2.1  Emergence of Private and Quasi-Private Standards

Private and quasi-private standards in the environmental area play a prominent role in the context of globalized business enterprises and trade. As goods move around the world, they are subject to an array of quality, safety, and environmental standards. And as national and/or regional standards have proliferated, they have given rise to efforts to create harmonized international standards that not only facilitate trade across the globe, but also help to reduce unnecessary costs associated with ‘multiple registrations, inspections, certifications, labels and conflicting requirements.’¹ Some global corporations with operations in a number of different countries find it useful to standardize their internal operations, allowing them to use the same protocols throughout their organizations independently of local law, either for efficiency purposes or to help minimize environmental risks and liabilities.

In addition to those drivers internal to private actors, external drivers have also pushed towards the creation and adoption of private and quasi-private standards. Over the past two decades, consumers have increasingly linked their values with their spending and investing habits. This shift in economic paradigm now spans a wide variety of decisions, from the certified organic food people eat, to the shoes and clothes they wear, to the financial investments they make for retirement. In part as a result of this emerging change in societal expectations, companies also are beginning (p. 501) to prefer working with suppliers and partners that have a positive track record vis-à-vis their social and environmental practices. Simultaneously serving to drive and respond to this consumer demand, non-governmental organizations (NGOs) (see Chapter 33 ‘Non-Governmental Organizations and Civil Society’) have created multi-stakeholder alliances that have sought to expand concepts of corporate environmental and social responsibility, and have established standards as tools that underpin trade and sustainable development.

Many of these private, market-driven systems that predominate the field today stem from a general dissatisfaction with government-led ‘command and control’ regulatory approaches (see Chapter 8 ‘Instrument Choice’) as well as with the failure of intergovernmental processes of the 1990s and early 2000s to result in meaningful action to advance sustainable commercial practices and protect human rights in the workplace. Consequently, stakeholders external to businesses, including investors, watchdog NGOs, social justice advocates, the general public, and even sometimes regulatory authorities themselves, have increasingly turned to incentive- and information-based approaches to supplement traditional command-and-control environmental regulation at the national level as well as to help differentiate good and bad actors in the market.

These drivers, plus others discussed later in this chapter, have led to a diversity of standard-setting processes. We focus here on three: quasi-private standard setting through the International Organization for Standardization (ISO), standard setting by industry itself and through direct industry-NGO partnerships, and the development of private standards as a result of cooperation between international governmental bodies such as the Organisation for Economic Co-operation and Development (OECD), the International Labour Organization (ILO), and the UN Environment Programme (UNEP), and the private sector, resulting in voluntary standards. These multiple pathways are now common enough that they create a burgeoning problem of proliferation of standards on the same subject matter.

2.2  ISO and Its Sister Organizations

At present, the ISO is perhaps the most recognized, and by and large well respected, international standards institution. Founded in 1946 to facilitate international trade, the ISO today is a worldwide federation of 148 national standards bodies. Membership in the ISO is voluntary and open to any country that wishes to participate. The ISO allows only one member per country. ISO members are the national standard-setting body, which may be a private entity, a government agency, or a hybrid. As a general rule, national standards bodies from industrialized countries tend to be private institutions, while in developing countries they are more often government agencies. The ISO’s unique blend of government and private representation (p. 502) has given it a stand-alone position as perhaps the single-most recognized and accepted developer of international standards, with more than 14,000 standards published over its almost 60-year history. The scope of the ISO’s work covers standards in all major fields except electrotechnical and food standards, which are the responsibilities of the International Electrotechnical Commission (IEC) and the Codex Alimentarius Commission, respectively. The ISO’s stated objective is to promote the development of standardization and related global activities with a view towards facilitating the international exchange of goods and services, and towards developing cooperation in the spheres of intellectual, scientific, technological, and economic activities.

ISO standards are discussed and developed in technical committees (TCs)—some 188 are now active—which are the forums where national standards bodies and their expert delegates provide their input into the standards. National standards bodies are, in turn, composed of producers, users/consumers, government ministries, and departments and academics, among others, and their membership is supposed to ensure a reasonable balance among all interests directly or materially affected by the standard under development. Theoretically, the ISO’s broad spread of interests at the national level gives it the legitimacy to enact standards with public policy implications, however, as discussed later in this chapter, it is questionable whether, in practice, the ISO or its members bodies actually achieve sufficient levels of stakeholder involvement and diversity to warrant such credibility. The international standards produced by the ISO are then further legitimized by typically being adopted by national standards bodies as ‘national standards’.

The ISO’s influence is exercised not only through its size and scope, but also through its status as a producer of some of the world’s ‘trade-legal’ standards as recognized by the World Trade Organization (WTO). The WTO’s Agreement on Technical Barriers to Trade, for example, requires member countries to adopt ‘relevant international standards’, which is an implicit reference to, among others, ISO standards, as the basis for their national standards. An adjunct Code of Good Practice specifically references the ISO, thereby lifting the ISO standards, which states may or may not adopt as their national standards, to the level of international law. This special trade-relevant status derives from the ISO’s quasi-intergovernmental character and from the fact that it was established contemporaneously with other trade-facilitating organizations. Other standards developed, for example, by the NGO-led initiatives discussed later in this chapter, are not afforded the same recognition in the context of the existing international trade regime. Thus, an interesting question arises about the trade implications of ISO standards. So long as such standards are applied by private producers or through private (contractual) agreements, they would seem to be outside the purview of the WTO, but once adopted by governments as the basis for mandatory or even preferential treatment, it is conceivable that non-ISO standards that were more restrictive than the ISO ones could be subject to a WTO challenge. The case, however, has not yet arisen.

Page Id: 502ReferencesAgreement on Technical Barriers to Trade (World Trade Organization [WTO]) 1868 UNTS 120, LT/UR/A-1A/10 OXIO(p. 503) Historically, the ISO focused exclusively on the development of product specification standards, including, for example, technical measures pertaining to the height of car bumpers, film sensitivity, and screw size.² Its first foray into more processoriented general standards came with the quality management series, ISO 9000, which is described in section 3.2 in this chapter. The ISO has expanded its scope over the course of the last decade to encompass environmental issues. With the creation of ISO/TC 207—dealing with environmental management in 1993, the ISO took its most notable step into the public policy arena, extending its influence beyond industry and their customers and into issues of general public interest. And the ISO is continuing (and even accelerating) its pursuit of the development of standards that directly support and advance sustainable development. In its 2003 strategic planning consultation document, ISO Horizon 2010: Standards for a Sustainable World, the ISO expresses its intention to continue moving into the environmental and social arenas, stating that its standards can serve ‘products and services that enter into world trade and that impact on the health, safety, environment and social progress of mankind.’

As a result of the ISO’s unparalleled reach, there is little doubt that any new ISO standards in the social or environmental field will continue to have a sizable (and likely growing) influence on businesses, governments, and civil society around the world. Yet, the ISO’s evolution from an institution that promulgates technical engineering standards to a social and environmental standard-setting body has not been accompanied by a parallel shift in the representation of important stakeholders within the ISO. Recent evidence suggests that developing countries and numerous key stakeholder groups remain underrepresented in the ISO.³ In addition to a lack of civil society and relevant government ministerial participation, small businesses and even some major industrial sectors tend to be underrepresented in environmental standards development, for instance, while consultants and standards bodies apparently have disproportionate influence. Part of the problem stems from the process of standards elaboration, which is done through a myriad of meetings all over the world, with no consistent funding available for NGO or developing country representatives. The language of the ISO is arcane, difficult for environmental or other civil society groups to understand and not often translated from English. Until recently, it was difficult to find environmental groups with the interest (or budget) to follow ISO proceedings consistently. Despite plans and protestations to the contrary, the ISO until the mid-2000s had taken few substantive steps towards greater inclusivity in its environmental and social standard setting.

These procedural limits also condition the rigor of ISO standards. A need for informal ‘consensus’ (roughly defined as the absence of sustained opposition on an (p. 504) issue of substance) to adopt a standard and the ambition to create standards applicable to large and small, developed and developing, and all types of organizations means that substance tends to be watered down to a least common denominator. As discussed in section 3 later in this chapter, these limitations have hobbled the ability of ISO environment management standards to drive sustainable development.

2.3  Non-State Environmental and Social Certification and Labelling Programmes

The perceived need for consumers to be able to distinguish sustainable from unsustainable and environmentally damaging products in the marketplace has led NGOs to create their own standards. Typically, these initiatives have consisted of normative performance and/or management standards that underpin third-party verification and certification/labelling elements. Unlike the ISO’s ‘systems’ standards, these NGO-driven initiatives generally require performance minimums and on-the-ground outcome assessment. Organizations independently assessed as having conformed to the requirements contained in the initiative’s standard(s) are entitled to include the initiative’s trademark/logo on its products, promotional material, and/or facilities. Examples of such standards-based initiatives include the Forest Stewardship Council (FSC), the Marine Stewardship Council (MSC), Social Accountability 8000, and Fairtrade Labelling Organization International, among many others.

For example, the FSC certifies forests (40 million hectares in 73 countries in 2003) based on criteria that address legal issues, indigenous rights, labour rights, multiple benefits, and environmental impacts surrounding forest management. Building on this example, Unilever Corporation and the World Wildlife Fund created in 1997 the MSC to use consumer pressure to drive improved fishing practices. The MSC is now an independent organization with a Stakeholder Council composed of a balance of fisheries, processing, retail, and environmental and social interests. The MSC has to date certified a small number of fish stocks.

It remains to be seen, however, to what extent these certification programs can make inroads into mainstream markets. They assume that consumers will be willing to pay a premium for sustainability, which may only be true of some commodities or of certain luxury goods. Small producers, moreover, may find it difficult to afford the cost of third party certification (or of the implementation of the actual standards, for that matter). They also depend heavily on the credibility of the certifying/labelling organizations—any controversy may spell the end of the certification effort. Yet, it is difficult to consistently balance the many factors involved in certification in a way that satisfies competing audiences.

Over time, successful NGO-initiated standards may change into bodies that look more like formal standards institutions, albeit without the ISO’s link to governments (p. 505) and international public law. For example, the Global Reporting Initiative, discussed later in this chapter, started as an NGO-industry collaboration based at the Coalition for Environmentally Responsible Economies (CERES), but has now created a permanent independent governing structure to develop new reporting initiatives and, eventually, to sell future standards much as the ISO does. Such initiatives may then develop a link to public law through inclusion in national legislation or public international initiatives, and may eventually carve out niches at the intersection of the public and private that are similar to (or in competition with) that of the ISO.

Of course, industry groups often create their own standards. These may range from industry- or company-specific ‘codes of conduct’ applicable only to their own operations to more wide-ranging standards applicable to suppliers or borrowers. The standard-setting process in this case is often quite opaque, although codes borrow heavily from each other, from the public sector standards discussed later in this chapter, and from NGO input (especially where codes are developed in response to public/NGO pressure). In certain high-profile sectors such as chemicals and banking, industry associations have played a key role in developing sector-specific codes.

2.4  Cooperation between the International Public Sector and the Private Sector

Finally, some standards straddle the line between public and private and are created by public international institutions for both public and private use. International financial institutions, for example, can set out substantive emissions and design guidelines to reduce the environmental impacts of bank-funded projects. The World Bank’s Industrial Pollution Prevention and Abatement guidelines, including sector specific protocols, are then used by private financiers as well as the bank and other government agencies. Another example might be UNEP’s 1994 Code of Ethics on the International Trade in Chemicals, which is aimed at private producers, references its compatibility with Responsible Care and other private standards, and yet is the product of a UNEP-convened series of consultations with industry, government, and NGO experts.

Public-private collaborations also result in more general codes of conduct aimed at industry. For example, the OECD’s Guidelines for Multinational Enterprises were created as a result of a set of meetings involving OECD member governments, in consultation with industry and NGOs. The ILO’s Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy emerged from the ILO’s government-worker-employer tripartite structure. Both set out a general set of obligations for private enterprises, which in the OECD guidelines includes both environment and health and safety obligations and, in the ILO case, includes principles on worker health and safety with significant environmental implications. They have more in common with other forms of public international soft law-making in terms Page Id: 505ReferencesCode Of Ethics on the International Trade in Chemicals by United Nations Environment Programme [UNEP]OECD Guidelines for Multinational Enterprises (Organisation for Economic Co-operation and Development [OECD])Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (International Labour Organization [ILO])(p. 506) of the access of private actors. Both are voluntary. The OECD guidelines, to the extent that they have any enforcement mechanism, use a public international process, in the form of national contact points within government ministries that are to receive complaints of violations, investigate, attempt to conciliate, and, if necessary, publish information regarding violations. The UN secretary-general’s Global Compact similarly sets out a short list of broad principles, three of them concerning the protection of the environment. Private enterprises voluntarily choose to sign up to the Global Compact, which deliberately avoids enforcement machinery and relies instead on creating networks for the transmission of best practices across industry.

There exist a dizzying array of types of private standards and an even wider range of functions that they attempt to serve in the market today. We adopt the ISO’s definition of standards as documented agreements containing technical specifications or other precise criteria to be used consistently as rules, guidelines, or definitions of characteristics, to ensure that materials, products, processes and services are fit for their purpose. Based on this broad definition, we lay out in this chapter a general (and loose) classification scheme of the types of private standards that are being developed and used today. The reader should be aware that in practice there are few clear-cut boundaries between the categories described here, with many existing standards containing elements of each of them. It is not uncommon, for example, for a single standard to include management/process requirements and performance minimums, in addition to prescriptive measurement and reporting protocols.

3.1  Technical Specifications and Performance Standards

Standard setting initially focused on product specifications, ensuring that devices such as automatic teller machine cards and kitchen appliances operate worldwide. Product specifications exist for environmentally related products such as measuring equipment, and for products and services with environmental hazards. Examples of the latter are the ISO’s standards on construction and materials and engineering technologies. In the environmental arena, the vast majority of performance-oriented standards have focused on limiting an organization’s adverse effects by establishing performance minimums for issues such as energy use or air or water emissions. These can apply to any stage of the product’s life-cycle, for instance, production, use, and/or Page Id: 506ReferencesOECD Guidelines for Multinational Enterprises (Organisation for Economic Co-operation and Development [OECD])(p. 507) disposal. Standards addressing performance minimums can be qualitative (that is, minimize toxic wastes or water use) or quantitative (no more than X emissions per widget produced). Performance standards set specific goals but do not require any particular way to meet them. They may apply equally to environmental aspects covered by national regulation, by international treaty or soft law, or to unregulated aspects not covered by any government regulation.

In recent years, best-in-class standards have gained prominence in the environmental standards arena. Often, such standards have been used within the context of certification and/or labelling schemes. Best-in-class standards are typically comparative rather than absolute, in that they benchmark a producer’s performance against others in the same product or service category. They can measure a single attribute (for example, energy efficiency) or they can evaluate and trade-off various attributes to obtain a measure of ‘environmentally superior’ products. Blue Angel in Germany or Greenseal in the United States are examples of eco-labelling schemes founded upon best-in-class performance criteria and standards for products and services. The programs grant the use of their logo to top performers that meet the minimum performance requirements.

3.2  Process and Management System Standards

3.3  Measurement and Reporting Standards

Another category of environmental standards focuses on measurement and/or disclosure of the social and environmental effects of the organization’s activities. Harmonization of measurement approaches can include standards such as the air and water quality measurement standards developed by the ISO’s Technical Committees 146 and 147, respectively. More recently, efforts have been made to develop greenhouse gas (GHG) accounting and reporting standards. Most notably, these include the Greenhouse Gas Protocol, which was prepared by the World Business Council on Sustainable Development and World Resources Institute (WBCSD/WRI), and the three-part ISO 14064 standard (currently under development), which provides specifications for the quantification, monitoring, reporting, and validation of GHG emissions applicable for organizations and GHG reduction projects. These protocols serve several purposes: they assist in the implementation of international treaty or national public law obligations such as the Kyoto Protocol to the UN Framework Convention on Climate Change and its associated emissionstrading schemes. They can also serve to, in effect, expand these public law schemes even to places where they do not yet apply, as in the application of the GHG protocols by US firms, either in preparation for what they see as eventual regulation or in order to participate in existing greenhouse gas emissions markets. Thus, private measurement protocols facilitate both public and private law schemes simultaneously.

A prime example of a disclosure protocol (and associated metrics) is the Global Reporting Initiative (GRI), a multi-stakeholder process and independent institution Page Id: 509ReferencesKyoto Protocol to the United Nations Framework Convention on Climate Change (United Nations Framework Convention on Climate Change [UNFCCC]) 2303 UNTS 162, UN Reg No A-30822 OXIOUnited Nations Framework Convention on Climate Change (United Nations Framework Convention on Climate Change [UNFCCC]) 1771 UNTS 107, UN Reg No I-30822 OXIO(p. 510) whose mission is to develop and disseminate globally applicable sustainability reporting guidelines. These guidelines are for voluntary use by organizations for reporting on the company-level economic, environmental, and social dimensions of their activities, products, and services. The GRI aims to create principles on sustainability reporting that are as well accepted as financial reporting guidelines. Reports prepared using GRI guidelines are expected to follow principles of transparency, inclusiveness, auditability, completeness, relevance, accuracy, comparability, clarity, and timeliness. A GRI report is also supposed to follow specified protocols regarding data presentation, metrics, and content, although organizations have considerable flexibility in adapting the guidelines to their particular audiences and needs. Enterprises may choose to report about all the specified categories provided in the GRI guidelines or to choose less comprehensive reporting, at least during an initial period. The GRI does not attempt to dictate how an organization obtains its information, but instead to give enterprises a useful and credible template, and their multiple audiences some way of using the information to benchmark and compare results. A related facilities reporting project is developing GRI-based indicators for plant-level reporting, allowing disaggregated plant-specific data that may be more relevant to a plant’s neighbours or local regulators, but less important for investors or consumers. The combination of plant- and company-level reporting allows companies to address a wide range of relevant audiences.

3.4  Proliferation of Standards Initiatives

All of these voluntary, private, and quasi-private standards have evolved in the dual context of market competition and the international legal framework. Since the inception of such schemes, government trade officials and some producers have expressed fears about growing confusion in the market place, as well as about the effects that they might have on market access and competitiveness of developing countries, particularly in cases where the programs were developed without their proper participation.⁷ Regardless, the growing recognition of the positive effects of voluntary environmental and social standard-based certification and labelling systems, such as the role they play in driving market competition and innovation, as well as the potential they hold for opening new markets, has caused many original opponents to change their views and positions.

However, this competition can also have detrimental effects. The success, and even potential success, of certain NGO-led initiatives has prompted the proliferation of a (p. 511) broad array of competing systems that have attempted to build on the momentum and credibility of the certification movement, while offering cheaper and less stringent alternatives. Indeed, it is precisely because NGO-led labelling and certification schemes have had significant bottom-line impacts for businesses in targeted sectors that some in the retailer/brand industries have taken a proactive role in developing competing standards and compliance systems that better suit their needs. This trend is particularly notable in the forest and coffee sectors. However, due to the poor stakeholder balance in some of these nascent industry initiatives, it is unlikely that they will result in standards and/or conformity assessment procedures that are considered meaningful by many civil society organizations. Yet, these industry groups are in the driver’s seat because in many cases they represent such a large percentage of the market, and can bring their marketing and other resources to bear. And as a result, the pressing question confronting the comparatively smaller NGO-led initiatives is how to best influence the newer competing initiatives to ensure the newer initiative’s credibility (and compatibility) with existing systems.

Among the industry-dominated competitors to NGO-led standards, the ISO is a case in point. In the forestry sector, for instance, some companies wanting to externally validate their environmental management practices may end up choosing to pursue ISO 14001 certification over the more rigorous (from an NGO’s perspective) FSC certification. Other areas of possible competition with NGO-led initiatives may emerge when the ISO finishes drafting the GHG accounting and corporate social responsibility standards that are currently under development.

Private standards are presumably ‘voluntary’ although they are often significantly more consequential than this label suggests. They can be considered voluntary only in that there are no legal requirements for a country to adopt them and in that there is not an entity that regulates or enforces their implementation. However, because countries often adopt private international standards such as the ISO’s as national standards, and because industry norms may mandate conformity to a standard as a condition of business, they can become de facto requirements for competitiveness in the international market.

Participation in the standards development process itself is also not entirely ‘voluntary’. Since the requirements within private standards can have significant implications for market competitiveness, various interests, particularly large multinational corporations, feel compelled to participate in the standards writing process. Requirements contained within a particular standard could have (p. 512) disproportionate economic consequences for a given country, industry sector, or individual company. Therefore, participation becomes virtually obligatory for potentially affected entities. Indeed, the development, diffusion, and implementation of private and quasi-private standards are driven by a swirling current of markets, risk prevention, and regulation. Each operates directly and indirectly through a number of different mechanisms, which we discuss in the next few sections.

4.1  Market Dynamics

4.2  Regulatory Incentives

5.1  Relationship between Public and Private Standards

Neither private nor public standards exist in a vacuum. Private standards have long interacted with, and are often developed in response to, public law-making and regulatory efforts. They can serve as gap-fillers or the technical foundation for existing public laws, as portents and precursors of new public law, or as pre-emptive efforts to retard or derail public regulation. For example, in terms of a technical foundation, under Europe’s ‘New Approach’, quasi-private standards form the underpinnings of much legislation in the EU.¹⁹ Under this approach, which was initiated in the 1980s, the European Commission, trying to facilitate expanded regional trade, set only the ‘essential requirements’ for a product or service to be sold throughout the market. The technical specifics were left to voluntary standards developed by private bodies, especially the European standards body CEN (Comité Européen de Normalisation or European Committee for Standardization, known by its French acronym). This approach has been used in EU directives on the energy performance of buildings, the promotion of the use of biofuels in transport, and on waste from electrical and electronic equipment. As for gap-filling, consider measurement protocols. Treaties may specify that states are to monitor environmental impacts, but they may not specify exactly how or with what measurement approaches. Private standards are often aimed at allowing producers, and thus indirectly and ultimately governments, to employ uniform, agreed-upon measurement protocols. The GHG Protocols are a case in point. In both cases, the use of private standards reduces government costs and the time required to implement public law obligations.

Based on the recognition of these realities, government agencies have for decades actively supported the integration of voluntary consensus standards into their policies and activities. In the United States, for example, reliance upon private standards in policymaking and public standard setting goes back to the late 1970s. Voluntary Page Id: 520ReferencesDirective of the European Parliament and of the Council laying down a procedure for the provision of information in the field of technical standards and regulations (European Parliament) (Council of the European Union) 98/34/EC, [1998] OJ L204/37(p. 521) standards were useful, according to the Office of Management and Budget, to: (1) ‘encourage federal agencies to benefit from the expertise of the private sector’; (2) ‘promote federal agency participation in such bodies to ensure creation of standards that are usable by federal agencies’; and (3) ‘reduce reliance on governmentunique standards where an existing voluntary standard would suffice.’²⁰ In order to codify these policies, the US Congress in 1996 passed the National Technology Transfer and Advancement Act (NTTAA) (Public Law 104-13). The act requires federal agencies to use voluntary standards to the extent practicable, to report when they have developed agency-specific standards, and to consult with both domestic and international voluntary consensus standards bodies when developing and adopting government standards. When a voluntary standard fails to address, or is inconsistent with, the mission of a government agency, an exception clause in the NTTAA permits a governmental agency to elect or develop other technical standards.

Private voluntary standards can also presage future national or international regulation. Private standards suggest the recognition of a problem area, an approach to addressing it, and an acknowledgment that industry has both the desire and the capacity to implement controls and to do so in a manner that optimizes economic efficiency. At the international level, private standard-setting processes may be more effective and agile than multilateral negotiations, especially where highly technical protocols are at issue, since they tend to include more of the directly affected parties rather than generalist diplomats. On the other hand, industry may sometimes enter into or advocate standards-creating processes in hopes that a voluntary, private approach will forestall more onerous public regulation at either the national or international level.

An example from the regime for control of marine oil pollution may be instructive. It became clear in the wake of the 1967 Torrey Canyon oil spill that a regulatory regime was in the offing. Oil tanker owners negotiated a private, voluntary Tanker Owners Voluntary Agreement Concerning Liability for Oil Pollution, in part hoping to avoid stricter mandatory controls. However, the existence of a voluntary agreement did not stop the completion of a public convention, but rather showed states that the general approach was feasible and economically viable. Public international regulation of information regarding pesticides and other hazardous chemicals also followed this route from private to public.

The WSSD example is emblematic of the many debates surrounding both the changing nature and scope of private standards as well as their evolving role in public policy. While private standards once typically played only a technical supporting role in government policy, they are now encroaching towards becoming a centerpiece of policy instruments.

It is in this regard that the ISO’s movement towards the standardization of ‘management systems’ (first quality, then environmental) is notable because it has marked a shift in the organization’s focus from technical engineering standards to standards that have greater (and more direct) implications for society and public policy. In other words, while local communities may have little interest in the thread width of a screw used in a company’s product, they are likely to be profoundly concerned about the methods by which an organization manages its environmental risks, given the potential impact on the community’s welfare. In this sense, unlike all other ISO standards, which primarily affect their users (and customers), the ISO 14000 series standards directly affect a much larger set of stakeholders. These stakeholders often carry the burden of environmental ‘externalities’, such as the costs of resource consumption and pollution, while industry stands to enhance profits by ‘externalizing’ environmental impacts.

Likewise, because the ISO 14000 standards aim to tackle issues relating to the environmental performance of companies and sustainable development more generally, they enter realms that are of interest to regulatory authorities, policymakers, and the public. However, given the ISO’s fifty-year history of developing technical standards almost exclusively out of an interest to industry, the institution remains heavily influenced by the private sector. Thus, as discussed earlier, while the ISO’s scope of work has substantially expanded to encompass activities that may have significant societal impacts, there has not been a corresponding increase in the representation of public stakeholders. This fact has been the source of consternation to some government agencies and civil society groups who have expressed a preference for the development of public standards whenever practical and feasible.

A corollary debate has emerged regarding the appropriateness of private voluntary standards to solve pressing public policy challenges. Private voluntary standards, (p. 523) which producers must pledge to abide by and which are enforced by indirect market pressures rather than regulators, have undeniable advantages. They reduce the cost of public regulation and enforcement, shifting enforcement costs to the producers themselves, who must pay for certification or the documentation of compliance. The administration costs of private standards should be lower than for equivalent public standards. Moreover, if the leaders in an industry are conforming to private voluntary standards, regulators can use shrinking enforcement or standards development budgets to greater effect in targeting the laggards. Private standards can often be more easily arrived at and more easily revised than public agreements—contrast the less than three years it can take to develop an ISO EMS standard with the decade or more it can take for the drafting, signing, and entry into force of a treaty. In part, this contrast is due to the less than fully participatory and open nature of the private standards development process, as discussed earlier, and so it is a dubious virtue. Nonetheless, the costs of standards development are at least partially borne by the private sector, and the participation of technical personnel and those from the industries or entities to be subject to the standard may make for quicker as well as more practical and workable arrangements because the ‘real parties in interest’ are directly at the negotiating table.

Moreover, private standards, because they are often self-imposed, allow for more precise tailoring to the needs of a particular enterprise. An enterprise can choose to focus on certain aspects of its environmental management, for example, or choose to report on those issues of greatest concern to inside or outside constituencies. As such, it can, under ideal circumstances, create ‘buy-in’ throughout an organization for the environmental goals espoused rather than having these goals become routine, minimalist exercises in box checking. In theory at least, these efforts will allow for improvement beyond the threshold compliance levels specified in international or local law and will allow those enterprises with the interest and means to do so to pioneer new approaches to as yet unregulated problems.

These strengths of private standards are also their weakness. The very flexibility that businesses appreciate reduces the credibility of these standards with local community, NGO, and regulatory audiences. If enterprises can pick and choose which environmental issues to focus on, which indicators/measures to report and the like, there will be little assurance that major problems are not being swept under the rug. And if the private standards are rigorous enough in design and verification mechanisms to avoid this problem, they will also, by definition, be too rigorous to entice any but a few leading companies into choosing to implement them, despite the incentives for doing so. There is, therefore, an inherent tendency for private standards to be, overall, less stringent than public ones covering the same subject matter.

Moreover, the penalties for non-compliance with management or certification schemes, or false or misleading reporting of environmental protocols, are extremely limited. With respect to ISO standards, the ISO’s Conformity Assessment Committee (CASCO) produces international standards and guides that provide information (p. 524) and general requirements on conformity assessment procedures—that is, deciding whether an organization has successfully implemented the standard. However, it is national accreditation bodies that set the criteria for certifiers. The International Accreditation Forum (IAF) is a world association of national conformity assessment accreditation bodies and other organizations interested in conformity assessment, mainly to ISO 9000 and ISO 14001. Its primary function is to encourage the development of a single worldwide system of mutual recognition of conformity assessment certificates, with an end goal of eliminating non-tariff barriers to trade. Both the IAF and CASCO have developed mutual recognition and other protocols. Nonetheless, harmonization of conformity assessment to private standards generally is in its infancy, as are attempts to set up worldwide standards for the qualification of certifiers, accreditation bodies, and independent standards auditors. It will take some time for these efforts to actually result in credible conformity assessment protocols that are accepted across borders, especially given the pressures on developing country certifiers and accreditation bodies to certify large numbers of companies.

Theoretically, companies can lose their ISO certification, and participants in other private schemes may be ejected from the schemes for continuing non-conformity with the standard. This happens rarely though and only after extensive negative publicity. The most common compliance assurance schemes involve private auditing and accounting firms, but several studies have shown that such audits are often incomplete and biased towards management. And with a few exceptions, such as the revamped Responsible Care programme, most industry standards do not even require external verification. A few attempts at stakeholder/labour/NGO monitoring have taken place in the labour standards context, but they have not become a widely accepted model. One complaint, therefore, is that private standards are for the most part toothless and cannot differentiate good players from bad. Related to this criticism is the more general complaint that all voluntary codes of conduct are enforced only by self-declaration and self-certification, with sporadic NGO denunciations of particularly egregious abuses being the only check.

The tension between stringency and widespread adoption has been a problem given the non-mandatory nature of private standards. With the exception of ‘green’ companies that stake their reputation on environmental probity, and large ‘blue’ companies subject to consumer scrutiny and sensitive to small changes in market share, the uptake of voluntary standards has been limited. Fewer than 25 per cent of large multinational corporations provide public information on their environmental performance, and this number has not grown significantly.²² While most major industrial players now have some version of an EMS in place, very few provide public information derived from the EMS or pursue third party certification. (p. 525) Environmental labelling, while growing, still covers a marginal percentage of goods sold. To truly affect environmental outcomes on a global scale, voluntary private standards are unlikely to be enough.

5.2  Revitalized Push to Create Public Standards

The combination of a lack of oversight, inadequate enforcement mechanisms, and the spotty uptake of private standards, in the midst of increasing perceptions that private enterprises play a key role in sustainable (and unsustainable) development and that states by themselves have insufficient resources to tackle emerging challenges, has led to new efforts to move standard setting for enterprise behaviour into the public realm. These efforts take several forms. First, there is the attempt to open up private/public bodies such as ISO to greater transparency and inclusiveness by providing a more prominent role for civil society organizations, small businesses, and other underrepresented sectors. Second, efforts continue to strengthen and augment existing public voluntary standards on corporate behaviour, including the OECD Guidelines for Multinational Enterprises, the ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, and the UN Secretary General’s Global Compact.

A third effort involves moving beyond voluntary principles, codes of conduct, and private standards towards some form of mandatory international supervision of private sector commitments. A step in this direction might involve international guidelines accompanied by a reporting and/or monitoring mechanism. One such effort includes the UN Commission on Human Rights’s efforts to prepare Norms and Guidelines on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights. A draft version of these norms was approved by the Sub-Commission on the Promotion and Protection of Human Rights in 2003, but it has been prevented by some states and corporate interests from being more formally adopted by the UN to date. The norms include obligations on private corporations to respect national and international law on the protection of the environment, to observe the precautionary principle, and to generally conduct their activities in a manner contributing to sustainable development. The norms create a non-binding guideline recommending that business enterprises internally implement them, use them in their supply chain policies, and report on their progress. In its ongoing effort to advance the norms, the Office of the High Commissioner for Human Rights released a report linking corporate responsibilities to intergovernmental agreements in early 2005. Many of the participants in the UN process, especially NGOs, envision eventually some kind of monitoring and/or complaint system through the UN as well as through states and companies themselves, although the contours of such a system are as yet unclear. In part, the problem Page Id: 525ReferencesOECD Guidelines for Multinational Enterprises (Organisation for Economic Co-operation and Development [OECD])The Ten Principles of the UN Global Compact (United Nations [UN]) OXIOTripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (International Labour Organization [ILO])(p. 526) stems from the fact that, aside from general exhortations to respect human rights and a limited number of international crimes, such as war crimes, crimes against humanity, and genocide, international law does not impose obligations directly upon private actors.²³

5.3  Future of Private Standards

It is evident from this analysis that private standards have played, and will continue to play, a valuable and economically efficient role in addressing pressing social and environmental problems. It is the view of the authors, however, that such private standards can (and should) only be used as a complement and supplement to public standards and that caution must be taken to ensure that they do not evolve into a complete substitute for them. It is more than likely that in coming years increased attention will focus on businesses’ environmental management practices, and certification and reporting standards will almost certainly play an even more prominent role underpinning the global economic system than they do today. Public and private standards will both coexist, mutually reinforce each other, and overlap, and a variety of hybrid standard-setting processes are to be expected. It will also probably be a long-term negotiating process before states reach agreement on the appropriate nexus between public and private standards as well as the precise role private standards should play in advancing sustainable development. Meanwhile private international standards developers are moving aggressively into the sustainability field, and the differences in coverage and rigor between different kinds of private standards—especially those generated by NGO coalitions as opposed to business-led initiatives—are likely to become more salient. It is therefore urgent that those concerned with international environmental regimes consider private standards organizations and their products as an integral part of public environmental policy regimes and factor in the impact of private schemes on public regimes.