Sustainability Labelling ProjectEVG1-CT-2000-00031

FINAL REPORT ON EC PROJECT:

SUSTAINABILITY LABELING AND CERTIFICATION: TOWARDS AN INTEGRATED LEGAL, ECONOMIC, ECOLOGICAL, AND SOCIAL APPROACH

EU Contract No. EVG1-CT-2000-00031

Final Report and Progress Report for Period:

1 December 2002 – 30 November 2003

Vol. I

Barcelona, January 2004

Departamento de Derecho y Economía Internacionales, Universidad de Barcelona (UB)

Instituut voor Milieuvraagstukken (I.V.M.), Vrije Universiteit Amsterdam

Centro Interdipartamentale Ricerche sul Diritto delle Comunita europee (CIRDCE), Universita degli Studi di Bologna

CONTRACT No.: EVG1-CT-2000-00031

TITLE: Sustainability labelling and certification: Towards an integrated legal, economic, ecological, and social approach.

PROJECT ACRONYM: Sustainability Label

PROGRAMME: Energy, Environment, and Sustainable Development

SUB-PROGRAMME: Environment and Sustainable Development: Socio-economic aspects of environmental change in the perspective of sustainable development

SUB-PROGRAMME AREA: RTD Activities of a Generic Nature

START DATE: 1 December 2000

END DATE: 30 November 2003

REPORTING PERIOD: 1 December 2002 – 30 November 2003

CONTRACTOR 1

SCIENTIFIC COORDINATOR:

Dra. Victoria Abellán Honrubia

Departamento de Derecho y Economía Internacionales

Facultad de Derecho

Universidad de Barcelona

Avda. Diagonal 684

08034-Barcelona (Spain)

CONTRACTOR 1:

Dr. Konrad von Moltke

Nicolien van der Grijp

Instituut voor Milieuvraagstukken (I.V.M.)

Vrije Universiteit Amsterdam

De Boelelaan 1115

1081 HV-Amsterdam (The Netherlands)

CONTRACTOR 2:

Prof. Lucia Serena Rossi

Centro Interdipartamentale Ricerche sul Diritto delle Communità Europee (C.I.R.D.C.E.)

Università degli Studi di Bologna

Via Zamboni 27-29

40126-Bologna (Italy)

5. MAIN SCIENTIFIC FINDINGS RELATED TO THE PROJECT

A) Main scientific findings related to Work Package 3

The essential elements from the Work Package 3 working papers have been summarised by describing the opportunities, limitations, and challenges that sustainability labelling and certification schemes are facing. In rough terms, these elements are related to political commitment, the elaboration and specification of the sustainability concept, and the legal aspects.

a) Opportunities:

1. Concerning political and corporate commitment, many international governmental, non governmental and hybrid organisations have committed themselves to the goal of sustainable development.

Amongst others, in the European Union such a commitment was introduced by the Treaty of Maastricht 1992 and the Amsterdam Treaty 1997, as well as by the secondary law. At the European Council of Lisbon (2000) and at the European Council of Gothenburg (2001) it was stated that sustainable development is a fundamental objective under the Treaties. Since then, sustainability labelling and certification has been recognized as a tool to achieve such a sustainable development at EU level. The EC Commission contemplate them as one of the tools to enhance corporate social responsibility in its Green Paper on a framework for corporate social responsibility (2001). In its Green Paper on Integrated Product Policy (IPP) (2001), the Commission proposes a strategy to strengthen and refocus product-related environmental policies to promote the development of a market for greener products through e.g. labelling on the product. In its White Paper on Governance (2001) the Commission explicitly recognises that the privilege of making rules and regulations is not any more restricted to public actors alone, but also belongs to the private domain.

The principles and norms elaborated by the United Nations, as a global Organization provided with general goals, also cover the different dimensions of sustainable development, this being a “key element of the general framework for the activities of the United Nations”. For instance, the UN Conferences on Trade and Development have underlined the need for sustainable growth and development in the framework of a world economy that tends to be global and liberalised. UNDP has set up the concept of “human development” since 1990. Its Human Development Index is one of the most prestigious current parameters of development. Furthermore, the UN has broad information on the socio-economic evolution of the international community, obtained through a variety of sources, such as the specialized agencies and other international Organizations inside and outside the UN system, the governments of the Member States, non governmental actors and, finally, via the action of its own organs and bodies. With this basis, and within the ample functions given by article 1.3 of the UN Charter (the achievement of international cooperation in the social, economic, cultural and humanitarian fields), the Organization can articulate its political guidelines and operative activity in the framework of the different cooperation and assistance programs.

As for the multilateral trade organizations, the GATT 1947 was conceived as a forum for liberalization of trade, which would deal with social or environmental concerns only as far as these could affect the principles of the multilateral trading system. Under the influence of the Rio Summit, however, the Marrakech Agreement establishing the WTO included in its Preamble an express reference to the objective of “sustainable development”, trying to emphasize that trade liberalization is therefore conceived as a means to achieve this objective. Consequently, it is emphasised nowadays that the WTO system is not framed as a monolith exclusively centred on the opening up of markets. In fact, WTO law expressly states in various of its provisions (to be interpreted in the light of the said Preamble) that trade liberalization must succumb when the realization of the latter prevents a Member to guarantee other, superior, public values; the general exceptions clauses therefore representing part and parcel of the Geneva multilateral trading system.

2. Concerning the elaboration and specification of the sustainability concept, a rich tapestry of ideas can be found. Legal definitions are present in several new treaties. Legal precedents on sustainable development are also to be found in international case law and in national legal systems that either refers to international case law or are themselves defining the issues.

As for the international organisations, even though the EU Treaty does not define the concept of sustainable development, it has already been done in secondary EC law. The different organs and bodies of the UN have produced a variety of instruments dealing with sustainable development, through a series of international conferences and summits, thematically autonomous, which globally constitute a framework for the governance and sustainability of the international community. In such a context, for instance, the UN Conference on Environment and Development and the UN Commission on Sustainable Development have elaborated on the definition of sustainable development. ILO has adopted a resolution on “Fundamental Principles on Rights at Work” that can be considered as the minimum legal (human rights) standard or content of the concept of sustainability, at least in its social dimension. In a different context, the WTO Appellate Body has specified that the principle of sustainable development, also within the multilateral trade context, has a “three-dimensional” nature, which thus comprises and integrates, besides environmental protection and economic development, social development. The OECD and its member states also promote the development of a set of corporate governance standards and guidelines, in co-operation with other relevant international organisations and the private sector. In particular, the OECD and its member states are elaborating a strategy towards the achievement of sustainable development, which is considered a key priority for OECD countries.

On the other hand, business organisations dedicated to sustainable development are also developing practical tools and concepts to make sustainable development and corporate social responsibility operational and to raise awareness about them in the business community. For instance, the international multi-stakeholder organisation, Global Reporting Initiative (GRI), has developed Sustainability Reporting Guidelines in the field of human rights, labour standards, and environmental practice.

3. As for legal aspects, international law has developed a small but growing number of specific principles, with a different legal status, in order to respond to the current environmental and social issues. At the international law level, environment and development are areas primarily covered by soft law. To the extent that bottom-line standards are seen as desirable, the international law framework is the best framework for such standards. In anticipation of such hard law, voluntary labelling schemes may pave the way for the adoption of such standards. However, international law is unlikely to come up with top-end standards for environmental and sustainable development standards. This leaves room for the non-governmental sector and national governments to promote top end standards. In other words, the action of the non-governmental sector, in particular, contributes to the development of soft law principles.

b) Limitations:

1. Concerning political and corporate commitment to sustainable development, the governmental and non-governmental commitment to sustainable development is frequently inadequate, ambiguous, and inconsistent. Business organisations dedicated to sustainable development may cover up a lack of true commitment. And Governments too can be ambiguous. For example, the Lisbon goal for 2010 set by the European Council speaks of sustainable economic growth for Europe and improving the competitiveness of European business and not of sustainable development. Moreover, most present initiatives –with the notable exception of the European Union- stimulating sustainable development emphasise the economic and environmental components of the concept, and neglect the social one.

2. As for the elaboration and specification of the sustainability concept, the reality is that the proliferation of definitions of sustainability has not led to clarification on its content, let alone consensus.

3. As for legal aspects, the existing law on sustainable development has reached a situation where it can be argued that there is a customary law introducing a right to sustainable development, but only as a general principle of law. There is a lack of legal and regulatory development of this principle: Sustainable development is still too abstract to impose a specific rule on States. In addition, at the international law level, environment and development are areas primarily covered by soft law. So, important problems arise with regard to under what conditions such a soft law may become compulsory and how it really influences international law procedures. As a result, neither a universal legal instrument nor regional agreement currently establishes a binding set of principles or even a comprehensive framework for our field of study. The legal status of social and environmental labelling schemes still is difficult to fit into the international legal order.

c) Challenges

1. Concerning political and corporate commitment to sustainable development, the challenge is, on the one hand, how to enhance the content of the political commitment of government and non-governmental bodies to sustainable development. On the other hand, and in order to enhance a common understanding on the three-dimensional nature of the concept of sustainable development, far more efforts should be devoted to face and fully understand the reasons stated by those international actors –mainly developing countries- opposing the inclusion of the social dimension in the notion of sustainable development, especially within the WTO.

2. As for the elaboration and specification of the sustainability concept, the challenge is how to identify the common and the controversial features of sustainable development and corporate social responsibility, as adopted by different organisations and institutions, and make them applicable for sustainability labelling and certification schemes. Here again, as just indicated, far more attention should be devoted to the analysis of the reasons stated by developing countries opposing the inclusion of the social dimension in the notion of sustainable development.

3. As with the legal aspects, the challenge is how to develop labelling and certification schemes that do not violate international law and to find a balance between legitimate environmental and social interests on the one hand, and legitimate trade and development interests on the other hand, in the context of WTO and other international legal instruments.

B) Main scientific findings related to Work Package 4

Since the 1970s several actors (NGOs, industry, and government) have started to develop labelling and certification schemes for products and services that are claimed to be preferable from an environmental and/or social point of view, particularly since such schemes are compatible with a free-market approach, as opposed to a command-and-control approach. Initially, these actors adopted either social schemes, mostly focusing on labour conditions and trade relations, or more or less integrated environmental schemes. In a later stage, the first examples emerged of a convergence towards “sustainability” schemes, incorporating both environmental and social criteria and this trend has led to several new initiatives that have come into operation.

The inventory focuses on voluntary labelling and certification schemes as opposed to mandatory schemes. Furthermore, it focuses on second and third party verified claims, which means that corporate claims and self-declarations are excluded from the research. The field of research has been demarcated on the basis of a distinction between multi-sector schemes (those which potentially cover a range of different products and services) and sector-specific schemes

Concerning multi-sector sustainability labelling and certification schemes, and in line with the concept of sustainability, it would be logical to distinguish between environmental, biodiversity, animal welfare, labour, human rights, and trade schemes, as well as, sustainability schemes incorporating all aspects. In practice, this rather rigid categorization is not so easy to follow, since most schemes have dominant features but also contain elements of the other categories, although they cannot be classified as real ‘sustainability’ schemes covering all aspects in a balanced way. We have therefore decided to employ their original ‘species’ names and to come up with an overview of the sustainability aspects covered by the various schemes in the final chapter. Subsequently, we dealt with environmental schemes, fair trade schemes, organic schemes, and integrated production schemes. Specific sector sustainability labelling and certification schemes are most commonly found in the sectors of clothing, textiles, and footwear; fisheries and marine life; food and beverages; forest management and wood products, and tourism. These are the main sectors the inventory addresses. However, we have also included a listing of other sectors that are covered by sector-specific schemes, including cut flowers, electronics, furniture, and office equipment.

The research findings about multi-sector and sector-specific labelling and certification schemes mainly highlight the following issues:

  • Public and private involvement;
  • Products and services covered;
  • Geographical scope;
  • Sustainability aspects included;
  • North-South relations.

1. Concerning public and private involvement, it seems not to be a unique alternative for the multi-sector labelling and certification schemes. Most environmental schemes are public or semi-public operations, while fair trade schemes are up to now a fully private affair. In the organic sector, most schemes have a private origin, but the number of public schemes is on the rise. With regard to schemes for integrated production, our picture is not complete but our assumption is that these are primarily privately ruled. All four of these types of schemes have an international framework, mostly of a private origin, except for the Codex Alimentarius Commission that is a joint body of the FAO and WHO. From the point of view of sector-specific labelling and certification schemes, it seems that they can be characterized as mainly private undertakings embedded in frameworks provided by public international law.

2. As regards coverage, fair trade schemes, organic schemes, and schemes for integrated production all cover agricultural products and some of them also apply to processed agricultural products, such as food products and textiles. Fair trade schemes, however, only apply to a very small selection of agricultural products from specific tropical regions, as opposed to organic and integration production schemes, that cover in principle almost all crops from all geographical situations. Environmental schemes usually include a wide variety of products, with paper products and paints as the most common ones. In some cases, these schemes also cover services, such as tourism and catering. It is remarkable, though, that some product categories are not covered at all by any schemes.

3. With regard to geographical scope, it can be concluded that environmental and social labelling and certification schemes are not yet established in all countries and regions. It seems that the member states of the EU and North America have by far the majority of such schemes in operation and that Africa and South-America are the least involved. Asia and Australia are both in-between cases.

4. Sustainability aspects that are covered by the different types of multi-sector and sector-specific labelling and certification schemes refer to certain qualities of products, production processes, or services that are not only relevant from a private perspective, but also from a public perspective as they aim to protect common goods and resources, and social values. As a starting point, we make a distinction between six different categories of sustainability aspects, including environment, biodiversity, animal welfare, human rights, labour conditions, and trade relations. On that point, the inventory shows that environmental impacts are in principle covered by all types of multi-sector schemes, although to a lesser extent for fair trade schemes. Social aspects are less broadly covered by the different schemes. Fair trade schemes are here the exception, with their primary orientation on trade relations and labour conditions. The developments of the last few years indicate that fair trade and organic schemes are converging towards each other and beginning to approach the ideal of true sustainability schemes. You can see the EKO-Oké banana, an organic banana traded under fair trade conditions, as a symbol of this integration process. When considering the inclusion of social and environmental criteria from a sectoral perspective, the dominance of environmental aspects as well as the non-inclusion of fair trade criteria is significant.

5. With regard to North-South relations, it can be concluded that fair trade schemes are radically different from all other schemes, because they have as a primary objective the improvement of North-South trade relations by creating more equitable supply chain arrangements. Other social and environmental schemes may provide opportunities to some Southern producers, but may also hinder market access for others. The most common complaints of Southern producers are related to costs of complying with the requirements, the multitude of different schemes based on different criteria, the costs of inspection and certification, and the fact that criteria are in most cases developed and imposed by Northern countries.