How to Build an agreement

Core to any standard system is the need to build a consensus, that is to reach agreements that can be supported by all your key stakeholders.

This sentence is self-evident...and impossible at the same time.

It is self-evident because agreements that have the support of all your key groups of stakeholders are the most durable and form a solid foundation for your system. It is impossible because getting that agreement on everything from everyone is, well, impossible.

Multiparty negotiation is one of the most challenging elements of building a consensus standard. It is necessary to get agreement between a wide range of interests, many of which are contradictory. (For more on what a consensus means see my earlier post: Who Can Write a Standard?)

In my experience multiparty negotiations follow a consistent pattern:

1. Very quickly, the group can reach an agreement on close to 90% of the issues. This is the case because, despite our differences we all agree on wide common base (I know this does not feel like the case but it is really true!).
2. Getting agreement on the next 7% of the issues will take a lot of work, trust building and creative thinking but it can be done.
3. The last 3% is the killer. These are the issues where the most fundamental disagreements reside.

As I state in the title, agreements are built. The popular myths are either that the agreement is a compromise, that is all sides must ‘lose’ something or one side just gets its way at the expense of all the others. While these happen sometimes, the best agreements are built from innovative approaches to old problems. This is important because agreements we can actively support are more durable than those we can just accept.

Back in the early days of FSC, the original Principles and Criteria had a text of principle 9 – it dealt with the issues of ‘old growth forest’ and the parties could not agree to a text. After many tries to get an agreement a proposal was made to create a committee of representatives from the three FSC chambers  who would be charged to develop an agreed text for principle 9 (these included environmental, social and economic representatives from both the developed and developing countries).

To create the group, each of the chambers elected their developed and developing world representatives. To incentivise the group to reach a decsion, the FSC board which approved the process was clear, if this group did not solve the problem, the board would. This last point helped because very few folks liked any proposal that the board had produced to date.

When convened, the group started off with the all the expected concerns raised, the foresters from the economic chamber talked about ‘over-mature trees’, the environmentalist talks about the value of ‘old growth forests’, and the social chamber representatives talked about the need for sustainable employment and preservation of cultural sites in forest landscapes.

About halfway through the time we had together, a new idea emerged. It was proposed that we talk about ‘high conservation values’. That is, the concerns of each group could be mixed up in different ways. The question ceased to be “Is this an old growth forest?” and became “What are the high conservation values for this forest?”

Because of this change in approach a text of principle 9 was proposed that required protection of high conservation values. The text was clear that high conservation values could be found in just about any forest, from plantations to virgin forests and everything in between.

For FSC, the issue of principle 9 was the killer 3%. It took years to build an agreement, but it happened because a new idea was brought into the room, it was explored, and an agreement was built. The solution worked better for everyone’s concerns than any other. When the meeting ended, no one left feeling like they had lost.

A creative solution that allows the parties to think about an issue in a different manner is often the route to building agreements.

Writing Code for Humans

My father used to say: “If all else fails, read the instructions!” I think that this is an accurate way to describe how people function. The first thing we do when we open a box is to toss the instructions aside and try to figure out how to use our new toy. We will puzzle through a problem, press buttons on the new camera, and assemble the IKEA cabinet our own way before we find out that that we wasted time, did it wrong, or worse, broke it.

This natural tendency is at odds with how standards, audits and such are designed and implemented. Tossing the certification instructions aside is not going to ensure that your implementation of a complex system is going to be successful.

Standards, audits, certification, labelling, and other bits that are part of a certification scheme are detail oriented and require clear, step-by-step instructions and guidance for users. 

It really helps if the stuff is clear, easy to read and works with the way humans work. But, let’s be honest, most scheme documentation is confusing, not well organized and hard to follow.

We often think of instructions as a computer program in which each step, no matter how trivial must be written and placed in its proper order in the sequence. Humans, thankfully, are not computers and we are a bit more flexible than computers. With that said, clear instructions designed for humans do help and when properly prepared it is more likely they will be followed.

So how do you write code for humans? Here are a few things to keep in mind:

1.       Understand what your user needs

Find out who is going to use your instructions and guidance; write for them. If it is likely to be an intern or junior staffer, keep that in mind. Your writing may be their first real introduction to standards and certification.

2.       Use words and graphics

Some people read the words and ignore the graphics, others read the graphics and just look at the words as if they are footnotes to the graphics. Whenever you can, give presentations that both can read.

3.       Write in the positive

It is very hard to follow instructions that tell you what not to do. Instructions are so much clearer when you keep this in mind.

4.       Tell them how their work will be evaluated or audited.

Give a clear description of how their work will be used. If it is to be audited, explain the steps in how that works.

5.       Don’t think they are stupid or that they can read your mind.

Write for readers that are smart and want to learn, that is why they are reading your work. At the same time, be aware that what is ‘obvious’ to you may not be to others, so include all the steps in your descriptions.

Are voluntary standards really a form of environmental governance?

I have been reading studies, articles and such for years that describe voluntary standard systems (VSS) as a form of environmental governance – and for just as long I have been wondering if that really is the case.

The term ‘governance’ is very broad can include governments (national, state, provincial, county, municipal, etc…) and civil society (businesses, not-for-profits, charities, unions, churches, universities, partnerships, informal collaborations, the girl scouts, etc…).

I am a bit biased, I guess... I think of 'governance' as a role that includes a measure of direct control. This is informed by my experience as a member of several boards of directors and having worked directly for boards. The governance role of a board is focused on setting a direction and making sure that it is the goal of the organization. (Boards also have a budget and legal compliance role but let's put that aside for now.)

Most of the time when we hear the term ‘governance’ we think of a decision-making body that can create and enforce a policy, rule or regulation. As a result, most people do not think of voluntary or optional systems a form of governance because it lacks the capacity to compel compliance.

Since I am not a lawyer, I will skip over any musings on how legislation and regulation come to be; I will just focus on the voluntary side.

Standards are not legislation or regulation (see my earlier post “Conformity vs. Compliance”) although they can be easily confused. 

Voluntary standards are normally developed to codify norms of practice, that is they are designed to create specific outcomes, whether it is a common screw thread for bolts and nuts or how to manage watersheds.

Once they are developed, voluntary standards are either become the common practice or they are ignored. Those that become common practice create a new norm and nuts of a certain size all fit bolts of the same size. (These are the ones that can 'feel' like they are mandatory.) Those that are not adopted, fall by the wayside or sit in limbo until they are needed, if ever. The ‘decision’ is made in the market, and competing standards are used by different players until one is the clear winner. As a result, VHS became the norm despite the obvious superiority of Betamax (I know, I am showing my age now….)

Voluntary standards establish the norm by competition in the market. Winners and losers are not often clear because the winner may be selected for reasons that are not clear at the start.

A new norm, widely accepted may have the effect of regulation because once it becomes the new norm it is hard to use some other option, and have it accepted. Sometimes these other options can arise and disrupt the accepted norm, and then things change.

Well, what does this mean for a new standard system? I would see this as an opportunity to look at competing standards in the past and really understand why some succeeded and some failed. Shelves are full of standards that were rarely used (I should know because I spent lots of time writing some of them). Also, for every successful standard there are many competing ideas that were discarded.

I have my own ideas about why some succeeded and others fail. But that may just have to wait for a future post.

A NOTE: Yes, I agree that some governments adopt standards as regulation, effectively making them law in some jurisdictions. I consider these standards to have become regulations since they then have the force of law – they are no longer voluntary, even thought they were originally developed outside of legislatures and government departments.

"White Label" Standards

A white label product is a product or service produced by one company (the producer) that other companies (the marketers) rebrand to make it appear as if they had made it.  ("White-label product" Wikipedia, 24 January 2018)

In the world of social and environmental certification many have noted a growing frustration by some large brand owners with the use of certification trademarks on their product packaging.

This frustration may be due to one or more issues:

• loss of packaging 'real estate' to other peoples' logos,
• having to pay a logo licence fee to display other peoples' logos,
• fear that using other peoples' logos to assure their customers is also weakening their own brand,
• frustration that multiple logos may be needed for packaging, sourcing of certain components, treatment of workers, and production aspects such as water use, CO2 emissions, energy consumption, waste management, recycling, etc...

Underneath these issues is the powerful desire by some brand owners for their customers to trust the brand as being responsible across a range of issues. These brand owners want you to see their product and to recognize the brand as providing the assurance that the environment is protected, workers are well treated, and all materials are sourced in the most responsible manner possible. 

It is possible that as the number and complexity of social and environmental standards grows, brands will be looking for ways to 'transfer' the assurance provided by third party certification logos to their own brands. This is important to the brands because they want to have their brand to be all the assurance that customers will want.

This can present a challenge to standards system owners. First, it can mean that all the effort that they have invested in growing their own brand may be diminished or lost altogether. 

Also, it can pose a significant challenge to the viability of a scheme owner. If its logo is its main source of revenue, then the loss of logo revenue may put at jeopardy the viability of the certification itself.

In the end, most brand owners will still need to monitor and evaluate their supply chains and their own production - and third-party certification is a fantastic way to do it. Just because the brand does not want to display your logo does not mean that they want to build their own audit and certification system.

A first step is to understand what the brands that rely on your certification want and need. Paying close attention, really listening and engaging in discussions with brands is crucial. The last thing you want is to be surprised by an announcement that one of the brands using your logo will be dropping it from all its packaging.

Your business model may need to be re-thought – this can include a range of questions such as:

• How can you continue to finance your operations, keep your standard current and maintain high quality assurance?
• Can you provide a ‘white-label’ service to brands that want it?
• How will you address concerns of smaller brands that want to continue using your certification mark?
• Can you deliver the market change that you are committed to?

Humility

Do we develop standards and certification to change the world?

This may seem a bit grandiose, but to some degree it must be true. Social and environmental standards have been driven by individuals and groups that want to save natural ecosystems, preserve endangered species, make the lives of workers and small producers better, make trade fair, save indigenous cultures, protect the oceans, save the forest….well you get the picture.

To create an international standard and go to the trouble of turning it into a global enterprise requires dedication, hard work and a belief that we can make change happen, even reform an entire industry sector.

While this undying belief that we can effect change must be present, it should be tempered with humility.

By humility, I mean a sense that a much as we believe in what we are doing we must also be aware that we may make mistakes. These mistakes can help us to realize that there are better ways to do our work and make the difference we are driven to deliver.

That is, errors CAN help us - but they may not if we do not have the humility to recognize that our system is not flawless and that we can change the way we work.

To be blunt, errors to not happen just because of the failure of others. 

We should be looking at our own work with an eye to seeing our own weakness and failures. More than that, we should be looking to make changes, even hard changes, to better deliver on our objectives.

The Growing Importance of Social and Environmental Certification

NOTE: I am sorry that I have been remiss in maintaining this blog, events over the last year took over my life and demanded attention. I am hopeful that a new normal has been established so that my work-life-chaos balance has stabilized. I will endeavour to post regularly to this blog.

For many years some folks have been predicting the demise of social and environmental certification. The reasons for these predictions are many and include:

• Market confusion caused by too many schemes;
• Brand owners resistance to having 3rd party logos on their packaging;
• Failure of 3rd party certification to solve the worlds problems;
• High cost of certification for primary producers;
• Failure of a price premium to support improved performance;
• Failure of 3rd party schemes to really deal with the weakest players;
• Large northern companies benefiting over smaller and southern producers;
• etc....

Yes, social and environmental certification has many issues that need to be addressed and is not (and never has been) the silver bullet that will fix all problems.

But there are benefits.

First let's consider the principle strength of 3td party standards. They function within markets and as a result can only effectively be regulated by goverments using tools that regulate trade.

Why does this matter?  Some national goverments have been taking actions to restrict the ability of civil society players to drive change. These actions have included:

• Restrictions on civil socitey organization raising funds.
• Restricions on travel by NGO reseachers.
• Punative audits by governments of charities they do not like.
• Austerity budgets by governments that undermine social and environmental progress.
• Active promotion by goverments of projects that undermine rights of individuals and groups as well as those that subsidize environmentally dangerous industrial practices.
• Restrictions on travel and investment by academic and business professionals from developing countries.
• Restrictions on students' travel and study in other countries.
• etc...

These and other actions are designed to weaken the capacity of civil society to challenge inequity, injustice, environmetal degredation and undermine efforts to increase the capacity of civil society to challenge governments, militaries or the ultra-rich.

What can social and enviromental certification bring to the table?

First of all, because social and environmental certification is a commercial practice, any efforts designed to restrict it by necessity will also apply to all other forms of certification. Most governments (othe than absolute dictatorships) cannot target one company and ignore all others - the rules that apply to one certification system apply to all. A country cannot, for example outlaw MSC or Fairtrade certiifcation, it would have to ban the use of all foreign standards in their country and that would have a massive impact on their ability to trade internationally. 

The same principle applies to the use of trademarks. If a country outlawed the use of the FSC logo on products all other owners of international brands would become nervous about protecting the value of their brands in that country. Again, international trade could be negatively impacted as international brands would likely reduce investment in the offending country. Why would a brand owner invest in a country that has just oulawed the use of a brand logo?

The close integration of social and environmental standards, certification and labelling with business mean that actions to restrict its use by definition stray into regulation of trade, business and industry.

3rd party social and environmental certification is not the panacea that will solve the worlds problems, but it is a useful tool that can support social change by encouraging business to adapt to a market demand for responsible products and services.

As governments retrench and seek to silence dissenting voices, tools that can bypass these efforts are needed. Social and environmental certification is one of those tools.

As a result we will see more reliance on independent standards in international supply chains to meet the growing consumer demand for responsible products and services. 

Using risk as a way to improve assurance

Risk is a wildly misunderstood concept. First of all most people do not understand what is meant by the term 'risk' and secondly many folks think of it as a way to make certification easier for big, rich clients and harder for small, poor ones.

When used properly, neither of these are true.

What is risk?

Risk is the relationship between the impact, and the frequency of a threat; that is the likelihood that the threat will occur and the consequences if it does. I'll try to break it down further....

A threat is a negative event. It is something that can happen and have a negative impact. An asteroid hitting Earth is a threat.

The impact of a threat is what happens when the threat occurs. Space rocks can vary in size from bits of dust to planet size rock and everything in between. The impact of dust, sand and rocks that are smaller than a car is usually nill. A really big rock can be catastrophic (just ask the dinosaurs...)

Frequency is how often the threat occurs. Thousands of bits of stuff from space hits Earth every year and almost all of it burns up before it hits the planet surface. A few survive being incinerated in the atmosphere and hit the surface; they usually do so in the oceans or in places where there are few humans. Once every few million years something really big hits Earth and causes major problems. The last really big one was 65 million years ago.

So in terms of risk, there is a very high chance that the Earth will be hit by stuff from space and an extremely small chance that the impact will disrupt our lives. The risk to my life from space rocks hitting earth is very, very low.

Risk and certification

First of all, let's be really clear; certification is about risk. 

At its most basic, certification is a way to provide assurance that a particular set of specifications are found in a product, service, process or production method. It provides assurance that you are getting what you are paying for - as such it helps to manage the risk that you will receive a product that does not conform to your needs. 

Risk can occur at many levels - within the certification world risk can be found in a number of places, including:

• the audit and certification process
• the client who is certified
• the chain of custody
• and the certification scheme itself

A well designed certification scheme has identified the threats that may occur at each step and determined which pose significant risks. 

Once the risks are known, the certification scheme should consider each risk and, where practicable, put in place steps to eliminate, mitigate or otherwise manage those risks so that the frequency of occurrence is reduced, the impacts are minimized or both. In some cases a risk can be completely eliminated (but this is rare).

Pitfalls in the process

The biggest problem that can occur in this whole process is bias. Sometimes folks will assume that other people will make mistakes while somehow they themselves are immune to error. Sometimes we will decide before hand where the problems are and completely ignore other areas.

A teacher may decide that the risk of failure by their students are due to the school, the student's families, the school administration, the government but not due to their own failing. A school board may decide the teacher is the biggest risk and that board policy or curriculum is never an issue.

A certification scheme may assume that problems are due to bad auditors or lying clients but never consider that their own standard and certification requirements are vague and unclear.

A note on reputation and risk

One of the fundamentals of business is that a risk to your reputation can be one of the biggest risks that a company can face. The risk that your customers loose trust in you can be devastating to a product line or an entire company.

A consequence of this is that certification schemes must pay close attention to risks to their own reputation; but that is not all. Certification schemes must recognize that all of the players in the system, including the accreditation bodies, certification bodies, certified clients, processors who use certified products, and retailers that sell the final product all are relying on your certification as a way to manage or mitigate risks to their own reputations.

As with other types of risk the certification scheme should identify risks to players at each stage in the value chain and consider how their scheme can best manage or mitigate the risks that their users may face. 

There are many other ways that risk can be used to better manage a certification scheme; but for certification schemes whose currency is assurance, managing the aspects of reputational risk is a significant priority.

Before Certification: Comments on “Beyond Certification” by Scott Poynton

The recent publication “Beyond Certification” by Scott Poynton (Dō Sustainability, Oxford, UK, 2015) has a number of valuable insights; however I think that he starts his analysis in the middle of the story and proposes a solution that almost exactly describes the world before FSC certification.

Before I get to the options that Poynton’s book presents, I will start with the bigger picture – not to be negative but as a way to frame the issues that I think are most important.

Lost in the mist of time

I would like to start way back to the before the 1992 Earth Summit and consider the vast amount of effort that was being invested by a host of organizations in the creation of a global code of conduct to govern the behaviour of trans-national corporations. This code of practice was to be a center piece at the upcoming Earth Summit. The code of practice was being prepared under the auspices of the UN Centre for Trans-National Corporations and would govern the conduct of global operations of major corporations. It was based on a broad definition of sustainability – environmental, social, cultural, and economic. Most of us now have never heard of this effort because it died before Rio.

Prior to the Earth Summit a deal, brokered by the Swiss billionaire Stephan Schmidheiny was reached with the support of major governments and corporations: it was proposed that the code of conduct be taken off the agenda for the Rio Earth Summit. Instead of addressing trans-national corporations in an intergovernmental forum there would be the creation of an international standard for how corporations addressed environmental issues. The result was the creation of the ISO 14000 system, a set of standards and guidance documents that form an ‘environmental management system’ based on the model of the ISO’s 9000 quality management system standard. It is no accident that in 1992, the same year that saw the Earth Summit in Rio, BSI published an environmental management system standard for the UK which became the model for ISO 14000.

To most of the organizations that worked so hard on the code of conduct for transnational corporations, this development was a large step backwards. Rather than having a code of conduct that could be used to hold corporations to account a voluntary management system standard was proposed. This new standard would contain no minimum performance levels, the first approved version of this standard did not even include the requirement that certified companies comply with environmental legislation.

At the same time as the preparation for Rio was growing a global concern with deforestation. Astronomical rates of deforestation were occurring worldwide with growing impacts in the developing world and on indigenous peoples. One response was undertaken by a small group that formed to create a standard to would allow consumers of forest products to purchase those products that were certified to be harvested from well managed forests and would not contribute to deforestation and the destruction of local and indigenous communities. This group grew to launch the Forest Stewardship Council in 1993. It was a new tool that could apply market pressure to forest companies for global practices, even when nations were powerless to do so. It is a tool that has seen success far beyond the expectations of many of the founders.

I see a direct connection between the abdication by governments of the responsibility to set enforceable limits on the behaviour of transnational companies and the efforts to foster the growth of a market tool that could have some of the same effect.

An FSC vision

The goal of the FSC was to create specific, measurable performance requirements that, while adapted to different forest types in different social circumstances would all conform to a global set of principles and criteria. Nowhere in this vision is the flexibility for a company to be certified for meeting only those parts of the standard that it chooses. It’s and all or nothing proposition.

FSC, as with many other global certifications schemes, strives to set a benchmark that is either conformed to, in which case the products could be certified, or not, in which case the products cannot be certified. No one, I would expect even FSC itself, would say that it has succeeded on all counts and in all circumstances. It is important to note that certification is a positive statement; it does not mean that products that are not certified are from badly managed forests. The pedigree of uncertified products is simply unknown.

Poynton’s proposal

Poynton proposes moving beyond certification to a model in which corporation define their values, that is clearly state ‘who we are’ and then implement transparent, transformative and verified steps to bring their actions in line with their values. To me, this sounds very much like the process described in the ISO 14000 system. Companies define their environmental objectives and then put in place a management system to deliver on their own objectives.

In just about every case presented by Poynton, the prompt for companies to begin to enter into this process is as a result of being targeted by a large campaigning NGO. His central case is that of Nestlé after it had been a target of Greenpeace’s campaigning efforts to stop Indonesian deforestation for the production of palm oil. In almost none of the cases presented did a company change course without significant outside pressure.

Somehow this process of companies coming to learn that their values are out of sync with their practices is once again the responsibility of NGOs; not-for-profit organizations and charities funded by individual donors and foundations. It is hard to imagine that there are enough well-funded NGOs with the resources to launch enough campaigns against offending corporations large and small. It is also worth noting that a number of governments including those of Russia, India, Canada, Egypt, and some US states to name a few that are taking or have recently taken legal and regulatory actions against these same NGOs for challenging corporate practices while major corporations file SLAPP suits against these same NGOs for challenging their practices.

Without certification we are back in a world that resembles the 1980s with campaigning NGOs challenging destructive and abusive corporate practices and calling for action by governments that refuse to take responsibility for environmental protection and safeguarding the lives of their citizens.

This situation is exacerbated by WTO rules that only allow on a limited basis for countries to discriminate based on ‘process and production methods’. As a result countries cannot prohibit importation of products that destroy critical habitat of endangered or at risk species, are produced by workers that are exploited or where indigenous cultures are destroyed. Non-governmental standards offer the opportunity for purchasers to select those products that conform to their values and those of their customers.

Options to move beyond the current practice of certification

Notwithstanding my critique of Poynter’s book above, there are a number of things that certification schemes and their supporters can do to better respond to the problems with certification as it occurs now.

These include (but are not limited to):

• Not offering certification. Some groups who wish to step up their advocacy and directly impact markets think that if certification works for forests or fair trade then it can work for their sector. Sometimes the best methods available include not becoming a certification scheme. This could mean becoming something like a consulting firm or as a partner to existing companies with a role of offering assurance about the products and services being offered.
• Don’t go it alone. If you do decide to offer certification there is no rule that says you have to do everything by yourself. If all the big schemes now in operation got together and designed chain of custody rules that can apply to forest products, coffee, chocolate, fish, diamonds, clothing, etc. then there is a chance that chain of custody procedures would be more robust. It is not necessary for experts in each sector to develop and run a unique chain of custody scheme. They could do the same for components that are common to multiple schemes such as worker rights, discharge of wastes, use of pesticides and herbicides, etc.
• Start with the market, not the producers. When looking at how to transform a market, start by ignoring the producers and start with the companies that process, market and retail products that use raw material in one sector. Often primary producers operate at the thinnest margin. They will respond to their customers but not to efforts to get them to change their practices without some benefit to them.
• Design a way for the poorest performers to improve. In many cases the causes of environmental destruction and socially exploitive practices are because of extreme poverty and complicit governments. If you focus your efforts on the getting improvements from the bottom 20% of an industry sector by working with them you may get more improvement than by certifying the top 20%.
• Add value. Spend time with creative entrepreneurs in your sector and find methods and approaches that are being used now by really inventive people. Take those practices and bring them to a wider audience to improve performance across an entire sector.
• Focus on the workers. Business is always telling us that their real value is their workers. What can you bring to improve the lives of the workers that drives greater value for the company while bringing benefits to workers and their families.

Recognize emerging trends. This includes the growth of south-south trade, the explosion of technology that allows information to be gathered by remote sensors, real-time monitoring and humans that carry cell phones in their pockets.

Final thoughts

The use of certification as a means to transform markets is still evolving. While it is important to critique the use of this tool, it is important to understand that we need to consider both the past (why certification became so important) and the future (emerging trends that are shaping our world).