Ethical Accreditation Schemes
Review of leading global ethical compliance and CSR accreditation organisations and schemes, assessing their:
- governance and funding
- membership and beneficiaries
- assessment methods
- areas of criticism
As a cross-industry consultancy with more than 830 member companies, BITC claims to be the UK’s largest business membership organisation committed to corporate responsibility.
Set up in 1982, it seeks to promote community regeneration and small business development. BITC enjoys mainstream establishment support; in addition to being one of Prince Charles's charities, David Cameron spoke at BITC’s Leadership Summit in 2011.
BITC has a ‘race to the top’ ethos and hopes to play the role of a ‘critical friend’ to business, seeking to promote sustainability through networking and facilitation.
Along with Global Reporting Initiative, BITC has been credited with making corporate social responsibility (CSR) reporting a mainstream business practice in the UK.
The Prince of Wales has been the BITC President since 1985. The Board of Trustee Directors, which determines the organisation's mission and purpose, is made up almost entirely of current and former CEOs and other business leaders.
BITC also has a number of Leadership Teams that provide strategic guidance on a range of issues.
BITC's more than 830 member firms employ a sizeable proportion of the UK's private sector workforce, and many thousands of people are involved in various training initiatives and campaigns run by BITC and a host of partners.
The CR Index is comprised of 98 companies; 30% of which are FTSE listed. Companies are from across industries and are eligible to participate if they operate in the UK.
BITC does not verify member companies against a specific code of conduct. Instead, it focuses on self-assessment against the BITC Corporate Responsibility Index.
The CR Index requires members to report to BITC on an annual basis in four key areas: corporate strategy, integration, management, and performance and impact.
BITC then reviews submissions to ensure consistency and reliability across company submissions. Companies are given a ranking each year based on their sustainability reports. In 2014, the average company score was 85%.
The high average CR Index scores opens up BITC to the criticism of setting unambitious benchmarks, while the initiative’s inclusion of firms from controversial industries such as mining, oil and tobacco raises questions about potential conflicts of interest with its purported sustainability goals.
Moreover, despite being a 'praise for good performance' rather than a 'name and shame' initiative, BITC has even been criticised by some leading company members for not challenging them enough.
Despite its 30-year history and staunch support from the political and business establishment, general consumer awareness of BITC is low.
In response, it is attempting to up its profile in two ways:
1) The annual Responsible Business Awards
2) CommunityMark - a national standard that publicly recognises excellence in community investment. Recipients are effectively allowed to treat the CommunityMark as a certificate, and are permitted to display the logo in branches and on their website.
BITC does not publicise the details of how companies are verified against the claims they make in their reports.
For this reason, it is difficult to measure the actual impact of this initiative.
Established in 2002 by the European industry body the Foreign Trade Association, the Business Social Compliance Initiative (BSCI) aims to establish a common, cross-industry platform for monitoring social compliance in global supply chains.
BSCI has a large membership base, especially among European retailers. Unlike many industry-driven initiatives, BSCI evaluates the progress of its member companies through audits.
As an initiative of the FTA, BSCI is ultimately run by the FTA's Board of Directors.
This board is made up of business and consultancy representatives. Six Working Groups advise on specific policy areas. With regard to funding, BSCI is highly dependent on participating company members.
Members / beneficiaries:
BSCI works with more than 1,500 participating company members. The vast majority of these companies are European, with Germany having the largest number of members.
BSCI coordinates thousands of audits every year, reaching millions of workers. Many audits take place in East and South Asia.
BSCI requests its members to conduct a minimum number of audits of production sites using SA8000 auditors accredited by Social Accountability Accreditation Services.
In addition to audits, BSCI focuses on remediation / corrective action through training and capacity building for both suppliers and participating brands. If a factory is non-compliant it can have up to two re-audits, each taken up to 12 months apart.
BSCI's close ties with the FTA have been criticised by the Clean Clothes Campaign because of the trade association's history of lobbying against binding CSR commitments.
The Carnegie Council for Ethics in International Affairs has criticized BSCI for having a ‘top-down elite structure’ with very little non-corporate influence.
Several German groups have also voiced criticism of BSCI, among them the think-tank Suedwind-Institut (for being a voluntary effort that does not compel members to tackle degrading work conditions) and The Federation of German Consumer Organizations (for letting companies superficially partake in social responsibility while ignoring human rights violations).
BSCI does not carry a consumer label, and neither does it certify factories or participating members. As a consequence, there is little awareness of this initiative beyond industry insiders.
The FTA Annual Report incorporates a section on BSCI that provides headline data on number of audits, audit countries, number of training participants, et cetera.
However there is little detail, for example on individual factory and company member performance.
Established with the support of the UK's Department for International Development, the Ethical Trading Initiative is a tripartite organisation bringing together companies, trade Unions and NGOs with the aim of improving working conditions across supply chains.
The ETI also lobbies the UK government to promote ethical public sector procurement.
The ETI Board has overall control over policy and strategy. It includes corporate, trade union and NGO members.
Core funding comes from DFID and is supplemented by a combination of members' fees, individual project funding and trading income.
The ETI has some 70 members representing £166 billion in turnover, and claims to reach millions of workers each year through its members' ethical trade activities.
The ETI counts some of the UK’s best known brands as members.
Although the ETI does not provide information about individual supply chain production sites in which the Base Code is being implemented, it does claim that approximately 40,000 suppliers are affected.
Rather than auditing member companies' production sites, the ETI chooses instead to focus on programmes, in particular supply chains where there are good opportunities to improve working conditions through multi-stakeholder collaboration.
However, responsibility is placed on member companies to progressively implement the ETI Base Code in full throughout their supply chains.
The ETI currently focuses only on working conditions and labour rights. Members of the ETI have to report annually on their ethical trade activities in relation to the Base Code.
The ETI Secretariat and representatives from trade unions and NGO membership also conduct random validations.
ETI has been criticised for fostering little progress with regard to working hours, living wages and collective bargaining rights, in spite of improvements in health and safety and elimination of child labour.
ETI has also been criticised for failing to integrate workers and voices from the Global South in its decision-making process as well as not challenging the significant asymmetry of power between retailers and suppliers.
Moreover, ETI has been criticised for expecting producers to bear the brunt of compliance costs.
Because the ETI does not directly audit production sites or accredit auditing companies, certificates are also not issued to any member company.
There is no consumer facing label and compliance with the principles is used for business to business purposes. Corporate members are, however, able to notify consumers of their ETI membership, for example, on their websites.
At present, information about individual company performance and the specific production sites covered by the Base Code is not made public by the ETI.
The FLA, a non-profit organisation facilitated by US President Clinton in 1996 and incorporated in 1999, brings together three key constituencies – universities, civil society organizations (CSOs) and companies – to find sustainable solutions to systemic labour issues.
The FLA seeks to protect the workers who manufacture the clothing, footwear, luggage, jewellery, electronics and other items enjoyed by consumers around the world.
The 19-member Board of Directors, FLA’s policy-making body, is comprised of an independent Chair and an equal split of 6 representatives each for universities, CSOs and companies.
Most of FLA's funding comes from members' dues and government grants; however, a detailed financial breakdown has not been made public.
The FLA's multi-stakeholder affiliates include companies, suppliers, CSOs, colleges and universities.
The participating companies include some major international brands.
Companies join the FLA on a voluntary basis, but they must implement the FLA Workplace Code of Conduct for as long as they are affiliated.
The FLA currently focuses only on working conditions and labour rights, however it does require that employers adopt responsible measures to mitigate negative impacts that the workplace has on the environment.
The Workplace Code of Conduct is derived from ILO conventions and has nine key provisions:
3. Harassment or abuse
4. Forced labour
5. Child labour
6. Freedom of association and collective bargaining
7. Health, safety and environment
8. Hours of work
FLA holds affiliated companies accountable for enforcing its Workplace Code of Conduct in the factories, farms and facilities they use.
Working with FLA staff, independent external assessors randomly visit approximately five percent of facilities supplying affiliated companies each year.
United Students Against Sweatshops has been highly critical of the FLA for not pushing hard enough to improve standards, and advises against universities joining the initiative.
“...it [FLA code] is a weak code that fails to provide for women's rights, a living wage, the full public disclosure of factory locations, or university control over the monitoring process. It is more corporate cover up than industry reform.”
The Worker Rights Consortium (WRC) has also criticised the FLA for giving Apple manufacturing facilities in China a ‘clean bill of health’ after only a superficial inspection.
The FLA does not carry a consumer-facing label. Communication to consumers primarily takes place via brands' websites.
Otherwise, FLA is designed to be communicated to consumers via NGOs.
Although the FLA does not certify either production facilities or participating companies, it does accredit companies' compliance programmes.
The FLA also publishes summaries of the unannounced assessments it has conducted, including information on the relevant participating company/buyer; however these assessment/audit reports do not include the name of the enterprise operating the factory/farm.
FLA also does not publish a full list of the factories affected indirectly by the FLA through accredited internal audits conducted by participating companies.
Fair Wear Foundation works to improve workplace conditions in the garment and textile industries. FWF verifies that its member companies implement the FWF Code of Labour Practices in their supply chains.
Trust and cooperation is repeatedly emphasised in the FWF approach, with a focus on tailored remediation that utilises local expertise.
The FWF has also put living wage issues at the core of its work.
FWF has a tripartite governance structure, with equal representation for business associations, trade unions and NGOs on the Board.
Regarding funding, more than half of FWF's revenues come from membership dues and audit fees. Another large chunk – around one-third of total revenues - come from various EU and UN-related subsidies.
FWF has nearly 100 member companies from all over Europe and is active in production countries like China, India, Bangladesh and Turkey (around 80% of production comes from these countries).
Eligible companies must be based in Europe, and can include include producers, distributors, wholesalers, and retailers. Garment and textile manufacturers can also join FWF as long as they operate in a producing country where FWF is active.
Member companies tend to be from the small and medium end of the apparel market.
FWF conducts ‘verification audits’ at a sample of the factories which supply member companies. It currently focuses on working conditions and labour rights.
Designed for the garment industry, its Code of Labour Practices is guided by eight core principles, mostly derived from ILO conventions.
1) No forced labour
2) No discrimination in employment
3) No child labour
4) Freedom of association and the right to collective bargaining
5) Payment of a living wage
6) No excessive working hours
7) Safe and healthy working conditions
8) Legally binding employment relationship.
FWF audit teams are assembled with advice from local stakeholders. Worker interviewers are often representatives of local NGOs with relevant expertise. These teams are drawn from local partner networks established in various countries.
Emerging as it has from civil society (NGOs and trade unions), FWF has not received as much criticism as some more business-friendly entities.
However, although the FWF deserves praise for bringing on board many of the small to medium companies often ignored by other initiatives, and despite its European focus, its list of members is noticeably short of larger brands or retailers.
Although it doesn't carry a consumer-facing label on individual items of clothing, FWF encourages its brand members to be transparent about their participation in order to encourage consumer awareness and vigilance.
Company members can publicise membership on their websites. If using the FWF logo in store, however, members must first ask permission and are also not allowed to claim that their products are '100% fair'.
FWF provides a full breakdown of its funding sources in its annual reports.
Fair Trade is widely viewed as the most effective attempt to promote the ideals of ethical consumption to a mainstream audience.
The launch of the first Fair Trade label came in 1988 with the Dutch Max Havelaar initiative.
Based in Bonn, Germany, Fairtrade International is the strategic organisation uniting more than 20 labelling initiatives across the world, including the UK's Fairtrade Foundation
Globally, the six biggest Fairtrade products are bananas, cocoa, coffee, cotton, sugar and tea, though many other products are also widely available.
Each national labelling initiative has its own particular governance structure, and in the case of the Fairtrade Foundation this consists of a Secretariat running day-to-day operations in addition to a Board and also a Certification Committee.
Fairtrade International, meanwhile, which steers the movement's global strategy, is governed by an annual General Assembly responsible for electing the eleven-member Board of Directors.
Regarding funding, more than half of Fairtrade International’s 2013-14 income was derived from membership fees, and just over a third from grants.
The UK is the world's biggest Fairtrade market with over €2 billion in sales in 2013, accounting for more than 30% of total global sales (€5.5 billion).
There are now more than 30,000 Fairtrade products available. Fairtrade goods are produced in 74 countries and available to buy in more than 125. T
here are more than 1.4 million farmers and workers affiliated with some 1,200 certified producer organisations across the world, of which about half are in Latin America and the Caribbean, a third in Africa, with the remaining in Asia.
Fairtrade standards are split into four categories:
1) Standards for small producer organisations
2) Standards for hired labour
3) Standards for contract production
4) Trade standards.
Much debate surrounds the effectiveness and viability of Fair Trade. In general, NGOs and international organisations are willing to promote Fair Trade because of its advantages – the premium, minimum price, pre-financing and emphasis on democratic cooperatives.
However, a number of academics have criticised Fair Trade. Two main critiques are made:
a) because less than 50% of certified coffee is actually sold at the Fair Trade price, farmers may opt to sell their worst quality coffee at the Fair Trade minimum price, only to trade their best quality coffee on the 'open' market.
b) the 'poorest of the poor' – migrant workers – are not protected because they do not have land and hence are not able to join a cooperative.
Others criticise Fair Trade for merely tinkering with the existing capitalist hegemony, emphasising individualistic consumer sovereignty above all else, and failing to offer a high enough minimum price for struggling farmers.
Fairtrade is a consumer-facing organisation with a widely recognised label placed on certified products.
While consumers use the label to find products with Fair Trade ingredients, at the production site only democratically run cooperatives made up of smallholder farmers without full-time employees of their own can join.
Reports from audits are not publicly available, however detailed descriptions of cooperatives are available.
Based in Bonn, Forest Stewardship Council is a multi-stakeholder forest management organisation that brings together NGOs, indigenous peoples' organisations, community forestry groups, forestry professionals, timber traders, and retail companies.
The FSC label is designed to reassure the consumer that their purchase has been sourced from a well-managed forest.
Governed by its members, the FSC welcomes individual or organisational stakeholders from business and civil society. Members can join one of three chambers, focused on environmental, social and economic issues.
FSC's constitution calls for 50/50 representation from the ‘Global North’ (mostly consuming countries) and ‘South’ (mostly producing countries) in both the General Assembly, which meets every three years and the nine-member Board of Directors.
The bulk of FSC’s income stems from its accreditation programme.
FSC has several hundred members including some very prominent international companies.
The FSC also has several high profile conservation NGO members.
As of July 2015, there are FSC-certified areas in 80 countries covering more than 180 million hectares. The bulk of these areas are in Europe or North America.
FSC organises independent, third-party certification of forest areas, and uses chain-of-custody techniques to ensure that labelled products are traceable to their source.
Therefore, when a consumer purchases a product branded with the FSC label, they should be confident that it has been sourced from a well-managed forest.
There are ten FSC Principles that every forest owner or manager must comply with, and they relate to the following issues:
1) Compliance with all laws, regulations, treaties, conventions, agreements and FSC principles
2) Establishing long-term tenure and use rights
3) Indigenous peoples’ rights
4) Community relations and worker's rights
5) Fair distribution of forest benefits
6) Environmental impact
7) Management plan
8) Monitoring and assessment
9) Maintenance of high conservation value forests
10) Plantation management.
Despite receiving criticism for arguably allowing the certification of some large plantations that cannot realistically guarantee compliance, FSC is widely viewed as the most credible forest certification system.
FSC has had a mixed reaction over the years from various NGOs.
The website FSC-Watch, which is dedicated to scrutinising the FSC, is run by a group of people that includes Simon Counsell, one of FSC's founders. FSC-Watch criticises the FSC for failing to tackle structural issues related to poor governance in some forest areas, and also argues that vested commercial interests are having a growing influence over its policy.
Criticism has been made of the prohibitive expense of FSC certification, which tends to favour larger suppliers.
FSC has also been criticised for certifying timber companies that have questionable sustainability records and for certifying vast areas of clearcutting.
High. A consumer-facing label is placed on products sourced from FSC certified forests.
Because the FSC label is awarded on a product-by-product basis, member companies do not need to be compliant on all of their range, however.
For example, while in 2012, IKEA sourced only 22.6% of its wood from FSC certified forests, the company was permitted to highlight FSC participation on its website like other members.
There is a wealth of facts and figures relating to certified areas and suppliers, members et cetera on the FSC website. However, FSC has been criticised for not requiring full disclosure of audits results and for a general lack of transparency about the auditing process taking on the ground in forest areas.
The Global Reporting Initiative is a network-based organisation that promotes economic, environmental and social sustainability.
GRI convenes a network of over 600 organisational stakeholders from over 60 countries.
GRI provides a baseline framework on reporting sustainability that can be used across industries, and one of the organisation's core objectives is to make sustainability reporting as routine as its financial equivalent.
GRI's Board of Directors carries ultimate responsibility for guidance, finances and activity. The board is made up of a chair and proportional representation from GRI's four constituencies: business, civil society organisations, labour and mediating institutions.
The GRI's governance structure is also made up of a larger Stakeholder Council, responsible for making policy recommendations. Regarding funding, GRI received more than half of its income from project and service fees, and around a quarter from member fees.
Members and beneficiaries:
The GRI organisational stakeholders include many prominent global brands. Nearly 8,000 organisations have produced almost 20,000 reports using the GRI framework.
The top sectors using GRI are financial services, energy and utilities, and food and beverage products.
These contain a wide range of performance indicators split into three categories:
i) Economic (economic performance; market presence; indirect economic impacts),
ii) Environmental (materials; energy; water; biodiversity; emissions, effluence and waste; products and services; compliance; transport)
iiI) Social (labour; human rights; society; product responsibility).
GRI recommends (but does not mandate) that reporting organisations use external assurance to verify claims made in their reports. While not recommending particular assurance providers (auditors), it does set criteria on acceptable providers.
SustainAbility has argued that GRI's broad substantive focus compels businesses to report on many issues superficially, rather than focus in detail on those that really matter, producing lengthy reports that may check boxes but provide insufficient detail on core issues and impacts.
Meanwhile, CSR Consultant Elaine Cohen has argued that GRI needs to focus on the rigour of assurance claims made against its performance indicators, describing this area as “the Wild West of Sustainability Reporting”.
From academia, GRI has been criticised for failing to shift the balance of power from corporations towards civil society and for largely sidelining NGO and trade union voices*, as well as for ignoring small and medium enterprises in favour of multi-national corporations**.
GRI does not have a consumer-facing label. Concerned consumers can find out about company participation through the GRI website, and occasionally through company websites.
GRI is very transparent about members, funding, the reporting framework and governance structure in its annual reports and website, while its Sustainability Disclosure Database contains every report since 1999.
However, because of the focus on process-based reporting over systematic assessment and remediation in production sites, it it not possible to verify with confidence the actual impact of GRI.
* Levy, D.L., Brown, H.S. and de Jong, M. (2009) 'The Contested Politics of Corporate Governance: The Case of the Global Reporting Initiative’, Business and Society, 49 (1): pp. 88-115.
** Brown, H.S. (2011) ‘Global Reporting Initiative’, in T. Hale and D. Held (Eds.) Handbook of Transnational Governance: Institutions and Innovations. Cambridge: Polity Press.
Based in London, the Marine Stewardship Council was established in 1997 by WWF and Unilever, becoming fully independent in 1999. MSC works to sustain stocks in the wild rather than aquaculture farmed fish.
MSC-certified fish is now available in a total of 97 countries, sourced from 231 certified fisheries, with 10% of all wild seafood now being caught to the MSC standard - 2015 Report.
MSC is governed by a Board of Trustees.
There is no formal membership structure, but it is recognised that the Board should be balanced with representatives from different sectors and geographical regions to reflect the broad mix of people who have a stake in the MSC's mission.
The bulk of MSC’s funding comes from charitable activities (logo licensing), with some also from charitable donations.
Globally, there are now almost 20,000 MSC-certified products available from retailers and restaurants.
In the UK, nearly 900 products are available to buy at retailers large and small. The UK is also one of ten countries with restaurants supplying MSC fish.
MSC's standards are grouped under three key principles:
1. Sustainable fish stocks – maintaining high populations; promoting stock recovery; sustaining age and genetic structure of stocks.
2. Minimising environmental impact – sustaining ecosystem balance; protecting endangered species.
3. Effective management – respecting international agreements; long-term planning; stakeholder engagement; observing the rights of indigenous fishers; creating mechanisms to halt the fishing of threatened stocks.
Certification to the MSC standards is conducted by third-party auditors.
Campaigners including Greenpeace and conservation workers have questioned the sustainability of some of the fisheries accredited by MSC. .
High. The MSC is the world's leading certification and ecolabelling program for sustainable seafood.
MSC is arguably one of the most transparent certification initiatives, providing background information and links to highly detailed assessment reports for individual certified fisheries in its Track a Fishery database.
It also has a list of fisheries that have exited the programme, as well as a list of those that didn't pass their certification assessment.
For consumers, the MSC website includes a ‘Where to buy’ section which has an easy-to-use and detailed list of all certified products.
Organic is one of the most well-known and popular means to shop more ethically.
The International Federation of Organic Agriculture Movements (IFOAM) is the umbrella organisation for organic agriculture, and its establishment in 1972 marked the beginning of the modern, organised organic movement.
While food dominates the organic market, an increasing number of non-food items such as textiles and beauty products are now available.
While organic certification is globally governed by IFOAM, day-to-day organisation is highly fragmented between countries. IFOAM has some 800 member organisations (affiliates) in 100 countries across the world, responsible for producing and/or certifying organic goods.
Ten of these are based in the UK, the most prominent being the Soil Association. IFOAM's General Assembly elects a ten-member World Board every three years, and this board then selects around three of its members to sit on the Executive Board.
The biggest chunk of IFOAM's income is project revenue.
There are some 2 million certified organic producers worldwide, with some 650,000 in India alone. 170 countries produce data on certified organic agriculture.
The three largest consumer markets for organic products are the USA, Germany and France. In the UK, most of the big retailers have a large range of own-brand organic products.
While regional variations exist, all organic initiatives work from the internationally recognised Principles of Organic Agriculture.
These are grouped into four categories:
1) Health – of the soil, plant, animal, human and planet
2) Ecology – working with, emulating and sustaining existing ecological systems
3) Fairness – equity, respect, justice and stewardship of the shared world through fair relationships between humans, animals and the environment
4) Care – agricultural management that is precautionary and sustainable, taking into account the needs of future generations.
These broad principles are fleshed out in the detailed IFOAM Norms document.
The body responsible for overseeing the implementation of these norms is the International Organic Accreditation Service, founded by IFOAM in 1997.
Unlike other ethical consumption movements and initiatives, which tend to focus on the extrinsic aspects of production such as working conditions and the environment, Organic derives most of its value from intrinsic changes to the final product, e.g. less artificial pesticides and fertiliser residue; ban on antibiotics and genetically modified materials.
Consequently, much of the debate surrounding organic agriculture focuses on the nutritional and health qualities of these products.
The primary criticism is that there are minimal nutritional benefits to organic food.
The second main area of debate is about the wider environmental impact of organic farming. Critics of organics argue that organic outputs are actually more carbon intensive per unit of production, citing research positing organic yields to be 25% lower than their non-organic equivalent – making them less viable as a solution to global food supply challenges.
Very high. Organic productscarry a consumer-facing label, which varies from country-to-country.
The UK's most well-known label is found on products certified by the Soil Association, who inspect all certified farms and businesses on an annual basis.
The Soil Association does not publish the findings of its audits, making it difficult to assess the relative areas of compliance and non-compliance with IFOAM Norms over time.
There is also little discussion of the auditing method, that is, how standards are actually measured on farms.
Based on area coverage alone, the Programme for the Endorsement of Forest Certification is the world's largest forest certification system. It claims to be the certification system of choice for small, non-industrial private and family-owned forests.
PEFC seeks to transform the way forests are managed globally – and locally - to ensure that everyone can enjoy the environmental, social and economic benefits that forests offer.
PEFC has two membership categories:
1) National members are independent national organisations established to develop and implement a PEFC system within their country.
2) International stakeholder members are international entities including business associations – and to a lesser extent NGOs – committed to supporting PEFC's principles.
Members are represented in the General Assembly, the PEFC's highest authority.
The Board of Directors is the PEFC's second decision-making body.
The third and final EFC decision-making body is the Geneva-based Secretary-General's office.
The PEFC’s activities are financed almost entirely from membership fees.
PEFC allows the certification of individual products rather than whole brands, and as a result does not have a company membership option. PEFC has certified some 263,000,000 hectares of forest, making it the world's largest forest certification system.
This covers over 750,000 forest owners and over 16,000 companies with Chain of Custody certificates. See 2014 Annual Review.
On paper at least, PEFC has the most comprehensive range of standards of all forestry certification initiatives.
It is the only programme to require compliance with all eight of the ILO's core labour conventions.
There is, however, no single, globally applicable code of conduct for PEFC-certified areas. Rather, PEFC combines International Sustainability Benchmarks derived from the International Organization for Standardization with National Standards during a consultancy period, which usually ends with a country-specific framework verified by a third-party accreditor.
PEFC's complex and at times opaque system of standardisation is difficult to fully discern, with arguably greater weight given to the process of standard-setting over the normative focus of particular standards.
Systemic problems relating to auditing, governance and stakeholder participation have been cited in various critiques of PEFC.
Regarding governance, a Greenpeace report from 2011 states: “The PEFC system was established by the forest and wood products industry, and the governance structure reflects this with the balance of power sitting with industry representation”.
In the same report it is argued that the limited role given to NGOs vis-à-vis business associations in the International Stakeholder Members group has discouraged many environmentally focused NGOs from engaging with PEFC. The report also raised serious questions about PEFC's auditing procedure.
The WWF has found a lack of genuine stakeholder engagement in PEFC's decision-making process, citing also an imbalance in stakeholder representation; their analysis also criticised PEFC for not being transparent enough in relation to its auditing practices.
PEFC's decentralised structure, denoted by its National Governing Bodies, was also criticised for producing major inconsistencies between countries in relation to both the rigour of the certification process and the public availability of data.
PEFC has a consumer-facing label displayed on products able to be traced back to certified forest areas. Its website contains detailed guidelines on the appropriate use of this globally recognised logo, which distinguishes between 'on-product' use for specific products traceable back to certified areas, and 'off-product' use, which allows companies to display the PEFC logo in annual reports, websites, et cetera.
Greenpeace's in-depth analysis of PEFC criticised the initiative for being selective in the kinds of information it shares with the public, and for offering sparse public summaries of individual forest management plans, which are essential for truly meaningful stakeholder involvement.
This sentiment was also reflected in the conclusions of the WWF report.
The Rainforest Alliance works to conserve biodiversity and ensure sustainable livelihoods. It was established in 1987 in response to the environmental emergency of uncontrolled deforestation.
Initially operating solely as a forest certification programme, RA launched its first certified farms in 1992. In 1993, RA helped establish the Forest Stewardship Council, as well as launching a sustainable tourism programme.
Day-to-day operations are led by the New York-based President. Strategic governance is steered by a Board of Directors.
The RA funding model is primarily based on government grants and contracts, certification fees, participation agreements, contributions/membership and corporate grants.
Rainforest Alliance has won wide support from some of the world's best-known food brands.
The initiative's Shop the Frog site allows ethically minded consumers to search easily for products by category.
A number of retailers also offer own-brand RA-certified products.
As of 2012, RA had certified over 1,500 sites covering 1.53m hectares of farmland to its SAN standard, and another 75 million hectares to the FSC standard.
The Rainforest Alliance Certified Seal is awarded to farms and forestlands that meet the standards of the Sustainable Agriculture Network (SAN), a third-party auditor made up of a coalition of conservation NGOs.
RA is also a founding member of the Forest Stewardship Council, pledging to work only with businesses that meet FSC standards.
Three key criticisms can be made against Rainforest Alliance.
1. RA offers no minimum or guaranteed price to producers, which does nothing to reduce the precarious position of, for example, coffee farmers, while also allowing consumers to believe that ethical purchases do not require any redistribution of value to producers*.
2. RA is criticised for certifying coffee products that can contain as little as 30% certified content.
3. RA does not require buyers to offer crop pre-financing to farmers**.
Similar criticisms have been made against Utz Certified, which can be grouped alongside RA as a mainstream, 'business-friendly' alternative to Fair Trade in that free market forces are not tampered with through the use of premiums or targeted finance for producers.
Critics would argue that this enables big brands, at minimal expense, to reap the reputational benefits of being associated with initiatives superficially akin to Fair Trade.
Rainforest Alliance has a consumer-facing label, and certifies individual products rather than entire companies.
Due to its support and links to the FSC, it is also possible to find double-certified RA and FSC products.
The RA has a list of all certified sites.
RA also publishes a certification policy, with details about how farms should be audited. However, specific farm audit reports along with recommendations for remediation are not publicly available.
* Neilson 2008 'Global Private Regulation and Value-chain restructuring in Indonesian smallholder coffee systems', World Development 36 9 : 1607-1622.
**Thomas, W. 2005 Financing Fair Trade. London: Sage.
Social Accountability International works to protect the integrity of workers around the world by building local capacity and developing systems of accountability through socially responsible standards.
SA8000 is a code of conduct verification and factory certification programme run by SAI. It is designed to enforce existing international agreements, including ILO conventions, the Universal Declaration on Human Rights, and the UN Convention on the Rights of the Child.
SAI is managed by a Board of Directors. The Board of Directors has also established an SA8000 Advisory Board and directed it to provide the President of SAI with expert advice regarding the drafting, operation, policy, and development of SA8000.
The Advisory Board advises the President of SAI, who in turn reports to SAI’s Board of Directors.
In 2011, 40% of SAI's income came from grants, with the rest from earned income in training fees, corporate programmes and other sources.
Corporate programme members include some prominent international brands.
Social Accountability Accreditation Services (SAAS) accredit auditors to assess facilities against SA8000 standards.
As of 2015 there are 3,490 certified facilities across 65 industries in 72 countries employing nearly 1.9 million people.
SA8000 is widely used by companies with global supply chains, often in developing countries. The largest number of certified facilities are in Italy, India, China, Romania and Pakistan.
Due to the issues covered in SA8000, certified companies are normally from the apparel, textiles, manufacturing, or food manufacturing sectors.
Responsibility for choosing an accredited auditor and meeting standards lies solely with factory owners, while facilities seeking certification must go beyond simple compliance to integrate the standard into their management systems.
SA8000 standards are assessed by private auditors accredited by Social Accountability Accreditation Services (SAAS).
Sustainability consultancy firm ERM has argued that there is a danger that a certification scheme becomes a process of managing paper work and documentation of evidence rather than a tool for changing behaviour and work-site culture.
The Maquila Solidarity Network has criticised SAI for the dominant role it gives to giant social auditing firms and the minimal role allowed for workers and Southern NGOs.
SAI has also been criticised for its co-operation with the BSCI, which is seen as weakening the relatively strong SA8000 standards.
From academia, SAI has been criticized for not holding corporations directly accountable for labour conditions in their supplier factories. Instead, the onus is on these suppliers to pay for costs associated with audits and remediation.*
SA8000 does not have a consumer-facing label. Production facilities are the object of certification. SA8000 certification is not for specific items produced by certified facilities, but rather the process through which the products are made.
The SA8000 certificate is principally designed for factories to use to communicate social compliance to their buyers. Buyers sourcing from SAI-certified factories can then use SA8000 certification as evidence of social compliance to civil society.
Comprehensive factory lists are available on the SAAS website, as well as a list of accredited auditors.
SAI do not, however, share any information that links production facilities with buyer/brands.
*1 Braun, R 2011 Social Accountability International, in T Hale and D Held Eds. Handbook of Transnational Governance: Institutions and Innovations. Cambridge: Polity Press.
SFI Inc. is an independent, nonprofit organization dedicated to promoting sustainable forest management.
It is a forest certification system, originally launched in 1994 by the American Forest and Paper Association. In 2005, the Programme for the Endorsement of Forest Certification recognised SFI as a valid certification system, and since then the two notionally rival organisations have co-operated in North America, currently the only region in which SFI certifies forests, and where SFI is the largest system by area coverage.
SFI is the preferred certification system for large forestry companies, and aims to mainstream certification by taking a non-confrontational approach to business stakeholders.
The SFI programme is governed by a Board of Directors, which has full control of SFI policy and standards.
It has a 'three-chamber' structure, with equal representation for environmental, economic and social interests.
SFI receives the vast bulk of its financial support from programme participants, which is any business or organisation that uses SFI's standards.
Despite having legal independence from industry, SFI continues to have close financial and personnel link with the American Forest and Paper Association.
There are some 250 SFI Programme Participants; some 80% are already certified and the others are yet to be certified against SFI's standards.
Participants are mostly made up of timber and construction companies, with a number of civil society organisations also on the list.
No prominent UK-based or UK-facing furniture retailers were visible, and this is likely due to SFI's current focus on North America.
SFI updates its standards every 5 years.
A major change to the structure of the 2015-2019 Standards and Rules was to establish three stand-alone standards, for forest management, fiber sourcing and chain-of-custody.
No matter where users sit in the supply chain, SFI has a relevant standard to support responsible forestry. The SFI's standard-making process is rather opaque and undemocratic (in comparison to, say, the Forest Stewardship Council), but both initiatives rely on third-party auditors.
Despite receiving support from some of America's 'big greens', SFI has received vociferous criticism from some quarters.
The most high-profile opposition comes from ForestEthics, who are campaigning to prevent SFI certification from being recognised as a sustainable wood option in the US Green Building Council's LEED Green Building Standards.
ForestEthics argue that SFI is a marketing tool for selling environmentally harmful products by falsely describing them as 'green'”. A successful campaign led by ForestEthics has persuaded 24 companies to forego SFI-certified paper in favour of the FSC.
Another key critic of SFI is Sierra Club, which in 2009 filed a complaint against SFI-certified timber company Weyerhaeuser for conducting irresponsible logging on extremely steep and unstable slopes – actions that resulted in massive landslides and extensive damage to public and private property.
SFI carries a consumer-facing label.
There are seven labels in total, distinguishing between products with a certain percentage of certified material, and those that are merely produced by a certified company and therefore may not necessarily contain certified content.
SFI publishes summaries of forest audits but not detailed breakdowns of (non-)compliance against individual standards, or the findings from stakeholder interviews.
The United Nations Global Compact is the largest corporate social responsibility initiative in the world.
It was founded as a strategic policy initiative for businesses committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, the environment and anti-corruption.
Under the compact, companies are brought together with UN agencies, labour groups and civil society, with the aim of facilitating the adoption of social and environmental norms into global business practices through learning and dialogue.
By combining the moral authority and convening power of the UN with the private sector’s solution-finding strengths, the UNGC aims to be a voluntary yet accountable multistakeholder forum.
The UN Global Compact Board is responsible for providing ongoing strategic and policy advice for the initiative.
Members of the board are appointed by the chair – the United Nations Secretary-General. The Board is a component of the broader Global Compact governance framework, which divides functions into main elements, each with differentiated tasks: the Global Compact Leaders Summit, Local Networks, the Annual Local Networks Forum, the Global Compact Board, Global Compact Headquarters, the Global Compact Government Group and Friends of the Global Compact.
The UNGC is funded by voluntary contributions from Governments to a UN Trust Fund (53% in 2010) and from the private sector via the Foundation for the Global Compact (47%).
As of 2015 UNGC has around 8,000 business participants, including over 100 from the Financial Times Global 500 firms list. It also has some 4,000 non-business participants. See https://www.unglobalcompact.org/what-is-gc/participants/
While encouraging participants to implement the Ten Principles in all production sites, UNGC does not administer a direct or indirect system of monitoring / auditing. This raises questions about its relative effectiveness on the ground.
One study, however, did find that membership of UNGC was significantly linked to the inclusion of measurable performance indicators in CSR reports*.
The UN Global Compact asks companies to support and enact a set of core values derived from various UN agency conventions.
The Ten Principles relate to four key areas:
1) Respecting human rights
2) Non-complicity in human rights abuses.
3) Freedom of association and collective bargaining,
4) Forced labour,
5) Child labour,
7) Precautionary approach to environmental challenges,
8) Promoting environmental responsibility,
9) Using environmentally friendly technologies.
10) Working against corruption in all its forms.
In order to demonstrate performance against these principles, UNGC participants are required to produce an annual Communication on Progress (COP).
Although it claims not to have the mandate or resources to monitor participants’ progress, members can be expelled for persistent failure to communicate and/or systemic or egregious abuses.
For example, in 2008 UNGC delisted 600 members for failure to communicate progress.
Three key critiques have been voiced
1. For the lack of a sanctioning method for non-compliance;
2. For allowing companies that have not demonstrated concrete progress to remain as members;
3. For admitting companies with dubious human rights records.
Dissent has also come from within the UN system. For example, Maude Barlow, senior adviser on water issues to the President of the UN General Assembly, has criticised the UNGP for 'bluewashing' its members.
From an academic perspective, UNGC has been criticized for aligning the UN too closely with business interests and in turn for sacrificing its relative effectiveness. It has also been criticized for not monitoring members’ production sites, and for its focus on voluntarism, learning, and dialogue, which by themselves do not provide sufficient incentives to leverage significant changes in business behaviour**.
UNGC is not a certification body, and does not endorse particular participants.
However participants can endorse the UNGC, and, subject to the Global Compact Logo Policy can use the UNGC logo on pertinent material or corporate websites.
It is possible to view the annual Communication On Progress for every participant on the UNGC website, and to find out which companies are failing to communicate.
* Chen, S. and Bouvain, P. (2009) ‘Is Corporate Responsibility Converging? A Comparison of Corporate Responsibility Reporting in the USA, UK, Australia, and Germany’, Journal of Business Ethics, 87: 299-317.
**Hale, T. (2011) ‘United Nations Global Compact’, in T. Hale and D. Held (Eds.) Handbook of Transnational Governance: Institutions and Innovations. Cambridge: Polity Press.
Utz Certified (known as Utz Kapeh until 2007) is a mainstream certification programme operating in the coffee, cocoa and tea sectors.
Originally launched by Dutch food retailer Ahold, it is one of the world's fastest-growing certification programmes, and by the end of 2012, 13% of all cocoa, 8% of the global coffee harvest and 2% of all tea produced worldwide originated from almost 500,000 Utz Certified farmers.
By 2020 the initiative has an ambitious target of 50% coverage across each of these sectors, in order to “increase impact through volume”.
Utz Certified was founded as a market-friendly alternative to Fair Trade, preferring to encourage rather than compel buyers to offer premiums to farmers.
Utz Certified is governed by a ten-member Supervisory Board, while day-to-day affairs are run by the Executive Team, based in Amsterdam - see Utz Governance.
The main source of Utz Certified's income is fees, with a smaller portion from subsidies.
In recent years, Utz Certified has expanded beyond its core consumer base in the Netherlands, Belgium, Germany and Switzerland, and is now available in more than 50 countries, including the UK.
Coffee continues to be Utz Certified's biggest seller by far. Utz’s program reached 575,000 farmers and 335,000 workers in 2014. See Utz Annual Report
The remit of Utz Certified's standards is broad, encompassing managerial, environmental and social/labour concerns.
The Code of Conduct focuses on good agricultural practices, enabling farmers to strengthen their productivity – producing a higher yield of a better quality, more efficiently.
At the same time, social and environmental requirements contribute to better lives for farmers, their families and workers, and the protection of the earth’s natural resources.
The rapid rise of Utz Certified over the past decade has unsurprisingly raised its public profile, and with this has come an increased amount of scrutiny and criticism.
The Observer was one of the first to question its ethical credentials, in particular for its lack of a Fairtrade-style minimum price.
There is also a growing body of academic literature criticising the programme as a less stringent alternative to Fair Trade. One paper*, for example, argues that the rapid growth in certified coverage of programmes such as Utz Certified is arguably due to their 'mainstream', 'business-friendly', and hence less strict, social and environmental standards.
Another paper** argues that mainstream certification programmes such as Utz Certified (and Rainforest Alliance) are a threat to Fair Trade because they allow consumers to believe that they can enjoy ethical coffee without any form of premium at the point of purchase.
Utz Certified uses a distinctive consumer-facing label to indicate that a particular product has been produced in a responsible manner.
Utz Certified does not make public the results from audits of certified farms.
Utz Certified places great emphasis on traceability. For example, IKEA claims that all “coffee sold and served at IKEA shall be Utz Certified and traceable all the way back to the plantations”. In reality, however, tracing IKEA coffee on its website often results in a long list of coffee-growing estates across the globe, any of which could be the source of a particular product.
* Kilian, B., Pratt, L., Jones, C. and Villalobos, A. (2004) 'Can the private sector be competitive and contribute to development through sustainable agricultural business? A case study of coffee in Latin America', International Food and Agribusiness Management Review 7 (3): 21-54.
**Neilson (2008) 'Global Private Regulation and Value-chain restructuring in Indonesian smallholder coffee systems', World Development 36 (9): 1607-1622.
Worldwide Responsible Accredited Production (WRAP)
Established by industry association American Apparel and Footwear Association (AAFA represents over 700 companies), Worldwide Responsible Accredited Production claims to run 'the largest independent facility certification program in the world mainly focused on the apparel, footwear, and sewn products sectors'.
WRAP carries a code of conduct similar to 'rival' initiatives such as SA8000 and the ETI, however, when national law clashes with a particular standard, WRAP does not actively attempt to influence the behaviour of either governments or brands.
In its governance and finances, WRAP claims to be independent from industry. WRAP is governed by a 10-member Board of Directors, the majority of whom are required by WRAP's Articles of Incorporation to be from outside the apparel and footwear industries.
WRAP receives its income from registration, training and accreditation fees. In neither seeking nor accepting government grants WRAP claims to be fully financially independent.
WRAP is not a membership organisation, and does not certify brands or businesses, only facilities/factories. It places full responsibility for the certification process on factories, and does not make any demands of brands.
In 2008, over 1,700 factories from 60 countries participated in WRAP certification. Certification lasts between 6 months and 2 years.
In addition to labour issues derived from ILO conventions, WRAP also addresses the environment, customs compliance and drug interdiction in The Wrap 12 Principles.
These relate to the following issues:
1) Compliance with Laws and Workplace Regulations,
2) Prohibition of Forced Labour,
3) Prohibition of Child Labour,
4) Prohibition of Harassment or Abuse,
5) Compensation and Benefits,
6) Hours of Work,
7) Prohibition of Discrimination,
8) Health and Safety,
9) Freedom of Association and Collective Bargaining,
11) Customs Compliance,
12) Security. WRAP rarely conducts on-site inspections with its own personnel.
It usually bases its evaluation of a factory on unannounced (within a notified 30-day window) assessments conducted by WRAP-accredited auditors.
WRAP has received heavy criticism by unions and NGOs since its inception.
Although it has no formal legal links with the AAFA, some NGOs, such as the International Labor Rights Forum have argued that WRAP was "set up as an industry-dominated project to avoid outside, legitimate monitoring".
Some academics concur, arguing that WRAP is not a strong multi-stakeholder initiative but a weaker industry-driven system: "Available evidence suggests that auditing under the WRAP system is quite lax".*
They “see this shift of responsibility from brands to mostly developing country producers as a problem, because it does not force brands to own up to their role in setting social standards" **.
WRAP has also been criticised by Maquila Solidarity Network for capitulating too much to local laws, and for being an industry-dominated project that lacks transparency.
WRAP does not publish a list of participating brands and retailers, choosing instead to let companies make their own choice about publicly acknowledging WRAP participation.
As a result, there is little awareness of WRAP among consumers, except those who visit companies' CSR pages.
WRAP certifies factories, not brands. It is not very transparent in providing specific details about its operations or finances.
Although WRAP publishes lists of both licensed auditors and certified facilities on its website, the latter list contains only factories that have provided express authorisation to be mentioned, while factory audit reports are not made public.
* Bartley, T. (2010) ‘Transnational Private Regulation in Practice: The Limits of Forest and Labor Standards Certification in Indonesia’, Business and Politics, 12 (3): Article 7.
** Braun, (2011) ‘Social Accountability International’, in T. Hale and D. Held (Eds.) Handbook of Transnational Governance: Institutions and Innovations. Cambridge: Polity Press.