Between 11 March 2019 – 15 March 2019, the nations of the world will gather in Nairobi for the fourth session of the UN Environment Assembly. This is world’s highest-level decision-making body on the environment. One of the themes of this year’s meeting is transforming economies toward sustainable consumption and production. Many of the environmental challenges we presently face are a result of the goods we consume and the manner in which they are produced. Be it toxic materials in our drinking water or the decline of Sumatran tigers in Indonesia, the culprit, in both cases, is human consumption (via cell phones and palm oil, respectively).
While the problems associated with consumption are well-known, international agreements to address them have fallen short of expectations. Cooperation through international organizations has been limited, insufficient, or entirely absent across many environmental issue areas. The Wealthy industrialized countries have been reticent to curb their consumption citing economic and quality of life concerns. As George H. W. Bush said at the 1992 Earth Summit, “The American way of life is not up for negotiation.” For their part, poorer developing countries have avoided signing any international agreements that may hinder their economic growth. Progress in international negotiations has therefore been incremental. Even when breakthroughs have emerged, countries have repeatedly reneged on international agreements.
Perhaps for these reasons, a range of innovative solutions to environmental problems have emerged outside the modern state system. One of the most promising of these solutions involves using market forces to address environmental challenges through sustainability standards, eco-labels, and third-party certifications. Eco-labels leverage the power of global supply chains to change the way goods are produced. They do so by establishing and enforcing voluntary standards that guide and constrain businesses across national borders. In essence, when a large company like McDonald’s determines that it will only source certified sustainable seafood (as it did for American branches in 2013), all of McDonald’s suppliers must obtain certification or risk being replaced. In this way, the economic leverage of large corporations in global supply chains becomes a useful instrument for exporting and enforcing environmental regulations across borders.
In recent years, eco-labeling has moved from the fringe to the mainstream. Today, many of the world’s largest brands use eco-labels to manage the impacts of their complex global supply chains. Lipton Tea, the single largest purchaser of tea leaves in the world, currently sources all of the tea for its tea bags from Rainforest Alliance certified farmers. Unilever aims to source all of its palm oil from certified suppliers by the end of 2019. By some estimates, one in every five products that crosses a border is now certified to a third-party standard of some sort.
Jason Clay, a Senior Vice President at World Wildlife Fund, estimates that production of just 15 priority commodities generate some of the most pressing environmental issues like deforestation, pesticide use, and over-fishing. Within these 15 commodities, 70% of cross-border trade is controlled by fewer than 500 companies. In some cases, single companies control a quarter of the entire market (e.g. Cargill with palm oil). If NGOs can convince these major players to purchase only eco-labeled goods, then there is the potential to transform entire global supply chains in a very short period. As Gerald Butts, former president and CEO of WWF Canada observed in The Globe and Mail:
Coke is the No. 1 purchaser of aluminum on the face of the earth…The No. 1 purchaser of sugar cane. The No. 3 purchaser of citrus. The second-largest purchaser of glass, and the fifth-largest purchaser of coffee. We could spend 50 years lobbying 75 national governments to change the regulatory framework for the way these commodities are grown and produced. Or these folks at Coke could make a decision that they’re not going to purchase anything that isn’t grown or produced in a certain way – and the whole global supply chain changes overnight… Coke is literally more important, when it comes to sustainability, than the United Nations.
So can eco-labels provide the environmental outcomes that have eluded international agreements? That remains to be seen. They can certainly provide timely responses to urgent environmental challenges. They do, however, have significant limitations. Principally, while some eco-labels are credible and capable of transforming global supply chains, others are little more than greenwash used to burnish corporate brands. The problem is that there is often very little to separate credible eco-labels from greenwash. It is important to distinguish credible third-party eco-labeling organizations from non-credible ones. Separating the real from the fake is an essential first step in determining whether non-state governance more broadly is capable of achieving better environmental results than conventional international negotiations.
Feature image credit: “Forest” by SplitShire. Public domain via Pixabay.