Signed, Sealed… Delivered? Behind Certifications and Beyond Labels

Drawing on over 85 expert interviews, Signed, Sealed… Delivered? explores the value and challenges that businesses find in using certification and 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 differentiate themselves in the marketplace. And like any tool, certification and labeling have limits — including limits to scale.

Watch the summary video (put together by the brilliant Geoff Kendall) or download the full report from SustainAbility here.

Questioning and evolving the eco-label

[This blog originally appeared on Guardian Sustainable Business.]

In the last fifty years, the value of internationally traded goods has increased from 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?

Cliff Burrows, president of Starbucks, acknowledges that trust is critical as we seek to move to more sustainable business models: “Customers have demonstrated that they are more likely to buy products and services from companies they trust.”

Enter the eco-label: an independently verified, on-pack label 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 Germany’s Blue Angel, the world’s first eco-label appeared, the time is ripe for asking: How well has the eco-label lived up to its ambitions? And how does the model need to evolve to accelerate more sustainable modes of consumption as 7 billion of us, and counting, bump up against the limits of the planet’s natural resources?

Certainly, many eco-labels have done a great deal to raise awareness and to create trust, to change what we expect from certain product categories, and to build capacity and create a common framework around sustainability. Consider the success of the Fairtrade movement in the UK, where sales of products topped £1bn in 2010 and the 15th annual Fairtrade Fortnight is now drawing to a close.

But as Burrows notes, the eco-label model may have become too successful: “A wide array of certification programs has been developed, creating confusion among customers and undue burden on farmers. The industry needs to better understand what is meaningful to customers and works best for producers.”

And it’s not just the food and beverage industry that is affected. As of today, the Ecolabel Index lists 377 schemes in 211 countries and 25 industry sectors, from Italy’s 100% Green Electricity to New Zealand’s Zque natural wool label. In January alone, we saw announcements on a new label for wind energy, another front-of-pack nutritional label, and a certification process for conflict minerals.

More worryingly, it’s unclear how much impact eco-labels have really had. WWF’s 2010 review noted “insufficient comparable and meaningful data available” on the impacts of certifications and roundtables. Not only that, impact isn’t always the top priority for businesses: last week’s ISEAL 100 thought leaders survey found that only 56% of those surveyed from the corporate sector saw “improved sustainability performance” as the main benefit of using voluntary standards, while 78% cited “increased operational effectiveness”.

The need to question and to evolve the eco-label model is becoming more acute as global companies begin committing to audacious, long-term sustainability goals and need to find effective ways of delivering, as well as credible ways of communicating what they’ve done. Consider Unilever, which has committed to sourcing 100% of its agricultural raw materials sustainably by 2020. How will the company deliver – and show that they’ve delivered – on this goal when, as of 2009, only 8% of global tea production was certified sustainable according to one of 10 independent standards?

As Jan Kees Vis, Unilever’s global director of sustainable sourcing, says: “Companies and brands are struggling with the question how to mobilise consumers to give preference to products and brands that have the potential to deliver positive social and environmental outcomes. The tools available seem to be labels and brands, and I think there is room in the market for both.”

Eco-labels have started to evolve to meet the challenge: ISEAL and WWF have recently completed major strategic reviews of their voluntary standards and multi-stakeholder initiatives. But we need to step back and consider what eco-labels were designed to achieve in the first place, consider objectively the limitations of the eco-label as a tool, and ask how it can be complemented by other ways of creating trust and influencing behaviour change across global supply chains.

Ultimately, eco-labels strive to accelerate sustainable behaviour. Neither consumers nor producers can be expected to do the right thing unless they know what that is, and eco-labels are to be commended for focusing on this need – as are the global companies who are pushing to make effective use of them.

Patrin Watanatada is leading a project at SustainAbility to explore these issues. Signed, Sealed… Delivered? This can be downloaded here

Sunlight & stories for Congo

Here’s what I’d love to see companies doing with their sustainability reporting:

  • Be ready for Pull: Disclose a set of minimally processed data that professional analysts can crunch and compare.
  • Get ready to Push: Communicate selected data in ways that will resonate with a company’s key stakeholder groups, placed where they are most likely to see and use it.

In other words, Sunlight + Stories.

Nowadays, disclosure – the act of releasing information – can feel a little unexciting. Now that a sizeable majority of Fortune 500 companies are engaging in some form of sustainability reporting, much of which isn’t being read by anyone other than professional report readers, discussions in sustainability circles are moving towards how data can be used not simply made public – in order to influence thinking and behavior.

But none of that changes former U.S. Supreme Court Justice Louis Brandeis’s famous statement that “sunlight is the best disinfectant.”  Yesterday, we got a reminder of just how groundbreaking disclosure can be: Congress’s Wall Street reform bill includes a provision that requires companies to report whether they source conflict minerals from Congo or countries in the region, and what steps they are taking to exclude these from their supply chains. (Minerals such as coltan, tin, and tungsten are key to making the electronic parts of our laptops, mobile phones, cameras and other digital goodies, and profits from their sales seem to be financing the warlords.

Tremendous news. Is this one of the first mandatory requirements in the US for human rights disclosure in the supply chain? In any case, it comes a decade after activists such the Enough Project first began pressuring companies on this issue, a decade in which demand for consumer electronics worldwide has surely skyrocketed. Congratulations to everyone who fought hard for this.

The numbers are bad enough: according to the International Rescue Committee, some five and half million people have died from causes related to the fighting in Congo since 1998, making it the deadliest conflict since World War II. A woman is raped every 30 minutes.

But what’s brought these numbers to terrible life for me are stories: for example, playwright Eve Ensler’s monologues written from the point of view of girls and women who have been repeatedly, brutally raped in one of the most terrible weapons of war imaginable, which I saw performed as part of Congo Now!, a campaign organized by the UK’s All-Party Parliamentary Group on the Great Lakes Region that uses photography, music, interviews and readings to raise awareness and push for action. Or the stories quietly told by the NYT’s Nick Kristof, who’s been writing about Congo since 1997. Women for Women International tells the stories of women rebuilding their lives and lets ‘sponsors’ connect with these women with financial and emotional support on a one-to-one basis.

Sunlight + Stories. A powerful combination.

Google’s mission to make journalism sustainable

James Fallows has a great piece in The Atlantic on Google’s work to “[reinvent journalism’s] business model to sustain professional news-gathering.”  It’s a fascinating look at business model innovation, journalism, and sustainability for a number of reasons:

First, it’s a fast and clear analysis of an industry business model going through a dramatic transition as we speak (I’d love to read something similar for auto or pharma).

Second, it gives us insights from outsiders on the current state of journalism. Google News head Krishna Bharat believes that there is a deeply fundamental inefficiency in the media today, namely “the predictable and pack-like response of most of the world’s news outlets to most stories.”

“Why is it that a thousand people come up with approximately the same reading of matters? Why couldn’t there be five readings? And meanwhile use that energy to observe something else, equally important, that is currently being neglected.”

Third, it’s a look at how one company, seeing that “huge, historic technological forces” are threatening the viability of a crucial part of its value chain, is throwing its core competencies towards collaborating with that industry to make it sustainable in the truest sense—having the capacity to endure.

“We help people find content,” [Nikesh Arora, president of global sales] told me. “We don’t generate content ourselves… When there’s no great content, it’s very hard for people to be interested in finding it.”

“For the last eight years, we mainly focused on getting the algorithms better,” Krishna Bharat said, referring to the automated systems for finding and ranking items in Google News. “But lately, a lot of my time has gone into thinking about the basis on which the product”—news—”is built. A lot of our thinking now is focused on making the news sustainable.”

It is this same mindset that, say, global processors and retailers of food should be taking: respecting producers—smallholders and Big Farmer alike—as fellow businesspeople operating within an enormously challenging commercial and resource-constrained context and asking “How do we do our our best to help the sector that produces our key input achieve the capacity to endure? And how can we leverage our core competencies, like world-class distribution capabilities and a deep understanding of consumer behavior, to help develop solutions?”

One inspiring lesson seems to be that “an accumulation of small steps can together make a surprisingly large difference.” Google being Google, their efforts here consist of lots of experimentation and prototyping—Fallows describes a few, like Living Stories, an effort to aggregate a news outlet’s reporting on a single key topic over time.

The forces weighing down the news industry are titanic. In contrast, some of the proposed solutions may seem disappointingly small-bore. But many people at Google repeated a maxim from Clay Shirky, of New York University, in an essay last year about the future of the news: “Nothing will work, but everything might.”

Fourth and finally, it’s a look at the three areas (“improving the distribution, engagement, and monetization of information streams”) in which Google is trying to re-design the business model for news, which is interesting from a corporate transparency and reporting perspective. Most of this harnesses Google’s deep expertise in advertising or technologies such as YouTube Direct, which gives newspapers the means to allow readers to send in video clips and do a bit of citizen reporting. For example, Fallows notes that “Al Jazeera used YouTube Direct during the elections in Iraq this spring to show footage from around the country.” One of the things my Open.com piece advocates for is for sustainability reporting to experiment with sourcing data from stakeholders—imagine the possibilities here.

Open.com: why corporate sustainability strategists must usher in a new era of collaborative reporting and open data

Can sustainability reporting in its current form really drive the radical insight, collaboration and behavioral change that we so need?

As the Economist reminds us in a recent report (‘Data, data everywhere’, February 27th, 2010), “The point of open information is not merely to expose the world, but to change it.”

At SustainAbility, we work with companies on disclosing and communicating sustainability-related information – corporate sustainability reporting – because we believe it can be an effective way for a company to develop a sustainability strategy, hold itself accountable, and engage stakeholders. But like many observers over the last decade, we think there is a lot left to be desired.

Companies know they’ve reached a crossroads. The leading reporters are experimenting with new platforms, channels, and forms of assurance. These are all good developments – but they don’t feel like enough.

And it’s not because a lot of smart and passionate people aren’t thinking about making sustainability reporting more valuable. There is something structurally wrong – but what?

Turns out it’s the US and UK governments leading the charge on accountability – by harnessing the power of ICT and social media to make government more transparent (promote accountability), participatory (strengthen decisions by tapping into society’s expertise), and collaborative (engage staff, citizens, non-profits and businesses in the government’s work).

The day after he took office, President Obama signed the Open Government Memorandum calling for “a new era of collaborative democracy and open government.” His is the first US administration to appoint a Chief Information Officer, Vivek Kundra.

In the UK, World Wide Web inventor Tim Berners-Lee is working with Prime Minister Gordon Brown to open up government databases, and Conservative leader David Cameron is giving talks at TED on his Open Government and Transparency Plan.

There are three big themes in Obama’s open government plans that have implications for next-generation corporate sustainability reporting.

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Crowdsourcing reporting

The Nieman Journalism Lab had a fascinating blog entry a little while ago bout the Guardian’s crowdsourcing their investigative reporting of the MP expenses scandal. As of then, 23,718 Guardian readers had reviewed 206,962 pages of documents, and here are some of the findings, including Gordon Brown expensing “noahs animals” (perhaps a demonstration of how seriously he’s taking climate change?). Cost to the Guardian? A week and change of time for software development plus £50 to rent temporary servers from Amazon’s contract hosting service.

They draw out a couple of lessons on why this worked:

  • Made it fun and competitive: An easy interface, a progress bar (giving the community a goal to share and showing volunteers the immediate effect of their work), lists of the volunteers who’d reviewed the most documents, and bad guys to chase (apparently participation shot up once Simon Willison, the developer, added the MPs’ mugshots to the database)
  • Launched immediately: Without perfecting everything, they launched it the night Parliament released the records, realizing that waiting even 12 hours might fail to capture the sudden welling of public outrage (170,000 documents were reviewed in the first 80 hours)

The software may be reusable. How might this be used for sustainability reporting?

SustainAbility reports on sustainability reports

[Originally posted on the Fletcher INTERNet]

Have been in London for almost six weeks, working for SustainAbility, a consultancy and think-tank that works with the private sector to integrate the “triple bottom line” of social, economic, and environmental performance – along with financial performance – into core business strategy.

They’ve hired five of us interns to work on a specific project, the SustainAbility/UNEP/Standard & Poor’s Global Reporters 2004 bi-annual survey of corporate sustainability reporting. The survey benchmarks fifty reports that are considered to represent international good practice in sustainability reporting.

Corporate sustainability reports are increasing in number every year. This past May, for example, Gap Inc. made headlines with the release of its first-ever Social Responsibility Report, in which they discuss the working conditions of their garment factories. Other big-name companies who have begun serious sustainability reporting in the past few years include Starbucks, Ford, Shell, Hewlett-Packard… the list goes on. Interesting, too, to look at what companies are still not reporting. But that’s another entry.

So, what exactly is sustainability reporting? And why bother reporting on reporting… isn’t that a little meta?

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