication may be reproduced, stored Seafood 17
in a retrieval system or transmitted in Electronics 18
any form or by any means, electronic, Apparel 19
electrostatic, magnetic tape,
photocopying, recording, or otherwise, 4 Value, challenges and implications 20
without permission in writing from the
copyright holders 5 Recommendations 25

ISBN 6 Emerging good practice 27
1-903168-26-0
Case studies Mars 32
Design Nestlé 34
Rupert Bassett O ce Depot 36
Timberland 38
The cover image consists of Cafédirect 40
certification and ecolabel logotypes Method 41
downloaded from The Ecolabel Index.
www.ecolabelindex.com 7 On the horizon 43

Blog 8 Final remarks 44
Continue the Signed, Sealed…
Delivered? conversation at
www.sustainability.com/blog
Appendices

1 Research and collaborations on certifications, labels and standards 45

2 Interviewees 47

3 Notes 50


Signed, Sealed… Delivered? looks ‘behind certifications and beyond labels’ at how
Foreword 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 Lee

Mark Lee
Executive Director, SustainAbility
lee@sustainability.com


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
watanatada@sustainability.com mak@sustainability.com


30 second Signed, Sealed… Delivered? explores the value and
challenges that businesses find in using certification and
summary 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.


Certification, labeling and the standards-setting organizations behind them have
Executive been pioneers in building a more sustainable economy. They’ve made what was
once invisible visible, changed societal and consumer norms, given producers
summary 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 organizations
This report has been written primarily behind certifications and labels gives businesses a credible and shared reference
for 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 certified
with sustainability certification and or labeled goods. However, businesses also experience challenges when they
labeling. We also expect it to be of perceive independent standards to be too low or too slow to change. Where
interest to organizations working in the businesses experience most challenges and see least value is in working with
certification and labeling space seeking certification and labeling to create demand from B2C consumers.
greater insight into the way in which
businesses use them and how they can
become more e ective partners.

Executive summary Signed, Sealed… Delivered? 7

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

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

In the last fifty years, the value of internationally traded goods has increased from
Why 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? 10
Why 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? 11
Why this research? Behind Certifications and Beyond Labels

Labeling is now Examples of companies Labels used in the sector Users of the ten largest
commonplace in many in the sector companies in the sector
consumer goods industries (Exceptions)

Apparel Adidas Organic (cotton) All
Nike (Richemont
Richemont Rolex)
VF Corporation

Carpet Beaulieu GreenGuard All
Interface NSF 140
Mohawk
Shaw

Electronics Apple Energy Star All
LG EPEAT
Panasonic
Samsung

Food & Coca-Cola Fairtrade All
Beverage Kraft Marine Stewardship Council (Anheuser-Busch
Nestlé Organic Kirin Holdings)
Unilever Rainforest Alliance
UTZ Certified

Household & Henkel AISE All
Personal Care Kimberly-Clark Eco-Cert (Procter & Gamble
L’Oréal Fairtrade Kao Corporation)
Procter & Gamble Nordic Swan
Organic

Pulp & International Paper Forest Stewardship Council All
Paper Nippon Paper Programme for the (Procter & Gamble)
Oji Paper Endorsement of
Stora Enso Forest Certification
Sustainable Forestry Initiative
Sustainable Green
Ecosystem Council

Source: SustainAbility research

2.0

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 line
and 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? 13
How 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 Demand
and labeling work to achieve for processes, capacity-building, intent or delivery by identifying and
better sustainability outcomes performance or expertise, relation- through certification, appealing to a want
measurement ships, infrastructure verification or other or need among
and networks assurance buyers

Standards 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

If certification and labeling started out primarily as ways for NGOs and
How businesses policymakers to deliver change through markets, they’ve now also become widely
used by businesses as operational tools: to make purchasing decisions, manage
use 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.

How businesses use Behind Certifications and Beyond Labels
certification 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 sustainability
certifications and labels

Civil Gov’ment /
Society & Institutional
Regulators Customer

Respond to Meet purchasing
pressure and specifications
disclosure
requirements

Influence changes Influence changes Support
in practices in practices brand story

Producer 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 USDA

1962 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

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

Interest in Sustainable Seafood

1985

1959 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

Seafood Choices Alliance formed; Unilever sustainable fish commitment

1972 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

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 3

1980

Interest in Greener Electronics

1985

1990

EPA starts Energy Star program / TCO launched in Sweden

1995

EPA-DOE partnership begins for increased Energy Star product categories

2000

EPA funds the start of Green Electronics Council / WEEE becomes European law
Release of Electronic Industry Code of Conduct
2005 Green Electronics Council founded
EPEAT system released based on IEEE-1680
Sustainable ICT Forum / GeSI created

2010 Shortcomings of Energy Star revealed
18

1975
Timeline 4

1980 Concern grows over chemicals and ﬂame retardants in fabrics
Interest in Ethical Apparel


1985

1974 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

SA8000 standard created by SAI / Nike code of conduct
Ethical Trade Initiative Base Code
Saipan sweatshop lawsuit / Fair Labour Association incorporated

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

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.

Value, 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.


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.”


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


“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

How will certification and labeling need to evolve to accelerate more sustainable
Recommendations 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% 5

Certified world supply of
various commodities
<20% 6

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

We see a shift towards a new model, based on the essential foundation set by
Emerging 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 can
standard? 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.

Signed, Sealed... Delivered? Behind Certifications and Beyond Labels

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