This blog is reprinted from my summer 2013 newsletter.

I would like to share a few brief insights from two worthwhile articles from the International Journal of Sociology of Agriculture and Food, Volume 20. The first article, Private Agri-food Standards: Contestation, Hybridity and the Politics of Standards, examines how and by whom private standards are created. Some of the questions addressed include who is included or excluded from the standard-setting process, how benefits and burdens are distributed, how trust, accountability and legitimacy are created, and what and whose values are reflected in the standards?
 
While public standards are established by government authorities and enforced through laws and regulations, private standards are voluntary and enacted through market forces (e.g. consumers preferring certified products). At times however, public regulations incorporate private standards (e.g. European Union accepting voluntary standards certification to meet biofuels sustainability criteria) and private standards adopt public standards (e.g. public food safety standards are often required in private standards). It is important for standards operating in global trade where rules and regulations are largely voluntary to have credible and authentic governance mechanisms.
 
The distribution of power (and costs and benefits associated with private standards) in the supply chain, a topic about which I am passionate, is also discussed in the article. The authors note that very large retailers have strong purchasing power globally and have established themselves as the primary link to consumers. Retailer-led standards can centralize their power further leaving small-scale producers and other value chain operators with little leverage.
 
The article suggests that private standards are no longer simply focused on reducing transaction costs and increasing market efficiencies; rather, they are now tools that brands and their suppliers use to enter new markets, coordinate efforts, and establish niche products or markets.
 
Another effect that is emerging from the proliferation of private standards is their ability to define "good" and "bad". This can have indirect effects on companies who adopt standards ("good" companies) and those that don't participate at all (inferred as "bad" companies). These are all topics that should be considered when promoting, using or developing private standards.
 
The second article, Pushing the Boundaries of the Social: Private Agri-food Standards and the Governance of Fair Trade in European Public Procurement, looks at how private standards such as fair trade and others are integrated into European public procurement policy and programs, including how the integration of ethical standards creates a new level of governance in the global agri-food system.
 
The authors explore how public procurement can recognize the social movement through private standards, how legitimate these standards are to lawmakers and decision makers, and what issues can arise from the use of private standards in public procurement.
 
An interesting point, referenced to Arce and Long (2007), is a potential shift from government's imposing rule from a central entity to governance that brings together different interests, knowledge and values to shape solutions that work under their conditions and supports their shared vision. For example, legal and legitimacy considerations may shift as societal expectations of companies increase. Taking a conservative approach to avoid legal issues may lead to scrutiny of a company's actions and authenticity related to other issues that society feels are equally important.
 
The article concludes with a question of whether private standards will become common tools governments could use to promote ethical consumption. Regardless, the different role private stakeholders play in creating and implementing private standards and the way they are used by governments is creating new complexities in the interaction of public accountability, market principles and civic activism.
 
While I believe private standards have had a positive contribution to the sustainability movement, I also think it would be wise to take a step back and learn from our experiences to advance the use, effectiveness and governance of existing and future ones.

This blog is reprinted from my summer 2013 newsletter.

In recent years, we have seen a significant increase in the number of initiatives to promote more responsible supply chains. In some cases multiple programs that originate from different industries are targeting many of the same issues and suppliers. For example, several different industries (such as jewelry, electronics, aviation, and gold financial markets) have initiated efforts - all with the same goal to ban conflict minerals from their supply chains - that can target suppliers (e.g. smelters or refiners) that are common to all industries. 
 
I would like to share a bit about four different organizations - World Gold Council (WGC), London Bullion Market Association (LBMA), Responsible Jewellery Council (RJC), and Electronic Industry Citizenship Coalition/Global e-Sustainability Initiative (EICC/GeSI) - that have worked together to align with and recognize each others' programs to reduce redundancy, lower costs and resource demands, and promote consistent expectations across the various supply chains. I believe their collaboration will better enable wider and more effective adoption that is both warranted and - in the case of U.S. companies subject to SEC's conflict minerals due diligence and disclosure requirements[1] - required. I work with two of these efforts - EICC/GeSI and LBMA - and would like to provide a high-level overview of how these programs function together as well LBMA's approach in developing an audit program that enables its members to meet industry standards in an efficient and effective manner. 
 
Let me start with a brief description of the focus and approach of each of the four programs.

• EICC/GeSI has developed audit protocol for gold refiners used in the electronics sector. The outcome is inclusion in EICC/GeSI's Compliant Gold Refiner List, based on an independent audit.
• LBMA has developed audit protocol (LBMA Third-Party Audit Guidance) and requires a third-party audit of refiners on the London Good Delivery List. The outcome is continued Good Delivery Accreditation.
• RJC has developed auditable chain-of-custody (CoC) requirements for responsibly-produced and conflict-free gold as well as conflict-sensitive sourcing practices. The outcome is a RJC CoC Certification based on an independent audit.

WGC is developing a conflict-free standard for gold mining companies operating in conflict-affected areas. The outcome will be a Management Statement of Conformance. WGC's program centers on mining companies performing their own due diligence in accordance with the WGC Standard. The other three operating programs (EICC/GeSI, RJC and LBMA) require an audit by a qualified, independent auditor. Each takes a different approach to qualifying and engaging with auditors. EICC/GeSI administers their audit program using three experienced and qualified firms (liz muller & partners is one such firm), that are contracted directly with EICC/GeSI. RJC accredits qualified auditors. LBMA qualifies auditors through an application process and lists auditors on their Recommended Supplier List, from which LBMA members can hire an auditor directly to conduct the audit (including liz muller & partners). The LBMA application poses questions on key qualification criteria, such as the firm's independence, quality management, complaint mechanisms, integrity and ethics, audit competency and training (EICC/GeSI has similar requirements). LBMA members may use other firms, but they must be pre-qualified by LBMA. 
 
Core elements of each of the programs are consistent. For example, the evidence required to validate a country of origin is generally consistent from one program to the next. Each of the audit-based programs recognizes the other's outcomes as being compliant with their own. In other words, LBMA will accept an EICC/GeSI CFS (conflict-free smelter) audit finding, and vice versa. LBMA and EICC/GeSI will also accept RJC's CoC Certification as being compliant for their program, and vice versa. The mutual recognition helps promote common expectations (e.g. required documentation) and minimizes redundancy in certification or audits of suppliers.  It is worth noting that LBMA has an additional element of money laundering that is not addressed by EICC/GeSI or RJC.
 
Even though most of my experience has been auditing under the EICC/GeSI program because LBMA's program has only been initiated this year, I would like to take a look at LBMA's approach to implementing their program. I believe it will prove to be an effective model that can allow for rapid and widespread implementation while concentrating LBMA's resources on maintaining credibility of their program and individual audits. In some ways this approach is similar to many arrangements with other certification schemes, whereby a third party - independent from the standard-setting body - performs the audits, but LBMA's approach does not require a full accreditation program nor the creation of a new certification or management body. I believe that this key difference reduces the cost of the audit (thereby making it more readily adopted by suppliers), streamlines the process to become audited and thus industry-wide implementation, and allows greater flexibility for companies to select an auditor that fits their needs. I also believe these features may provide a viable model for the many certification initiatives that are pursuing more financially self-reliant models aimed at large scale application. 
 
LBMA's role in the overall program centers on developing LBMA's conflict-free standard, establishing a supporting audit protocol, approving all audit findings, and creating and providing resources (including compliant refiners and recommended auditors) to their members, who will implement the program independently. Even though auditors are not formally accredited, they must meet general auditing criteria, conduct an LBMA audit in accordance with the LBMA Third-Party Audit Guidance and report all findings to LBMA in a standard format. LBMA will then review the audit based on material used, origin of gold-bearing ore or material, the judgment used by the auditor in making their determination, and compliance with LBMA Third-Party Audit Guidance. LBMA provides trainings and other helpful information to the auditors to ensure they have up to date information and to optimize consistency across all auditors. 
 
This approach allows LBMA to execute control at critical stages of the process (e.g. approving and training auditors to ensure qualifications and standards are met, final approval of compliant or non-compliant members) without being involved in every step along the way (and possibly hindering timely implementation). By retaining final approval of all findings, LBMA strengthens their ability to ensure the quality and consistency of audits and member implementation, and the overall credibility of their program. 
 
I encourage the stakeholders in other certification efforts, many of whom are working on how to best harmonize standards and approaches as well as become more financially self-reliant, to keep an eye on how these conflict-free minerals programs and standards bodies progress - both individually and together - over time.

[1] Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act

This blog is reprinted from my autumn newsletter.

The "bar" I am referring to is a bar of soap. Yes, that simple soap wrapped in a colorful paper wrapper or thin paperboard box. The same kind I used to give my mother on Mother's Day, bringing a smile to her face. I like to use a bar of soap, both symbolically and literally, to illustrate how the sustainability movement - and each of us as consumers - must address the need to return to basics.  

We have replaced the highly effective, longer lasting product in minimal packaging - a bar of soap - with more expensive, shorter lasting liquid soaps in complex packaging (e.g. pump bottles). Both achieve the same outcome - but have very different impacts. My friend and colleague has pointed out that just one bar of soap equates to six liters of liquid soap. In addition, we over-use antibacterial soaps despite numerous studies showing little or no added benefits over regular soap. To make matters worse, studies also show that the antibacterial ingredients are wreaking havoc on aquatic ecosystems.

What troubles me most is that the role marketers have in leading this shift and how consumers have bought into it so easily. I fear that brands that have created such a strong brand image as being sustainable (e.g. Method, Mrs. Meyers) have (unintentionally) convinced consumers that the carbon footprint of their products and packaging is negligible, allowing consumers to feel good - and at times even proud - about their purchases.  

We need all consumers to recognize that all products and packaging have environmental impacts, and that we should minimize our consumption of both. Yvon Chouinard, Founder and CEO of Patagonia, has just launched a campaign to address this very issue.

There is another part to this puzzle. If we want people to make adjustments towards truly more sustainable options we need to provide them with good information that they can readily understand (as introduced in my previous article). We can provide common general guidance: avoid packaging or opt for more durable products. Still, as consumers become more sophisticated, they may want a bit more detail (science-based, please). Now that brands and suppliers are beginning to measure carbon footprints, consumers are beginning to better understand what that represents. But will consumers understand multiple indicators that are highly complex in nature (e.g. water impacts, social benefits) and have the ability to judge a product's or brand's impact when faced with multiple parameters? How many indicators is too many, not enough....or just right?  

I applaud efforts to establish consistent indicators across an industry (e.g. Sustainable Apparel Coalition's Higg index) for their use by sourcing and other business decision makers. However, when communicating to consumers, I think we should strive for simplifying indicators. I believe we can focus on a handful of key indicators, which would be applicable globally. We may have to adjust how the results are communicated (again, in a simple and easy to understand manner) to ensure that the proper context is provided. For example, water consumption would need to be overlaid with water scarcity to better evaluate the impact of the product or process. I also believe we need to communicate the social and environmental benefits of a product (please see my next newsletter for more on this subject).  

Managing this amount of information across all of the products we use and food we consume every day can become overwhelming very quickly. In the end, I believe consumers will want brands to evaluate the detail and simply offer only products that they can feel comfortable using. 

More importantly, we must first ask consumers to consume less. This challenge requires businesses to reinvent their growth models, products and purpose. It may also require a new type of marketing - creating a longer-term relationship with the consumer based on the authenticity of brand in pursuing our shared mission of creating a more sustainable future. It is going to be a long journey, but I hope it is one that has a happy ending.