Bearing the standard

If it grasps the opportunities offered by sustainable certification, China can reap commercial, environmental and social rewards, while helping set the rules for a greener global economy, argues Joshua Wickerham.

International voluntary sustainability standards – such as the Forest Stewardship Council, which certifies sustainably managed forests and forest products – are tools for verifying socially sound and eco-friendly goods and services that play an increasingly important role in global trade. However, they are still relatively new and underused in China. These standards offer Chinese companies, officials and NGOs new ways to take part in setting the rules of the global economy, and a powerful instrument to help the country’s companies gain market rewards for good social and environmental performance. This is a soft-power strategy worthy of attention.

These standards are usually set by businesses and NGOs in a process that involves transparent consultation with corporations, governments and other interested groups. This “co-regulation” of global trade to codify common values means that consumers often trust these standards more than those set by companies or governments alone. And s
uch transparent and wide engagement ensures that all voices, from poor producers to rich consumers, are represented.

Voluntary standards are a crucial element of the global economy, offering transparent, traceable and credible mechanisms that, within key global commodities like tea, wild caught fish, forestry and many others, already certify over 10% of global production. They cover everything from sustainable fishing (the Marine Stewardship Council) to labour issues in factories (like SA8000) to farmers’ income (Fairtrade) to environmental sustainability in farmed fish (the Aquaculture Stewardship Council) to how water itself is used by factories and communities (the emerging Alliance for Water Stewardship standard).

Standards bodies and their partners work to build capacity in producers to ensure they can continue to comply with standard criteria. These producers or factories are subsequently certified or evaluated for compliance by independent third-party certification bodies. And, completing the loop, these independent certifications are audited by standards bodies. Finally, many standards have a logo that is easily recognised by consumers. For example, the Forest Stewardship Council (FSC) logo, now carried by everything from paperbacks to train tickets, represents sustainably managed forests. The FSC logo is recognised more than any other voluntary standard by European consumers, with 67% recognition in the Netherlands and approximately one in three in the UK. A 2009
WWF Hong Kong survey suggests that about 15% of the Cantonese-speaking population (covering Hong Kong, Guangdong province and other parts of southern China) recognise the FSC logo.

Rather than being a burden, such labels can help small and large businesses reach new markets and build trust with high-end consumers. In the case of Fairtrade, the logo sends the message that the farmer who grew your fruit, coffee, tea, chocolate or other agricultural commodity is guaranteed a sustainable income. Farmers, especially farming cooperatives, can apply for group certification and gain a fairtrade premium (extra income) that is used collectively by the community on projects like schools or training in sustainable agricultural practices. Other standards, such as the
FSC, help businesses buy and sell sustainably harvested lumber that meets European Union and United States timber requirements while also catching the eye of consumers.

With global brands like Tetra Pak putting FSC labels on their ubiquitous containers and Unilever using the Rainforest Alliance mark on its Lipton-brand tea to demonstrate care for workers and the environment, it is clear these standards are becoming more than something it is simply nice to have: they are increasingly critical to consumer acceptance.

Banks and insurance agencies are also finding standards increasingly important indicators of the financial fitness of loan recipients or insured companies because they demonstrate not only the intention to implement sustainability, but independently verified proof of these efforts.

Mars, the world’s largest chocolate company, is using international voluntary standards Rainforest Alliance and UTZ Certified to transform cocoa production. Standards bodies and others train farmers to cultivate sustainable agricultural practices that help Mars manage its supply chain, and help farmers strengthen production and ensure long-term supply. At the same time, these standards contribute to improvements in key quality of life indicators, such as farmers’ income levels, health and education and soil fertility. This training is also an increasingly valuable way of protecting cocoa fields from climate change. Mars has set a goal of having all of its cocoa certified by 2020.

To compete in global markets, emerging Chinese brands can employ similar methods to win over consumers and secure supply. International voluntary sustainability standards can improve China’s image, build trust
and contribute to the country’s sustainable development. Consumers buying farmed fish independently certified by the Aquaculture Stewardship Council can rest assured the fish are safe to eat and the fish-farming technology used minimises environmental impacts like greenhouse-gas emissions or water pollution. With over 86% of farmed fish produced in China, the opportunities for its leading aquaculture businesses to adopt this standard and reach new export markets are huge.

Cooperation between international standards bodies and the Chinese government can also help ensure corporations are implementing Chinese social and environmental policies, and gaining market recognition for such efforts through independent certification. Increasingly, carbon standards offer tools to compare the carbon footprint of products and services. Additionally, sustainability standards can provide opportunities for the engagement, professionalisation and orderly development of Chinese NGOs, as highlighted by the Ministry of Environmental Protection’s guidelines on the cultivation of green NGOs issued in January.
NGOs could participate in the setting and revising of international standards along with representatives from corporations and government.

Chinese and international NGOs, working with Chinese business and government leaders, could also explore ways to provide additional assurance during certification and assessment to help make sure international standards maintain their characteristic rigour and independence. More work to train and build capacity in these professional environmental NGOs, as well as develop their role in building a robust, transparent and professional certification market, can translate into increased trust, transparency and market acceptance of Chinese goods and services.

Many sectors and industry associations are also getting involved in choosing, influencing and using specific standards. For example, the Chinese National Textile and Apparel Association has been cooperating with labour standards Social Accountability International and the Business Social Compliance Initiative to share best practice and offer Chinese companies training and capacity building. The Chinese tea sector has made efforts to bring together leading standards to create training programmes for producers that help them build capacity to reach higher standards. Similar sector approaches can have obvious benefits and bring clarity to a complex standards landscape in other sectors where China has strengths, such as electronics, agricultural commodities and fisheries.

China has great potential to benefit from international voluntary sustainability standards, but only with the right combination of support from foundations, international donors, foreign governments, Chinese government officials, Chinese and foreign NGOs, technical experts and business leaders. These stakeholders have a chance to learn from two decades of experience in other countries which have used these standards to their advantage. International standards bodies can deepen collaboration with China’s strong domestic standards infrastructure and increasingly responsible businesses.

In the near future, Chinese stakeholders may even get strongly involved in shaping and creating standards that are accepted by international civil society and foreign consumers, business and governments. The rewards for such investments will come as consumers, investors and other decision-makers in China and around the world increasingly build sound social and environmental practices into the backbone of a sustainable global economy.

Joshua Wickerham advises a number of standards organisations on China engagement and serves as an international consultant to the Sino-German CSR Project’s voluntary social standards initiative.

Homepage image by Marcus Lyon