International trade has made it impossible to see the consequences of our purchases. Buy a smartphone, and you might later learn you helped exploit factory workers. Eat a hamburger, only to find out that you are destroying the rainforest.
Our textbook solution to this problem, to date, has been certification. You look for the label that assures you that green watchdogs have certified a product: organic, fair trade, dolphin safe, cruelty free, and approved by the Forest Stewardship Council. Then you consume in peace.
If one label turns out to be lacking or flawed, we make another. The Ecolabel Index has catalogued 459 different forms of certification. Certification can seem like the only way to deal with the opacity that comes with international trade. But in a new book-length essay, Beyond Certification, Scott Poynton argues that certification is failing — and offers an alternative. It’s a surprising and persuasive argument. I’ll hit the key points here.
Poynton is the founder of The Forest Trust, a nonprofit that helps companies green their supply chains. I’d expect someone in a position like that to admit that certification isn’t perfect, but then sigh and explain that we have to work with what tools we have. Instead, Poynton argues that the basic structure of certification stifles progress. He writes: “Certification isn’t working and is, in fact, part of the problem.”
I have watched certification consistently fail to deliver industry-wide transformation, all the while becoming an industry in its own right. It is incontrovertible that the people and environment the certification schemes are supposed to protect, preserve and enhance aren’t faring so well. If we are to believe all the excitement and razzle-dazzle about the sustainability that certification schemes purport to deliver, at the very least the world should be on a strong path toward improvement. Sadly, it isn’t.
Saving the world is tough. If that’s the benchmark, then we are all failing. But Poynton goes farther, making the case that certification schemes are part of the problem:
They allow people to make lots of money while smothering the critical analysis, debate and innovation that can lead to a fundamental transformation in how we interact with each other and the natural world.
How so? Well, Poynton spells out the problems with certification in detail, and I’ll highlight just two points: Certification regularly relies on consensus, and it removes any incentive for companies to do more than a bare minimum.
The problem with consensus:
When you seek consensus among the participating companies, Poynton writes, it triggers a race to the bottom.
In the case of standard-setting, the quality of the standard depends on who is at the table during negotiation. When a party disagrees with a proposed change to business as usual, consensus rules the day, and the result is the lowest common denominator of agreement. Alternatively, if a party lobbies hard against a crucial change, the matter gets spun off to working groups, and after the ensuing endless process, typically the decision is business as usual. The process itself is not transparent, as concerns are hidden from public view. And any review of the standards reawakens strongly held positions and ignites endless negotiation and wordsmithing.
You could see this problem clearly in the case of palm oil — the Roundtable on Sustainable Palm Oil sought consensus among the companies involved, and as a result, it took a very long time to get very meager commitments.
The problem of incentive:
A certification scheme defines a series of checkboxes: Do these things and you can qualify for the label. The incentive is to check the boxes as cheaply as possible, not to make big, real change. And so, rather than focusing their full power on solving environmental problems, these companies simply jump through the hoops — even when they don’t make any sense:
‘Sustainability’ has always been conceived of as something that should be done pre-competitively. It is, after all, about everyone and everything winning and the whole world being made better. Logically, then, all the players should get together pre-competitively to work out the best way forward; they should seek processes that lift all boats together. They can’t let certification be soiled by the nasty world of competition where bad things happen. But multi-stakeholder, pre-competitive certification processes are the opposite of the cut and thrust, uncomfortable real world that emboldens innovation and risk takers. They disarm the dynamic life force of human ingenuity that, when released, brings change and transformation …
When a company is focused on ticking someone else’s boxes, it doesn’t have to pay attention to larger issues or to transformation. It changes only to the degree prescribed by the standard. And once certified, it doesn’t have to address any issue not in the standard.
Instead of using their resources to solve the problem (of deforestation, or poverty, or pollution), these companies are using their resources to comply with the standards. And once they check the boxes, there’s no incentive to push further. As a result, certification schemes flourish, but the actual crises continue to fester. For these reasons (and a couple more), Poynton says that certification is simply the wrong tool:
I believe the reason for this failure is that the systems, processes and command/control approaches of certification are the polar opposite of what is needed to tackle wicked problems. It’s not certification’s fault it has failed – we’re asking it to do something that it’s fundamentally incapable of doing. We’ve built the wrong tool. At the same time, certification insidiously gives people the impression that an effective system is in place, so they don’t need to worry. It’s easy to be concerned about forest destruction, for example, but not many people are interested in the limitations of a certification scheme to fix the problem. If they do take an interest, then cynicism will be their likely reaction, which is as bad as indifference.
OK! Certification won’t save us. What should we do instead?
Poynton offers a four-step process. He labels those four steps: values, transparency, transformation, verification.
Instead of trying to hem companies in with ever more complex certification schemes, Poynton suggests setting them loose to solve these problems. Under certification schemes, Poynton says, executives generally believe that their work is done: They are sustainable; they are among the angels! But in fact, further down the supply chain, workers may be rolling their eyes, and complying with the letter of the laws, while flouting the ultimate goals. A better approach, Poynton argues, is to appeal to a company’s values:
Just as we do, companies also have the power to produce and shape a product in accordance with their values, or at least those of their customers. If they don’t want child labor in their products, they can ensure none is there. The same with deforestation. It’s that simple.
If a company says, “No, we’re not cutting down the rainforest — that’s just not who we are,” the next step is to ask, “How do you know?”
The Forest Trust, where Poynton works, has companies map their supply chains. Companies usually know who they are buying from, but have no idea where those suppliers get their raw materials. So TFT asks companies to map the source of their materials, all the way back to the land. Then they tell companies to make that public:
Once a company has developed its supply map, even one with holes, the next task is to share it. While scary, this ‘radical transparency’ is critical because it opens up all sorts of opportunities for the company. Foremost, it shows stakeholders the company isn’t hiding anything. This is something of a revolution, because NGOs tend to assume companies are ‘shady,’ that they don’t like to collaborate and share information, that they’re more likely than not hiding bad things about their operations that would embarrass them if made public. Sharing something hitherto considered highly confidential, of being open and transparent, has a power that cannot be overstated. The whole discussion with antagonistic NGOs changes when they know a company is prepared to share information. At the very least they will engage in, even become deeply involved in, a dialogue.
After a company has mapped its supply chains and made this information public, it faces the crux: transformation. Next it has to actually bringing about change on the ground. It’s not always fast, and it’s never easy, but it is possible. Poynton has lots of examples of companies making real, substantive change. One good case study is ScanCom, a Danish furniture maker, that found that basically all the wood it could buy came — at least partially — from illegal logging:
When it was clear that no one in the region could supply the wood and deliver on ScanCom’s policy and Values, the company decided to buy the wood itself. It established a wood procurement team to purchase and bring the supply it needed to its Vietnamese suppliers. The team scoured the globe for wood sources that could meet its values. First, it found FSC certified Meranti timber in Sabah, Malaysia, and brought the first ever shipment of any FSC certified wood to Vietnam. Then it found FSC certified Eucalyptus deglupta plantation wood in the Solomon Islands. ScanCom’s Vietnamese suppliers, attuned to the magnificent, huge, dense, cylindrical illegal logs that came from natural forest, at first refused to buy the small, light, plantation grown Eucalyptus from the Solomons. This was an important crossroads because the timber was available in volume, unlike the Meranti from Sabah, and represented a great opportunity. ScanCom persuaded three factories to take a chance. Albeit with gritted teeth, the three moved ahead, and the first FSC Eucalyptus chairs ever in Vietnam rolled off their production lines.
The key here is that the company has a vested interest in transformation. Instead of simply following the letter of the law — as all too often happens with certification — it puts its power for innovation and creativity to work on the problem. Then, instead of turning a blind eye when suppliers skirt the rules, the company buckles down:
It can be done if you work with people. They know how to sneak illegal wood into a product, so they must know how to keep it out, right? If you see them as part of the solution as opposed to someone to force into compliance, you energise their inherent capacity to do good.
The final step is verification. The core of verification, Poynton writes, is a simple system that allows anyone to file a complaint:
‘You said you wanted no link to deforestation, yet this supplier is chopping down forests. What’s going on?’
‘You said you wanted no link to child labor, but there are children working in that factory, in that farm.’
‘The migrant workers here are telling friends their passports have been confiscated and they’re being forced to work.’
Etc., etc., etc.
This information is massively powerful and helpful. Some companies hate getting such feedback because they feel everything is under attack – their integrity, the policy of which they are very proud, who they are. Over time, they get over the feeling of injustice, or it diminishes as they realise how incredibly useful the information is in capturing misdeeds and policy breaches.
It’s almost impossible for any one company to police its entire supply chain. But, if it makes that supply chain public and allows anyone to report problems, it can tap into an enormous — and free — force of open-source watchdogs. Instead of hiding from NGOs, companies can use them to become stronger.
To reduce Poynton’s book to one sentence: These companies are good at what they do; let’s work with that talent, rather than against it.
I’d raise a skeptical eyebrow at the idea of corporations working for the common good if I hadn’t already seen a case study of how this works. Poynton was a key character in a long piece I wrote on the wave of “no deforestation” commitments that have swept the palm oil industry. That saga makes it clear that there’s more to what’s happening than just executives making expensive changes out of the goodness of their hearts. Corporate leaders only reassess their values (and ask if their companies are truly representing those values) when their customers demand change. This process comes from the bottom up as much, or more, as from the top.
You can see this happening all over in food. The organic label is meaningful to some people, but it’s almost passe at this point. Many people are quite happy to buy from farmers whose values they trust, even if they haven’t checked all the boxes to be certified organic.