During the 1970s and 1980s, growing consumer awareness of the power held by multinational corporations and the abuses taking place throughout the supply chains of products consumed in the Global North led to the development of a wider civil society movement supporting fair and ethical trade. This movement culminated in the emergence of a number of multi-stakeholder initiatives (“MSIs”) in the 1990s: schemes aimed at certifying products as ethical, sustainable, or fair. One of their key objectives was to hold corporates to account for practices throughout their supply chains.
Two of the most prominent certifications in this country are issued by the Fairtrade Foundation and the Rainforest Alliance. Both organisations purport to help improve conditions at the bottom of multinational supply chains. Fairtrade’s mission is described as “better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world”. The Rainforest Alliance, in turn, claims to work on issues “from fighting deforestation and climate change to building economic opportunities and better working conditions for rural people”. Both organisations claim to ensure that conditions at source meet minimum standards and, in turn, certify produce with their logo for sale on the global market.
Such certifications give consumers a degree of comfort that they can buy products with a clear conscience. More recently, however, criticism of such ethical certification schemes has been growing. Can we really trust them?
What are the problems?
A fundamental criticism of so-called ethical certifications and the MSIs that underpin them is that there is a lack of real evidence that the schemes really work. Indeed, the world of certifications appears to be marked by a lack of rigorous, methodological research, making it difficult critically to analyse whether, and to what degree, the schemes impact on the lives of those they are said to assist. An excellent recent report by the Institute for Multi-Stakeholder Initiative Integrity at Harvard Law School is a welcome addition to this otherwise limited field.
The report does not make for happy reading. It presents the culmination of ten years of research into MSIs and their effectiveness, and analyses a number of different certification schemes, including, for example, Bonsucro, Fairtrade International, Rainforest Alliance, and the Sustainable Forestry Initiative.
In summary, it finds that such certification schemes are failing to have a positive impact on the conduct of companies and, on the contrary, may serve to entrench abusive business practices. The report finds that “MSIs are not effective tools for holding corporations accountable for abuses, protecting rights holders against human rights violations, or providing survivors and victims with access to remedy.”
Specifically, the report finds that MSIs such as Fairtrade and Rainforest Alliance are lacking in a number of key respects. It notes that the influence of such certification schemes is waning, and that they fail to include rights holders, thus risking the entrenchment of corporate power. The standards adopted by each certification scheme are necessarily limited to that scheme’s own objective, which may create a misperception that certification by one scheme means that the product is entirely ethical and environmentally friendly. In reality, however, the schemes all have their own particular focus. Fairtrade, for example, aims primarily to ensure that producers are paid a decent living wage, whilst the Rainforest Alliance focuses on environmental issues and climate change. The report further notes that monitoring and compliance are inadequate: the schemes are not properly set up to detect human rights abuses at source.
This latter point is important. In order to be granted certification, producers and companies must subject themselves to regular audits that are generally carried out by third party auditors on behalf of the certification scheme. Producers must directly pay these auditors a fee for inspections to be undertaken and audits to be completed, thus creating a clear conflict of interest. Recent reports have suggested that auditors have “overlooked” highly abusive practices on farms and plantations, and that this method of auditing is inappropriate. It appears, therefore, that consumers can no longer rely on certifications as reflecting a supply chain that is ethical and free from abuse.
What is happening now?
As a result at least in part of these criticisms, companies have begun moving away from independent MSI certification to create their own “bespoke” certification schemes. Sainsbury’s dropped the Fairtrade certification from its own brand tea in 2017, replacing it with its own “fairly traded” brand. Mondelez, Nestle and Starbucks have all developed their own, in-house certification schemes for cocoa and coffee.
Despite the failings of the established MSIs, this move away from them and toward “in-house” certification is worrying. It allows companies to set their own standards, and to claim they satisfy these standards without independent auditing, inspection or verification. Accordingly, any concern that corporate abuses are not properly being monitored and exposed through existing MSIs is only amplified. In-house certification will further limit transparency and accountability in the complex world of supply chains and will make it easier for companies to greenwash their activities. As the MSI Integrity report notes, in-house initiatives risk “further undermining the credibility of voluntary approaches to human rights regulation.”
The MSI Integrity report makes clear that ethical certification schemes alone are not instruments of human rights protection. They are not effective in ensuring accountability for corporate abuse. They do, however, continue to have a role as part of a more complex picture. Thus, whilst certification schemes will no doubt continue, it is necessary to supplement these with other measures. Public regulation together with private MSIs is required to help strengthen the standards with which companies must abide. Technology such as blockchain will become increasingly helpful in ensuring transparency, allowing consumers to trace their products all the way through the supply chain. In the meantime, companies that engage in or sanction abusive practices will have to continue to be held to account through other means, including through litigation in this jurisdiction and abroad.