Development a Reality: the Role of Social and Ecological ... · Development a Reality: the Role of...

Programme Office for Social and Ecological Standards

Making Sustainable Development a Reality: the Role of Social and Ecological Standards D. Burger / C. Mayer

ISBN: 3-935638-44-2 Published by: Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH Dag-Hammarskjöld-Weg 1-5 Postfach 5180 65726 Eschborn Germany Internet: http://www.gtz.de Programme Office for Social and Ecological Standards Telephone.: ++49(0)6196-79-0 Telefax: ++49(0)6196-79-11-15 Internet: http://www.gtz.de/social-ecological-standards Responsible: Dr. Burger Authors: Dietrich Burger / Claudia Mayer Translation team: John D. Cochrane Lynne Jagau Production: Verlag Kessel, Eifelweg 37, 53424 Remagen, Tel./Fax: ++49 (0)2228-493, eMail: [email protected] Printed by: www.business-copy.com

Programme Office for Social and Ecological Standards

Making Sustainable Development a Reality: the Role of Social and Ecological Standards Eschborn 2003

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List of Contents

Page

Figures...................................................................................................................... iv

Acronyms and Abbreviations ................................................................................. vi

1. Introduction ...................................................................................................... 1

2. The Vision of Sustainable Development ........................................................ 7

2.1 From the Vision of Catch-up Development to the Vision of Sustainable Development ................................................................................... 7

2.2 Guiding Principles of Action for Sustainable Development ........................... 15

2.2.1 The Resource Management for Inter-generational Equity Principle .......... 19

2.2.2 The Efficiency Principle ............................................................................ 21

2.2.3 The Social Justice Principle...................................................................... 22

2.2.4 The Partnership Principle ......................................................................... 25

2.2.5 The Coherency Principle .......................................................................... 26

2.2.6 The Principles – Guidelines for Steering a Course towards Sustainable Development......................................................................... 31

2.3 The Vision: Magic Formula, Empty Formula or Orienting Framework?......... 31

3. Challenges for Sustainable Development.................................................... 37

3.1 Sustainable Development Calls for Networked Thinking................................ 38

3.2 Resisting the Temptation to Adopt a More Simplistic Vision ......................... 41

3.3 Building Frameworks Conducive to Sustainable Development ..................... 45

3.3.1 An Integrated View of the Natural, Economic and Social Frame- works........................................................................................................ 46

3.3.2 Taking the Framework Dynamics into Account ......................................... 46

3.3.3 Utilising Scope.......................................................................................... 48

3.4 Effective Governance Structures for Sustainable Development .................... 50

3.4.1 Governance: Who Puts the Frameworks in Place?................................... 50

3.4.2 New Governance Structures Are a Must................................................... 51

3.4.3 New Co-governance Structures................................................................ 52

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3.5 Sustainable Development – an Ambitious Venture ......................................... 62

4. Implementing the Vision – the Instrument of Standards ............................ 65

4.1 Abstract Vision and Concrete Standards - Two Sides of the Same Coin ................................................................................................................. 65

4.2 Definition, Criteria and Functions of Standards .............................................. 66

4.3 Designing Standards Initiatives for Sustainable Development - Options ............................................................................................................... 68

4.3.1 Standards – Dimensions of their Development and Status ....................... 71

4.3.2 Compliance Verification ............................................................................ 75

4.3.3 Accreditation............................................................................................. 79

4.3.4 Commercialisation Strategies of Standards Initiatives............................... 80

4.4 Impacts of Standards Initiatives ....................................................................... 86

4.5 Development Policy Demands on Standards Initiatives and the Limits to their Effectiveness ............................................................................. 92

5. Standards of Sustainable Development in Practical Development Cooperation .................................................................................................. 101

5.1 Development Cooperation Seeks Sustainable Global Development............ 101

5.1.1. Significance of Social and Ecological Standards for the Achievement of Objectives by Development Cooperation ............................................ 102

5.1.2 Social and Ecological Standards in TC................................................... 105

5.1.3. Setting an Example: Standards within GTZ ............................................ 112

5.2 Conclusion ....................................................................................................... 112

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Figures

Fig. Title Page

Fig.1 a: Social and ecological standards are a serious attempt to make development sustainable and globalisation just ........................................................... 2

Fig. 1 b: The themes covered by each chapter ............................................................. 4

Fig. 2.1 a: From 'catch-up' to 'sustainable' development .................................................. 7

Fig. 2.1 b: Levels of orientation for action....................................................................... 10

Fig. 2.1 c: Capturing a vision can be a tricky business................................................... 11

Fig. 2.1 d: Interactions between the economy, the environment and society.................. 12

Fig. 2.1 e: The Rio vision of sustainable development ................................................... 14

Fig. 2.2 a: Resources for sustainable development........................................................ 16

Fig. 2.2 b: Principles of sustainable development .......................................................... 17

Fig. 2.2 c: Principles of sustainable development (“guiding star”) .................................. 18

Fig. 2.2 d: The principles of sustainable development and rules for their application..................................................................................................... 19

Fig. 2.2.3: Political preconditions for development ......................................................... 25

Fig. 2.2.5: Coherence of a sub-system with its neighbouring or ambient systems......................................................................................................... 28

Fig. 2.3 a: The role of the sustainable development vision............................................. 33

Fig. 2.3 b: Validity and degree of specificity of orientations for action............................. 34

Fig. 2.3 c: Identifying objectives on the basis of needs, values and capabilities............. 36

Fig. 3: Challenges for sustainable development – a tall order! ................................. 38

Fig. 3.1 a: One example of networked actors: tropical forest management .................... 39

Fig. 3.1 b: Frameworks leading actors to the vision ....................................................... 40

Fig. 3.2 a: The sustainable development vision in competition with more simplistic visions............................................................................................ 42

Fig. 3.2 b: Three aspects of an economic rationale ....................................................... 43

Fig. 3.3.3: Steps along the way to utilising scope for action ........................................... 50

Fig. 3.4.3 a: Co-governance - the architecture for sustainable development ..................... 53

Fig. 3.4.3 b: Influences on corporate policymaking ........................................................... 57

Fig. 3.4.3 c: Dealing with stakeholders ............................................................................. 58

Fig. 3.4.3 d: Matrix of influence and interests for stakeholder selection............................. 59

Fig. 3.4.3 e: Shareholder/stakeholder orientation of corporate policy goals ...................... 61

Fig. 3.4.3 f: Social orientation of corporate policy............................................................. 61

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Fig. 4.2: Standards and criteria ................................................................................... 67

Fig. 4.3: Quality characteristics of standards initiatives ............................................... 70

Fig. 4.3.3: Demands placed on certifiers pursuant to ISO .............................................. 80

Fig. 4.3.4 a: Commercialisation strategies of standards initiatives .................................... 81

Fig. 4.3.4 b: Translating "compliance" into target group-specific declarations of quality ....................................................................................................... 83

Fig. 4.4 a: Possible impacts of standards initiatives, illustrated by examples ................. 87

Fig. 4.4 b: Building social capital through standards initiatives ....................................... 90

Fig. 4.5: The demands placed on standards initiatives by development policy............ 92

Fig. 5.1.2: TC activities for the broad-based introduction of standards ......................... 106

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Acronyms and Abbreviations

CoC Chain of custody

CSD Commission on Sustainable Development

CSR Corporate social responsibility

DAC Development Assistance Committee

EU European Union

FLO Fairtrade Labelling Organizations International

FoE Friends of the Earth

FSC Forest Stewardship Council

GATT General Agreement on Tariffs and Trade

GTZ Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH

IAF International Accreditation Forum

IEC International Electrotechnical Commission

IFOAM International Federation of Organic Agriculture Movements

IIED International Institute for Environment and Development

ILO International Labour Organization

IOAS International Organic Accreditation Service

ISEAL International Social and Environmental Labelling and Accreditation Alliance

ISO International Standards Organization

ITTO International Tropical Timber Organization

IUCN The World Conservation Union

MAC Marine Aquarium Council

MSC Marine Stewardship Council

NGO Non-governmental organisation

OECD Organisation for Economic Cooperation and Development

PPP Public-Private Partnership

PR Public relations

SA 8000 Social Accountability 8000

TC Technical Cooperation

TU Berlin Technical University of Berlin

UN United Nations

UNESCO United Nations Educational, Scientific and Cultural Organization

UNCED United Nations Conference on Environment and Development

UNEP United Nations Environment Programme

WCED World Commission on Environment and Development

WTO World Trade Organization

WWF World Wildlife Fund

1. Introduction

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1. Introduction

A political matter: the term "social and ecological standards" might lead the reader to suppose that the present publication is primarily of a technical nature. It will indeed address technical issues, for instance how standards should be defined so that they can be clearly measured, or which rules should be observed in the setting and implementation of standards to ensure that international standards are not infringed. Yet at the heart of this work is the political issue of how economic actors, be they large enterprises or small farmers, can be motivated and supported to become protagonists of a development process that is not bought at the expense of humankind and the natural environment. German development cooperation is convinced that this kind of development, which serves the needs of people and the environment, is possible (BMZ 1997), and it is placing all its measures and institutions in the service of this task.

In 1992, shortly after the end of the East-West conflict, the governments of 178 countries met in Rio de Janeiro for the UN Conference on Environment and Development, where they agreed on a common vision of sustainable development. Hopes were high that this essentially cooperative vision would determine the future development of countries and the global economy, and guarantee greater social justice and ecologically sound natural resource management. These hopes were not fulfilled: in August 2002, the German newspaper Frankfurter Rundschau published an article entitled "The natural capital of our global environment is more under threat than ever before. In the run-up to the World Summit and 30 years after its trail-blazing report 'The Limits to Growth', the Club of Rome draws sobering conclusions" (ANON 2002). Amongst other things, the article stated that: "The most affluent 20 percent of the world's population currently consume 86 percent of the world's natural resources, while half the people in the world live in poverty."

Although governments remain committed to the Rio vision of sustainable development, as they expressly underlined at the World Summit in Johannesburg in 2002, world development over the last 10 years has been characterised much less by this cooperative vision, and far more by conflictual visions. With neoliberalism the dominant paradigm, steering of the economy has been left largely to the market and, as deregulation has advanced, public goods such as health, education and water have increasingly been privatised, i.e. subjected to regulation by market mechanisms. The cross-border exchange of goods, financial capital and information is growing rapidly. The globalised, i.e. de-territorialised, economy is becoming disproportionately powerful, moving beyond the reach of political control, and emerging as an entity in itself distinct from human society and the natural environment.

This form of globalisation is causing more and more citizens and policymakers to feel uncomfortable. Since the meeting of the World Trade Organization (WTO) in 1999, the meeting of the G7 heads of government in Genoa 2001 and the World Social Fora in Porto Alegre in Brazil from 2001 to 2003, an increasingly broad and diverse movement of civil society organisations has been forming in opposition to this kind of globalisation.

Numerous initiatives undertaken either jointly or severally by state, private sector or civil society actors aim to place social and ecological checks on the economy that induce actors to comply with certain standards, thus making a contribution towards sustainable development. These "standards initiatives" are designed to help concretise the Rio vision of sustainable development, i.e. to make globalisation more just and ecologically sound, thus to a certain extent building a bridge between Rio and Porto Alegre (cf. Fig.1 a).

Making Sustainable Development a Reality: the Role of Social and Ecological Standards

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Fig.1 a: Social and ecological standards are a serious attempt to make development sustainable and globalisation just

The present publication will explore options for promoting sustainable development through social and ecological standards, and seek to make those options more accessible to development cooperation.

The aim of the work: to assemble a basic conceptual and methodological toolbox for supporting standards initiatives; this should then help facilitate

• the exchange of instruments and experiences between standards initiatives,

• the evaluation of standards initiatives, and

• the initiation of new, effective standards initiatives.

The term "standards initiatives" is construed deliberately broadly: such initiatives may be launched by state and/or private sector and/or civil society organisations. The initiatives may focus on the setting, verification or enforcement of standards. The standards themselves may be legally binding, or may be voluntary undertakings.

The target group: the work is designed to make it easier for development cooperation experts to effectively support standards initiatives. The experts in question are first and foremost the staff of the GTZ Programme Office for Social and Ecological Standards, who support a wide variety of standards initiatives and who need this 'position paper' – which they have discussed at numerous meetings - to provide them with a joint conceptual basis. At their 'expert meetings' with staff of other projects to support standards initiatives, and staff of GTZ's public-private partnerships programme, those staff too have expressed their need for such a position paper. Beyond that, the work is also designed to sensitise staff of various development cooperation organisations, as well as consultants and scholars working in the

Rio Visionof Sustainable Development

GlobalisationDeregulation

Social and Ecological Standards

Rio Visionof Sustainable Development

GlobalisationDeregulation

Social and Ecological Standards

1. Introduction

3

field of development cooperation, and to support them in their cooperation with standards initiatives.

Taking the present work as a basis, there are plans to produce versions for other target groups, such as policymakers and journalists, worded and presented accordingly. Furthermore, the conceptual underpinnings presented here will be illustrated in three further handouts covering case examples of organic agriculture, social labelling and forest certification.

The structure of the work: the sustainable development vision is dealt with in Chapter 2. This vision is the overarching goal of German development cooperation. Consequently, it is both the point of departure, and the point of reference, for the present work. Following a presentation of the history of the vision, five guiding principles for action are identified and described: the resource management for inter-generational equity principle, the efficiency principle, the social justice principle, the partnership principle and the coherency principle. The goal of following all these principles to the same extent when dealing with natural resources, the economy and social issues can never be fully realised. Sustainable development must be understood as an ongoing process of adjustment and readjustment. Two aspects are particularly important here: the process of adjustment always affects various interests, and must be thought of as a process of negotiation; when seeking paths to sustainable development, no aspect relevant to development may be left out altogether. The sustainable development vision can be put very concisely: don't leave it out – negotiate it. The chapter is rounded off with an explanation of the orienting functions which the vision can perform.

The principles of sustainable development are basic common sense. This means the vision can easily be perceived as trivial or as stating the obvious. Consequently, Chapter 3 describes the major challenges associated with a real orientation towards the sustainable development vision. In actual fact, orienting one's actions towards the vision means 1, thinking in networked systems, which requires the courage to embrace complexity, 2, resisting the temptation to adopt simplistic visions, and especially today's dominant paradigm of economism, 3, accepting co-responsibility for building frameworks conducive to sustainable development, and 4, developing co-governance structures that steer actors towards sustainable development. The chapter concludes by summarising the challenging implications that embracing the sustainable development vision entails, and the help that standards initiatives can provide to those who embark on this ambitious venture.


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Fig. 1 b: The themes covered by each chapter

Chapter 4 presents the definition, criteria and functions of standards. Standards initiatives endeavour to concretise and make binding the abstract vision of sustainable development by designing concrete standards. They often involve a wide variety of actors. The initiatives can also differ widely in terms of their four components, which are: standard setting, compliance verification, accreditation and commercialisation strategy. Possible characteristics are described in detail, in order to create a basis on which to judge standards initiatives from a development-policy perspective, and with respect to cooperation and mutual recognition. Differentiated aspects of the possible impacts of standards initiatives are then described, namely

• the range of the impacts (within a corporation, national frameworks, global frameworks);

• the type of resources affected (environmental, economic or social resources), and

• whether they are functional impacts (the function or mode of utilisation of the resource is modified) or structural impacts (the structure and composition of the resources are modified).

From a development policy perspective, the impacts of standards initiatives that are of interest are not just those within standard-compliant companies, but also those on the wider frameworks. Standards initiatives can make a significant contribution towards capacity building in the concerned companies, as well as in research, teaching, the public sector, associations and civil society. Standards initiatives can also help build social capital, a resource whose key significance for development is increasingly being recognised and acknowledged. Social capital, i.e. the stock of rules, institutions and collective knowledge, can be increased by standards initiatives in a variety of ways, e.g. through the

Vision of Sustainable Development (Ch. 2)

Definition Principles

Challenges for Sustainable Development (Ch. 3)

Networked Thinking Complexityof the Vision

Building AppropriateFrameworks

Effective GovernanceStructures

Implementing the Vision – the Instrument of Standards (Ch. 4)

The Vision andStandardsare Linked

Definition andFunction

of Standards

Optionsfor Design Impacts

Minimum Condi-tions of Develop-

ment Policy

The Vision ofDevelopmentCooperation

Options for Intervention by TC Standards at GTZ

Standards of Sustainable Development in PracticalDevelopment Cooperation (Ch. 5)

Vision of Sustainable Development (Ch. 2)

Definition Principles

Challenges for Sustainable Development (Ch. 3)

Networked Thinking Complexityof the Vision

Building AppropriateFrameworks

Effective GovernanceStructures

Implementing the Vision – the Instrument of Standards (Ch. 4)

The Vision andStandardsare Linked

Definition andFunction

of Standards

Optionsfor Design Impacts

Minimum Condi-tions of Develop-

ment Policy

The Vision ofDevelopmentCooperation

Options for Intervention by TC Standards at GTZ

Standards of Sustainable Development in PracticalDevelopment Cooperation (Ch. 5)

1. Introduction

5

institutionalisation of fora for co-determination or conflict transformation, through new alliances, or through a new culture of participation and negotiation.

The chapter concludes with a description of development policy demands upon, and the limits to, standards initiatives.

Chapter 5 deals with the role played by standards of sustainable development in practical development cooperation, and how development cooperation can support the introduction of standards as an instrument of sustainable development.

2. The Vision of Sustainable Development

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“Our biggest challenge in this new century is to take an idea that seems abstract - sustainable development -

and turn it into a daily reality for all the world's people.” (UN SECRETARY GENERAL KOFI ANNAN)

2.1 From the Vision of Catch-up Development to the Vision of Sustainable Development

For a long time, development was understood as an exclusively economic process that could be adequately described in terms of growth in gross national product (GNP). Thus the United Nations defined the target for the First Development Decade from 1961 to 1970 as being 5% and that of the Second Development Decade from 1971 to 1980 as being 6% growth in GNP.

Fig. 2.1 a: From 'catch-up' to 'sustainable' development

1949 Truman’s address to the nation Concept of catch-up development

1961 1st UN Development Decade (1961 – 70)

goal of development: economic growth (+5% GNP)

1962 Silent Spring by R.Carson life on earth is threatened

1968 UNESCO Biosphere Conference term "sustainable development" used for the first time

1971 2nd UN Development Decade (1971 – 80)

goal of development: economic growth (+6% GNP)

1972 Limits to Growth by D&D.Meadows Report to the Club of Rome

limited resources and the capacity of the earth to withstand burdens set limits to growth

1972 UN Conference on the Human Environment (Stockholm)

environment or development

1983 World Commission for Environment and Development (Brundtland Commission)

Final Report (1987): ”Our Common Future” definition of sustainable development

1992 UN Conference on Environment and Development (Rio de Janeiro)

vision of sustainable development (embracing the economy, society and the environment)

In his 1949 address to the nation, President Truman spoke of “underdeveloped” areas that had not yet reached the state of economic development of the countries of the North, particularly the USA, and whose development needed to “catch up” (SACHS 1997). This idea of “catch-up development”, which long dominated the discourse of development, was based on the notion that all people move on the same track, and that development thus means


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catching up on the same form of economic growth already achieved by those who have gone before them - the pioneers.

Since the 1960s, the interrelationships between economic development and the environment have gradually become a key issue on the development agenda. In her book Silent Spring published in 1962, Rachel CARSON drew attention to the hazards to which life on earth was being exposed by the chemical industry. In particular, the report to the Club of Rome entitled The Limits to Growth, submitted by Donella and Dennis MEADOWS in 1972, aroused keen interest. This report illustrated very clearly that exploitation of the environment poses a threat to economic growth. The relationship between economic growth and the environment was discussed in detail at the 1972 United Nations Conference on the Human Environment held in Stockholm, albeit at that point still in terms of the dichotomy of environmental or economic development.

The one-dimensional idea of catch-up development was gradually superseded by a more holistic, multi-dimensional concept of development. The term “sustainable development” was first used at the UNESCO Biosphere Conference held in Paris in 1968 (IUCN/UNEP/WWF 1980). In 1980, the World Conservation Strategy of IUCN, WWF and UNEP defined the term as follows:

“For development to be sustainable, it must take account of social and ecological factors, as well as economic ones; of the living and non-living resource base; and of the long-term as well as the short-term advantages of alternative action”.

In its 1987 report entitled “Our Common Future”, the World Commission on Environment and Development (WCED) set up by the United Nations in 1983 and led by Gro Harlem Brundtland, laid special emphasis on responsibility towards future generations, and gave the following definition:

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

In 1992, the United Nations held the World Conference on Environment and Development (UNCED) in Rio de Janeiro. At this, the largest conference ever held, the delegations of 178 industrialised and developing countries from a whole range of regions and cultures agreed on a shared vision of sustainable development. This vision is construed as a:

"[...] global partnership for an economically viable, socially just, ecologically sound development not only for the present, but also for the future". (Agenda 21, Preamble)

Compared to the one-dimensional and single-track understanding of development, this concept represents a completely new paradigm. It is also far more comprehensive than that of the Brundtland Commission.

Sustainable development, understood as a process to harness potentials, is at the same time construed as a normative or ethical principle. The development interests and opportunities of future generations are placed on an equal footing with those of the present generation. This entails an obligation to manage both natural resources and economic and social resources, such that future generations encounter a stock of resources that saves them from


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poverty and offers them opportunities to satisfy their needs and undergo development that are at least equal to those enjoyed by the current generation.

This vision implies a process embracing the following dimensions.

• An all-embracing process: The nature of the process is such that it embraces all spheres of life, i.e. not only the economic, but also the ecological and social dimensions. All efforts are people-centred. Poverty alleviation is an absolutely essential prerequisite for sustainable development. In terms of location, sustainable development embraces the entire globe. Global sustainability in turn embraces and presupposes regional, national, sub-national and local sustainability. In human terms, all people, social groups and governments participate in sustainable development, both as actors and as stakeholders.

• A situation-specific process: The subjects of the development process must always find their own path to development, in accordance with the respective ecological, economic, social and cultural conditions that characterise their particular situation.

• A process of negotiation: Sustainable development cannot be planned on a technocratic basis, but needs to be negotiated between the civil society, the private sector and the government (IIED 2001: 3).

The vision of sustainable development is often criticised on the grounds that it is too general, or even that it is an empty formula. KREIBICH (1996) speaks of a "consensus-building empty formula". It has been suggested that the general nature of the vision of sustainable development makes it possible to construe any decision at all as being compatible with it. Though visions are readily quoted in ceremonial addresses, few people are inclined to ascribe to them an orienting capability for day-to-day business. A local politician in Germany's Land of Hesse is quoted as having said, "People who have visions should go and see a doctor".

In other words, the action-guiding potential of visions is underestimated. This may be due to the fact, often overlooked, that human behaviour in general requires orientation at various levels: the basic orientation provided by values and norms that must be respected, the orientation generated by situation-specific goals, and the orientation provided by concrete action directives. The degree of abstraction of these levels of orientation varies as widely as the scale of different maps. To ignore this fact, and expect a vision to be as concrete as an operational objective, would be as pointless as criticising a map of the world for not showing which road leads from village A to village B. Figure 2.1 b shows different levels of orientation for action.


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Fig. 2.1 b: Levels of orientation for action

A vision (cf. LENDI 1995: 624.; LEHNES/HÄRTLING 1997: 12)

• is an abstract construct drawn from a wealth of details, and is therefore eminently suited to identifying basic principles;

• creates a normative (guiding) framework for concrete goals and directives;

• can in principle be realised – unlike a utopia;

• can compete with other visions;

• may change through time, but remains significantly more constant than situation-specific goals.

Guidelines or principles are the structural elements, the basic rules of a vision. Section 2.2 details the guiding principles of the sustainable development vision elaborated in Rio. The orientation it provides is made more concrete by applying operational, i.e. objectively verifiable standards. This theme is dealt with in depth in Chapter 4. Ultimately, the most concrete orientation is provided by action directives, although these are not dealt with in the present publication.

Vision

Guidelines orPrinciples

Operational Goals /Standards

Action Directives

Vision

Guidelines orPrinciples

Operational Goals /Standards

Action Directives


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Fig. 2.1 c: Capturing a vision can be a tricky business

(From ZEPF et al. 1991: 60)1

Designing visions is made more difficult by two problems in particular: in any society, values and norms are subject to a certain degree of change. Visions must also take account of this fact, and change "along with the process of continuous adjustment to social, political, economic and technological developments" (MAUTE 1994:8).

The second problem associated with designing visions results from the cultural, political and economic heterogeneity of societies, which makes it more difficult to achieve consensus on a joint vision. Seen in this light, the fact that the Rio Conference succeeded in producing a consensus between 178 culturally, politically, economically and geographically extraordinarily diverse countries, resulting in an agreement on a joint vision of sustainable development, merits acknowledgement as an epochal event.

The core message delivered by the vision of sustainable development emerging from Rio is that decisions affecting the development process must always take into account the social, economic and ecological dimensions (IIED 2001: 25). The economy, the environment and society are inseparably linked (see Fig. 2.1 d).

None of these three domains can undergo sustainable development unless due account is taken of their interactions with the other two domains. It is worth remembering, for instance, that an estimated 40% of the global economy is based on ecological products and processes (IIED 2001: 35). “The creation of justice or equality of opportunity to serve primarily social policy interests is not just a social objective, but is also conducive to good long-term economic performance, and is thus also an economic objective. It is also virtually impossible

1 Translator’s note: "It won't keep still!"

It won't keep still!

It won't keep still!


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to achieve ecological goals if the material conditions under which people live make it difficult for them to see those goals as a priority” (GERMAN BUNDESTAG 1998: 33).

Fig. 2.1 d: Interactions between the economy, the environment and society

The Rio vision has often been interpreted as a vision for environmental policy, in which case sustainability is seen as one goal amongst several, including poverty reduction and food security. By contrast, the present publication construes sustainable development as a comprehensive vision for development that embraces all the other development goals. This corresponds to the BMZ's conceptual understanding of development as declared in October 1996 (BMZ 1997). The Protection of Humanity and the Environment – Objectives and General Conditions of Sustainable Development Study Commission of the 13th electoral period of the German Bundestag also construed the vision in this comprehensive sense: “The aim – figuratively speaking – is not to place three separate pillars alongside each other, but to generate a three-dimensional perspective rooted in the reality of development. The debate is moving towards an understanding of sustainability policy as social policy that in the long run will essentially accord equal treatment to all the dimensions mentioned” (GERMAN

BUNDESTAG 1998: 32). This comprehensive notion of sustainability is also found in “Memorandum ´98”, which during the run-up to the German parliamentary election in 1998 called for German policy in general to be oriented towards sustainable development (DEUTSCHER/HILLIGES/KULESSA (edss) 1998). This marked the beginning of the third phase of

Environment Society

Economy

raw materials,energy

protection, management

goods,services

labour

natural resourcebase

solid waste,waste gases

Environment Society

Economy

raw materials,energy

protection, management

goods,services

labour

natural resourcebase

solid waste,waste gases


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the sustainability debate. Whereas that debate had initially focused on resource scarcity as a constraint to development, and then on the limited burden-carrying capacity of the environment, the capability of economic and social frameworks to withstand pressure in the long term now rose to the top of the agenda (GERMAN BUNDESTAG 1998: 30).

At Rio, the complex vision of sustainable development embracing all areas of life was presented and further elaborated in five documents (see Fig. 2.1 e). Two of these documents, the conventions on biodiversity and climate protection, are legally binding on the signatory states, while the other three documents are self-imposed obligations with no legal force, even though they do possess political clout. A highly readable, abridged version of these documents has been published by the NGO Earth Council under the leadership of Maurice Strong, the former Secretary-General of the Rio Conference (EARTH COUNCIL 1994, EARTH COUNCIL 2002).

Rio Declaration: The vision of sustainable development is set out in 27 principles. The goal is to establish “a new and equitable global partnership through the creation of new levels of cooperation among states, key sectors of societies and people”. It is emphasised that human beings are at the centre of concerns for sustainable development (Principle 1). Principle 2 emphasises both the sovereign right of states to exploit their own resources, and their responsibility to ensure that activities under their jurisdiction do not cause damage to the environment of other states. Principle 7 underlines the fact that “states have common but differentiated responsibilities” in protecting and restoring the health and integrity of the Earth's ecosystem. Principle 8 calls for the elimination of unsustainable patterns of production and consumption, and the promotion of appropriate demographic policies. Principle 15 is also famous for its precautionary approach to environmental protection: “the lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”.

Agenda 21: With its 40 chapters, this extremely comprehensive document comprises a strategy for action which "aims at preparing the world for the challenges of the next century". Special importance is attached to poverty reduction, and in particular to access to vital resources for the poor and for disadvantaged minorities. Agenda 21 pinpoints key aspects of the management of all resources needed for development.

Chapter 2 deals specifically with the tensions between trade and the environment. It is assumed that governments will strive "to promote an open, non-discriminatory and equitable multilateral trading system that will enable all countries – in particular the developing countries – to improve their economic structures and improve the standard of living of their populations through sustained economic development" and "to promote and support policies, domestic and international, that make economic growth and environmental protection mutually supportive" (Section 2.9 (a) and (d)). Agenda 21 calls upon governments to address the relationship between trade and the environment within the framework of multilateral fora and international organisations (see Section 2.2). A process of continuous and constructive dialogue is designed to guarantee that solutions to global problems are jointly sought. Governments from the North and the South committed themselves to a democratic and participatory approach. The document emphasised the cooperative forms of consensus-building and decision-making, and of operational interaction between governmental and non-governmental actors from the local to the global level.


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Fig. 2.1 e: The Rio vision of sustainable development

The Convention on Biological Diversity: This document aims to preserve the diversity of species and ecosystems, as well as genetic diversity within species. Further aims are to ensure the sustainable management of those resources, equitable distribution of the benefits generated by the use of genetic resources, access to such resources, the transfer of corresponding technologies, and the protection of all rights to such resources and technologies.

The Framework Convention on Climate Change: This aims to stabilise the concentration of greenhouse gases in the atmosphere within a time frame that will allow ecosystems to adjust naturally to climate change, that will avert any threat to food production, and that will allow sustainable economic development. In 1997, the states signatory to the Convention negotiated country-specific emission reduction targets which they laid down in the Kyoto Protocol; Germany, for instance, is required to achieve CO² emission levels between 2008 and 2012 that are 21% lower than the values recorded in 1990. It was also agreed in the Kyoto Protocol which measures within or outside of a country will be acknowledged as a contribution towards improving that country's CO² balance. The acknowledgement of forests as CO² sinks was particularly fiercely disputed; they were not acknowledged as such until the Conference of Parties in 2001 in Bonn.

The Statement of Forest Principles: The Forest Principles should have led to a forest convention. In Rio, this process failed as a result of the refusal of the industrialised countries to provide specific financing instruments for sustainable forest management in developing

UN Conference on theHuman EnvironmentStockholm 1972

UN development strategy: increase in GNP61 - 70 : 5%71 - 80 : 6%

Ecological dimensionof sustain-

able developmentPrinciples:

2, 4,11, 13,14, 15,17, 18,19, 24,

26

Rio Declaration : Basic concept in the Preamble, Principles 25, 27

Section 1Section 1Social andeconomic

dimensions

Social dimensionof sustain-


1, 3,5, 10,20, 21,22, 23

Economic dimensionof sustain-


6, 7,8, 9,12, 16

Section 2Section 2Resources

fordevelopment

Section 3Section 3Strengthening

the role ofmajor groups

Section 4Section 4Means

ofimplementation

Agenda 21: Beginning of a global partnership for economically viable, socially just, ecologically sound, i.e. sustainable, development

BiodiversityConvention

Framework Conventionon Climate Change Forest Principles

People-centredSustainable Development

UN Declaration of Human Rights 1948

UNO 1945

UN Conference on theHuman EnvironmentStockholm 1972

UN development strategy: increase in GNP61 - 70 : 5%71 - 80 : 6%

Ecological dimensionof sustain-


2, 4,11, 13,14, 15,17, 18,19, 24,

26

Rio Declaration : Basic concept in the Preamble, Principles 25, 27

Section 1Section 1Social andeconomic

dimensions

Social dimensionof sustain-


1, 3,5, 10,20, 21,22, 23

Economic dimensionof sustain-


6, 7,8, 9,12, 16

Section 2Section 2Resources

fordevelopment

Section 3Section 3Strengthening

the role ofmajor groups

Section 4Section 4Means

ofimplementation

Agenda 21: Beginning of a global partnership for economically viable, socially just, ecologically sound, i.e. sustainable, development

BiodiversityConvention

Framework Conventionon Climate Change Forest Principles

People-centredSustainable Development

UN Declaration of Human Rights 1948

UNO 1945


15

countries. The principles adopted emphasise the importance of forests for sustainable development. They underline the responsibility of the state to protect forests and ensure sustainable forest management. The sovereign right of countries to manage their forests is acknowledged, although countries are required to ensure that no damage is caused to another country as a result. The Forest Principles state that national forest policies should create a framework conducive to participation by all stakeholders within a society in forest management. In particular, the culture, interests and rights of indigenous populations and forest inhabitants are to be respected. At the same time, the participation of women in all aspects of sustainable forest management is to be supported. Sustainable forest management must take into account the social, economic, ecological, cultural and spiritual needs of present and future generations. The vitally important role of forests in maintaining the equilibrium of ecological processes needs to be acknowledged at the local, regional, national and global levels. National forest policy formulation must take into account the pressure on forests, and the demands placed on forests by factors outside of the forestry sector.

2.2 Guiding Principles of Action for Sustainable Development

The five Rio documents outline a complex vision of sustainable development, which was further elaborated at the Rio follow-on conferences. Presented below is a structured interpretation of the complex vision that identifies five guiding principles for action which, in accordance with the vision, are designed to orient both the management of all types of resource, and human social interaction in the widest sense. To avoid any misunderstandings, it should be emphasised that this interpretation of the vision based on five principles is not to be found in the Rio documents themselves, but has been developed on the basis thereof.

Just like an interpretation of a work of art, an interpretation of the vision of sustainable development cannot claim to be universally valid. It is rather the case that a variety of guiding principles can be drawn from different interpretations:

• A group of researchers at the Technical University of Berlin has identified the principles of integration, permanence, distributive justice and participation as "constitutive elements" of sustainable development (WEILAND 2001: 93ff).

• The council of experts on environmental issues has identified the following "strategic principles" of sustainable development: transparency, cooperation, participation, intra-generational justice, inter-generational justice, risk provision, sufficiency, efficiency, diversity, consistency and networking (SACHVERSTÄNDIGENRAT 1994).

• Ahead of the World Summit in Johannesburg, Germany's Federal Chancellor Gerhard Schröder identified four principles of sustainable development: (inter-)generational justice, quality of life, social cohesion and international responsibility (SCHRÖDER 2002).

The interpretation of the vision based on five guiding principles for action offered here dates back to a presentation made by a GTZ in-house "working group on sustainability" in the run-up to the Eschborn Dialogue in 1998 (GTZ 1998; BURGER/HAPPEL 1997). The dialogue was entitled "Thoughts on Sustainable Development". The first three principles of inter-generational resource management, efficiency and social justice are basic principles underlying decisions on the management and utilisation of all types of resources. Having said that, these principles cannot all be optimised simultaneously, as from a certain point onwards they become mutually conflictual. For instance, increased efficiency might entail a


16

reduction in social justice. The two other principles of partnership and coherence provide an orienting framework for societies to address constructively their contradictions and conflicts, in order to preserve and maintain their active and reactive capabilities. This is crucial, because these capabilities are absolutely key to sustainable development - as emphasised by the Study Commission on the Protection of Humanity and the Environment: “With all these issues, increasing society's capability to adapt and deliver innovative reactive and proactive responses will be the most crucial task in ensuring the survival and sustainability of humanity and the environment” (GERMAN BUNDESTAG 1998: 29).

Fig. 2.2 a: Resources for sustainable development

The resources of sustainable development can be broken down into three categories (see Fig. 2.2 a). In accordance with the sustainable development vision, the five principles identified must be applied in the management of all resources.

Figures 2.2 b and c are designed to emphasise the integrated nature of the strategy for sustainable development: each principle must be applied in all three dimensions, i.e. in the management of all natural, economic and social resources.

Sustainable development is not an environmental programme. It relates not only tonatural resources, but also to all tangible and intangible resources that people need forlife. These are:

• Environmental resourcesbiosphere, landscapes and biotope with their constituent air, water, soil, vegetationand fauna;

• Economic resources- anthropogenic material capital such as plant, roads and buildings,- financial capital

• Social resources:

- human resources:people with their education and health

- social capital:the stock of rules, institutions and collective knowledge that determine "howindividuals and societies interact, organise and share responsibility and rewards„(WORLD BANK, 1997).

- The Study Commission on the Protection of Humanity and the Environmentspeaks of the "institutional capital" that "shapes the frameworks for the life of theindividual".


17

Fig. 2.2 b: Principles of sustainable development

Common sense immediately tells us that these principles are all appropriate rules for behaviour. Nevertheless, it is not possible to follow all five rules in all three dimensions at the global, regional, national and local levels at the same time without restriction. Observing all the principles, dimensions and levels would make each resource management decision unmanageably complex. Therefore, practical decision-making usually focuses on segments of complex problems, e.g. on the efficiency principle in the case of economic resources, leaving out other principles such as inter-generational resource management and social justice, as well as environmental and social resources. This leaving out of many aspects to focus on a few is often termed "pragmatic", in contrast to the holistic view, which is often described as "unrealistic". Yet because reality tends to be very complex, omitting key aspects often leads to unrealistic and impracticable or even counterproductive proposals for action.

The tendency to deal with complexity by leaving out certain aspects is promoted by the theoretical orientation of the (social) sciences. In the effort to formulate theories and draw conclusions that remain valid independently of time and space, entire spheres of reality are left out. Those formulating or using the theories then often overlook or forget all the aspects that have been left out, and claim a validity for the theory which for that very reason it cannot possess. By contrast, sustainable development calls for a different culture of complexity management:

Don't leave it out – negotiate it!

Resourcesof

The Environment

The Economy

Society

The ResourceManagement for

Inter-generationalEquity Principle

Principles

maintenance of thecapability of naturalresources to functionand regenerate

maintenance of the value of material capital

maintenance of hu-man and social ca-pital, including tra-ditional knowledge

The EfficiencyPrinciple

efficient, sound natural resource management

economic, market-driven resource management

efficient manage-ment of knowledge and skills

The SocialJustice Principle

just access to natu-ral resources, justdistribution of envi-ronmental risks

just distribution of returns, risks and participation

access to edu-cation, solidary community, good governance, fora for conflict trans-formation

The PartnershipPrinciple

alliances for en-vironmental and nature protection

economic alli-ances

political alliances

The CoherencyPrinciple

adjustment to natural environmental condi-tions, environmentally compatible action

adjustment to and ne-gotiation of economic frameworks

adjustment to political,social, cultural and his-torical frameworks, negotiation of socio-political frameworks

Resourcesof

The Environment

The Economy

Society

The ResourceManagement for

Inter-generationalEquity Principle

Principles

maintenance of thecapability of naturalresources to functionand regenerate

maintenance of the value of material capital

maintenance of hu-man and social ca-pital, including tra-ditional knowledge

The EfficiencyPrinciple

efficient, sound natural resource management

economic, market-driven resource management

efficient manage-ment of knowledge and skills

The SocialJustice Principle

just access to natu-ral resources, justdistribution of envi-ronmental risks

just distribution of returns, risks and participation

access to edu-cation, solidary community, good governance, fora for conflict trans-formation

The PartnershipPrinciple

alliances for en-vironmental and nature protection

economic alli-ances

political alliances

The CoherencyPrinciple

adjustment to natural environmental condi-tions, environmentally compatible action

adjustment to and ne-gotiation of economic frameworks

adjustment to political,social, cultural and his-torical frameworks, negotiation of socio-political frameworks


18

Fig. 2.2 c: Principles of sustainable development (“guiding star”)

The sustainable development vision and its simplified representation (see Fig. 2.2 b) is not a directive prescribing the full application of all principles in all dimensions and at all levels. Nor does it describe a target state, but is rather designed as a tool to be used in the ongoing quest for possible improvements. The matrix is designed to help identify imbalances in resource management, take account of compelling needs and possible responses, and prevent aspects that are temporarily left out from being completely overlooked. Regardless of the disciplines or sectors concerned, a review of this kind should be conducted for all measures of natural, economic or social resource management, as this enables specific questions to be addressed in the wider context of sustainable development.

In the following sections the individual principles of action for sustainable development are dealt with in greater detail, and rules and recommendations for their application presented (see Fig. 2.2 d).

Resource Management for

Inter-generational Equity Principle

Social Justice Principle

Coherency Principle

Partnership Principle

Efficiency Principle

Environment

Economy

Society


Inter-generational Equity Principle


Coherency Principle



Environment

Economy

Society


19

Fig. 2.2 d: The principles of sustainable development and rules for their application

2.2.1 The Resource Management for Inter-generational Equity Principle

Put very simply, the core message of this principle is that we should not be living at the expense of our grandchildren. Measures should be taken now to conserve the resource base of future generations, so that a capital stock is available to them in the form of a resource base which, although not identical to the resources on hand today, is nevertheless of equal value. Compliance with this principle is designed to create opportunities for present and future generations to enjoy the same quality of life. This "quality of life" goal goes beyond the idea of merely preserving the integrity of the natural environment. It also includes job satisfaction, health and appropriate housing, as well as personal and human security (SCHRÖDER 2002).

The principle of resource management for inter-generational equity was first formulated with respect to natural resources. In many societies it is respected as a matter of tradition, e.g. in. the context of hunting and fishery, as well as in the management of soils and trees. It was also the point of departure for the development of sustained-yield forest management. Having said that, the principle is not confined to natural environmental resources, but must also be applied with respect to economic and social resources (GERMAN BUNDESTAG 1998: 43).


Inter-Generational

Equity Principle




Coherency Principle

Sustainable development: global partnership for economi-cally viable, socially just, ecologically sound devel-opment, not just today but also in the future

regeneration rulesubstitution ruleburden intensity ruleprecautionary hazard containment ruleintegrated resource budget management rule

technical rationalisation, efficient allocation of resources by the market,if - prices reflect scarcity,

- frameworks are conducive toinnovation and sustainability

- ecological and social frameworks

- allocation of benefits and costs- protection against risks- portunities for self-development- power wielding and conflict

transformation

- respect for competence and culture- definition of roles- ability to engage in open dialogue

illumination and negotiation of:- horizontal inconsistencies- vertical inconsistencies- temporal inconsistencieswith other systems


Inter-Generational

Equity Principle




Coherency Principle

Sustainable development: global partnership for economi-cally viable, socially just, ecologically sound devel-opment, not just today but also in the future

regeneration rulesubstitution ruleburden intensity ruleprecautionary hazard containment ruleintegrated resource budget management rule

technical rationalisation, efficient allocation of resources by the market,if - prices reflect scarcity,

- frameworks are conducive toinnovation and sustainability

- ecological and social frameworks

- allocation of benefits and costs- protection against risks- portunities for self-development- power wielding and conflict

transformation

- respect for competence and culture- definition of roles- ability to engage in open dialogue

illumination and negotiation of:- horizontal inconsistencies- vertical inconsistencies- temporal inconsistencieswith other systems


20

On the basis of the guidelines documented for the ecological dimension by the Study Commission on the Protection of Humanity and the Environment, the following more general rules can be drawn up for the inter-generational management of all types of resource:

The regeneration rule: The rate at which renewable resources are extracted should not exceed their regenerative capacity. This means first of all that the quantity extracted must be less than the regeneration increment up to the next extractive intervention. Having said that, a purely quantitative comparison of quantity extracted and incremental increase cannot guarantee that the value and regenerative capacity of natural capital will be maintained.

This is clearly illustrated by the example of tropical forests. Where relatively small quantities of high-quality timber are harvested, the volume extracted may well be quantitatively less than the growth increment up to the next harvest. Yet because the trees removed are often replaced by fast-growing, lower quality pioneer species, the customary selective utilisation of the best trees usually means a reduction in the value of the timber capital stock. In other words, yield and increment also need to be compared in qualitative terms. In order to maintain the full functional value of the forest for the environment (e.g. erosion control), the economy (e.g. timber merchant) and society (e.g. cultural value), as well as its regenerative capacity, it is also necessary to preserve species diversity, natural structures, and the dynamics of growth and rejuvenation.

The regeneration rule should be applied not only with respect to natural resources. It should also be applied in the economic context (depreciation), and with respect to social resources. Traditions are repositories of knowledge stored over generations. Where abandoned traditions are not replaced by fresh learning, the society concerned becomes poorer. Consequently, a society's knowledge must be regenerated through lifelong learning by its members. Social capital, such as social security systems or conflict management mechanisms, must be reproduced at a rate at least commensurate with the rate at which it is being eroded or depleted by changed framework conditions, otherwise assets will be lost.

The substitution rule: The substitution of resources, and especially natural resources, with material capital ("weak sustainability") has generated considerable controversy in the sustainability debate, as it can easily lead to a depletion of resources. Where non-renewable resources are utilised, a maximum rate of recycling needs to be ensured. Where these resources are consumed without recycling, it is imperative that they be substituted with other – preferably renewable – resources on a scale at least commensurate with the scope of consumption. "The society of the 21st century will be more dependent than ever on the development of social, intellectual, creative and cooperative skills and capabilities. Material resources must be substituted with an expanded body of knowledge." (GERMAN BUNDESTAG 1998: 42). This will also require a follow-on risk assessment, in order to allow existing losses to be reduced, and future depletion to be prevented through timely substitution, e.g. in the nuclear energy and genetic engineering sectors (see also the precautionary hazard containment rule).

The burden intensity rule: “It is not resource scarcity that is jeopardising economies, but the limited capability of ecological systems to withstand the burdens generated by pollutants and waste emissions of all kinds” (BUND/MISEREOR 1996: 23). Burden intensity is a function of the level and the rate of repetition of an emission. It must remain proportionate to the capability of the resource to react. Just as the capability of natural resources to withstand emission burdens without losing their capacity to perform their essential functions is limited, so too are there limits to the burden-bearing capacity of social resources. Social cohesion for


21

instance, which is a repository of social capital, cannot be exposed to an unlimited burden of unequal opportunities without suffering damage, i.e. without a loss of social capital.

The precautionary hazard containment rule: Principle 15 of the Rio Declaration on Environment and Development states: ”where there are threats of serious or irreversible damage, lack of full scientific certainty shall not shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation” (EARTH COUNCIL 1994: 19). Social resources should be handled with a similar awareness of the risks.

The integrated resource budget management rule: The above-mentioned rules represent necessary, though certainly not sufficient conditions for the protection of resources for future generations. To prevent wealth from being consumed, and countries or the entire world from becoming poorer, regular budgeting is imperative. It is crucial in this context that key elements of a country's wealth not be overlooked. While the liberal founder of economics, Adam Smith, still saw the wealth of a nation in holistic terms in his major work An Inquiry into the Nature and Causes of the Wealth of Nations (1776), the economic perspective, especially in its neo-liberal manifestation, has since become increasingly narrow. Today's conventional parameter of national economic performance, national product, fails to capture changes in environmental capital, human resources or social capital. By contrast, the World Bank has now begun to calculate the "genuine saving" made by each country: to obtain a value for this parameter, expenditure on education is added to the calculated "net saving", from which the costs of natural resource degradation plus an estimated value for environmental damage are then subtracted. The World Bank describes these adjustments to the parameter of savings that take into account human and natural resources as a first approach towards capturing the genuine savings made by a country (THE WORLD BANK 1997: 14).

The World Bank calculates the "wealth of nations" in terms of human resources, natural capital and material capital (THE WORLD BANK 1997: 19ff). The country rankings based on this understanding of wealth differ considerably from the conventional rankings based on gross national product (GNP).

2.2.2 The Efficiency Principle

This principle of managing resources as effectively as possible is known in the economic context as the "economic principle", and in the technical and organisational theory contexts as the "rationalisation principle". According to this principle, resources should be managed so that a certain impact is achieved with the minimum possible input of resources or financial expenditure.

There are indications that the efficiency of resource management can still be considerably improved, such that it would allow economic growth without increasing resource degradation. In their work “Factor Four”, Weizsäcker and his co-authors (WEIZSÄCKER et al. 1997) describe the possibility of "doubling wealth while halving resource use".

The mechanism of control for economically efficient resource management is the market. “The idea of a seek-and-learn process inherent in the regulatory notion of sustainability finds its economic expression in the competitive environment of the market economy. The allocation of resources for various purposes at the appropriate locations using the most efficient methods is considered the real task of market control” (GERMAN BUNDESTAG


22

1998: 38). It “is possible to distinguish two basic impacts of competition: it tends to make the production of products and services cheaper, and creates incentives for new ideas, organisational forms, products and services” (ibid: 48).

Having said that, markets can only perform this cost-reducing and innovation function if prices and competition are not distorted (e.g. by non-internalised costs, subsidies or incomplete information). To guarantee this, the Study Commission drew up two rules: "Prices must permanently be the main instruments of market control. They should as far as possible reflect the scarcity of resources, sinks, production factors, goods and services. The frameworks for competition should be designed so that functioning markets arise and are maintained, and innovations are stimulated such that a long-term orientation pays off, and the social change required for adjustment to future needs is promoted" (GERMAN BUNDESTAG 1998: 48).

Even if prices and competition are undistorted, which in the case of natural resources and developing countries they are not, the control of natural resource use cannot be left unrestrictedly to the market, because the efficiency principle would then be entirely undirected, and the market would be blind to social and ecological goals. “But it is imperative that we conserve the resource base on which life depends. If we do not, we will undermine economic development, and ultimately place democracy at risk. Any healthy national economy needs functioning competition, and effective social and ecological controls” (RAU 1998). Only in conjunction with the other principles, and in particular only when controlled by consensual, negotiated systems of objectives, can the efficiency principle help bring about sustainable development.

2.2.3 The Social Justice Principle

This principle requires that the benefits and drawbacks of resource use, in other words profits and costs, as well as opportunities and risks, be distributed fairly among the concerned social groups. The prime imperative of social justice is to prevent structural poverty, i.e. poverty suffered by groups as a result of the inequitable distribution of opportunities and risks. Social justice does not follow automatically in the wake of free market economics. The "horse-and-sparrow theory" (KEYNES), which states that if you feed the horse more oats some may pass through onto the road for the sparrows, does not apply in practice. As the Study Commission on the Protection of Humanity and the Environment states, social justice is not only a result of, but also a prerequisite for economic development: "The creation of justice or equality of opportunity, though primarily a matter of social policy, is not just a social objective, but is also key to building long-term economic performance capacity, and as such is also an economic objective" (GERMAN BUNDESTAG 1998: 33).

To identify constraints to sustainable development in the sphere of social justice, three thematic areas should be considered:

a) Allocation of rights of access to resources, information and decision-making processes among countries and social groups:

This should include not only formal, but also informal and traditional rights, and not only monetary costs and returns but also natural expenditure and returns. New forms of land use, such as plantation economics, may be perceived as unjust, even though they are in accordance with formal law, if they infringe on traditional rights, e.g. rights involving hunting,


23

fishing and gathering forest products. People's access to resources – and especially access to education – must be understood in a wider sense, and analysed accordingly.

b) Distribution of opportunities and risks

Justice and security are closely linked. In the context of the terrorist attacks of the 11th of September 2001, Germany's Federal Chancellor Gerhard Schröder writes: "[...] without an agenda for global justice, there can be no global security. We need a new concept of security which incorporates economic, ecological and social aspects" (SCHRÖDER 2002).

Traditional societies appear to be very aware of risks, and in particular seem to pursue strategies to avert risks that could threaten their livelihood. At first glance, an observer might see such strategies as hostile to innovation. For instance, small farmers in Brazilian Amazonia are very reluctant to substitute the financially less attractive cassava crop with cash crops that could be marketed at higher returns, because cassava can be harvested at any time, and offers effective protection against hunger. At the same time, indirect risks also need to be taken into account, i.e. risks that can only be influenced indirectly by the farmers' own actions, and are dependent on external factors such as the climate or other actors. These might include for instance the risk of erosion and/or flooding in a village caused by forest clearance above the village. Traditional forms of risk spreading in solidary communities are often not easy to recognise and understand. Dismantling them can lead to a loss of social capital.

c) Forms of power wielding and conflict management

As the sustainable development vision becomes more tangible, the conflicts of interests which make it more difficult or impossible to achieve compromise come to light. An employers' association will have different interests from a church-based or social initiative, which in turn will have different interests from an environmental group. The vision will not disguise these conflicting interests or make them go away. However, a discussion of what the various actors would understand sustainable development to mean in their concrete case would make it possible to at least seek a compromise. Whether rights of access to resources can be effectively exercised, and whether opportunities are allocated fairly across different social strata, will depend not least on the quality of governance and forms of conflict management. Figure 2.2.3 lists criteria applied by various organisations to measure the quality of governance or political frameworks for development.

The status of the three above-mentioned thematic spheres of social justice in a given country will depend largely on that country's culture and history. It would certainly be wrong to apply the same value system universally in all contexts. Nevertheless there is a broad international consensus on some themes, for instance those provided for in the United National Universal Declaration of Human Rights in 1948, or in conventions and other international agreements. When jointly designing development processes, especially within the framework of development cooperation, it would seem appropriate to refer explicitly to international conventions and agreements as a common basis of legitimacy.

The supreme concern of social justice is poverty alleviation. It was the key concern of the Rio Conference. Agenda 21 devotes an entire chapter to it right at the beginning, because poverty is seen as the main constraint to sustainable development. German development cooperation has made poverty alleviation its first priority area. All projects are required to


24

demonstrate how they help reduce poverty. In 1996 1.2 billion people, or 24.5% of the population of the developing countries, were suffering from poverty of income, i.e. had access to less than one US$ per capita per day (BMZ 2000: 207). Reducing this poverty is not only an ethical, but also a pragmatic imperative, because poverty is both a cause and a result of problems in all three of the above-mentioned spheres of social justice. Poverty is a cause and a result of unjust rights of access to resources, information and decision-making processes, unjust distribution of risks, and unjust forms of power wielding and conflict management. Poverty can jeopardise not only social justice, but also all the other principles of sustainable development. Consequently, poverty alleviation is pivotal to sustainable development.

Yet it would be wrong to draw the converse inference, i.e. that poverty alleviation alone can guarantee sustainable development. It is the core element, an essential though not sufficient precondition for sustainable development. Alongside poverty alleviation, sustainable development also requires other guiding frameworks for action. The close link between poverty and various policy fields is particularly evident for instance with respect to trade policy: according to the World Bank, the abolition of all import duties and subsidies that protect agriculture in the Western industrialised countries would enable the 48 poorest developing countries to generate an additional annual income of US$ 40 billion. The Inter-American Development Bank has calculated that the trade barriers put in place by the "First World" cost the emerging countries more than twice as much as they gain from development assistance (ZILLER 2001: 9).

Groups negotiate their claims within the frameworks of culture and formal law - including international conventions and agreements - that are de facto in place. How much practical scope they actually have to do so depends on the political frameworks, and especially power relations, that determine whether and to what extent such negotiation processes are permissible. The interests and rights of stakeholders are now being addressed and asserted in more and more thematic areas and countries. In some countries, public agencies and private enterprises alike may jeopardise their public legitimacy if they fail to take appropriate account of the interests of sections of the civil society. The likelihood of achieving sustainable development depends very much on the quality of such fora for negotiation, as well as on the extent to which groups are able to see and articulate their particular interests in the context of sustainable development, and for instance respect the limits of responsible consumer behaviour (the “principle of sufficiency”).


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Fig. 2.2.3: Political preconditions for development

(Source: HAMMEL 1997)

2.2.4 The Partnership Principle

Partnerships between states, key sectors of society and persons are called for in many places in the Rio documents, e.g. in the Preamble to and Principle 27 of the Rio Declaration. As understood at Rio, partnerships are an essential feature of sustainable development. Without partnerships, the changes necessary for sustainable development can neither be brought about, nor can those that have been achieved be maintained.

Partnership means sharing, not in the sense of breaking up and thus destroying a whole, but in the sense of sharing and participating in a whole that should in principle be preserved and further developed. Partnership goes beyond common experience, requiring that the visions that give orientation be at least shared to some minimum degree. The visions of the partners can certainly differ, but must contain a certain overlap of common values. If, for instance, a German municipality enters into a partnership with an indigenous village in Amazonia, their visions can be very different, but they must at least share some notions such as that the forest is worthy of conservation. Partners need to have a minimum of mutual knowledge and communication. Partnerships also require a certain, though not necessarily formal, level of agreement concerning mutual expectations and definition of roles.

Typical features of viable and resilient partnerships are respect for the expertise and culture of the other partner(s), transparent and reliable definition of roles, an ability to engage in dialogue, and openness between the partners.

Participation can vary widely in scope. There are often major discrepancies between the way the partners involved judge both the participation as it is, and the participation as (they think) it should be, which can seriously jeopardise a partnership. This risk is always present where non-governmental organisations are involved by the private or public sectors; the only appropriate response to it is to regularly establish transparency of perceptions and expectations concerning the participation. Sound partnerships rarely emerge on the spur of the moment. They usually grow gradually, passing through the following phases:

World Bank OECD/DAC BMZ

Good Governance (1989) Participatory Development and Good Governance (1995)

Criteria for Frameworks Conducive to Development (1991)

Accountability in the use of public funds

Transparency of decision-making

Predictability of behaviour of public sector representatives

Openness of information for all economic actors

Rule of law

Rule of law

Efficiency of public administration

Stemming of corruption

Restriction of excessive military expenditure

Respect for human rights

Popular participation in decision-making

Rule of law and guaranteed legal certainty

Introduction of a social market economy

Governance for development

World Bank OECD/DAC BMZ

Good Governance (1989) Participatory Development and Good Governance (1995)






Rule of law

Rule of law









World BankWorld Bank OECD/DACOECD/DAC BMZBMZ

Good Governance (1989)Good Governance (1989) Participatory Development and Good Governance (1995)

Participatory Development and Good Governance (1995)







Rule of law





Rule of law

Rule of law




Rule of law















26

• In the information phase the actors merely share information, initially concerning questions of common interest, then increasingly also concerning themselves (where the partners anticipate more extensive participation, this first stage is occasionally jokingly referred to as the “invite - inform - ignore” phase).

• In the communication phase additional feedback is given, including feedback on mutual perceptions, although at this stage the relevance of that feedback to concrete decision-making (consultations, hearings) remains an open matter.

• In the cooperation phase, tasks and objectives are shared on a case-by-case basis, and participation is extended beyond information sharing and feedback to include participation in decision-making (co-determination).

• The partnership/alliance phase is reached when longer-term, formal or informal agreements concerning participation and mutual expectations have been achieved that extend beyond individual cases.

The importance of formal agreements for a partnership is often overestimated. They only say something about the quality of a partnership insofar as they reflect common ground that has been established through time. Partnerships, in the form of associations, cooperatives etc., should therefore be given enough time to grow.

In a position speech on economic policy delivered on 4 September 2001, Germany's Chancellor Gerhard Schröder said: “The Dutch social democrat Wim Kok speaks of the 'European model' of reconciliation of interests and negotiation. I myself have occasionally used the terms 'participatory model' and 'participatory ethics'. All these expressions mean one thing: in Europe, an indigenous and unique model of civilisation and society has emerged as the sole paradigm, one that is based on the ideas of the European Enlightenment and takes participation to be the driving force of development. This social ethic differs considerably from the American and the South-East Asian models. Only Europe stands for the reconciliation of economic, social, cultural and ecological interests. The idea of participation in the material, social and intellectual goods of a society is genuinely European. This combination of material quality of life, democratic participation, social security and educational opportunities as prerequisites to personal development is only found in Europe.....Only in Europe do we find this link between self-initiative and community spirit, between individualism and solidarity” (SCHRÖDER 2001: 7). Schröder's judgement also spotlights the Achilles heel of the global sustainable development vision: it has European cultural roots, and is therefore often termed "Eurocentric". It would appear that the vision's European roots are no obstacle to countries from other cultures making their joint commitment to the vision, as was demonstrated in Rio. Yet it is certainly advisable for Europeans engaged in negotiation for development to remember that their negotiating partners might have to overcome cultural obstacles on the path to sustainable development.

2.2.5 The Coherency Principle

To some extent, this principle is the hub of sustainable development, in that the ultimate long-term aim of the vision is to harmonise the sub-system of human economic activity with the overarching system "earth". The motto is: “think global, act local”. The principle calls for consistency and compatibility between the sub-systems of human activity on earth.


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Sustainable development is a holistic concept that embraces all spheres of human life. However, this holistic aspiration conflicts with the limited human capacity for coping with complexity: people are only able to perceive and address sub-systems, which are segments of the whole. They are then at risk of mistaking the part for the whole (reductionism), and of overlooking the interrelationships between the sub-system and its ambient system – as well as the contradictions and risks which those interrelationships entail.

One way out of the dilemma created by the fact that holistic perception is impossible, and reductionism dangerous, is offered by a constant switch of perspectives. This means that, at intervals, the focus is taken from the sub-system under consideration and directed outwards, so as to perceive both the framework conditions and extraneous factors affecting the sub-system in question, and the impacts of that sub-system upon the outside. In this repeated switch of focuses from the inside to the outside, the outward perspective must take various directions: to the right and left to the adjacent sectors, in order to check horizontal consistency, upwards and downwards to the supra- and subordinate planning and activity levels, in order to ensure vertical consistency, and also backwards and forwards to the past and the future, in order to check the compatibility of planning with developments to date, i.e. consistency across time and compatibility with tradition(s).

In other words, an individual needs great breadth of vision to perceive inconsistencies within and between the various sub-systems. Perception must extend far beyond the boundaries of the sub-system within which the subject is operating. The approach of switching perspectives may appear trivial, and indeed, it means nothing else than “looking beyond the end of one’s nose”. However, the implementation of this approach is by no means trivial, because for someone to raise his/her sight beyond the sub-system in which they are working generally means they need to acquire an additional perceptual faculty: the production engineer, for instance, usually has not learnt which parameters need to be observed when analysing a social system; s/he will need to enter into an exchange with the specialists in the neighbouring disciplines.

If, when switching between perspectives, contradictions or ruptures between a sub-system and its neighbouring or ambient systems come to light, then these inconsistencies must be evaluated to see whether they pose a significant threat to sustainable development. If they do, the sub-systems can then be redesigned accordingly. Such modifications must be negotiated between the concerned actors and sub-systems.


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Fig. 2.2.5: Coherence of a sub-system with its neighbouring or ambient systems

Horizontal incoherencies between various sub-systems or sectors, e.g. between agriculture and forestry, arise very frequently in land-use planning. Efforts are often then made to solve the problem by means of better, in many cases very expensive data collection and mapping, but this regularly fails. Conflicts between different perspectives and interests can be resolved in three different ways:

• Possibly, improved information and communication can lead to improved understanding, and reveal that the conflict is in fact illusory; in this case, win-win solutions are possible from which both sides profit.

• Possibly, one view can be enforced at the expense of the other; this, however, entails a risk that the conflict may erupt anew at any time when the relations of power change.

• Resolving a conflict through compromise requires common systems of objectives or visions to be in place that are supraordinate to the conflicting goals. In planning processes, investing time and money in forums to elaborate common visions often generates higher returns than the effort put into additional data collection. Having said that, planning experts are usually much less well acquainted with the techniques of conflict management than with those of data collection.

In the event of vertical incoherencies between planning and implementation bodies at different levels, an agreement to observe the subsidiarity principle can be helpful. In the Constitution of the Federal Republic of Germany, this principle regulates the relationship between the federation and the individual federal states. In the context of decentralisation processes, this can also be helpful in resolving potential conflicts between central and decentral authorities. The principle states that the higher community or body may only

adjacent sectors/areas

previous systems

future systems

spatially/hierarch. supraordinate

systems

spatially/hierarch. subordinate

systems


sub-system

vertical coherence

temporal coherence

vertical coherence

temporal coherence

horizontal coherence



previous systems

future systems


systems


systems



previous systems

future systems


systems


systems


sub-system

vertical coherence

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vertical coherence

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appropriate those tasks that cannot be performed by the lower-level body. In addition to this "restriction on appropriation", the subsidiarity principle also contains a “requirement to provide assistance”: to assist the decentral unit in realising its potentials, appropriate frameworks (i.e. an enabling environment) and in particularlised to guarantee security (of a financial and legal nature). Instead of intervention, the subsidiarity principle demands “the courage to let grow”.

Contradictions or ruptures between previous and future developments can be understood as temporal incoherencies. Their importance for the development process is particularly difficult to assess. On the one hand, development necessarily implies change, and thus certain breaks with the past; on the other hand, there is a danger that the breaks brought about by change will cause damage, e.g. if elements are substituted without an awareness of their true value, or if too many elements are substituted within too short a time frame.

Temporal incoherencies emerge particularly where rates of economic, social and environmental change are both highly discrepant, and inadequately mutually harmonised. The Study Commission has the following to say on this issue: “There is a broad consensus that the key precondition for sustainability is harmonisation of the sometimes rapid processes of technical and economic change, with the much less rapid change processes of both traditional socio-political and sociocultural structures, and the natural environment; these more gradual processes unfold in accordance with their own laws and at their own pace” (GERMAN BUNDESTAG 1998: 29).

Particularly in the social sphere, temporal incoherencies can easily be overlooked and can have serious consequences for sustainable development. For instance, a new social security system may in theory be far more efficient than a traditional system; but if the users are unable to see any link between the new system and the previous one, and do not have enough time to learn how to handle the new system, the innovation may be ineffective or damaging.

Possibly the most serious errors in development planning have been committed by inadvertently attempting to introduce innovations without giving enough attention to temporal incoherencies, to dangerous discontinuities between the past and the future, particularly in the social sphere. Such discontinuities that might occur during change processes can be avoided or mitigated by observing the following three rules:

1. Innovations should be based on a careful analysis of existing practices. This seemingly trivial rule is rarely observed in reality. Thus very often new forms of land use are introduced because they appear to be more efficient in terms of generating marketable produce, without the ecological and social functions of the existing land-use practices having been examined and understood.

2. Innovations should be designed and put across as a further development of existing practices, such that it is made clear which technological, cultural, organisational or economic elements are being retained, and which substituted.

3. The speed of innovation and the speed of learning should be harmonised. This rule is equally important with respect to both the development and the implementation of innovations:


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∗ The development of innovations always commences with hypotheses that need to be subjected to theoretical or practical verification, i.e. tested. It is dangerous, although not unusual, for innovations to be introduced before the test or learning experience has been processed, and thus for unverified hypotheses to be viewed as innovations.

∗ An innovation has not been implemented until it is actually put into practice, as opposed to merely being laid down in a plan or in a legal regulation. According to the European Commission Green Paper on Innovation “[...] innovation is taken as being a synonym for the successful production, assimilation and exploitation of novelty in the economic and social spheres” (EUROPEAN COMMISSION 1995). Experience shows that innovations are learnt faster and better by their users, the more intensively those users actively participated in the development of the innovations. The participation of target groups in the development of innovations is undoubtedly a time-consuming process. Nonetheless, it has often proved to be a mistake to develop innovations on a non-participatory basis in order to save time. Such time gains are frequently illusory, because implementation then takes place all the more slowly, if at all.

Applying the coherency principle involves performing two operations. The first, which might be termed the "searchlight component", involves illuminating the development process in all directions in search of incoherencies. The second, which could be termed the "roundtable component", involves addressing and analysing the incoherencies thus detected, an operation which can lead to a change of course. From the perspective of a sub-system, there are two options for changing course with a view to reducing incoherencies with the ambient system: either adapt better to the ambient system, or modify the ambient system itself. In a development process, it is not possible to eliminate all incoherencies through negotiation. During the negotiation process it is important for negotiators to bear in mind not only the incoherencies and their impacts on sustainable development, i.e. the changes needed, but also the elasticity of the other partners in negotiation and their willingness to change.

Understood thus, the coherency principle performs the function within the development process analogous to that performed by the central nervous system in the body. It detects disturbances in the form of incoherencies, processes this information, and instructs the implementing organs to change course accordingly. Because we are unable to perceive and optimise the development process on a holistic basis, the coherency principle needs to be translated into rules that can reduce the incompatibilities between sub-systems. It is of paramount importance for the development process that the coherency principle be institutionalised and further elaborated. This will require various competences:

• technical competence in information collection and processing, as incoherencies may otherwise not be properly identified,

• communicative competence, as the negotiation process may otherwise not run smoothly,

• mediation competence, so that conflicts can be resolved, and

• political competence, as it may otherwise not be possible to take decisions on changing course.


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Institutionalisation of the coherency principle is a key indicator of sustainability, and provides a substantial addition to the stock of social capital.

2.2.6 The Principles – Guidelines for Steering a Course towards Sustainable Development

The development of a region, or of an individual enterprise, is influenced directly and indirectly by a very large number of actors, which means that framework conditions are constantly changing. Development as complex as this cannot be designed sustainably by planning a programme on a one-off basis. Implementing the vision of sustainable development rather calls for an ongoing process of adjustment and learning, because new and different threats to sustainability will constantly keep arising. At the same time, new opportunities to make the development process more sustainable will also keep emerging.

The five principles constitute a guiding framework intended to make the general vision of sustainable development easier to apply. They are designed to help planners identify key aspects of development as a whole, and especially risks and opportunities for sustainability, without focusing exclusively on more specific, individual aspects. For instance, the efficiency principle is designed to help focus attention on aspects of efficient resource use, while at the same time providing a reminder that this perspective is incomplete, and that the principles of inter-generational equity and social justice should also be considered. In other words, the principles should help development planners focus on key specific aspects of sustainable development, without losing sight of the wider sustainable development process.

Similarly, the principles are designed to help evaluate key aspects of development by establishing a link to the norms and values on which consensus was achieved in the vision of sustainable development. The principles should help create a situation in which, for instance, a development is not judged solely according to criteria of efficiency, but where appropriate value is also attached to considerations of inter-generational equity and social justice.

How do the principles provide an orienting framework for planners seeking the right paths to sustainable development? By helping identify how the key aspects of development can be shaped in order to move closer to the vision of sustainable development, e.g. partnerships that can be intensified. In other words, the principles should not be understood as operational directives, but as a framework to guide planners in perceiving, evaluating and designing complex processes oriented towards the comprehensive vision of sustainable development. As such, the principles orient and structure the ongoing process of learning for micro-economic, regional or global development.

2.3 The Vision: Magic Formula, Empty Formula or Orienting Framework?

The holistic, all-embracing understanding implicit in the vision of sustainable development has given rise to serious misunderstandings and controversies. Given that the vision claims to embrace all people, life domains and biotopes, it is then concluded that the vision claims to be able to resolve all tensions and conflicts between and within societies and sectors, and to establish clear and consistent directives for action by all countries and social groups. In other words, it is believed to be a magic formula for solving all problems.

However, the vision cannot, nor is it designed to, eliminate or “make disappear by magic” conflicting interests, such as those between industrialised and developing countries, or


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between urban and rural populations, or conflicting goals, such as those between short and long-term profit, between private and macroeconomic profit, or between agricultural and forestry production goals. Nor can it, or is it designed to, relieve countries and social groups of the responsibility for identifying and negotiating their paths to development by prescribing for each actor precisely who should do what, when, where and how. The vision is designed neither to resolve conflicts, nor to prescribe developments on a deterministic basis. Having said that, it can serve as an orientation aid to help identify solutions to conflicts and paths to development.

Given that the vision of sustainable development contains no precise prescriptions determining the actions of individual actors, but only relatively general directives, the conclusion tends to be drawn that it is an empty formula, i.e. that any action whatsoever would be compatible with the vision. This conclusion is wrong, because general directives also guide people's actions. Section 1 of the German Road Traffic Regulations requires each road user to act so as not to endanger any other road user. Although this is certainly a very general directive, it is still not an empty formula. It does not permit any behaviour at all, but draws a line between action which is not allowed, and action which is – in other words it acts as a guiding framework. Calling a vision an empty formula is particularly inappropriate where a number of directives are put in place that, although non-specific, nevertheless relate to different dimensions, as is the case with the sustainable development vision. Just as in surveying or especially shipping, where triangulation is used to obtain highly precise data on coordinates and directions from several very distant, unreachable points of orientation, non-specific but multidimensional visions can also give direction and orient actions.

The sustainable development vision is neither a magic nor an empty formula. It should be seen not as a deterministic, but rather as a heuristic principle, or as a tool to orient the learning process of seeking and identifying paths to development through negotiation with partners in development.

A vision can orient three spheres of human action, namely perception, judgement and intervention. Visions can perform various functions (cf. BLEICHER 1996: 100 ff):

Focusing function: while the vision of sustainable development presented here cannot be achieved in full, it does help focus attention on key elements, and helps those seeking solutions form a clear understanding of what they are looking for. The vision’s principle that sustainable development is based on partnerships, for instance, can be helpful in identifying paths to development for a specific region, in that it focuses attention on alliances between key actors in the regional development process that might still need to be strengthened. Using the sustainable development matrix (cf. Fig. 2.2 c), critical variables and destabilisation tendencies can be detected, and options for improvement identified.


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Legitimisation function: sustainable development cannot be prescribed or planned by technocrats, but must be negotiated between key actors. Here, the vision of sustainable development can serve as an aid to negotiation by recalling to the actors’ minds the consensus achieved in Rio. For instance, negotiations on development cooperation measures can be facilitated by making explicit reference to the basic consensus already agreed on by the partner countries which adopted the vision of sustainable development at the Rio Conference and at subsequent events, including aspects such as participation by minority groups, gender and development, or the principles of sustainable forest management. If goals and measures are clearly linked to the vision agreed on by 178 countries, they cannot be dismissed so easily on the grounds that they are "Eurocentric" or "donor-driven". On the contrary, that link to a shared basis of legitimacy demands that such development proposals be thoroughly explored.

Fig. 2.3 a: The role of the sustainable development vision

VISION OF SUSTAINABLEDEVELOPMENT

The vision eliminates conflicts and deter-mines the correct

behaviour of all actors in all situations

Any action at all canbe justified by citing

the vision

Magic formula Empty formula

Orienting framework

When identifying paths to development in negotiations between partners in development:

- focusing function- legitimation function- identification function- guiding function

VISION OF SUSTAINABLEDEVELOPMENT

The vision eliminates conflicts and deter-mines the correct

behaviour of all actors in all situations

Any action at all canbe justified by citing

the vision

Magic formula Empty formula

Orienting framework

When identifying paths to development in negotiations between partners in development:

- focusing function- legitimation function- identification function- guiding function


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Identification function: where the actors in a development process, e.g. the staff of a company, share a common vision, this has two effects: first of all, outsiders know “what the company and its staff stand for” – which makes that company (and its staff) more predictable and reliable. This can make negotiations easier, and reduce their transaction costs. Secondly – and importantly – a joint vision causes a convergence of minds, generates motivation and energy to act, and mobilises creative learning capabilities (SENGE 1990: 206). A joint vision can “give meaning and direction to action for a social system that generates benefits” (BLEICHER 1996: 95). Finding meaning and direction, and achievement, are closely interconnected: “Anyone demanding greater achievement, must offer meaning” (W. BÖCKMANN, quoted in BLEICHER, 1996: 97). The identification function of a vision – its capacity to motivate by giving meaning – is captured in the aphorism: ”Building a boat doesn't mean hoisting the sails, forging the nails, reading the stars, it means calling forth a longing for the sea” (SAINT-EXUPÉRY 1996: 232).

Directive function: action can be guided by various categories of orientation: visions can act as guide rails that contain by demarcating the limits of permissible and non-permissible action. They can also point action in a basic direction, which is then always defined more precisely through principles, goals, criteria and indicators. These orientations can be organised hierarchically (cf. LAMMERTS VAN BUEREN/BLOM 1997). As we move further down the hierarchical order, the measurability (degree of operationalisation) and degree of specificity increase, while the validity of the orientation decreases (cf. Fig. 2.3 b): the sustainable development vision is designed to provide universal orientation at the local and global levels, for all spheres of life and for an unlimited period, yet it remains non-specific and difficult to measure. By contrast, an indicator describes a spatially, temporally and materially circumscribed state with a high degree of specificity and measurability.

Fig. 2.3 b: Validity and degree of specificity of orientations for action

vision principles goals criteria indicators

Val

idit

ysp

ace,

tim

e , c

on

ten

t

Deg

ree

of

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Hierarchy of Orientations for Action

vision principles goals criteria indicators

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Hierarchy of Orientations for Action


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The different levels of orientation do not conflict with each other, but are mutually complementary. Visions play an important role in the process of identifying project objectives. Situation-specific goals are based on an assessment of

1. needs, motivation, the "want to";

2. norms and values, the "should/may" imperatives of indigenous or exogenous origin that may be either formalised or handed down informally, and

3. the given options, opportunities and risks, the "can" (cf. Fig. 2.3 c).

Since framework conditions are constantly changing, the "open process" of identifying operational objectives is a never-ending one: objectives have to be continuously revised (GERMAN BUNDESTAG 1998: 44). In this situation the overall orientation is easily lost, and is at risk of giving way to an opportunistic arbitrariness if the process of identifying objectives is not tied into the normative framework of a vision and the values which it embodies.

Albert Einstein put it succinctly when he said: “In my view, perfection of the means and confusion of the ends are hallmarks of our age” (quoted in BLEICHER 1996: 94). The demands placed on orienting frameworks increase with the performance capability of the tools for their realisation. The force of our interventions into ecological, social and economic processes has increased to a much greater extent than the quality of our tools for steering and controlling the processes thus unleashed. Figuratively speaking, this is like flying a supersonic plane using the navigation instruments of a glider. In practical terms, the Rio vision and its ongoing development as an orienting framework is therefore highly significant. The vision helps reduce the complexity of perception, judgement and intervention in the context of development processes, and therefore reduces burdens. It can motivate, thus releasing energy for action. By orienting the process of identifying objectives, it helps focus and direct that energy. Of course it goes without saying that this only applies where the sustainable development vision is applied in the sense intended and elaborated upon here, and not where it is applied as a rhetorical means to disguise negative situations that fail to undergo positive change.

Having said that, the vision is not a blueprint for "making development happen". It is a tool to help support the process of negotiating paths to sustainable development. One precondition for this is that objectives and activities are still to some extent open, as negotiation would otherwise be pointless. “Sustainable development is a journey, not a harbour” (IUCN/IIED 1994). The process of negotiation and adjustment always remains an ongoing one, as it will never be possible to satisfy all the principles of sustainable development on an optimal and permanent basis.


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Fig. 2.3 c: Identifying objectives on the basis of needs, values and capabilities

(want to)

(sh

ou

ld, m

ay)

(can)

*(Objective)

Val

ues

Framework conditions

Needs(want to)

(sh

ou

ld, m

ay)

(can)

*(Objective)

Val

ues

Framework conditions

Needs

3. Challenges for Sustainable Development

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"Our aim is to secure the future of our society on the basis of inviolable values,

by applying the principle of sustainability."

(GERMAN CHANCELLOR G. SCHRÖDER, 4/9/2001)

In a declaration, 18 Green MPs expressed their regret that "the principle of inter-generational justice will not be

applied effectively until fundamental reforms are put in place".

(FRANKFURTER RUNDSCHAU, 16/11/2002)

Commitments to sustainable development are easily made. Yet no less easily, key principles are sacrificed. Many people consider the sustainable development vision more appropriate for the "Sunday sermon" than for the everyday world of economics. They believe that other laws apply in that world, that it is not wishful thinking and visions that the market needs, but clever old Homo economicus, who knows everything, and who makes use of the liberty he has to do all that he is capable of doing. They believe it is not the sustainable development vision, but the laws of the marketplace that should be used as an orienting framework. Others object to the demand that social, ecological and economic factors be taken into account jointly, and mutually networked, on the grounds that it would be much too complicated and impossible to put into practice. And others believe that the given "objective constraints" leave no scope for sustainable development. Finally, the broad-based civil participation in decision-making processes called for at Rio (e.g. by Principle 10 of the Rio Declaration) is criticised for being unrealistic and incompatible with the sovereign role of the state.

It is indeed the case that, since the Rio Conference, the sustainable development vision has fallen far short of being implemented across the board. IIED (2001: 25) states that: “Since Rio, while we have all been spending more time on words than action, life has become worse for many”... “it is clear that the central message of the Rio Conference - that sustainable development calls for integration of the social, economic and environmental dimensions - has not yet become instinctive in the world of trade policy”.

So it seems that sustainable development is not really such appropriate material for harmonious Sunday sermons after all. Nor should the vision be trivialised and underestimated as an "empty formula for consensus-building“ (KREIBICH 1996). Taking sustainable development seriously means addressing several difficult challenges, which requires courage. Many therefore see sustainable development as a tall order (cf. Fig. 3). In the following sections, four challenges will be presented: the challenges of networked thinking, the complexity of the vision, the shaping of frameworks, and the development of sustainable co-governance structures. Against this background, the importance of standards initiatives becomes clear. Those initiatives, and how they can help overcome the challenges for sustainable development, will then be dealt with in Chapter 4.


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Fig. 3: Challenges for sustainable development – a tall order!

3.1 Sustainable Development Calls for Networked Thinking

The need for networked thinking becomes particularly clear where the interactions of a variety of actors need to be understood and influenced. Figure 3.1 shows an example of actors with highly divergent interests, potentials and backgrounds who are directly or indirectly involved in tropical forest management. They form a network of actors in which each actor is influenced by many other actors in several ways. Actors'

• perceptions are influenced by the information they receive from other actors;

• judgements are influenced by the rules and standards that other actors set or comply with;

• interventions in the value creation process are influenced by other actors in the chain of value creation (product or service chain).

In Technical Cooperation, attempts have often been made to influence the behaviour of actors, e.g. through training, without taking appropriate account of their networking with other actors. Such measures have very often proved ineffective.

C h

a l

l e n

g e

s:

thinking in networked systems

as opposed to

in isolated segments

vision of economics in the service of life

as opposed to

economism

shaping and utilising frameworks

as opposed to

passively accepting "objective constraints"

co-governance of guiding frameworks

as opposed to

delegation of sole responsibility to the state

Sustainable development

requires the courage to embrace :

• complexity

• transparency

• responsibility

• cooperation

A tall order!

C h

a l

l e n

g e

s:

thinking in networked systems

as opposed to

in isolated segments

vision of economics in the service of life

as opposed to

economism

shaping and utilising frameworks

as opposed to

passively accepting "objective constraints"

co-governance of guiding frameworks

as opposed to

delegation of sole responsibility to the state


requires the courage to embrace :

• complexity

• transparency

• responsibility

• cooperation

A tall order!


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Fig. 3.1 a: One example of networked actors: tropical forest management

For resource management to comply with the principles of, and make the best possible contribution to, sustainable development, basically each individual actor would need to orient its actions towards the Rio vision. Actors by no means do so, either in the forestry sector or in other sectors, and this applies equally at the local, national and global levels. There are two reasons for this.

• First of all the imperative of the sustainable development vision is not strong enough, because actors are also influenced by other visions.

• Second, the individual actors' scope for decision-making is constrained by their setting. The natural, economic and social environments often make it difficult or impossible to behave in accordance with the sustainable development vision.

Economic actors who interact in a variety of ways in the production of goods and the delivery of services may differ widely in terms of their interests, values, experiences, knowledge and skills, as well as their access to resources and their influence on other actors. For these diverse yet closely networked actors to move jointly in one direction, and help rather than hinder each other in doing so, two things are required: an understanding and an acceptance of both the vision as or point of orientation ("guiding star"), and of guiding frameworks which make it easier for actors to find the right path, and avoid deviating from it (cf. Fig. 3.1 b). These frameworks form part of the wider context, and may be of a natural, social and/or economic nature; they may already have been in place, or may result from "structural policy" measures. Actors use the vision and the frameworks rather like road users, whose

Direct users of the forest

Consumers, beneficiaries,interested parties

Tropicalforest

Prospectors

Loggers

Shifting cultivators

Hunters, gatherers

Tourists

Power genera-ting companies

Energy andminingcompanies

Timber tradeand industry

Traders andprocessorsof forest products

Large-scale arable and livestock farms

Constructioncompanies

Touristindustry

WorldBank

Regionaldevelopmentbanks

Settlementauthorities

Planningauthorities

AgriculturalauthoritiesAgricultural

trade and industry

Traininginstitutions

Developmentcooperationinstitutions

FAO

WTO EC

Governmentsof other countries

Parliaments ofother countries

Parliaments ofthe country

Political parties,associations

Interestgroups

UN

Consumers ofanimal products

Consumers ofmining products

Generalpublic

Beneficiaries and climate-regulatingfunction.

Beneficiaries ofprotective functions

Consumersof timber products

Consumers ofgathered produce

Consumers ofagricultural products

Intermediary users

Political institutions

Forestryauthorities

Authorities and promotionorganisations

Governmentsin the country

Researchorganisations

Research institutes

Actors

Direct users of the forest

Consumers, beneficiaries,interested parties

Tropicalforest

Prospectors

Loggers

Shifting cultivators

Hunters, gatherers

Tourists

Power genera-ting companies

Energy andminingcompanies

Timber tradeand industry

Traders andprocessorsof forest products

Large-scale arable and livestock farms

Constructioncompanies

Touristindustry

WorldBank

Regionaldevelopmentbanks

Settlementauthorities

Planningauthorities

AgriculturalauthoritiesAgricultural

trade and industry

Traininginstitutions

Developmentcooperationinstitutions

FAO

WTO EC

Governmentsof other countries

Parliaments ofother countries

Parliaments ofthe country

Political parties,associations

Interestgroups

UN

Consumers ofanimal products

Consumers ofmining products

Generalpublic

Beneficiaries and climate-regulatingfunction.

Beneficiaries ofprotective functions

Consumersof timber products

Consumers ofgathered produce

Consumers ofagricultural products

Intermediary users

Political institutions

Forestryauthorities

Authorities and promotionorganisations

Governmentsin the country

Researchorganisations

Research institutes

Actors


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behaviour is guided on the one hand by a rational desire to reach their destination, and on the other hand by the rules and regulations in place.

Fig. 3.1 b: Frameworks leading actors to the vision

The frameworks should be

• effective, i.e. should successfully orient actors' behaviour towards sustainable development, and should be

• efficient, i.e. the ratio of input to output in implementation of the rules should be as favourable as possible.

Both requirements demand that appropriate account be taken of both the diversity and the networking of the actors concerned.

Networked systems are comprised not only of relations of cause and effect flowing in one direction, but also of ramifications and feedback flows. These causal relationships need to be seen as a network incorporating flows and counterflows in various directions.

Conceptualising networked systems, or in other words "networked thinking", is considerably more difficult than thinking about segments of a system where cause and effect relationships flow in just one direction. Many processes, however, only become comprehensible when the system is seen as a networked whole, as opposed to considering only parts of that whole. For instance, what appear to be slight impacts on a system may, through feedback, generate self-reinforcing effects that render the system unstable or may even lead to its collapse.

As globalisation unfolds, economic, social and environmental processes are taking place within increasingly complex, de segregated and networked systems. To understand and influence such processes, and monitor the effectiveness of interventions, it is imperative that these systems be viewed not (only) in segments, but holistically and as a networked whole.

Actors

Vision

Guiding frameworks

Actors

Vision

Guiding frameworks


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Being able to understand networked systems presupposes a highly developed capability to deal with complexity. At the same time, establishing that understanding also creates fresh options for intervention into those systems, and corresponding impact monitoring.

• Intervention: since the various parts of a networked system are interlinked, a change at one point or to certain elements of the system may generate impacts at a quite different point or within quite different elements of the system. Just as pain in the foot can be remedied by an injection in the arm, in networked production and marketing systems changes at remote production sites, for instance environmentally-sound tropical rainforest management or the child labour-free manufacture of carpets in Nepal, can be promoted by sensitising the purchasers of the products in the industrialised countries to the significance of the conditions under which they were produced. Similarly, in networked systems changes may be brought about in poorly accessible or less sensitive elements of the system through interventions at more accessible points or more sensitive elements.

• Impact monitoring: just as the point of intervention and point of impact need not be identical in a networked system, an appropriate monitoring window onto only one part of the networked system may also permit access to changes at another point in the system. The monitoring window may even be outside the monitored system entirely. This is the case for instance when the level of oil in a car engine is measured. Using the principle of communicating pipes, the oil level is measured at a point outside the poorly accessible engine itself.

Understanding networked systems makes it possible to define the zones of intervention, impact and monitoring by the criterion of maximum efficiency, without the three zones necessarily being congruent.

The vision alone will not guarantee that the highly diverse actors move in the direction of sustainable development. As well as the vision itself, guiding frameworks are also required. As explained in Section 3.4, the state, the private sector and civil society may participate in the establishment and development of such frameworks in a variety of ways. Yet no matter how they are created, these frameworks can only be efficient and effective if and when they take appropriate account of the networking of actors. The fact that some standards initiatives that seek to help build guiding frameworks for sustainable development are far more successful than others is no doubt largely due to the fact that they take better account of key aspects of networking between actors. For instance, standards initiatives that take account of the networks between producers, processors, traders and consumers have often prove far more effective than those which leave out a large section of the network, and seek through normative measures to influence only the producers.

3.2 Resisting the Temptation to Adopt a More Simplistic Vision

Given the complexity of the sustainable development vision, actors are always liable to be tempted to ignore aspects or entire dimensions of reality, and to adopt a simplified vision as their orienting framework (cf. Fig. 3.2 a). For instance, nature conservationists occasionally pursue approaches that leave out economic and social aspects of development, and are oriented exclusively towards species and biotope conservation. Similarly, groups working for the protection of minorities may make the preservation of a certain culture an absolute priority, and ignore aspects of economic development or changed environmental conditions.


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The sustainable development vision is currently being put under particular pressure by an alternative, simplifying vision that focuses exclusively on economic aspects, while social and environmental aspects are left entirely to the state, and its regulatory frameworks for the private sector. This orientation has been adopted by a large segment of the private sector and the economic sciences. It was advocated particularly strongly by the Nobel prize-winner M. FRIEDMANN (1970), who published an article in the New York Times Magazine with the programmatic title The social responsibility of business is to increase its profits. A view of this kind might be termed "economism". "As with all –isms, what this means is a world view; in this case one which, hidden behind the jargon of value-free objective rationality, elevates economic rationality (efficiency) to the status of absolute and supreme arbiter of values, and propagates a virtually limitless economisation of our lifestyles, society and politics. Economism is the grand ideology of our times" (ULRICH 2002: 35).

Fig. 3.2 a: The sustainable development vision in competition with more simplistic visions

The economic ethicist Ulrich, on the other hand, sees economic behaviour as a means of creating values. Economic activity is "not an end in itself, but a means to the end of the good life" (ULRICH 2002: 9; ULRICH 2001: 204). Economic activity in the service of life means addressing not just one, but three types of question (cf. Fig. 3.2 b):

• Questions of efficiency, i.e. how can the maximum impact be achieved through a specific input of scarce resources, or how can a specific impact be achieved through a minimum input (economic rationale)?

• Questions of purpose, in other words, why pursue economic activity, which values should be created, for which lifestyle, and how should improved productivity be utilised?

• Questions of justice or legitimacy: for whom should values be created; how should the benefits and costs of "rationalisation" be justly distributed; which (international) frameworks are needed for a just (global) economic order?


Economism

Absolute nature

conservationOne-dimensional

social visions


Economism

Absolute nature

conservationOne-dimensional

social visions


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Fig. 3.2 b: Three aspects of an economic rationale

(ULRICH, 2002: 30)

The question of purpose - what constitutes the good life - and the question of legitimacy – how is just co-existence to be defined and achieved - are the classic fundamental ethical questions. Yet they are often left out of the picture, so that the economic sphere addresses only the question of efficiency.

Economism draws its value judgements from the marketplace, and demands that the market be liberalised and left to its own devices as far as possible. Two arguments are put forward in favour of this approach:

• The "objective constraints argument" states that the fierce (global) competition which is de facto in place leaves no room for aspects other than market costs and prices to be taken into account.

• The "common good argument" states that the liberalisation (deregulation) of market forces will ultimately generate universal benefits.

"The 'market principle' is wrongly declared the supreme principle of social organisation – the aim is no longer to build a market economy that is integrated into an ethico-political framework, but to build the total market society" (ULRICH 2002: 59). The "neoliberal rhetoric of objective constraints and common good" ignores the questions as to the purpose and legitimacy of economic activity, while claiming to be "value free". "The ideological function of the usual economic rhetoric of the common good is quite simply to conceal the eminently partisan character of the market principle in order to advance the interests of capital" (ibid: 41). Furthermore, the logic of the objective constraints argument is questionable, in that the constraint of leaving out other normative aspects is often itself generated by a rationale of profit maximisation.

Purpose

What for?

For whom

?

Creating values

Efficiency

JusticePurpose

What for?

For whom

?

Creating values

Efficiency

Justice


44

In contrast to economism with its idiosyncratic economic logic, the sustainable development vision does not exclude questions of purpose or justice, but provides for them to be negotiated between partners. This also corresponds to the principles of "integrative economic ethics" – the title of a book by ULRICH (2001). The author subtitles the book "Foundations of a life-conducive economy". What is conducive to life is negotiation, i.e. applying the strength of superior arguments, as opposed to excluding non-economic aspects. Exclusive economism reduces

• practical reasons to a rationale of efficiency;

• progress to economic growth;

• civil liberty to market liberalism.

Economism represents the economic policy programme which, according to MATZNER (2003), has achieved dominance in the USA over the last 20 years and "now dominates the globalisation agenda around the world". His three postulates are known to the American public as the Washington Consensus:

1. priority for monetary stability above all other public tasks

2. market freedom and deregulation

3. forced privatisation of public property and public affairs.

"At the end of the day, the global market stands for health, education, old-age provision, water, genes, research results etc. etc.".

Economism can be seen as one of the more simplistic visions. Such visions at first glance appear to possess comparative advantages that make it much more difficult for more complex visions, and especially the sustainable development vision, to compete with them:

• They satisfy the need to reduce complexity, a need that is especially pronounced in individuals who have developed only modest complexity management skills, and who find themselves out of their depth given the growing complexity of all spheres of daily life.

• They are much easier to put across.

• They focus on for example efficiency aspects which, if neglected, very quickly and visibly lead to those responsible suffering negative impacts. Reduced profitability is quickly punished and, now that stock-market reports have become an essential component of the news, inevitably becomes common knowledge. Although neglecting the questions of purpose and legitimacy also compromises the sustainability of enterprises, this erosion of sustainability is often less rapid and less visible.

• This reduction of the vision to a few or just one aspect allows users to focus attention and learning processes on that aspect. Enterprises that focus on efficiency, and especially shareholder value, can achieve very considerable efficiency gains in the short-term. Yet these apparently positive results can easily prove to be illusory where the neglect of social or ecological aspects generates negative impacts, or where legality problems arise.


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• The management instruments for pursuing and possibly optimising efficiency aspects have a tradition, in terms of both how they are applied and how they are put across, which is centuries older than that of the very young instruments for addressing social and ecological issues.

It would be wrong to conclude that this critical attitude to economism, and its presentation as a danger to sustainable development, is based on an underlying rejection of economics and the efficiency principle. This critique is directed only at the exclusive and reductionist focus on the efficiency principle, which loses sight of the perspective of a life-conducive economy. It would be equally wrong to conclude that all economists adopt economism as their own vision. Applying such a blanket criticism to all economists would be absurd, in view of the works produced by some of the winners of the Nobel Prize for Economics, such as "The Political Element in the Development of Economic Theory" by Gunnar MYRDAL (1970), or "Development as Freedom" by Amartya SEN (2000).

Economic activity and the efficiency principle are vitally important to any society, as are orientation aids that reduce complexity. Yet the simplifications needed must not be allowed to become reductionist simplifications that jeopardise the life-conducive character of the vision pursued. Those who are serious about building sustainable development must resist the temptation of visions that simplify, and above all the vision of economism, even though that vision is being promoted by influential forces and is very much in keeping with the spirit of the age.

Having the courage to embrace complexity, either through networked thinking or by resisting the temptation of simplistic visions, often forces an individual or group to make more transparent their own actions and the impacts of those actions. Where an enterprise sets itself the goal of not only maximising profits, but also meeting certain social and ecological standards, then it must make the social and ecological impacts of its activities transparent both to the top management, and to the workforce, shareholders and civil society stakeholders. Creating transparency of this kind obviously requires much greater courage from enterprises than that required to simply pay lip service to ecological or social goals.

3.3 Building Frameworks Conducive to Sustainable Development

"Frameworks" should be understood as the constellations of natural, economic and social resources (cf. Fig. 2.2 a) that are present outside the enterprises or households of actors, and to which those actors have access. Frameworks conducive to sustainable development are those which both create the scope needed by actors to make a positive contribution to sustainable development, and prevent actors from acting against the interests of sustainable development ("guiding frameworks").

To establish whether the frameworks in place create scope or a corridor that is conducive to action for sustainable development, it is necessary to

• view the three categories of resource (environmental, economic and social) from an integrated perspective;

• take into account the dynamics of resource development;

• ensure that actors are able to perceive the scope for action.


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3.3.1 An Integrated View of the Natural, Economic and Social Frameworks

The corridors allowing actors sufficient scope for action conducive to sustainability must be three-dimensional; this is to say that they must guarantee access to sufficient environmental, economic and social resources. The presence of natural and economic resources alone does not create scope for action in situations where social frameworks (social capital) do not allow actors access to those resources. The social capital of traditional knowledge on natural resource management, e.g. in medicine or hunting, becomes devoid of value where the plants or animals concerned are no longer present. The value of a road for the sustainable development of a region can only be measured with reference not only to the natural and economic resources accessed as a result, but also to the social frameworks guaranteeing that those resources are managed sustainably and not plundered with a view to maximising short-term gains. A forest stand inventory enriches a society's state of knowledge, i.e. creates social capital. Yet this creates new scope for action only for those actors with access to the economic resources needed to manage those forests.

Although action for sustainable development does need to be guided by the appropriate frameworks, the resource categories should be viewed not in isolation, but from an integrated perspective. The changes needed in behaviour do not necessarily have to be brought about through new imperatives or prohibitions, but can be achieved through changes in access to economic or natural resources, as the following example demonstrates. Where population density is low in the humid tropics, the burning of forests is an ecologically and economically appropriate form of preparing land for crop cultivation. Yet where population density is high, and cropland therefore scarce, fallow periods must be kept short, which means that this form of slash-and-burn agriculture would severely impoverish both the ecosystem and the farmers themselves. Legislation prohibiting burning will remain ineffective unless and until farmers are offered alternative options. Where farmers are given access to the financial and technical resources necessary for switching to permanent tree crops (e.g. oranges), for instance, burning can be stopped without imposing any ban.

In other words, frameworks that guide actors towards sustainable development can be achieved, acknowledged or capitalised upon not only through binding imperatives or prohibitions, but also through a variety of measures creating scope for action conducive to sustainability. In particular, this includes measures which help facilitate access to economic or natural resources.

3.3.2 Taking the Framework Dynamics into Account

The frameworks for all three dimensions are subject to change, both intentional and unintentional. The dynamic nature of these frameworks creates an even more difficult and never-ending challenge: ensuring that the actors enjoy the scope needed to facilitate their contribution to sustainable development, while imposing certain constraints to keep them from straying from the desired path.

The natural frameworks can be modified in various ways, e.g. through afforestation, dyke construction or seawater desalination. The rate of access to natural resources can be accelerated or slowed down through economic measures such as price adjustment, or through social measures such as land redistribution. In recent decades, environmental damage and the degradation of non-renewable resources have increased exponentially. The most pressing problems include global warming, marine pollution, advancing desertification,


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and the growing scarcity of both safe water and fuel and mineral reserves. This has also been associated with rising costs for the extraction of these resources and protection of the environment.

Actors' economic frameworks can be changed either by modifying the availability of non-monetary capital (e.g. roads, canals, factories), or by controlling financial flows (e.g. through taxation or lending), or through economic incentives (e.g. favourable prices or costs).

Present global economic trends are characterised by autonomy and increasing volatility of financial flows, an increase in the global integration of trade, investment and production structures that are disproportionate to growth, a shift in production from tangible to intangible goods, and last but not least an increase in transnational enterprise activity. Particularly far advanced is the globalisation - the "de-territorialisation" - of financial markets. Buyers and sellers the world over have access to similar information, and are able to swiftly capitalise on price differences thanks to low transaction costs. Companies are motivated to internationalise their activities by the incentive of increased profits. These higher profits can be generated either by entering new markets and/or expanding existing ones, or by tapping cheaper sources of labour or semi-products.

With respect to social resources, economic globalisation is being accompanied by a process of deregulation. Not infrequently, this deregulation of the political agency of the nation state is described as a "Retreat of politics in the face of dominant economic market forces" (ALTVATER 1999). HAUCHLER et al. (2001: 13) proceed on the premise that "[...] in view of the de-territorialisation of financial movements, of decisions concerning the location of production activities, of technological developments and of consumption trends, states are now so enmeshed in the structures of competition that, when in doubt, they will still prefer to protect national interests at the expense of foresightful action in the global interest. Examples abound: the agricultural protectionism of the European Union, the lack of will to finance global environmental protection and natural resource management, the reluctance to create an international regime to protect competition, the unilateral withdrawal of the USA from international agreements." This results in the marginalisation of many small and poor developing countries, a widening gap between the haves and have-nots of development both between and within states, and the continued exploitation of natural resources.

Social resources can be broken down into the two categories of human resources and social capital. In line with this distinction, options for changing social frameworks include those involving human capacities, and those relating to institutional capacities. By modifying these capacities, guiding frameworks can be put in place or, if already in place, strengthened, and constraints eliminated, so that actors can orient their actions more strongly towards sustainable development.

The term "institution" can be applied to any more or less permanent organising principle within human society, i.e. both abstract regulatory principles (rules of behaviour), and concrete groups and organisations in which those principles are represented. Institutions can be modified in a variety of ways. Here are a few examples:

• Attitudes and expectations motivate actors to perform their roles, and society in turn expects them to play certain roles. Opinion-making and awareness-raising can modify these role expectations considerably, e.g. can lead to a situation in which corruption is no longer seen as a "peccadillo".


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• Once it has become an established practice or habit to allow interest groups to participate in a certain way in tasks, decision-making processes or successes, this can influence information flows and behaviour, and increase transparency.

• Rules and rights determine behaviour, and may take the form of either formal law, traditional law or rights grounded in the public consciousness.

• Monitoring can be performed either through formalised procedures, or indirectly through increased transparency and publicity.

• Infringements of the rules may entail a whole range of sanctions, including penalties or loss of respect. The options for appealing against sanctions may also be diverse.

• Fora for the negotiation and adjustment of rules, and for conflict management, may vary widely in composition and representation of interests, and may involve a broad spectrum of procedures.

• New business contacts, new markets, cooperations and alliances can significantly influence actors' behaviour.

• Finally, new or changed organisations can influence behaviour.

Yet these institutions can only generate behaviour conducive to sustainable development if and when they are utilised by actors with the appropriate capacities. Capacity-building can take several forms:

• Skills and expertise can be acquired through training, on the job, through consultancy or extension, or through the handing down of traditional knowledge in a variety of cultural settings.

• The learning capability needed to update knowledge and skills can be developed and supported in a variety of ways.

• Development of that learning capability will also depend on the available options for training and research.

Capacity-building and institutional development are referred to generically as capacity development (cf. GOMEZ 2000: 41). Capacity development is designed to help improve the structural preconditions for sustainable development (cf. Section 5.1).

3.3.3 Utilising Scope

Actors often behave like a bird that has flown into a room by mistake and keeps flapping against the window pane in an increasingly desperate attempt to get out, without noticing that the balcony door is open. Similarly, actors often complain about the lack of scope to act, when in fact they have simply failed to see it.

Figure 3.3.3 shows steps along the path to utilising scope for action:

• In order to recognise the scope that is there an actor – like the bird – needs a certain distance and peace of mind.


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• The actor must recognise the potential of the resources that s/he sees. Degraded ecosystems are often considered worthless, even though, as the example of secondary forests demonstrates, they can make significant contributions to sustainable development. The potential of renewable energies is only now being recognised. Traditional technologies often possess potentials that have not yet been matched by "modern" technologies. The Amazonian Urucú bush (Bixa orellana), for instance, from which a red pigment is obtained that indigenous people use to paint their faces, is often cultivated today to obtain colourings for foodstuffs. What often goes unnoticed or gets forgotten is the fact the bush was traditionally cultivated at the margins of fields to protect against leaf-cutting ants, and that indigenous women have obtained an effective contraceptive from the leaves. The fact that the potential of natural resources is often not fully recognised leads to them being, as MYERS put it so appropriately when speaking of the topical rainforest, "overexploited and underutilised". Something similar could be said of the unemployed and underemployed, who often possess a high degree of unutilised potential. Because potentials and scope often go unrecognised, it is often the case that actors speak of objective constraints, whereas in actual fact the only real constraints are those of the mind.

• Once the potential of a resource or an opportunity for action has been recognised, the actor must want to take advantage of that opportunity, i.e. must be sufficiently motivated.

• Not everything that an actor might want to do is permissible, i.e. the action must be sufficiently legitimate.

• A further requirement would be sufficient competence to perform the possible, desired and legitimate actions.

• Finally, an actor wishing to utilise scope for action must usually also have access to complementary, e.g. financial resources.

Where frameworks are to be shaped so that actors are steered towards sustainable development, planners must take care to ensure that actors are able to successfully negotiate all steps on the path towards utilising the scope created. Support measures often fail to generate the desired impact because the target groups did not receive support for this or that step. Shaping frameworks requires, amongst other things, effective governance structures, as described in the following section.


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Fig. 3.3.3: Steps along the way to utilising scope for action

3.4 Effective Governance Structures for Sustainable Development

3.4.1 Governance: Who Puts the Frameworks in Place?

Obviously, the word "governance" is a noun derived from the verb "to govern". More recently, it has come into frequent use as a term denoting something complementary to, though distinct from, "government". According to Rosenau (quoted GOMEZ 2000: 3f), the term "government" denotes a formal, legally sanctioned authority empowered to enforce compliance, whereas "governance" denotes a system of rules at all levels of human behaviour with no power to enforce compliance. WIELAND (1999: 7) describes governance as "a steering structure or a steering matrix for the management of economic and social transactions".

The Commission on Global Governance (CGG) (1995: 2) defines governance as follows: "Governance is the sum of the many ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accommodated and cooperative action may be taken. It includes formal institutions and regimes empowered to enforce compliance, as well as informal arrangements that people and institutions either have agreed to or perceive to be in their interest."

In a report to the Club of Rome, KING and SCHNEIDER (1991: 181) give the following definition: "We use the term to denote the command mechanisms of a social system and its actions that endeavour to provide security, prosperity, coherence, order and continuity to the system. … Taken broadly, the concept of governance should not be restricted to the national and international systems but should be used in relation to regional, provincial and local governments as well as to other social systems such as education and the military, to private enterprises and even to the microcosmos of the family."

present ≠≠≠≠ seen

seen ≠≠≠≠ acknowledged

acknowledged ≠≠≠≠ motivated

motivated ≠≠≠≠ allowed

allowed ≠≠≠≠ enabled

enabled ≠≠≠≠ equipped

present ≠≠≠≠ seen

seen ≠≠≠≠ acknowledged

acknowledged ≠≠≠≠ motivated

motivated ≠≠≠≠ allowed

allowed ≠≠≠≠ enabled

enabled ≠≠≠≠ equipped


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In other words, governance can take place either at the global level, which is termed "global governance” or at the regional, national, local or corporate levels, which is termed "corporate governance". It is not clear as yet how these various levels of governance can be coherently linked. Both the Preamble to the Rio Principles and the Preamble to Agenda 21 expressly emphasise that orienting action towards sustainable development is not a task of national governments alone, but one that should be jointly addressed by governments, the private sector and civil society. The debate concerning how the roles within such co-governance structures can and should be allocated is far from reaching its conclusion, and indeed may never do so.

3.4.2 New Governance Structures Are a Must

The classic division of governance roles between the state and the market, under which the state puts in place the frameworks that orient enterprises and households in the marketplace, is becoming increasingly obsolete, as both the state and the market are now no longer able to perform their respective roles. The "failure of the state" is chiefly a result of globalisation and privatisation. The de-territorialisation of financial and information flows, and of value creation chains, has led to a situation in which transnational enterprises are increasingly moving beyond the reach of state control, constraining states' scope for action (e.g. by threatening to withdraw investment), and becoming more powerful than many states. "Of the 100 largest economic entities of the world, 52 are now multinational enterprises and only 48 states. Measured by the volume of their economic turnover, the world's 15 largest enterprises control more economic activity than the world's 60 poorest countries" (GREFE / GREFFRATH / SCHUMANN 2002: 26). The failure of the state is being further reinforced by the privatisation of tasks previously performed by the public sector. Increasingly, these tasks are being left to the private sector and regulation to the market.

So far, international conventions and agreements have failed to halt the erosion of state governance. The international frameworks put in place have been described as "teethless" (GARCIA-JOHNSON 2001) and "inadequate" (HAUCHLER et al. 2001). According to HAUCHLER et al., there are three basic problems.

• The standards stipulated in most agreements are too low to solve problems on a lasting basis.

• The instruments agreed on for implementation of the standards are too weak to have any significant effect.

• There are usually no effective mechanisms obliging individual states to strictly implement the standards agreed on.

Without an effective global regime bolstered by real sanctions, competition between nation states for the world's resources will continue to be exacerbated by increasing scarcity and rising costs. The effectiveness of international agreements as instruments of governance is also being undermined by the fact that the world's mightiest nation, the USA, is not party to most of the conventions, but rather induces other countries to vote in its interests by pressurising them or by offering them financial incentives to do so. Global governance is thus at risk of being turned into the sovereignty of the strongest.


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The "failure of the market", i.e. the inability of the market to steer resource management towards sustainable development, boils down to the fact that both prices and competition are distorted, and that markets are blind to social and ecological goals (cf. Section 2.2.2).

As an effective steering instrument, the price mechanism fails to a degree commensurate with the degree of information specificity on the product concerned. Price formation on the basis of supply and demand for instance is inconceivable without some idea of what would be an appropriate price for a certain good (BERND 1999: 307). The internalisation of external ecological and social effects could lead to a state of equilibrium achieved by balancing considerations of supply and demand with integrated standards of environmental quality and socially compatible working conditions. However, a pseudo-market solution of this kind might generate qualities that are ecologically and socially untenable, since only demand-driven quality would be realised. Working on the assumption that each individual is motivated to maximise his or her own benefit, this need not be equivalent to that quality which would also guarantee the survival of future generations (cf. BONUS 1996: 33).

The neo-classical premise of market transparency as a precondition for undistorted competition is untenable. More recent conceptual approaches, such as that of institutional economics, assume that there is no market transparency, and that profit-seeking interests motivate actors to seek advantage through asymmetries of information and power. The information requirement is even higher in the sustainably produced goods trade, because more information is required on the manufacturing process itself. The market mechanism alone, however, does not create this transparency. New information and monitoring systems need to be established to deliver this additional knowledge on sustainable modes of production. Even in influential economic circles, there is a growing awareness that without healthy competition, a minimum of social protection and conscious efforts to protect the natural environmental, sustainable economic development will be at risk. The words of Germany's Federal President Johannes Rau spring to mind: "Any healthy national economy needs healthy competition, as well as effective social and economic frameworks" (RAU 1998). If the globalisation we are experiencing were to involve those social and ecological frameworks being lost, that would mean a globalisation of the exploitation of humankind and the natural environment.

These structural governance deficits mean that standards initiatives have an especially important contribution to make to sustainable development in support of governance structures.

3.4.3 New Co-governance Structures

As explained above, governance for sustainable development must be performed jointly by the state, the private sector and civil society. Actors from all three spheres must cooperate in building co-governance structures, and must do so at all levels, from the global to the corporate. This will entail significantly changed roles for each category of actor. In particular, actors will need to carefully coordinate and harmonise their involvement in governance tasks. Without a doubt, a passenger in a car plays an important role in the task of steering; but if s/he suddenly grabs the steering wheel without warning, it can become a very dangerous ride.

Of particular interest here is the governance of value creation chains, in which numerous actors with a range of functions help turn raw materials into end products delivered to the


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consumer. A value creation chain involves not only the physical transformation of materials, but also economic and social transactions. GEREFFI (1994) identifies key strategic points from which a value creation chain can be dominated, i.e. from which the rules for all other actors can be dictated. These rules determine not only what is produced, but also the mode of production, i.e. the environmental and social compatibility of the conditions of production, and the distribution of value added along the chain. In order to guarantee that all actors along the product chain comply with the standards agreed on by all in environmentally-aware and ethical business contexts, the actors and decision-making structures in the private and public sectors, and civil society, are usually very closely networked (GEREFFI et al. 2001).

HAUFLER (2003) distinguishes four forms of governance, according to who lays down the rules and standards: "traditional regulation, co-regulation, industry self-regulation and multi-stakeholder regulation". The behaviour of economic actors is steered by numerous frameworks. The state, the private sector and civil society are all involved – to differing degrees – in building these frameworks. Some frameworks are put in place almost exclusively by the state, with very little or only marginal involvement by the private sector and civil society. Others are put in place largely by civil society or the private sector. Usually, however, none of the three is completely uninvolved in building these frameworks, even if that involvement is not immediately evident. Indeed, all three spheres are involved in a multiplicity of ways in establishing a system of frameworks to guide economic actors towards sustainable development. This creates a multifaceted architecture of co-governance, as illustrated in Figure 3.4.3 a.

The actors involved in governance must coordinate their actions. Though the different categories of actor are each presented separately here, this is designed merely to help the reader gain a clear overview. It should not be understood as taking anything away from the need for coordinated action.

Fig. 3.4.3 a: Co-governance - the architecture for sustainable development

State

S

SS

Private sector

PSPSCivil

society

CS

CS

Standards initiative A

Standards initiative D

Standards initiative B

Standards initiative C

PS

CS

State

S

SS

Private sector

PSPSCivil

society

CS

CS

Standards initiative A

Standards initiative D

Standards initiative B

Standards initiative C

PS

CS


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The term "state" refers to the legislative and executive spheres, from the international level down to the municipal. Its sovereign steering functions are complemented by steering instruments of civil society and the private sector. The sovereign functions of fixing standards, controls, incentives and sanctions are supplemented by socially negotiated rules, through the monitoring of transparency, and through stakeholder incentives and sanctions. As well as being involved in these frameworks, the state is also a key actor in human resources development, especially in the health and education sectors, as well as in infrastructural development (especially road, rail and port infrastructure). The range of frameworks which the state can be involved in putting in place is a broad one. Yet the state's scope for decision-making and enforcement continues to be eroded by the forces of globalisation.

Nevertheless, the state remains a key architect of sustainable governance structures, and one that we cannot do without, chiefly for two reasons:

• The state has at its disposal a broader range of options for intervention into value creation chains than any other actor. Although other actors may perhaps be able to organise specific measures more efficiently, the involvement of the state is absolutely paramount to the coordination and harmonisation of coherent governance measures.

• The framework of legitimacy created by the state is crucially important for the governance activities of civil society and private sector actors. This is particularly relevant in the case of transboundary regulatory frameworks. Without some basis of legitimacy being created by the states concerned, e.g. through international conventions, other actors such as private enterprises will find it very difficult to introduce rules and regulations that are supposed to apply across different countries and cultures, without being accused of imperialism.

After states had failed – despite the Tropical Forestry Action Plan (TFAP) - to halt the dramatic advance of tropical forest destruction, in 1993 non-governmental organisations, together with representatives of the private sector, established the Forest Stewardship Council (FSC). This organisation defines globally applicable standards of good forest management, accredits certifiers, and lays down rules for national working groups and recognises these; finally it appraises and, where appropriate, recognises national standards. In this entire forest certification system, governments have so far had only an observer role. CASHORE (2003: 225) describes certification as a "surprising new phenomenon: the emergence of national and transnational private governance systems that derive their political authority not from the state, but from their influence on consumer preferences in the product chain". He calls such systems "Non-state, market-driven (NSMD) governance systems". This characterisation seems problematic in two respects, first of all because it was the state which supplied the FSC system with its legitimacy at Rio through the international agreements Agenda 21 and the Forest Principles, to which the FSC makes explicit reference. Secondly, it remains an open question whether and to what extent the FSC system can be considered "market-driven", since neither the FSC nor certification is sufficiently well known among end consumers. The system does not draw its legitimacy from the purchasing preferences of consumers. It is wholesalers who opt for FSC-certified timber, so that they can then cultivate a public image of themselves as actors for sustainable development in accordance with the internationally accepted vision.


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Through private sector and civil society actors, the FSC standards initiative attempts to translate the principles of sustainable development and sustainable forest management, on which governments agreed in Rio, into a consensual, verifiable and binding form. Though governments do not play an active role in the FSC certification system, they do strongly influence the process through which the governance system is put in place and enforced. They do so by providing the base of legitimacy for the system and by creating, through their legal systems, economic infrastructure, training and research, the frameworks without which the certification systems could not develop. Rather than calling this a non-state governance system, it would therefore be more appropriate to call it a co-governance system. The term "co-governance system" is also appropriate in organic agriculture, where the standards defined by civil society groups are translated into a law by the state, in order to guarantee the quality of the "certified organic" label. The labour standards of the International Labour Organization (ILO) are also produced through co-governance arrangements, because not only states but also trade unions are represented on the decision-making committees of the ILO. State involvement is especially important in ensuring the coherence (cf. Section 2.2.5) of different instruments and levels of governance.

Since the Rio Conference in particular, "civil society" has been an increasingly active participant in governance at all levels, from the global to the corporate. Interestingly, there is still no consensus as to the precise definition of the term "civil society". According to MEIDINGER (2003), the term refers "to a sphere of social life that is public, but outside the sphere of government." He quotes DIAMOND (1996: 228), whose definition is as follows "…it involves citizens acting collectively in a public sphere to express their interests, passions, and ideas, exchange information, achieve mutual goals, make demands on the state, and hold state officials accountable…..it excludes individual and family life, inward-looking group activity (e.g. recreation, entertainment, or spirituality), the for-profit-making enterprise of individual business firms, and political efforts to take control of the state."

The growing influence of civil society is closely linked to globalisation and privatisation: the "failure of the state" has brought about a governance gap in public affairs that is increasingly being filled by civil society. Having noted that profits are increasingly being privatised, while losses are being socialised as "external costs", "emancipated" citizens are voicing their opinions and assuming responsibility for public tasks that previously were often delegated to the state, since the state is now no longer able to perform those tasks satisfactorily.

Civil society forms a counterweight to the private sector. Like the private sector, to enhance its effectivity it avails itself of new potentials created by globalisation. This involves less the sphere of de-territorialised financial flows, and more the global information and communication networks, and the potentials which these create for civil society to act as a new "major power" and influence public opinion. Civil society forms, and is formed by, a complex network of non-governmental organisations (NGOs) that cooperate, or possibly compete, with each other in certain areas and at certain times. Occasionally, NGOs coordinate their cooperative or confrontative roles. MCNICHOL (2003: 255), for instance, reports a "good cop, bad cop coordination strategy" between the NGOs Worldwide Fund for Nature (WWF) and Friends of the Earth (FoE) in the context of forest certification.

To remain competitive, NGOs must develop twin competencies. First of all they need to develop professional competence with respect to the public issues which they address. Second, they need to develop media competence in the management of public opinion.


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NGOs derive their legitimacy from the credibility of their approach to issues of public concern. This can be measured through surveys, by "media presence" (roughly speaking, what the stock market is to the economy, the talk show is to civil society) and, with certain restrictions, by the volume of donations. It can be considered a precondition for the legitimacy of NGOs that they themselves comply with the principles which they advocate as being in the public interest. This would mean that NGOs working for sustainable development would also need to take into account the social and economic impacts of environmental campaigns in which they were involved, and to include an ethical component in any investments they might make.

The impartiality of NGOs is difficult to assess. The composition of decision-making committees is hardly an accurate reflection of the society whose public interests they represent. However, this criterion is of only very limited significance as an indicator of the impartiality of NGOs. NGO decision-making structures often lack transparency. Information on the provenance of an NGO's financial, human and material resources, in conjunction with information on its decision-making structures, can serve as an indicator of its impartiality. However, if an NGO is receiving major support from a commercial enterprise, it then becomes difficult to establish whether the NGO is retaining its impartiality, even though it is being sponsored, or whether it is being instrumentalised by the sponsoring agency.

Some NGOs are financed largely through donations, and some from a mixture of donations and returns on investments. Increasingly, NGOs are financing themselves through their own economic activities. These hybrid forms of NGO-cum-commercial enterprise (e.g. sale of goods, consultancy or certification services against payment) offer NGOs the advantage of greater financial independence, but increase the risk of conflicts of interest. The watchdog function of NGOs can be a key quality characteristic of certification systems. NGOs therefore occasionally call for this function to be financially compensated. A fine balance needs to be struck between the gain in financial independence, and additional conflicts of interest.

The private sector is affected by changes in governance in two senses.

• Increasingly, enterprises are being confronted with governance tasks that go beyond their corporate mission in the narrow sense, and

• they are being forced to accept that, increasingly, actors other than their own top management wish to be involved in their corporate governance.

Both aspects are related to the enormous increase in influence over the environment and society gained by the private sector, i.e. over the frameworks within which it operates, not least as a result of globalisation. That influence has also moved further and further beyond the reach of the state.

Co-responsibility of the private sector for frameworks: The de-territorialisation of the private sector brought about by globalisation can easily be interpreted by private sector actors as exonerating them from co-responsibility for the well-being of their social and natural environment. This can be explained as follows.

• The anonymisation of the global economy (the social role of the proprietor at the site of operations has largely disappeared) has made it easier to avoid or ignore responsibility.


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• The mobility of capital can tempt enterprises to cut off the branch on which they are sitting by neglecting their social and natural environments, while leaving themselves the option of relocating just before the branch falls off.

By contrast, corporate social responsibility (CSR) or the more recent term corporate citizenship implies that corporations, like good citizens, should also assume responsibility for the development of their natural and social environments, i.e. should not only utilise, but also nurture the frameworks within which they operate. CSR is not an innovation but an age-old obligation that is at risk of being forgotten, and therefore urgently needs to be addressed. CSR is being called for by widening segments of the public and, faced by the threat of a loss of legitimacy, enterprises are responding by making a corresponding commitment.

Stakeholder participation in corporate governance: Today, enterprises are influenced by a variety of individuals and groups. Large enterprises in particular must increasingly satisfy the needs not only of shareholders, but also those of public interest groups, strategic partners etc. – in a word, stakeholders. Enterprises are therefore operating within a complex system of interests and possible influences, the significance and possible impacts of which need to be carefully considered, and harmonised with corporate goals. Civil society actors, especially NGOs, are also gaining increasing influence over enterprises and their economic networks (GEREFFI et al. 2001: 2; GEREFFI 1994: 98f.).

Fig. 3.4.3 b: Influences on corporate policymaking

The stakeholders calling for their interests to be taken into account in corporate policymaking can be broken down as follows (BÖHI 1995):

• internal stakeholders: proprietors, management, staff

Corporate Policy

state

marketeconomic

theory

proprietors, shareholders

staff, managers

business partnersst

akeh

olde

rs

civil s

ociety

Corporate Policy

state

marketeconomic

theory

proprietors, shareholders

staff, managers

business partnersst

akeh

olde

rs

civil s

ociety


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• external stakeholders:

∗ private sector: clients, suppliers, competitors, investors, potential employees

∗ public sector and civil society: the state, local authorities, the media, social interest groups, political parties, educational institutions, religious groups, churches, women's groups, consumer organisations, trade unions, the general public, employers' organisations

∗ advocacy groups, e.g. environmental advocacy groups.

Fig. 3.4.3 c: Dealing with stakeholders

A sustainable enterprise must be willing to enter into dialogue with stakeholders, because "an enterprise that you can't talk to will soon have nothing left to say" (LEISINGER 1997: 121). On the other hand, factors of time and costs mean that an enterprise cannot always be in dialogue with all stakeholders. The following procedure might represent one way out of the stakeholder dilemma (cf. Fig. 3.4.3 b):

• A permanent, general stakeholder monitoring process could include all groups of actors who

∗ are influenced by decisions or actions of the enterprise, or

∗ who seek to influence the conduct of the enterprise.

• An evaluation of stakeholders, e.g. according to their interests and influence, could be used to identify the key stakeholders. MINTZBERG (1999) has proposed applying a matrix of influence and interests (cf. Fig. 3.4.3 c) to select those individuals and groups that should be involved in decision-making, and to determine the scope of that involvement. The scope of involvement of stakeholders should be determined on the basis of their

General stakeholder monitoring

Stakeholder dialogue

Possible opportunities:transaction,corporate policymaking

Phases:stakeholder diagnosis,stakeholder negotiation

Possible impacts:availability and efficiency of resources,damage containmentreputation,legitimation

Stakeholder evaluation, e.g. accord-ing to interests and influence

General stakeholder monitoring

Stakeholder dialogue

Possible opportunities:transaction,corporate policymaking

Phases:stakeholder diagnosis,stakeholder negotiation

Possible impacts:availability and efficiency of resources,damage containmentreputation,legitimation

Stakeholder evaluation, e.g. accord-ing to interests and influence


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interests and their capability to assert their expectations within the corporation. According to MINTZBERG, stakeholders with low interest and weak influence should be only minimally involved. Groups with strong interest but weak influence should be integrated into a close exchange of information and be made key allies in the formation of alliances. For actors with strong interests and strong influence, paths to closer cooperation should be sought.

• In a stakeholder dialogue with the relevant stakeholders it would be possible to

∗ conduct a stakeholder diagnosis to ascertain

- how they see the enterprise;

- how they rate it against the background of their basic values and goals;

- how they act or could act towards the enterprise, against the background of their general patterns of behaviour;

- which impacts they (might) generate that are relevant to the enterprise.

∗ Through stakeholder negotiations, the stakeholders' claims would need to be harmonised with the corporate goals of the enterprise. The following pseudo-solutions should be avoided in this context:

- Assertion of interests through power relations (does not comply with the sustainable development vision).

- Reduction of communication to the lowest common denominator (risk of certain dimensions of the sustainable development vision being lost sight of).

- Failure to take due account of conflicts of interest (agreements are worded so generally, and above all are not concretised through standards, that they end up being wide open to interpretation, despite their apparently consensual nature).

Fig. 3.4.3 d: Matrix of influence and interests for stakeholder selection

Influence

Interest

high

low

highlow

Keep satisfied Cooperate closely

Minimum input Keep informed

Influence

Interest

high

low

highlow

Keep satisfied Cooperate closely

Minimum input Keep informed


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The context in which a particular stakeholder dialogue is initiated can vary widely, ranging from specific transactions of the enterprise with stakeholders, to the incorporation of stakeholder concerns in fundamental corporate policymaking. The participants involved and the form of dialogue will then need to be determined on a correspondingly flexible basis. Depending on the context, the impacts of stakeholder dialogues can also vary widely:

• If the dialogue is being conducted in the context of the supply of resources (labour, raw materials, semi-products, funds, social capital such as knowledge and regulatory systems), the following impacts might be anticipated:

∗ availability of resources;

∗ cost minimisation;

∗ motivation of staff.

• A dialogue on corporate policymaking can generate impacts such as:

∗ social legitimacy;

∗ strengthened reputation in the marketplace and within society;

∗ avoidance of social friction;

∗ preservation of corporate liberty.

Impacts of Stakeholder Participation and CSR on Corporate Policymaking

BLEICHER (1996: 118ff) draws a distinction between two basic dimensions of general corporate orientation, the first of which bifurcates into the twin poles of shareholder and stakeholder orientation (cf. Fig. 3.4.3 e). The "shareholder orientation" is a "response to the desire of shareholders to realise positive results as quickly as possible", while the "stakeholder orientation" involves "those actors interested in the economic activity of the corporation cooperating with other social groups who expect benefits from that economic activity that can only rarely be achieved in the short term". The stakeholder orientation satisfies the two criteria of ethically appropriate corporate conduct that are the result of Thomas Dyllick's synthesis of approaches to corporate ethics (cf. BLEICHER 1996: 92):

• "The wider the circle of people and groups who see a decision as legitimate, the more morally appropriate that decision is."

• "The more a decision takes into account the needs and interests of those affected by it, the more ethically appropriate it is."

BLEICHER identifies a further dimension that he terms "ecological and social orientation", which in turn bifurcates into the twin poles of "avoidance of corporate social responsibility" and "acceptance of corporate social responsibility" (cf. Fig. 3.4.3 d). An enterprise oriented towards the sustainable development vision will be oriented more strongly towards stakeholders than shareholders, and more strongly towards social responsibility than its avoidance.


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Fig. 3.4.3 e: Shareholder/stakeholder orientation of corporate policy goals

(BLEICHER 1996)

Fig. 3.4.3 f: Social orientation of corporate policy

(BLEICHER 1996)

Ad

dr e

ssee

s o

f o

rien

tati

on

Temporal dimension of orientation

• exploitation of potential benefits and results

• quality-based, extrapolative planning

• corporate policy options determined on the basis of existing potentials

• development of potential benefits and results

• visionary, missionary planning

• successful options are derived from the desired goals

• one-sided orientation of corporate policy goals towards capitalised market value

• corporate policy action is determined by the notion of rates of return on capital invested

• an attempt is made to gain social acceptance by meeting minimum social requirements

• objectives are negotiated between interested groups

• multi-dimensional policy embracing the market, politics and morality

• social acceptance solicited through social responsibility of capital

short term long term

mo

nis

tic

plu

ralis

tic

Ad

dr e

ssee

s o

f o

rien

tati

on

Temporal dimension of orientation































short term long term

mo

nis

tic

plu

ralis

tic

stakeholder

shareholder

stakeholder

shareholder

Ori

enta

tio

n t

ow

a rd

s ec

olo

gic

al g

oal

s

strong weak

stro

ng

wea

k

Orientation towards social goals

• satisfaction of social demands is seen merely as a means to enhance performance

• the inclusion of social goals is exploited for personnel marketing purposes

• social concerns are perceived as an obstacle on the corporate policy path

• the personality of the staff member is desired and promoted

• human resources are placed at the core of corporate policy

• the inclusion of social concerns drives corporate action

• ecological goals are a product of legal standards

• ecological goals are defined at best implicitly, that verification of conformity is impossible

• achieving ecological goals is understood as part of the corporate mission

• ecological goals are a logical consequence of corporate social responsibility

• ecological goals are explicitly mentioned in corporate policy documents, and conformity is verified

Ori

enta

tio

n t

ow

a rd

s ec

olo

gic

al g

oal

s

strong weak

stro

ng

wea

k

Orientation towards social goals







• the personality of the staff member is desired and promoted

• human resources are placed at the core of corporate policy

• the inclusion of social concerns drives corporate action

• ecological goals are a product of legal standards

• ecological goals are defined at best implicitly, that verification of conformity is impossible

• achieving ecological goals is understood as part of the corporate mission

• ecological goals are a logical consequence of corporate social responsibility

• ecological goals are explicitly mentioned in corporate policy documents, and conformity is verified

policy of avoiding social responsibility

corporate policyof social

responsibility

policy of avoiding social responsibility

corporate policyof social

responsibility


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3.5 Sustainable Development – an Ambitious Venture

In summary it needs to be acknowledged that, although common sense tells us that the principles of sustainable development are almost self-evident, anyone embarking on the path to sustainable development will be confronted with major challenges. Tackling those challenges is an ambitious venture. The ambitious venture of sustainable development begins in the mind: seeing things in context, thinking in terms of networked systems rather than isolated segments, calls for the courage to embrace complexity. It also calls for the courage to develop resource management strategies that at the same time take into account as comprehensively as possible the constellation of cooperating, competing and affected actors, or strategies to fight terrorism that not only meet violence with violence, but also seek to identify and address the possible root causes. The same thing applies to a life-conducive orientation which, in contrast to the highly simplistic vision of economism, does not simply ignore key social and environmental problems or treat them as "externalities", but explicitly addresses them. This too requires the courage to embrace complexity. When fictions of economics such as that of complete market transparency, or of prices being determined exclusively by supply and demand, are discarded, what is revealed is not the "invisible hand" of the market, but the interests and power relations concealed by the simplistic assumptions of economism. In other words, an orientation towards a comprehensive vision such as that of sustainable development also requires the courage to embrace transparency.

Actors can only possess the will to help shape frameworks and discover scope for action, as opposed to passively accepting the so-called "objective constraints", which in reality are often just in the mind, if they also have the courage to assume responsibility. Actors of the state, the private sector and civil society do not find it easy to establish or further develop frameworks of co-governance where they have previously met each other only in confrontational situations. These actors must be willing to meet, understand and gain trust in each other. In other words, they must possess the courage to cooperate.

Sustainable development that requires as much courage as this is in the truest sense of the term a tall order. The first two challenges are of a predominantly cultural nature. The challenges of shaping frameworks and erecting the architecture of co-governance demonstrate the eminently political character of the sustainable development vision. Tackling and surmounting these challenges requires social capital. In the view of the Protection of Humanity and the Environment Study Commission of the 13th electoral period of the German Bundestag, formation of the social capital that determines a society's capability to adapt and generate innovative responses is the key task for survival and sustainability (cf. Section 2.2).

Standards initiatives, which will dealt with in the next chapter, help build social capital. These initiatives are regulatory frameworks that are put in place and enforced through co-governance mechanisms. They not only promote compliance with social and ecological standards in production operations, but also help modify guiding frameworks. They help actors embark on the ambitious venture of sustainable development, and realistically address the aforementioned challenges, by

• providing actors with orientation and guidance for learning, not only through the standards themselves, but also through the rules and recommendations governing the processes for defining and enforcing standards;

• creating incentives for compliance and sanctions for non-compliance with the standards;


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• promoting partnerships and alliances between the actors involved or interested in the respective spheres of sustainable development.

4. Implementing the Vision – the Instrument of Standards

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4.1 Abstract Vision and Concrete Standards - Two Sides of the Same Coin

The sustainable development vision is designed to facilitate the "grandchild-friendly" management of all kinds of resources by all social groups and organisations, both global and local. To this end it must, inevitably, leave out certain aspects of concrete (e.g. geographical, political, economic and ecological) situations, i.e. it must "abstract". Implementation of the abstract vision, however, demands that those aspects be concretised.

Occasionally, abstraction and concretisation are seen as opposites. Some "pragmatists" reject abstraction altogether as being "theoretical" and "unrealistic", and commit themselves unreservedly to concretisation. In doing so, however, they overlook the fact that both processes are essential to any conceptual engagement with reality that also seeks to change that reality, and that therefore those processes belong together like inhalation and exhalation. Any fixed term is an abstraction. The term "tree", for instance, is an abstraction of a cluster of attributes such as height, age or leaf shape, attributes which every tree that exists possesses, and possesses concretely. Yet it is precisely because every real phenomenon displays such a wealth of concrete attributes that reality could not be grasped in its full complexity without some strategy for complexity reduction, such as that of conceptual abstraction. To deal with real trees, the abstract term "tree" needs to be fleshed out with concretised attributes that were "lost" in the conceptualisation. In this situation, however, the forester will focus on different attributes than the rambler or the painter. There can be no such thing as an absolutely correct or absolutely complete concretisation. There should, however, be absolute clarity among cooperating or communicating individuals as to which attributes are important to them.

The theory of abstraction, which goes back as far as Aristotle, teaches "that the indisputable reduction of content is more than compensated by the radicality of the operation: through abstraction the essence, or to be more precise the essentials of the object are captured" (BRUGGER 1988: 2). This also applies to the abstract vision of sustainable development: the essentials are identified by leaving out the situation-specific aspects. To provide orientation for a specific situation, the vision needs to be rendered specific by filling in the gaps left by the process of abstraction. The abstract, general vision must be concretised for a specific context. The fact that the abstract vision always needs to be contextualised is not a weak point of the vision, but rather a guarantee of its effectiveness. The abstract nature of the vision of sustainability and its concretisation through standards go together like two sides of the same coin.

The UN Conference Rio+10 in Johannesburg planned to concretise the voluntary commitment to the vision of sustainable development that had been made by countries at Rio, by precisely identifying common goals, at least for selected themes. Only limited success was achieved in this respect. It would, however, be premature to conclude from this that the vision is, generally speaking, useless. Although the global concretisation of the voluntary undertakings made at Rio was not quite as successful as many had hoped, it remains indisputable that the vision does indeed provide orientation for action in many situations, e.g. for local Agenda 21s, for certification systems already in operation, and for numerous codes of conduct. It should also be remembered that the process of reaching agreement on the relevance of certain themes in itself may already represent progress towards concretisation, even though no verifiable goals habe been agreed upon. For


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instance, the fact that the USA conceded the relevance of state-imposed regulatory frameworks for the environment, thus moving away from its earlier categorical call for reliance on market mechanisms, was already a step towards concretisation of the vision.

The design and application of standards for certain life spheres is a helpful strategy for concretising the vision. Of particular relevance here are production standards, i.e. standards for products and production processes. To aid concretisation of the vision through standards, Section 4.2 provides a definition of standards, and describes their characteristics and functions. Section 4.3 outlines the broad scope for designing and applying standards. This offers a basis for planning new standards initiatives, and assessing existing ones. This constructive engagement with standards can generate changes that reach beyond the production sites where the standards are introduced. These impacts will be dealt with in Section 4.4. Finally, Section 4.5 will identify aspects of standards initiatives that seem absolutely essential from a development policy perspective if a standards initiative is to be considered eligible for promotion through development cooperation.

4.2 Definition, Criteria and Functions of Standards

The term "standard" denotes a norm, or an objective measure or level (e.g. the standard of living). Standards are widely applied in international trade, especially where prices are agreed on for goods when the goods cannot be examined. Prices are agreed on for clearly definable standards, i.e. quality types or grades, possibly before the good is produced or harvested (e.g. the futures market for grain, cotton, coffee). Standards also play a major role in mass production: suppliers must comply with certain standards so that the parts supplied can be fitted. Generally speaking, standards can be understood as clearly identifiable quality criteria that serve as parameters of the targets to be achieved.

Furthermore, the definition of standards pursuant to ISO requires that those standards be defined consensually, and approved by a recognised body: "A standard is a document, established by consensus and approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for activities or their results, aimed at the achievement of the optimum degree of order in a given context." (ISO/IEC Guide 2: 1991, Definition 3.2)

For a standard to specify clearly identifiable criteria, it must display the following features:

4. The substrate of the criteria to be measured must itself be clearly defined: if products are to meet specified criteria, then it must be clear whether those criteria must be met at all stages of development or processing of the product, or only at certain stages; where processes are to satisfy the criteria, the beginning and end of the phase during which the process must meet the required criteria must also be clearly defined.

5. A standard must be defined in terms of a criterion, a parameter of measurement and indicators. This can be illustrated for example with reference to the standard "human size". The criterion for this standard would be ambiguous, because it could be understood to mean a number of very different things. Only by specifying the measurement parameter "height" does the precise meaning of the criterion "size" become apparent. The fact that a person's height should be measured from the crown of their head to the soles of their feet seems obvious. Yet for many criteria the parameter of measurement is far from self-evident. Without that parameter, the criterion may well lack


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precise definition. The indicator for the parameter "height" states which height, e.g. 1.8 metres, an individual should display. Indicators can be measured along different kinds of scale: on a nominal scale (yes/no), on an ordinal scale (e.g. large, medium, small), or on a cardinal scale (numerical values). Targets – i.e. standards - can be specified as absolute values, as relative values (>X, <Y) or as extreme values (maximum, minimum). Certification standards often use "criteria", which usually incorporate both the criterion in the sense described above and the corresponding measurement parameter, and "indicators", which specify the target values.

6. The temporal dimension of a criterion indicates whether the criterion must be satisfied permanently, or only during a certain period, or only at a specified point in time.

Fig. 4.2: Standards and criteria

At first glance, standards often appear to be clearly defined, especially where targets have been jointly agreed on by the concerned actors. Yet on closer inspection, imprecise or extenuating clauses come to light that show the agreement to be more equivocal than first assumed. The most recent and perhaps most complete list of such "softeners" was provided by the resolutions adopted at Johannesburg. The extenuating clauses formulated there include:

• "increase substantially" (the share of renewable energies),

• "substantially reduced" (the extinction of animal and plant species),

• "fundamental changes" (in patterns of consumption and production),

• "where possible" (rest period for fishing grounds),

• "as soon as possible" (putting a stop to the losses of natural resources such as lakes and forests),

• "minimising impacts" (chemicals injurious to human health and the environment),

Standards are criteria that can be precisely measured

A standard must define:

• the substrate of the standard (process, product, etc.) What should meet

• the criterion plus parameters for the measurement thereof Which criteria

• the time frame within which the criterion must be met When, and

• the indicators How ?


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• removal within an unspecified time frame (farming subsidies of the industrialised countries),

• voluntary undertaking without monitoring (corporate responsibility and accountability),

• increase within an unspecified time frame (development assistance of the industrialised countries to 0.7% of GNP).

Standards perform a wide variety of functions:

• facilitating learning and innovation: learning in the sense of achieving a sustainable improvement in behaviour is only possible in the presence of a parameter for measurement, together with an indicator, that provide an objective standard for the measurement of behaviour. Innovations can only be tested and further developed if and when objective standards are in place to measure the degree of convergence with, or divergence from, target values.

• monitoring instruments: compliance or non-compliance with directives can only be ascertained with reference to criteria that can be objectively measured through corresponding parameters.

• management instruments: the key function of management is to provide staff with orientation. To this end, it is absolutely essential that objectively measurable standards of performance be laid down or negotiated (management by objectives).

• supporting communication and motivation in-house: clear agreements facilitate communication within a company, and goals that bear a clear relation to wider social values (e.g. sustainable development) raise staff motivation.

• supporting communication with business partners and clients: clearly worded and transparently monitored standards make it easier for clients and business partners to obtain information on a company's corporate values and policy, i.e. on what a company stands for and how it can be expected to act.

• reducing transaction costs: the costs of information procurement when contracts are being entered into can be reduced considerably where clearly defined standards are agreed upon and can be verified transparently.

Standards that are defined in relation to measurable criteria, are recognisably derived from the sustainable development vision, and are combined with a corresponding monitoring system, are a sure sign of modern management.

4.3 Designing Standards Initiatives for Sustainable Development - Options

A variety of organisations in various fields are engaged in a range of efforts to design and apply standards that concretise the sustainable development vision, thus making it more binding. These activities are referred to here collectively as standards initiatives for sustainable development. The term “standards initiatives” is deliberately broad in scope. It includes both legislative initiatives, such as the EU Directive on Bioproducts, certification systems such as forest certification by the Forest Stewardship Council (FSC), voluntary undertakings by corporations to comply with prescribed standards, such as the Global Compact proposed by UN Secretary-General Kofi Annan, and standards put in place and


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monitored by companies themselves, such as the standards which the retail chain C&A requires its suppliers to comply with.

Standards initiatives can be extraordinarily diverse. They often differ not only with respect to the standards applied, but also in terms of how the standards were established, how and by whom compliance with the standards is verified, how and by whom the certifying or verifying agencies are accredited, and finally how and by whom compliance with standards is rewarded through incentives, and non-compliance penalised through sanctions (commercialisation strategy). In other words, standards initiatives display a range of characteristic features that may assume a variety of forms (cf. Fig. 4.3). When standards initiatives are compared, e.g. with respect to the possibility of mutual recognition, it then becomes very important to compare the entire range of features, including both those intended or declared by the standards initiatives, and those actually observed.

The sheer diversity of options for designing standards initiatives - the options for defining standards, for verification of compliance, and for accreditation and commercialisation - might be interpreted as a sign of arbitrariness. Yet this impression would be incorrect, because both the relevant international conventions and agreements, and especially the International Standardization Organization (ISO), have laid down numerous rules governing how certain aspects of standards initiatives must be arrived at. For instance, standards have to be designed on a participatory and consensual basis. It is true that these rules do not possess binding legal force, and that no standards initiative can be forced to comply with them. Yet an initiative that did not comply with such generally acknowledged rules would run the risk of failing to gain acknowledgement by other initiatives, losing public credibility, or being classed by the World Trade Organization (WTO) as a barrier to trade.

Commissioned by the Forest Certification component of the GTZ Programme Office for Social and Ecological Standards, VALLEJO / HAUSELMANN (2000) prepared a compendium of such rules. Building on that, and involving the two aforementioned authors, NUSSBAUM et al. (2001) produced an extended version of the basic rules for standards initiatives.

The design options are described briefly, and evaluated from a development policy perspective. Quality criteria designed to be used as tools for decision-making on the eligibility of standards initiatives for development policy promotion are then identified on that basis. This guarantees that development organisations are able to pursue a coherent approach.


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Fig. 4.3: Quality characteristics of standards initiatives

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To illustrate the wide range of options for designing standards initiatives, the GTZ Programme Office for Social and Ecological Standards is currently preparing case studies that describe standards initiatives in several countries and sectors, with reference to the table of quality characteristics shown in Figure 4.3.

4.3.1 Standards – Dimensions of their Development and Status

Procedures for the Definition and Ongoing Development of Standards

When standards are being defined, it is important to put rules of procedure in place that ensure commensurate participation by stakeholder groups. In other words, the structures and procedures should guarantee plural participation in the development of standards. The procedures for decision-making and selection must be transparent, and the corresponding responsibilities of actors and groups of actors allocated accordingly. The goals of standard setting must be clearly defined, and potential fields of conflict identified.

The process of dialogue to define and continually improve standards is also affected by conflicts of interest. When social and ecological goals are laid down, power is also negotiated, as the issues at stake usually include access to, control over and the allocation of resources. To effectively prevent certain interest groups from being excluded, all stakeholder groups should enjoy real participation in decision-making processes affecting the formulation of goals and the setting of standards. The more interest groups that participate, the greater the certainty that all relevant information will be fed into the process. When standards are being defined, the input of relevant technical, scientific and practical knowledge must be guaranteed. Due to the difficulty associated with achieving a balance between the economic, social and ecological dimensions, processes of consultation are required to establish which dimension is most relevant to the majority of concerned actors. In this joint dialogue standards should be defined, and new insights and ideas gained by piecing together items of knowledge. To ensure that standards are accepted by all as binding rules, they should be developed and adopted on a consensual basis. Actors must be guaranteed opportunities to raise objections.

In the course of this process, the standards must "inevitably pass through the eye of the needle of the concrete organisation as it is lived and experienced, with all its formalised and informal practices, routines, and points of resistance to innovation and change" (DEUTSCHE

BUNDESSTIFTUNG UMWELT 2001). "The transition to a path to sustainable development is then achieved not through top-down implementation of the vision, but through a dynamic process driven from within", a process that harnesses inherent development potentials, and integrates external claims into the frame of reference (GELLRICH et al. 1997: 543 ff., quoted in DEUTSCHE BUNDESSTIFTUNG UMWELT 2001). This procedure guarantees that all stakeholders and actors identify with the vision, and take the necessary steps towards achieving it within their own immediate sphere. Commercial enterprises in particular must act as fair partners in democratic will-forming and decision-making processes, and seek to help facilitate a reconciliation of interests process. This means providing their workforce with information and training, as well as opportunities for effective participation.


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Standards - What They Contain

a) Object: standards can relate directly to product properties, in which case they are termed product standards, or may relate to aspects of the production process, in which case they are termed production standards. Product standards are a response to the underlying question of what direct hazards a product poses to humans and the environment. In other words they relate to properties of the product, and usually prescribe minimum or maximum values that the product must display. Production standards are a response to the underlying question of whether the production process posses hazards to humans and the environment. The definition of these standards takes into account not only the impacts of the process on the product, but also the ecological and social impacts generated by production of the product.

Whereas environmental standards usually relate both to properties of the product (e.g. certified organic standards) and to the way resources are consumed during the production process, social standards usually only relate to production processes, their aim being to improve labour conditions and terms of trade.

b) Criteria: for standards to function as an instrument for sustainable development, they must broadly incorporate the principles listed in Chapter 2. This means on the one hand that requirements concerning the social, ecological and economic dimensions of trade be formulated in full, and on the other hand that that the standards guarantee compliance with national and international laws, conventions and agreements. These demands mean that standards have to strike a balance between breadth and specialisation. If they focus too narrowly on one dimension, they may not serve the interests of sustainable development. Ecological balance, social justice and economic prosperity must be pursued as equally important objectives, and the dominance of one dimension must be avoided. A one-sided focus of standards programmes can for instance mean that the idea of biodiversity is accorded priority, while producers are given no economic incentive, or it may mean that the a product is pollutant-free, while resource consumption during the production process goes unchecked.

Where standards incorporate a very broad range of criteria, switching an operation to compliance with those standards can be a very difficult and protracted process. Consequently, it has recently been suggested that comprehensive standards should be broken down into modules, which should then be introduced and monitored gradually, in accordance with company-specific conversion programmes. Compliance with the conversion programme may be achieved before full compliance with the standard(s), and might merit certification (cf. GRAY et al. 2002).

c) Indicators: specific types of standards are often distinguished according to the indicators used to measure the criteria, e.g. performance standards that specify maximum or minimum limit values that must be complied with, and process standards that merely require the criteria in question to undergo a process of improvement. Examples of process standards are ISO 9000 and ISO 14000. These require the introduction of a management and monitoring system to guarantee a process of improvement. One aspect of this approach that might be criticised is the fact that an improvement process is not sufficient to guarantee that the criteria actually satisfy minimum or appropriate indicator values, as opposed to being a little less bad than they were before. This kind of typology is not very helpful, as many standards initiatives demand both limit values and an improvement process, e.g. the FSC.


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Standards – How Just They Are

The question of how just or otherwise standards might be is one which can be addressed on a variety of levels: moral, legal, contractual or corporate.

d) Legitimacy: standards are considered "legitimate" if and when they comply with generally accepted rules of behaviour, e.g. culture-specific moral values. When these standards are applied internationally, cultural differences between countries may mean that the same standard is seen as legitimate in one country, but not in another. If the standards reflect European values, they are liable to be criticised as instruments of "Eurocentric cultural imperialism". Consequently, international conventions and agreements are more suitable for providing a base of legitimacy than culture-specific principles of behaviour.

e) Legality: where standards comply with national or international laws, they are termed "legal". A distinction should be drawn between:

∗ legally permissible standards, and

∗ legally prescribed standards.

Where standards are incorporated into laws, compliance may nevertheless be voluntary: it is important to understand what the legal regulation actually refers to. For instance, EU Ordinance 209/91 on organic agriculture states that foodstuffs may only be traded as "bio" or "organic" if they comply with certain standards. Whether or not products are actually marketed as "bio" or "organic" is a voluntary decision. But if they are, then the standards are binding. The same principle applies to Forest Stewardship Council (FSC) certification: certification is voluntary; but for those who wish to use the FSC logo, the prescribed standards are binding.

The World Trade Organization (WTO) keeps a vigilant watch to see that standards are not misused as "barriers to trade". The present understanding is that voluntary standards are not a barrier to trade. If a government were to allow imports only if they were certified as meeting certain standards, this would be judged a barrier to trade, as other producers would suffer discrimination. A different case would be the state demanding certified goods from its suppliers not as a sovereign agency, but as an economic actor. If a supplier were then to seek certification of its goods for supply to that state as an economic actor, then the voluntary nature of certification would probably not be compromised.

Some voluntary standards, e.g. those of the FSC, expressly prescribe compliance with relevant laws. This may seem superfluous at first glance, yet such provisions have two key institutional functions:

• It is made explicit that voluntary and legally binding standards are mutually complementary, and are neither in competition with each other, nor does either make the other superfluous.

• Voluntary standards can support and unburden state institutions in the performance of their steering and especially monitoring tasks. In some cases the state rewards those who alleviate its burden by complying with voluntary standards, e.g. in Bolivia, where FSC-certified forestry operations enjoy reduced reporting obligations.


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c) Contractually-defined justice: certain standards can be agreed on between contractual partners, in which case the partners have the right to demand compliance with the agreed standards. The transaction costs for business deals of this nature are reduced considerably where the partners make use of established standards initiatives, especially certification systems.

d) Corporate rules: the top management of a company may require compliance with certain standards within sections of the company itself, and it may enforce compliance vis-à-vis the workforce through disciplinary mechanisms, and vis-à-vis external service providers, suppliers, tenants or concessionaries through contractual agreements.

Scope of Application

Whether and how standards are applied will depend on how precisely and completely they are worded, what concrete demands they make, how appropriate those demands are to the given social, economic and ecological circumstances, and the complexity and costs of compliance verification.

a) Operationality of standards: standards are described as operational when the criteria specified in Section 4.2 are worded so precisely and completely that they can be objectively measured. To this end it must be clearly specified which products and processes must satisfy which criteria when, and what the corresponding indicators are.

b) Appropriate targets: when defining the indicators that measure whether and to what extent the criteria are met, two dimensions need to be borne in mind:

• Utopia vs. realism: on the one hand, the standard should express a move towards the vision of sustainable development, i.e. an improvement in compliance with one or more of the five principles of sustainable development, in an ecological and/or economic and/or social context. On the other hand, the targets (indicators) must be realistic. Neither a continuation of the status quo nor utopian demands would constitute a real step towards realising the vision. With applicable standards, the indicators for the respective criteria are agreed on through negotiation, in which context some interested parties will seek a result closer to the status quo, whilst others will seek an outcome closer to their own (perhaps unrealistic) ideals.

• Global vs. situation-specific prescriptions: on the one hand, standards should be understood and accepted on as global, cross-cultural and cross-sectoral a basis as possible. On the other hand, standards that seek to be realistic and to constitute a real step towards sustainable development must take due account of the specific ecological, economic and social circumstances. For instance, they must consider whether or not the skills required of workers and managers in order to ensure compliance with certain standards can be transferred or not. What is realistic in one region might be utopian in another, and what might constitute major progress in one region might have long since become the norm in another region. Since the vision of sustainable development – as opposed to that of catch-up development – provides for situation-specific paths to development, it is only logical to devise situation-specific standards. On the other hand, any standard becomes all the more difficult to communicate, the more situation-specific it is in origin. The FSC has opted for a compromise here, in that all FSC standards must incorporate the same principles and criteria, while national working groups are required to negotiate and agree on


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the indicators on a country-specific basis, possibly differentiated by eco-region. This compromise, which does indeed do justice to the sustainable development vision, leads to a situation in which FSC-certified timber from one country is produced in accordance with different regulations than FSC-certified timber produced in another country.

f) Verification costs: the expense involved in measuring an indicator should be proportionate to the information value of that indicator. To the management of a production plant, the information value rises in proportion to the relevance of the measured value to operational steering. In other words: aspects of plant management that cannot be changed do not need to be measured with great precision or at great expense, whereas those that have a direct bearing on the design of plant steering measures justify high measurement costs.

Transparency of Standards

g) Comprehensibility: the wording of a standard when it appears as a technical document must be precise and fully comprehensible. The more imprecise or ambiguous the wording, the more difficult it will be to verify compliance on a replicable and transparent basis. At the same time, the scope for interpretation when implementing standards must be sufficient to allow context-specific adjustments. In order that complex and precise standards remain comprehensible to those actors called upon to comply with them, e.g. traditional small farmers, it may be necessary to produce different versions, edited to suit specific target groups.

h) Desirability: the history, content and editing of standards should be such as to convince users that it makes sense to apply those standards. Therefore, it must be apparent to the user that the standard is a contribution towards sustainable development, which in turn presupposes that the user him/herself also values sustainable development highly. Standards cannot be promoted without explicit reference to the values on which they are based. The same principle also applies to those individuals who are supposed to reward compliance with the standards, e.g. consumers.

4.3.2 Compliance Verification

Whether or not certain products or processes comply with certain standards can be verified in a number of different ways. One specific form of verification is certification, in which independent monitoring agencies verify whether or not the standards in question have been complied with, and then formally confirm compliance by issuing a certificate. As well as certification there are also numerous other forms of review, such as auditing, verification and internal monitoring systems.

Who Is the Verifying Party?

Three types of verification can be distinguished, according to the relationship between the enterprise being monitored and the verifying party:

• First-party verification: this form of verification – when carried out by a staff member of the same company – is crucial to companies who wish to introduce or modify corporate steering measures in order to guarantee full compliance. The presence of an effective in-


76

house monitoring system is usually a prerequisite for third-party certification. Compliance with standards is also a matter of public relations, and verification is often carried out by staff members of the company, for instance in the case of most codes of conduct. A distinction should be drawn here according to whether verification is being carried out on behalf of the PR department, or whether it is integrated into the structures of corporate controlling. Whereas in the latter case standards might be assumed to effectively influence corporate steering, in the former case one might suspect that paying lip service to certain standards might have more to do with image than with real corporate management. The category of first-party verification also covers the reports which governments submit on their implementation of conventions or international agreements, e.g. the reports to the UN Commission on Sustainable Development (CSD) on national implementation of Agenda 21, or the reports of the Member States of the International Tropical Timber Organization (ITTO) on their implementation of the agreed "Target 2000", namely to trade only in timber from sustainably managed forests from the year 2000 onwards.

• Second-party verification: this kind of verification – performed by staff members of partner or umbrella organisations – is common practice among business partners, for instance where partners wish to monitor compliance with agreed production standards, or where banks or insurance companies wish to verify compliance with certain standards. Verification is often performed by associations or other umbrella organisations on their members' premises; this can be an attractive option in terms of both the division of labour and cost-cutting, and may also be appropriate where an association has undertaken to comply with certain standards. In the latter case especially, it might be assumed that monitoring will be particularly strict, since associations would wish to protect themselves and their compliant members against damage to their reputation being caused by "black sheep". On the other hand, partners and umbrella organisations have a natural interest in not too much information on compliance problems reaching the public, which inevitably reduces the transparency of verification. An analogous form of verification is the monitoring of compliance with prescribed standards performed by public authorities, especially where those authorities perform both an advisory and a monitoring role.

• Third-party verification: this type of verification enjoys the highest credibility, and rightly so. However, impartiality is not guaranteed by the simple fact that the inspectors are not members of either the institution whose compliance is being verified or of one of the umbrella organisations of which that institution is a member. As with financial audits, certification is usually paid for by the institution being certified. This casts a shadow over the impartiality of the verifying party, as rather alarmingly demonstrated several times in recent years (e.g. in the Arthur Anderson case). Even if the verifying party is completely impartial at the time of verification, as can be assumed for instance in the case of auditors of the Bundesrechnungshof (German Federal Audit Office), it is not infrequently the case that after completion of the audit, the auditors concerned may accept attractive job offers or paid commissions from the audited institution. The impartiality of inspectors (or auditors) can only be guaranteed by ensuring that the inspectors themselves are monitored (the approval and monitoring of inspectors is termed accreditation), and that monitoring and accreditation processes themselves are made as publicly transparent as possible.


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Qualifications of Inspectors

Key qualifications of the inspectors include not only the training background of the team, and especially of the team leader, but also the breadth of professional expertise on hand within the team that will enable it to cover the entire range of criteria for the standards being verified. Teams should include not only experts in the respective field, but also specialists in social issues and ecological problems. It would seem especially important that the team should also include local experts who are sufficiently familiar with the culture, history and natural environment of the region. One serious problem in verifying compliance today is the fact that, especially in developing countries and countries in transition, and very few qualified national far less local, personnel are available to perform verification. At best, development cooperation may be able to alleviate the current shortage of qualified verification personnel. In the long run, however, an orientation towards standards, be it within companies, between business partners or in the context of third-party verification, can only be placed on a sustainable footing if and when the corresponding training of verifying personnel is made an integral component of vocational training.

Sources of Information for Verification

There are essentially three sources of information that can be accessed for verifying compliance: documents, interested and affected stakeholders, and production plants.

Of the documents that might be accessed, those produced by the in-house monitoring and controlling system are especially important. This is because when compliance is being verified, especially by a third party, it is not possible to conduct a primary inventory of corporate status and operations. The verifying third party must access information via the in-house monitoring system, the effectivity and credibility of which s/he must in turn verify. Particularly important too are those documents that demonstrate the legality and legitimacy of the institution whose compliance is being verified, and that reflect its strategic and operational planning.

The stakeholders of a company may include its own workforce, riparians, local organisations, clients, suppliers, banks, insurers and public authorities, provided that they are connected with, influence, or are affected by the activities of the company being verified. Their opinion on the company's compliance with the standards in question is an integral aspect of the verification process, and may draw the attention of the inspectors to relevant facts.

The actual inspection of production plants must usually be confined to random samples. The main purpose of these random samples is to verify the completeness and credibility of corporate documents.

Verification Methods

When reviewing documents, surveying stakeholders or inspecting production facilities, a further important aspect of the methodology of verification alongside the number (intensity) of random samples is whether or not the information sources themselves are selected at random, or systematically. Also important are the transparency of documentation of the findings, and the intervals between inspections.


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Evaluation of Findings

The comparison of target and measured values in compliance verification must also be followed by an evaluation process, which involves value judgements and decisions. If for instance the indicator values for certain criteria are not met, a decision will need to be taken as to whether the discrepancy is still within the tolerance limits, and whether corrective measures are required. Such value judgements and decisions are especially necessary in cases where some criteria are met, and others not.

Compliance verification, especially when carried out by third parties, is often organised in three stages.

• First, the findings are established.

• Second, commentaries are obtained from experts not involved in the verification process (a form of peer review). These peer experts assess the plausibility of the results, evaluate the significance of any failure to achieve the desired indicator values, and deliver proposals for decision-making.

• Further decisions, e.g. as to whether or not to issue a certificate, which may be made conditional upon the imposition of further regulations, are usually not taken by external specialists but, on the basis of the verification report, by members of the verifying institution who were not themselves involved in the verification process.

In terms of both form and content, very different verification results are possible:

• internal verification results and decisions on corrective measures, resulting from in-house compliance verification;

• informal certificates of compliance resulting from external compliance verification, possibly subject to

∗ certain preconditions, or

∗ further regulations;

• formal certificates resulting from external compliance verification by independent, accredited verifying bodies, subject to

∗ certain preconditions, or

∗ further regulations.

Certification may also entitle the certified institution to use a logo.

Crucial to the credibility of compliance verification is its transparency, i.e. it must be clear which rules are being applied in the verification and evaluation process, and that those rules are really being adhered to. Furthermore, it is not sufficient to establish transparency only for directly affected stakeholders. If compliance verification is to enjoy public credibility, then a broad public must at least have an opportunity to see for itself what the rules are, and that they are being applied. The Internet has vastly improved opportunities for creating public transparency.


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The quality of compliance verification is also heavily dependent on the presence of opportunities to raise objections. Three types of objection should be distinguished:

• an objection raised by the verified institution against the withholding of certification or verification of compliance, or the imposition of further conditionalities or regulations, or

• an objection raised by external interest groups against the verification or certification of compliance, or

• an objection raised by an accrediting agency against certification by a certifier accredited by that agency.

A standards initiative must have clear rules of procedure for dealing with objections of this kind.

4.3.3 Accreditation

Accreditation is "a procedure by which an authoritative body gives a formal recognition that a body or person is competent to carry out specific tasks" (ISO/IEC 1991). This accreditation of certifiers can also be termed certification of certifiers (VALLEJO/HAUSELMANN 2000: 20). The aim of ISO/IEC Guide 61 is to "describe accreditation as providing, by means of assessment and subsequent surveillance, an assurance that the market can rely on certificates issued by the accredited bodies" (ISO/IEC 1996a).

Categories of Accreditation Body

There is no international regulatory framework to determine who may or may not accredit. Although ISO Guide 61/62 does define requirements for an accrediting organisations, these are not monitored by any other body. Most accrediting bodies are organised in the International Accreditation Forum (IAF). Three categories of accreditation body should be distinguished:

1. National accreditation bodies; in many countries, an accrediting organisation is recognised by the state, the private sector and certifiers as the sole national accreditation body.

2. National accreditation bodies that recognise each other on a mutual basis.

3. International accreditation bodies such as those organised in the International Social and Environmental Accreditation and Labelling (ISEAL) Alliance, which include the Fairtrade Labelling Organizations (FLO), the Forest Stewardship Council (FSC), the International Organic Accreditation Services (IOAS) as the accreditation body of the International Federation of Organic Agriculture Movements (IFOAM), the Marine Aquarium Council (MAC) and the Marine Stewardship Council (MSC).

When selecting a certifier, producers must ensure that the accreditation body is a recognised one. IOAS for instance is recognised neither within the EU nor in the USA or Japan, which means that certificates issued by IOAS-accredited certifiers are invalid in those countries.


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Requirements Placed on Certifiers

The quality characteristics of the accreditation process correspond to those of the certification process. ISO/IEC Guides 61, 62 and 65 (ISO/IEC 1996a, 1996b, 1996c) describe general requirements that an (impartial) third party operating a certification system must satisfy in order to be recognised as competent and reliable (cf. Fig. 4.3.3):

Fig. 4.3.3: Demands placed on certifiers pursuant to ISO

Evaluation of Verification Results

The ISO rules for the verification per se and the evaluation of verification results in the context of accreditation largely correspond to those for certification (VALLEJO/HAUSELMANN 2000: 20).

4.3.4 Commercialisation Strategies of Standards Initiatives

One essential component of standards initiatives is their commercialisation strategy, i.e. the strategy they employ to motivate actors to reward compliance with standards. Figure 4.3.4a illustrates the logic of such a strategy:

Demandsplaced on certifiers

pursuant toISO 61/62/65

Internal quality assurance:• transparency of top

management

• clear responsibilities• continuous revision by top

management

• internal audits• competent staff

External quality assurance through

• accreditation• monitoring of certification procedures• monitoring of staff competencies• monitoring of decision-making procedures• certification (acceptance of conformity)

Behaviour towards clients• open access to all applicants• same rates for all• transparency of certification procedures• notification of changed requirements • notification of results• appropriate handling of clients' complaints• monitoring of certificate use

Demandsplaced on certifiers

pursuant toISO 61/62/65

Internal quality assurance:• transparency of top

management

• clear responsibilities• continuous revision by top

management

• internal audits• competent staff

External quality assurance through

• accreditation• monitoring of certification procedures• monitoring of staff competencies• monitoring of decision-making procedures• certification (acceptance of conformity)

Behaviour towards clients• open access to all applicants• same rates for all• transparency of certification procedures• notification of changed requirements • notification of results• appropriate handling of clients' complaints• monitoring of certificate use


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Fig. 4.3.4 a: Commercialisation strategies of standards initiatives

An operational standards initiative will have properly set standards, and accredited verifying bodies. It will enable producers who extract or process raw materials to demonstrate their conformity with standards, and will issue corresponding declarations of compliance. In the case of traditionally regulated standards initiatives, the standards will be set and monitored by the state. When producers fail to conform with standards, sanctions will be imposed. Regulatory systems of this kind often function inadequately, for a variety of reasons:

• Standards are often unrealistic, because they were set without the benefit of sufficient practical experience, and without the participation of either the producers themselves, or interested and affected stakeholders.

• State regulatory agencies often lack the trained personnel, equipment and funds to carry out effective verification.

• When sanctions are imposed, they often cannot be enforced. Since the weak nature of standards and state monitoring are common knowledge within societies, failure to comply with sanctions or corrupting government officials are often looked upon as nothing unusual.

To avoid or alleviate such weaknesses in the enforcement of standard conformity, groups and institutions for whom compliance is an important concern are developing an array of commercialisation strategies designed to motivate target groups to exert pressure on producers to comply. The more actors that can be motivated to do so, the broader will be the range of measures (assistance, incentives, sanctions) they employ to motivate producers to comply with standards. Target groups of such commercialisation strategies include individuals and organisations, and especially producers' business partners, who will derive an intellectual, practical or even financial benefit from producers' compliance with standards, without paying for that benefit, and often without even being aware of the benefits they derive

Standard-compliant producers


Promoters of commer-

cialisation


cialisation

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Beneficiaries of standard conformity


Complia

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with st

andar

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awareness raising

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compliance

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cialisation





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awareness raising

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from producers' conformity. To activate these passive beneficiaries, promoters of the commercialisation strategy explain to them why compliant producer behaviour is in their interests (explanations of quality), and raise the beneficiaries' awareness of how they can help facilitate compliant producer behaviour by

• helping producers achieve compliance;

• rewarding compliant behaviour through incentives, or

• penalising non-compliant behaviour through sanctions.

The promoters of a commercialisation strategy of a standards initiative are often social, environmental or consumer organisations. Private sector associations too can act as promoters by requiring their member firms to demonstrate their responsibility as actors for sustainable development by encouraging their clients and suppliers to comply with certain social and ecological standards. To help ensure that promoters make a strong and appropriate contribution, it is helpful for them to be involved in the standard-setting process. It is especially important that promoters possess strong communicative skills. Promoters can themselves be promoted, e.g. by the press, teachers, trainers, or the staff of development cooperation organisations.

The target groups of a commercialisation strategy should be seen as those actors who, through information, education, communication and sensitisation, can be motivated to reward and support standard-compliant behaviour by producers. The most likely target groups are the "silent" or "dormant" beneficiaries; however, the interest in compliance of those beneficiaries already awakened must also be kept alive. Commercialisation strategies are often aimed predominantly at the target group of end consumers. Yet precisely this target group is difficult to reach because:

• consumers are exposed to massive advertising campaigns encouraging them to buy the cheapest goods, while other quality features are pushed into the background;

• many products such as carpets, furniture or windows are only rarely purchased by the same consumer, which makes it difficult to put product-specific arguments across at the crucial moment;

• consumers are an extremely heterogeneous group who therefore have to be targeted through a variety of approaches.

In many commercialisation strategies the end consumers therefore only appear to be the target group, while the strategy is in fact geared more to the target group of end marketers. This group is easier to reach, easier to win over because they wish to be perceived as responsible actors for sustainable development and, of course, because they are more responsive to the threat of sanctions.

Promoters attempt to reach the target groups in two ways: through declarations – and explanations – of quality, and through awareness raising. The term "declaration of quality" is used here to denote a target group-specific item of information, presented to the target group in its specific mode of language and logic, explaining to members why standard-compliant producer behaviour is conducive to their specific interests. A declaration-cum-explanation of quality in this sense is a translation of the idea of "conformity" or "compliance" with standards, which is the language spoken by producers, into the language of the target


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group. Depending on the target group, the explanation of quality will need to highlight very different arguments.

Fig. 4.3.4 b: Translating "compliance" into target group-specific declarations of quality

a) Declaration – and explanation - of product quality: a distinction should be drawn between product quality in the strict sense, which can be ascertained by examining the product itself, e.g. by measuring the pollutant content, and the quality of the production process (production quality or product quality in the broad sense), which is often not reflected by properties of the product itself, as in the case of compliance with core labour standards. If the intention is to declare that a product originates from a production process in which certain standards were complied with, then it will be necessary to demonstrate not only the quality of the standard-compliant production process itself, but also the chain of custody (CoC) of the process, including all the subsequent steps of processing and marketing. This can be illustrated by the example of FSC forest certification. FSC certification of conformity guarantees a quality of production in which the timber was produced in a manner not injurious to the environment or humankind, but does not tell the consumer anything about the quality of the timber itself, e.g. its pollutant content. In order that the purchaser can be certain that the timber comes from a forest where FSC standards are upheld, the consumer requires a certificate of forest origin. At the same time, the end consumer also requires a CoC certificate confirming that the product has passed through the entire chain of custody, from the forest and through the hands of all the downstream processors and distributors, without being substituted or inappropriately mixed with other timbers. Since the end consumer is usually not so well informed about product properties or the conditions of production, or for that matter about the chain of custody, further explanation is required to enable the end consumer to

Conducive to

development

Development cooperation

organisations

Credit-

worthinessDistributors,processors

Conversion,legality,market

Product

quality

ConsumersLegality

State authorities

Riskreduction

Banks, investors

Compliance

Insurance companies

Conducive to

development

Development cooperation

organisations

Credit-

worthinessDistributors,processors

Conversion,legality,market

Product

quality

ConsumersLegality

State authorities

Riskreduction

Banks, investors

Compliance

Insurance companies


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fully comprehend the significance of compliance with certain standards. It must be explained to consumers how and why compliance with certain standards is relevant to them, and consumers' awareness of the need to actively support compliance must be raised.

b) Declaration of conversion: converting to production in conformity with certain standards can be an arduous and costly process. Consequently, for various standards initiatives ways are sought to support, monitor and facilitate the conversion process. A production plant can, for instance, undertake to implement a conversion plan, and have implementation of that plan monitored and certified in a conversion declaration (cf. GRAY 2002). Conversion declarations are used less when communicating with end consumers, and more on a business-to-business level when partners wish to reward the efforts of a production plant to convert, e.g. through purchasing guarantees. Incentives for conversion to sustainable production can be very helpful; having said that, they should not offer the same benefits as full conformity, as that would create a risk that the path to conversion would not be completed, with the production plant going only half the way.

c) Declaration of legality: the issue of a declaration of compliance with legal regulations in the production, processing and distribution of products can be a first step or part of one towards a declaration of full compliance and conformity. Processors and distributors should have a strong interest in such declarations, to avoid being accused of illegal practices and penalised. Where standards initiatives include a declaration of legality, it seems appropriate that state monitoring bodies should reward this practice, as it relieves them of part or all of their monitoring burden. The state forest department in Bolivia, for instance, rewards FSC certification by significantly reducing the reporting obligations of certified forest enterprises.

d) Explanation of market conditions: information on the supply of and demand for products in compliance with specific standards is very important for judging the dynamics of standards initiatives, and for sensitising potential promoters. Having said that, market studies should always be examined with great care, as they can easily mislead users into drawing premature conclusions. If it emerges for instance that end consumers are not familiar with a certain standards initiative, this does not necessarily mean that the potential demand for such products is weak. It may simply be the case that awareness-raising measures have not yet been conducted to sensitise end consumers.

e) Declaration of reduced risk: compliance with social and ecological standards can reduce considerably the risk of accidents, environmental damage and perhaps also social unrest in a plant. Insurance companies might reward such compliance when calculating their premiums.

f) Declaration of creditworthiness: conformity with standards often also means a reduced economic risk, especially where the standards include economic prescriptions, such as the FSC standards. On the basis of this kind of declaration of conformity, banks can acknowledge creditworthiness with considerably less need to examine and monitor documents, and extend loans on correspondingly favourable terms.


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g) Declaration of conduciveness to development: compliance with social, ecological and economic standards can make a significant contribution to sustainable development. Development organisations such as the World Bank, regional development banks, or organisations of multilateral and bilateral development cooperation should reward this in their agreements and projects by including standard compliance in their conditionalities.

The capability of promoters to sensitise target groups is absolutely crucial to the success of a standards initiative. As well as the objective information contained in declarations of quality, it is also important to present that information in a manner that is appropriate to the target groups, and that fosters the credibility of the promoters themselves. Numerous studies in various countries have shown that environmental organisations enjoy significantly higher credibility than governmental agencies, and even churches. The high level of communicative skills and the high degree of credibility of many environmental organisations explain the success of the standards initiatives supported and promoted by them. Nor should the potential threat posed by many environmental organisations be underestimated. The fear of campaigns, demonstrations and disruption generates impacts relatively quickly, especially among enterprises and retailers concerned about their image. The promoters of commercialisation strategies for standards initiatives often focus on the distribution and retail sector and less on the end consumer, because the ratio of input to impact is more favourable there. Perhaps the emphasis that commercialisation strategies have placed to date on sensitising target groups through spectacular, publicity-oriented campaigns has been slightly misplaced. At the same time, relatively little energy has been put into the less spectacular work of persuading target groups such as banks, insurance companies, employers' associations and development organisations of the benefits of standards initiatives.

Producers can be provided with various forms of assistance for conversion to compliance with standards. For instance, research can help further develop environmentally and socially sound modes of production, and make them easier to apply. In most countries, qualified consultants for conversion are difficult to find; there are few databases and software packages that might make conversion easier. Current training programme content is oriented too little towards sustainable management, and the methodology of working with measurable standards is seldom transferred. In many cases, production methods less injurious to the environment and humans have required different plant. Financing mechanisms for sustainable production practices are often not highly developed. Commercialisation strategies should work towards facilitating access to such mechanisms for producers willing to convert.

Producers can respond to a wide range of incentives. Not infrequently, producers who have converted to sustainable practices mention ethical aspects in their reports. Production that is people and environment-friendly is an end in itself for some producers, even though this attitude does not generate any immediate benefit for them. A broader willingness to adopt this attitude could certainly be achieved through corresponding PR work.

Commercialisation strategies for sustainable economic activity can aim to engineer a situation in which people and environment-friendly producers are rewarded with social prestige. Increased prestige can also bring economic or political benefits. Indigenous communities in Bolivia (Lomerio) made efforts to have their forestry activities certified, because they wished to demonstrate to the international community that they are capable of sustainable forest management. It was their hope that the increased prestige would help


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them assert their demand for the right to manage indigenous lands. This strategy proved successful.

Although a higher price for standard-compliant products can be a strong incentive for a standards initiative, especially so long as the supply of compliant products remains well below demand, the higher price is certainly not the only incentive and not the only motive for conversion to sustainable management. Securing market share and gaining prestige evidently play a major role alongside the higher price.

Studies increasingly show that compliant production can lead to cost reductions, on the one hand because business partners and public authorities reduce certain costs such as taxes, insurance or credit costs, and on the other hand because transaction costs within a standards initiative, i.e. the costs for drafting and concluding contracts, are lowered. The latter occurs for instance where purchasers or producers form associations, and last but not least where the sound management of people, the environment, plant and infrastructure itself reduces costs.

Legally prescribed standards are often bolstered with penalties that constitute sanctions. In many countries, however, penalties do not constitute effective sanctions. Often, standards initiatives organised by the private sector or especially civil society possess more effective sanctioning mechanisms than legally prescribed penalties, when they either threaten to punish or actually punish non-compliance by producers or distributors with demonstrations and disruptions. This kind of disruption backed up by awareness-raising work can easily lead to a loss of image, which might possibly lead to a lower turnover.

4.4 Impacts of Standards Initiatives

As explained in Section 3.1, in networked systems the scope of impact is not necessarily congruent with the scope of intervention. This is especially true of initiatives that set standards to be complied with by production, processing or distribution enterprises: compliant enterprises should be considered the sphere of intervention of such initiatives. The sphere of impact of standards initiatives may, however, extend far beyond the compliant enterprises in cases where not only conditions within the enterprises, but also national or global frameworks are modified by the initiative. The range of impacts may include national frameworks, for instance, where the standards initiative leads to the creation of new fora for participation in political decision-making or conflict transformation; where the standards initiative leads to the formation of new international alliances, its impacts may even become global in range.

A second dimension of the scope of impact of standards initiatives relates to the type of resources affected, i.e. whether the impacts involve environmental, economic or social resources.

Finally, a third dimension of impacts is the issue of functional or structural impacts. When as a result of the standards initiative the behaviour, function or mode of utilisation of resources is modified, this can be termed a functional impact. On the other hand, standards initiatives also generate structural impacts when the structure or composition of resources, i.e. their quantity, quality or availability, are modified. Structural and functional impacts are often closely interrelated, as structural changes can create the preconditions for functional changes.


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The distinction between the structural and functional impacts of standards initiatives cannot be an absolute one, since the structure and function of resources mutually interact. This can adversely affect the utility of the distinction for purposes of impact monitoring. On the other hand, the distinction is important because actors often attempt to solve functional problems, such as the effectivity or efficiency of organisations, through structural means. Yet where staff or units are transferred without changing their behaviour, these structural measures often fail to generate the desired functional impacts.

Figure 4.4 a shows the possible impacts of standards initiatives, illustrated by selected examples. Functional and structural impacts on environmental, economic and social resources, differentiated by range, are discussed below with reference to examples:

Fig. 4.4 a: Possible impacts of standards initiatives, illustrated by examples

Functional impacts on environmental resources: the ecologically sound timber harvesting methods prescribed for FSC certification cause little damage to soils during transport of the timber, and hence cause little surface erosion. Where these practices are adopted across enterprises in a region, this can significantly reduce river pollution, which in turn can reduce transboundary sludging of weirs, increase the efficiency of hydropower plant utilisation and reduce global fossil fuel consumption.

Structural impacts on environmental resources: compliance with the FSC rules for sustainable forest management leads to near-natural forest growth within the enterprise, possibly to a maintenance of or increase in the proportion of land under forest cover at the national level and, due to the increased binding of CO2 in the forest, to a lower atmospheric concentration of this greenhouse gas.

preservation of trad. knowledgeunion reps on committees

national sign. of traditional rightsunion reps on committees

local respect of traditional rightsproportion union membership

socialsocial functionalcapital structural

socialhuman functionalres. structural

economicfunctionalstructural

environmentalfunctionalstructural

Range

Resources

Global FrameworksNational Frameworks

Compliant Enterprises

poverty reductiongender equality

training level of labour poolproportion of females in workforce

reduction of child labourproportion of females in workforce

global economic performanceglobal structure of sector

increased value creationsectoral structure

corporate depreciationcorporate cost structure

reduced fossil fuel consumptionatmospheric CO2 concentration

reduced water pollutionproportion of land under forest

low soil damagenear-natural forest

preservation of trad. knowledgeunion reps on committees

national sign. of traditional rightsunion reps on committees

local respect of traditional rightsproportion union membership

socialsocial functionalcapital structural

socialhuman functionalres. structural

economicfunctionalstructural

environmentalfunctionalstructural

Range

Resources

Global FrameworksNational Frameworks

Compliant Enterprises

poverty reductiongender equality

training level of labour poolproportion of females in workforce

reduction of child labourproportion of females in workforce

global economic performanceglobal structure of sector

increased value creationsectoral structure

corporate depreciationcorporate cost structure

reduced fossil fuel consumptionatmospheric CO2 concentration

reduced water pollutionproportion of land under forest

low soil damagenear-natural forest

Standards

Initiative


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Functional impacts on economic resources: the cost-conscious management practices employed in FSC-certified forest enterprises lead to lower depreciation at the enterprise level, as well as increased value creation at the national level and greater global economic performance.

Structural impacts on economic resources: when banks reward standard-compliant production enterprises by lending to them on preferential terms, this not only impacts positively on the cost structure of the enterprise, but might even change the entire structure of the national sector, or indeed the global sector, by increasing competitiveness.

Functional impacts on human resources: compliance with the ILO core labour standard of the ban on child labour, in conjunction with the necessary complementary measures, leads to a better trained pool of labour at the national level, and a certain contribution towards poverty reduction at the global level.

Structural impacts on human resources: compliance with the ILO core labour standard of the ban on discrimination can lead to a higher proportion of females in the workforce at the enterprise and national levels, and to greater gender equity at the global level.

Functional impacts on social capital: respect for traditional forest rights, which is a prerequisite for FSC certification of a forest enterprise, can raise the status and effectiveness of those rights at the national level (as in the case of Bolivia), and may help preserve global access to traditional knowledge.

Structural impacts on social capital: compliance with the ILO core labour standard of freedom of organisation can lead to an increase in trade union membership within an enterprise, and to an increase in the numbers of trade union representatives sitting on committees at the national and international levels.

As illustrated by the examples above, the impacts of standards initiatives can – for various reasons – extend beyond the level of the enterprise:

• Compliant behaviour by enterprises can generate impact chains that take root outside the enterprise. These impacts are directly attributable to the standards in question.

• Apart from the impact chains generated by the implementation of standards, the processes leading up to the agreement, verification and commercialisation of standards can also generate change beyond the enterprises concerned: standards initiatives can also change the structure of national and global economic frameworks – in other words, they can make a contribution to global structural policy. To date, these impacts of standards initiatives have barely received any systematic study or been systematically utilised in a development policy context.

As stated in the German Bundestag (1998: 29), the formation of social capital is "the most crucial task in ensuring the survival and sustainability of humanity and the environment" (cf. Section 2.2). Standards initiatives can make a key contribution to this. And when they do, the whole is greater than the sum of the parts (i.e. standards initiatives as a whole make a larger contribution to sustainable development than the sum total of contributions made by individual enterprises). Standards initiatives can help build social capital in a variety of ways (cf. Fig. 4.4 b):


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• Orientation aids for sustainable resource management: the standards themselves, plus any supplementary regulations, as well as comments by the inspectors, provide valuable assistance and orientation to enterprises willing to convert. Enterprises that are already in conformity are extraordinarily important as demonstrative examples of the practical implementation of standards, and as proof of the fact that sustainable management is possible, and not just a dream entertained by idealists. At first glance, these orientation aids seem to resemble the traditional TC approach. Yet the demonstrative examples of compliant enterprises may differ in two respects from examples demonstrating traditional TC approaches: in many standards initiatives, the standards are not defined by "experts", but by participatory national committees and, secondly, standards initiatives often operate less on an enterprise-by-enterprise basis, which would give rise to a series of more or less mutually independent demonstrative examples, but generate changes both within compliant enterprises and within the national (and perhaps global) frameworks simultaneously.

• Institutionalised learning processes: many standards initiatives oblige participating enterprises to systematically document and evaluate their in-house operations. The documents produced are an important basis for systematic learning processes that can be networked and evaluated across enterprises.

• Collective expertise on resource management for sustainable development: in compliant enterprises, in the country in question and beyond, standards initiatives generate an accumulation of expertise concerning how resources can be managed soundly (i.e. taking into account economic, ecological and social aspects) and sustainably (i.e. in the interests of both present and future generations).

• Institutionalised stakeholder participation: many standards initiatives provide for broad participation in decision-making by stakeholders in the resource management process. In Bolivia, for instance, indigenous groups hitherto largely marginalised by forest policy have, by obtaining FSC certification, gained access to active participation in forest policy decision-making. The fact that this participation takes place not just occasionally or by chance, but has been institutionalised according to fixed rules, represents a growth in social capital. Institutions such as public hearings before and after an FSC evaluation can be institutionalised on a broad basis.


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Fig. 4.4 b: Building social capital through standards initiatives

• Institutionalised fora for co-determination and conflict transformation: fora established for the purpose of agreeing on national standards, e.g. national working parties for FSC certification, can become sectoral or national institutions capable of discharging tasks extending far beyond their original mandate.

• Innovative forms of co-governance: within the scope of standards initiatives, the private sector and civil society often participate in the setting of standards that were previously exclusively the domain of state policymaking institutions. This change of roles is rarely friction-free, yet it does create scope to re assign the roles of the state, private sector and civil society so that each can make the most of its comparative advantages, and maximum harmony can be achieved between ideals and reality in the performance of roles by corresponding actors, e.g. in monitoring by state bodies. In this context it is less appropriate to think in terms of dichotomous alternatives (state or civil society), and more of an aim to develop complementarities.

• Informative and cooperative networking of actors: standards initiatives whose commercialisation strategy provides for standard-compliant producers to be rewarded by the sellers or buyers of end products, must network the actors along the value creation chain with each other, in order to create a closed chain of custody including the producer, the processors and distributors, and the retailer of the end product. Information must be exchanged between these actors, and a minimum level of common interest, mutual trust and cooperation must be developed.

• orientation aids for sustainable resource management

• institutionalised learning processes

• collective expertise on resource management for sustainable development

• institutionalised stakeholder participation

• institutionalised fora for co-determination and conflict transformation

• innovative forms of co-governance

• informative and cooperative networking of actors

• alliances

• culture of participation and negotiation

• transparency as a barrier to corruption

• rule of law


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• Alliances: the community of interests, for instance among actors along the value creation chain, can result in alliances with formalised mutual agreements. Such alliances are formed for instance within groups of producers or purchasers, or between socially and ecologically-aware banks and standard-compliant borrowers.

• Culture of participation and negotiation: a standards initiative can transfer and disseminate the form and style in which negotiating partners conduct their dealings with each other across an entire sector, or even nationally. This is conceivable with the chamber principle, the consensus principle or the publicity principle of the FSC.

• Transparency as a barrier to corruption: the greater transparency usually associated with a standards initiative, e.g. transparency of the flow of timber and timber products, or the inspection of forestry operations by independent inspectors within the scope of FSC certification, places considerable constraints on corruption. Conversely, for hitherto corrupt enterprises, certification by a recognised standards initiative such as the FSC may be the only possible way to make a credible return to legality.

• Rule of law: various standards initiatives, e.g. FSC in Principle I, categorically require compliance with national laws. Furthermore, standards initiatives also promote the idea of the rule of law by upholding the burden of justification for sanctions.

This list of the possible assets of social capital cannot and should not disguise the fact that their existence cannot yet be considered proven. Only appropriate impact monitoring will be able to demonstrate to what extent the possible impacts of a standards initiative actually do result in social capital assets.

The impact monitoring of standards initiatives must relate not only to the intended impacts, but also to the unintended impacts, both positive and negative. This monitoring of changes and the "learning" from experience gained will make it possible to answer the following questions: Can we carry on in the same way as before? Or: What can and should we do differently to bring about the desired changes? In other words, impact monitoring creates the basis for adjusting standards initiative activities so that they are better oriented towards the intended impacts of sustainable development.

The possible impacts of standards initiatives listed above are for the time being hypothetical. Impact monitoring will simply need to identify indicators that, depending on the context, could relate to very different criteria. It would therefore seem inappropriate to begin the impact monitoring of standards initiatives by drawing up a list of indicators. A more promising approach would be to pursue first of all open case studies and expert surveys in search of data to confirm or refute hypothetical impacts such as those mentioned above, and thereafter to attempt on that basis to draw up a list of indicators for impacts.

Because standards initiatives never take place in isolation, but in a context in which numerous factors come into play at the same time that also influence the impacts being monitored, it is barely possible or appropriate to attempt to determine what proportion of the impact is attributable to the standards initiative or an actor supporting it. Any such attempt would produce a highly speculative result, because the "attribution gap" is unbridgeable.


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4.5 Development Policy Demands on Standards Initiatives and the Limits to their Effectiveness

Standards initiatives can generate considerable impacts for change: they can bring about change not only in standard-compliant enterprises, but also in the wider frameworks. In order that these changes are desirable from a development policy perspective, i.e. in order that they help create conditions conducive to sustainable development, standards initiatives must meet certain requirements. These are illustrated in Figure 4.5, and described in the sections below. Standards initiatives alone, however, cannot guarantee sustainable development. Consequently, at the end of this chapter we will discuss the limits to their development policy effectiveness.

Participation and Transparency in Standard Setting

Equal and fair participation by all stakeholders is a must in the standard setting process. To guarantee a coherent policy oriented to the sustainable development vision, it is essential that state, private sector and civil society actors negotiate and agree on standards jointly.

Fig. 4.5 The demands placed on standards initiatives by development policy

During the standard setting process it should be ensured that stakeholder groups participate, and that rules of procedure guaranteeing fair participation in decision-making are made transparent, and accepted by the actors concerned. Since participatory procedures must be learned, and indeed are a novelty for many actors, it can be a task of TC to facilitate a process of this kind. Having said that, a willingness to seriously comply with participatory structures, and improve them continuously, is absolutely essential if standards initiatives are to be considered eligible for development policy support. This is the only way that the needs

Breadth anddepth of impact


Coherency andcomplementarity with

state policy


state policy

Social justice ofcommercialisation


Participation inand transparency of

standard setting


standard setting

DemandsDemands

Credible monitoringCredible monitoring

Learning processwith impact measurement

and opportunities forcorrection



Clearly definedand measurable

criteria


criteria

Support for conversionto conformity





state policy


state policy




standard setting


standard setting

DemandsDemands

Credible monitoringCredible monitoring






criteria


criteria




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of those sections of the population currently discriminated against can be incorporated into the standards set.

In order that the standards set become a binding rule for all actors, they should be developed and agreed upon on a consensual basis. There must, however, be clear procedural rules for dealing with dissent and objections. In order that disputes arising during the standard setting process can be resolved, the decision-making processes and rules of procedure must be transparent and well-documented.

Clear, Measurable Criteria for Sustainable Development

The indicators of standards and the rules for measuring them must be clearly defined, and capable of unequivocal, objective verification – also with regard to the specified time frame for achievement of the desired targets. This is the only way that conformity or non-conformity with standards can be ascertained. Criteria and indicators describing the intended targets must be transparent and comprehensible. Possible scope for interpretation must be included in the definition, and accepted by the actors.

If standards are to point the way forward towards sustainable development, the demands placed on the social, ecological and economic dimensions of action must be comprehensively formulated, i.e. it must be clearly defined for the respective sphere of application of the standards to what extent the principles of sustainable development described in Section 2.2 must be complied with in the management of environmental, economic and social resources. In particular, the standards should provide guidance for cases where the individual principles conflict, i.e. where more rigorous compliance with one principle will automatically be at the expense of another principle.

Breadth and Depth of Impact of Standards

It is very important that the standards generate impacts on a broad basis. A standard can be considered all the more effective, the more enterprises that are in principle able to apply it. A standard that cannot be complied with in principle by certain categories of enterprise must be considered discriminatory against those enterprises. The GATT system prescribes that international trade should respect the principles of most-favoured nation status and non-discriminatory treatment. The principle of most-favoured nation status (Article I) obliges WTO members to extend any benefits, favourable arrangements, privileges or immunities granted for one import or export product unconditionally and forthwith to all comparable products to be imported from or exported to another Member State. The principle of national treatment (Article III) prohibits an imported product being treated less favourably than a similar product manufactured nationally. Compliance with these principles combined with the promotion of environmental and social standards involves the following inherent problems: according to WTO/GATT, it is permissible for a country to measure imported products by its own (national) technical standards, including its environmental, health and safety standards. Goods that do not comply with these national standards can be subjected to an import ban. By contrast, what is not permissible are import bans that relate to health or environmental burdens that arise during the production process in the country of manufacture, except where those impacts are detrimental to the environmental or health-related quality of the product (WINDFUHR 1999: 15ff., CHAHOUD 1998: 5 ff., LANDMANN 1999: 7).


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When determining the breadth of impact of standards, several possibilities need to be distinguished:

• The indicator for a criterion is defined imprecisely, e.g. due to "softeners" or extenuating clauses like "as much as possible" or "appropriately". In such cases, the broad-based feasibility of the standard is unclear, and possibly even open-ended. However, if all enterprises could in principle be described as being in conformity with a standard, that standard would become meaningless.

• Due to geographical circumstances, the indicator defined is unachievable for certain enterprises. In a case of this kind, the required conformity can be discriminatory. Some standards initiatives, e.g. the FSC, have solved the problem of achieving global feasibility without being either imprecise or discriminatory by setting different national or regional standards that differ only at the level of the indicators, while all FSC standards incorporate the same principles and criteria. The national working parties that decide on the national standards must comply with certain rules concerning participation and modus operandi, and must be recognised by the FSC. The verifying agencies must be FSC-accredited. All FSC-certified enterprises are entitled to use the same FSC logo, despite the differences between the standards.

• Achieving the indicators required entails a variety of conversion problems for enterprises. Often, small or local enterprises face greater obstacles to the implementation of standards than do large enterprises, e.g. because their documentation or the training of their managers do not comply with the requirements of the standards initiative, or because they do not have the funds needed to invest in conversion, and/or because they do not have access to corresponding loans. This kind of exclusion of disadvantaged producers, which is undesirable from a development policy perspective, can be alleviated or prevented through targeted measures to support conversion to conformity (see below). The exclusion of disadvantaged producers can also be counteracted through target group-specific adjustment or editing of standards, or of the conditions for verification - especially the documents to be presented, through gradual verification of compliance, and finally through modification of the standards themselves (e.g. variation for certain indicators depending on the size of the enterprise).

The depth of impact of standards refers to how deep the impacts generated in enterprises and in the wider frameworks are. The two categories of breath and depth of impacts are in theory closely interrelated: the less deep the changes generated by a standard are, the broader its scope of application; a standard that merely describes the status quo has no depth of impact, but is very broadly applicable. In practice, however, the commercialisation strategy also needs to be taken into account. For a standard with a very shallow depth of impact, it is very difficult to mobilise actors to reward compliance with this standard. Without incentives, however, producers are not willing to undergo conformity assessment, which means that a standard with a low depth of impact also develops a low breadth of impact.

Credible Verification

From a development-policy perspective, the credibility of verification plays a key role. It is a product of the impartiality of the verifying party, transparency of the verification process, and public participation. A well-documented, impartial (third-party) conformity assessment with a high degree of stakeholder and public participation is desirable, first of all to facilitate the identification and transfer of lessons learned from the process to other regions and sectors.


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Secondly, it is desirable in order to guarantee that disadvantaged sections of the population are also able to participate in the verification process.

It should be ensured that the verifying parties (auditors, inspectors) possess both the formal qualifications and the professional background and experience required to perform the assessment tasks. Where possible, interdisciplinary teams should be formed that include experts from both the branch concerned, and from the social, environmental and natural sciences. Extremely important in this context are local experts who are sufficiently well acquainted with the culture, history and environmental conditions of the locality.

Conformity assessment or verification should draw on a variety of information sources (documents, stakeholder interviews, observations), so that results can be cross-checked.

• When defining the unit of assessment (single enterprise, group of enterprises, associations etc.), it should be ensured that the sample density is sufficient to capture possible non-compliance with standards.

• Evaluation of the verification results must be transparent, i.e. publicly-accessible documentation should be prepared, and mechanisms for objection as well as clear rules of procedure for dispute settlement must be established.

• The verification results should be evaluated by a body (within the verifying agency) that was itself not directly involved in the inspection.

• It must be ensured that different inspectors, auditors or verifying agencies come to the same result, and that verification methods are applied consistently.

• The above-mentioned quality criteria must be guaranteed through accreditation of the inspectors with respect to verification methods applied, standards and qualifications of the inspectors. The standards themselves and the accredited verification methods should comply with ISO requirements.

Finally, the credibility of a verification process demands that clearly defined and transparent mechanisms be put in place, allowing not only the verified institution but also interested outsiders to raise objections.

Support for Conversion to Conformity

Standards initiatives can only encourage actors to orient their actions more strongly towards the sustainable development vision if and when enterprises willing to convert receive the required support. They need access to trained personnel, consultancy inputs, training, services, materials, machinery and equipment, financing and software.

Support can be provided to enterprises willing to convert in three stages:

1. Building of the aforementioned capacities (governmental inputs play a key role in this context).

2. Provision of information on the range of support services available, e.g. via the Internet.

3. Development of cooperative relationships, e.g. between consultants and the enterprise willing to convert, and of alliances, e.g. long-term purchasing agreements, possibly including pre-financing, with enterprises willing to convert.


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Social Justice in Commercialisation Strategies

The risk that only some of the standard-compliant producers are rewarded becomes greater, the smaller the range of commercialisation strategies. Especially where the commercialisation strategy flows through only few export markets, some standard-compliant producers are easily disadvantaged if they have no access to those markets, either because they lack the appropriate contacts or marketing expertise, or because they cannot meet the quantitative or qualitative demands of those markets. To make the commercialisation strategies more just for the various categories of producer, first of all barriers to access to commercialisation mechanisms - such as certain markets - need to be dismantled. Secondly, further commercialisation strategies need to be developed. As well as accessing further export markets, and especially national markets, an attempt must be made to mobilise hitherto passive beneficiaries and potential beneficiaries of standard-compliant production to reward such production, e.g. banks, insurance companies, development cooperation organisations and national public agencies.

Coherence and Complementarity with State Policy

With respect to their shaping influence both on enterprises and on the wider frameworks, standards initiatives should not be seen as an alternative to state policy, but should be seen as complementing and alleviating the pressure on it. Therefore, standards should be coordinated and harmonised with state policy.

Coherency with state policy can be created by wording standards so that they specify compliance with both national laws and with the international agreements to which the country concerned is a party, and so that they call for the avoidance of inconsistency with international conventions.

To avoid false rivalry between state policy and standards initiatives, it would seem appropriate to explain the contribution made by national and international policy towards legitimisation of the standards initiative. This could emphasise the complementary character of standards initiatives vis-à-vis state policy. Any standards initiative must be built on the legal and institutional framework created by the state, on its economic and transport and communications infrastructure, and on the skills and expertise created by the state education system. In other words, the state always exerts a key influence on the wider frameworks that co-govern standards initiatives.

Regulatory frameworks that help enterprises and require them to discharge their responsibility as actors for sustainable development must, as explained in Section 3.4, be established jointly by the state, the private sector and civil society, in co-governance. Such regulatory frameworks are established and enforced by various standards initiatives, and the state, the private sector and civil society are involved in each of these initiatives to a different degree, and in different roles. The commercialisation strategies of initiatives are also highly diverse. Where the state is heavily involved, compulsory standards are often imposed, and the commercialisation strategy is comprised largely of penalties; initiatives that are largely driven by the private sector and civil society, on the other hand, usually include voluntary standards, and their commercialisation strategies tend to be based on economic and social (image) benefits and drawbacks. The appropriateness of the division of roles within an initiative can only be judged in context. Whether or not a standards initiative is to be considered eligible for development policy promotion will depend on how it fits into the


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existing governance architecture, and whether it promises to boost actors' orientation towards sustainable development.

A Learning Process with Impact Monitoring and Scope for Corrective Measures

As with every development policy instrument, standards initiatives too should be subjected to a learning process to ensure that the instrument is employed in a manner appropriate to the respective situation, and generates the maximum impact. To this end, an impact monitoring procedure must be institutionalised that captures not only the intended, but also the unintended impacts, including the negative ones. The monitoring and evaluation (M&E) of impacts should be performed by an institution independent of the standards initiative. The full breadth and depth of impacts should be monitored.

In order that the learning process can improve the standards initiative, there must be scope for corrective measures, i.e. there must be a body to identify the need for correction, and it must be possible to make corresponding changes to the standards, to the compliance verification, including accreditation of the inspectors, and/or to the commercialisation strategy. Stakeholders should participate in the measurement and evaluation of impacts, and in the corrective measures, in order both to utilise their experience and knowledge, and to ensure maximum effectiveness of the corrective measures.

Limits to the Development Policy Effectiveness of Standards Initiatives

Standards initiatives can make an important contribution towards sustainable development by influencing enterprises and frameworks so that actors orient their actions more strongly towards the principles of sustainable development. Nevertheless, standards initiatives are no guarantee of sustainable development, since the frameworks within which enterprises operate may not permit effective standards initiatives, or because production units are immune to the incentives and sanctions of standards initiatives.

Standard-unfriendly frameworks: in all standards initiatives, the private sector, as well as the state and civil society, must play a certain role. Standards initiatives generate no impacts at all where frameworks do not permit either of these categories of actor to perform their role.

Where the state has lost power completely, as is currently the case in some African countries, and is no longer able to provide a minimum of legal certainty, in other words where the law of the strongest prevails, conditions are not conducive to effective standards initiatives. Yet an overpowerful and uncontrolled state may also allow despotism and corruption to become so strong that standards initiatives cannot be developed due to the lack of credible verification.

In the private sector standards initiatives can only strengthen orientation towards sustainable development if and when a certain scope for development and a will to undergo development are in place. Yet if the private sector frameworks do not permit access to the resources needed for further development, such as modern technologies, investment, modern labour legislation or new forms of cooperation, then standards initiatives too may fail to generate progress towards sustainable development. Similarly, the constraints generated by a lack of will to undergo development may also be due to framework factors, e.g. where the private sector is shielded from competition by privileges or protective duties.


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Civil society actors can play a number of important roles in standards initiatives, e.g. as a monitoring watchdog, as an electoral constituency co-determining the regulatory activity of the state, as a group of shareholders exercising their shareholder rights, or as responsible consumers. Yet these roles played by civil society are highly dependent on the frameworks in place. Where freedom of expression or basic democratic rights are curtailed, or where poverty prevails, civil society may not be able to play its roles in standards initiatives to the same extent, if at all. Nevertheless, it would be wrong to conclude that civil society cannot be mobilised for standards initiatives in poor countries. As the growing national marketing of FSC-certified timber in Brazil demonstrates, in poor countries too there exist sections of the population with purchasing power who can be sensitised to the importance of standards.

Private sector actors resistant to standards: certain categories of economic actor are particularly difficult, or even impossible, to win over for standards initiatives. This includes the entire informal sector, actors who are gainfully employed without having formalised that activity through any form of registration. Two questions arise here: how should production processes be recorded, and how should monitoring be organised. It is difficult to keep any record of working conditions and resource consumption in the informal sector, as these activities are not registered. A first step may then be to gradually develop methods and expertise either to formalise this sector, or to ensure by some other means that the sector complies with central environmental and social standards. Monitoring of the value creation chain must also be such as to ensure that suppliers in the informal sector are included in the monitoring process. Since state regulatory frameworks do not cover the informal sector, it is up to enterprises themselves to ensure that this monitoring takes place. It has also emerged that not all standards can simply be transferred to the informal sector, as their point may be lost in non-formalised work situations.

A further segment of the private sector that is very difficult to win over for standards initiatives are those actors who avoid transparency. Actors may have very different reasons for shying away from transparency:

• the wish to avoid illegal practices, including corruption, being exposed;

• fear that privileges may become public knowledge;

• the wish to suppress public awareness and debate of the fact that economic activity affects public interests, for fear of claims being raised in public that may compromise economic activity;

• fear that information considered company secrets, such as routes of procurement or distribution, may become accessible to competitors.

Finally, actors who mistrust outside intervention are also difficult to win over for standards initiatives. It is true that the sustainable development vision was negotiated in detail by 178 countries with different cultures and political systems. Nevertheless, it is closely related to European ideas, and especially those of the Enlightenment, and is therefore often described as "Eurocentric". When industrialised countries that advocate both the vision and corresponding standards initiatives then favour their own agricultural or textile sectors by introducing protectionist measures at the expense of developing countries, this feeds the suspicion that Western countries seek to impose the vision and appurtenant standards initiatives on other countries, in order to protect their own interests.


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At the national level, standards initiatives are occasionally suspected of being a first step of outside intervention that will eventually lead to a curtailment of property rights.

The mistrust of outside intervention is probably the strongest barrier to standards initiatives. Overcoming it would require considerably more work to sensitise actors to the sustainable development vision. On the other hand, an increasing number of case studies are demonstrating that the "sound" management of natural, economic and social resources in accordance with the principles of sustainable development ultimately also benefits producers, and that the standards of sustainable development describe nothing but modern, sustainable management. The more this insight is backed up by practical examples, the easier it will be to break down the barrier of mistrust of standards initiatives generated by the fear of outside intervention.

5. Standards of Sustainable Development in Practical Development Cooperation

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As an instrument for sustainable development within the scope of German development cooperation, standards appeared only quite recently. Roles that development cooperation could perform for the broad-based introduction of ecological and social standards on a cross-sectoral basis are still in the pilot phase, and the scope for supporting activities is not yet exhausted. Cooperation with the private sector is of key importance here because – as described in Chapter 3 – private enterprises are key actors in the shaping of paths to sustainable development. The present chapter will identify examples of both proven and potential roles and cooperations of GTZ, and especially of the Programme Office for Social and Ecological Standards, with actors of the state, the private sector and civil society. We do not claim that the list is complete. The chapter will begin by outlining recent trends in development cooperation, so that the relevance of social and ecological standards can be better understood in context.

5.1 Development Cooperation Seeks Sustainable Global Development

As the 21st century dawns, a number of development policy trends are emerging: the goal of development policy – to improve the life conditions of people in developing countries – remains in place, but is being oriented towards the vision of sustainable global development. According to that vision, development policy comprises not only international policy measures for the developing countries, but also a policy to change structures and frameworks – not only in the developing countries themselves, but also at the international level, as well as here in Germany.

Through its global structural policy for sustainable development, German development cooperation is responding to a difficult challenge. It seeks explicitly to help solve global problems, and steer globalisation. Conceptually, it seeks to systematically implement the resolutions adopted at Rio, as well as the International Covenant on Economic, Social and Cultural Rights, and thus the indivisibility of human rights within the framework of development cooperation. The indivisibility of human rights in particular was strongly emphasised at the World Conference on Human Rights in Vienna in 1993: "All human rights are universal, indivisible, interdependent and interrelated" (Art. 5). Prior to the World Summit for Social Development in Copenhagen, the Western donor countries had not acknowledged social rights as a binding framework to orient their development policy (NUSCHELER 1995), and only there did states in Article 2 Paragraph 1 of the International Covenant on Economic, Social and Cultural Rights accept obligations that were binding under international law: "Each State Party to the present Covenant undertakes to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures" (NUSCHELER 1995). States also undertook to implement the 20/20 initiative. This initiative provides for interested developing countries and developed partner countries to make a mutual commitment to allocate 20% of their national budget and 20% of their ODA respectively to basic social services.


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This trend is also evident among the OECD states. Whereas in 1986 the General Assembly of the OECD states either voted against the laboriously negotiated Declaration on the Right to Development or abstained, they subsequently accepted both Principle 3 of the Rio Declaration of 1992 and Point 10 of the Vienna Declaration of 1993, both of which acknowledge a "right to development". Point 10 of the Vienna Declaration states: "The World Conference on Human Rights reaffirms the right to development, as established in the Declaration on the Right to Development, as a universal and inalienable right and an integral part of fundamental human rights." The Vienna Conference thus not only raised the status of the "right to development" to a "universal and inalienable right", but also adopted – consensually - the following supplement: "Lasting progress towards the implementation of the right to development requires effective development policies at the national level, as well as equitable economic relations and a favourable economic environment at the international level". The OECD Principles of Corporate Governance also refer to the Universal Declaration of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work of 1998, the Rio Declaration of 1992, and the World Summit for Social Development Programme of Action of 1995 (HAUCHLER et al. 2001: 165ff.). In short, the OECD was able to draw on an adequate normative base of international standards, and the agreements reached now need to be implemented through development policy. The systematic implementation of these agreements is key to the credibility of development cooperation. The only appropriate response to the blanket criticism frequently heard - why bother trying to help when help is no use - is to systematically pursue the principles of sustainable development, and to relegate foreign-policy and commercial interests to the back of the queue in funding policy decision-making.

What are the implications of this for German development policy? First of all, it implies a departure from the traditional logic of North-South cooperation as a policy field largely detached from other policy fields. This means there is a need to implement the coherency principle described in Chapter 2, making it an integral component of the global structural policy concept, in order to meet the relevant obligations. It means there is a need to network BMZ with other Federal German Ministries more closely than was the case during the period of traditional North-South cooperation (e.g. with the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, the Federal Ministry of Economics and Labour, the Federal Foreign Office, and the Federal Ministry of Education and Research). BMZ can help facilitate greater coherence of German policy in a multitude of ways, by seeking to influence those policy spheres that are particularly important for realisation of the goals agreed on with partner countries within the scope of development cooperation. Secondly, it implies effective implementation of the partnership principle. This will require a concentration of financial resources on global problems, the development of a culture of global learning, and the formation of new alliances between states, enterprises and civil society.

5.1.1. Significance of Social and Ecological Standards for the Achievement of Objectives by Development Cooperation

On the basis of this fundamental understanding, a study was conducted on the future of development cooperation (BRAUN et al. 2000: 10) that identified social and ecological standards as one of the five themes for the strategic role of international development cooperation:


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• good governance and legal certainty,

• environmental/social standards and global trade relations,

• information and communication technologies for development,

• promotion of participation and the formation of social capital,

• the role of development cooperation in crisis prevention and conflict transformation.

The German Government also identifies social and ecological standards as being an important instrument in its strategy for sustainability, with a view to harmonising the structural change and growth process associated with globalisation, protecting of the natural resource base on which life depends (GERMAN GOVERNMENT 2002). Social and ecological standards are an instrument with which governmental, private sector and civil society actors can negotiate development in (strategic) partnerships, and simplify implementation of the principles already negotiated at the Rio Conference. The Study Commission of the German Bundestag sees the following strategic points of departure for an appropriate deployment of the instrument at the corporate level, and at the level of international policymaking:

• "[...] elaboration and implementation of minimum environmental and social standards, in the form of codes of conduct, guiding principles of international organisations, and voluntary obligations undertaken jointly with the private sector.

• [...] stronger emphasis on environmental aspects in international trade and investment committees (especially within the World Trade Organization – WTO), in international financial institutions such as the World Bank or the European Investment Bank, and in international financial services (e.g. the OECD environmental guidelines for export credit insurance)" (GERMAN BUNDESTAG 2000).

The Financial Cooperation mentioned in the last point in particular plays a significant role in the promotion of social and ecological standards. Development cooperation actors are working to bring about a situation in which debates within WTO concerning a multilateral investment agreement can only be conducted in the context of such an agreement being tied to the OECD guideline. The institutionalisation of social and ecological standards in an agreement of this kind is absolutely crucial to the pursuit of a path to sustainable development. The significance of this approach is evident not least from the fact that, in 1999, annual foreign investment in developing countries totalled US$ 198 million, which was more than three times the volume of ODA of the OECD countries (MERTENS 2001: 53).

As regards export credit insurance, it is now becoming clear just how difficult it is to implement the coherency principle. The efforts of BMZ to steer German government policy as a whole onto a course that coheres with development policy have often collided with "hard interests", chiefly those of the ministries for economics, agriculture and finance. This was evident for instance in the compromise reached by the ministries in early 2001 concerning the reform of the Hermes instruments (foreign trade sureties and guarantees). In its 11th Report, BMZ still states that the German Government will pursue the "vision of sustainable development (...) also when promoting German exports, by assuming responsibility for export credit insurance" (BMZ 1997). Although this principle was also incorporated into the new Hermes guidelines of April 2001, the finer details of the guidelines give rise to considerable doubt as to how seriously this should be taken. Many non-binding aspects leave any number of back doors open to German exporters to export their products. These aspects would not stand any serious test of sustainability. There is a lack of binding and verifiable standards. It


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was a severe defeat for development policy that the new Hermes guidelines did not include the recommendations of the World Commission on Dams. These related above all to large-scale projects that triggered numerous exports, also from Germany, and that time and again in years past generated heated debates concerning Hermes guarantees. Nor was the transparency of decision-making procedures improved, as had been called for (cf. EBERLEI 2001; URGEWALD 2003).

In an expert study commissioned by the Programme Office for Social and Ecological Standards, Windfuhr identifies further policy fields of governmental development cooperation in which social and ecological standards play an important role (WINDFUHR 2002: 28-56).

• Integration of ecological and social standards into priority area strategy papers and country strategies, as well as socio economic short analyses (following an analysis of constraints).

• Integration of standards into country strategy papers and poverty reduction strategy papers at the (inter)national level, and integration into the relevant strategies of elements to promote compliance with the standards.

• Integration of the debate on paths to sustainable development into political dialogue with partner countries. This includes the sphere of government advisory services for labour legislation, organic agriculture, forest management, etc. For instance, in several countries environmental or labour ministries, or their subordinate agencies, have received advisory services. Another form of advisory service is support in the formulation of corresponding national strategies or action plans for the ecological and social standards associated with TC measures.

• Government advisory services in the establishment of state advisory and service enterprises, and staff training.

• Government advisory services in the establishment of state complaints systems for standard compliance (e.g. ombudsman systems).

• Simplification of incorporating of the theme into the work of BMZ/GTZ staff using checklists with which problems and possible opportunities for implementing standards in individual projects can be identified, and possible solutions elaborated.

Seeing standards as an instrument for implementation of the Rio resolutions, human rights and the International Covenant on Economic, Social and Cultural Rights, means thinking about the various dimensions of sustainable development from a systemic perspective. These dimensions correspond to the DAC criteria that have been in place for development cooperation since 2000, and that call for the cross-cutting themes of good governance, gender, environmental protection and natural resource management, and poverty orientation to be incorporated into project design. In other words the various dimensions of development must already be examined for intended and unintended impacts during the planning phase, and quality criteria and parameters – i.e. standards and indicators – must be identified so that the project impacts can be measured. When this approach is taken seriously throughout project cycle management, then all development cooperation projects that make a contribution towards sustainable development constitute a kind of standards initiative. With the standards initiatives described in Chapter 4, however, ownership will ideally be in the hands of local structures, and no longer dependent on external support.


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Points of departure for development cooperation projects to generate this local ownership, and promote the introduction and implementation of social and ecological standards for sustainable paths to development, are outlined below.

5.1.2 Social and Ecological Standards in TC

In the previous sections, the claims raised for the instrument of social and ecological standards were high. For the instrument to do justice to the complexity of today's chains of cause-and-effect, competent individuals are required who can create and utilise scope for action. However, since strategies for action are dependent not only on the expertise of individuals, but also on the actions of other actors and on the prevailing frameworks, the appropriate sphere of intervention for Technical Cooperation is the shaping of frameworks, and in particular the creation of social capital (institutional development), and the enabling of actors to utilise changing scope for action (capacity-building). Support in the sense of capacity development, i.e. intervention to change frameworks and to enable state, private sector and civil society actors to apply their expertise, must occur simultaneously and on a proportionate scale (cf. Section 3.3). These two spheres of intervention are mutually complementary, because improved frameworks are only helpful when competent actors are able to utilise them, and an increased competence of individuals and organisations is only beneficial – a painful lesson that has often had to be learned in Technical Cooperation - when frameworks are conducive to the application of that expertise.

In this context, the role of TC is a broad one: delivery of advisory and consultancy inputs, moderation and facilitation, and the promotion of participation by target groups often barely included in will-forming and decision-making processes. It functions as a platform on which civil society, state and private sector actors are integrated and networked. Trilateral networks of this kind have the potential to bring together different positions, and generate results that perhaps none of these actors would have been capable of achieving on their own (cf. Fig. 5.1.2).

The Programme Office for Social and Ecological Standards is mandated to access various activity areas through pilot projects, generate lessons learned for future development cooperation interventions and process experience to make it available to others. Questions high on the agenda are how the market and trade can be utilised to positively influence frameworks for sustainable development, and to guarantee the participation of key interest groups in the design, implementation and verification of standards, which is vital if these standards are to be accepted. Examples of activities in the various activity areas will now be described briefly, and the effectiveness of those activities evaluated.


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Fig. 5.1.2: TC activities for the broad-based introduction of standards

Raising Awareness of Standards as an Instrument for Implementation of Sustainable Development

A necessary, though not sufficient, condition for the broad-based implementation of social and ecological standards is first of all an awareness among actors of the potential significance of this instrument on the path to sustainable development. Given the large number of actors (cf. Section 3.1) involved in a sustainable mode of production and consumption, there is a need for a variety of target group-specific awareness-raising measures. These may involve either information transfer (facts and figures), or the stimulation of processes of reflection on values and ideas about human coexistence in harmony with nature. In seeking to create this awareness, GTZ is becoming involved in a new area of activity by targeting actors within Germany, be they consumers or German enterprises.

• Information campaigns for consumers: by supporting organisations that sensitise consumers to sustainably produced products, sustainable consumer behaviour is promoted. By disseminating information brochures and participating in eco-fair events on products, activities and organisations, and by at the same time networking a range of actors, GTZ is helping consumers make more informed and aware purchasing decisions based on greater transparency. BMZ/GTZ are for instance supporting a website that acts as a service provider for both eco-fair organisations and enterprises, and for consumers interested in sustainable consumption, as well as for multipliers (www.eco-fair-trade-

Expert advisory services

Enablement of participation

Moderation, platform

State

Civil so

cietyP

rivate sector

6.Establish-

ment of advisory,

monitoring and service enterprises

2.Support of standard

setting for sustainable

development

4.Support of commer-

cialisation

1.Awareness raising on

standards for sustainable

development

5.Support of implemen-tation of

standards

3.Building and promotion of

strategic (innovative)

alliances, e.g. PPPs

Promotion of implementation of international conventionsIntroduction of legislation and design of policy strategies

TC activities for capacity building TC activities for institution buildingKey :

Expert advisory services

Enablement of participation

Moderation, platform

State

Civil so

cietyP

rivate sector

6.Establish-

ment of advisory,

monitoring and service enterprises

2.Support of standard

setting for sustainable

development

4.Support of commer-

cialisation

1.Awareness raising on

standards for sustainable

development

5.Support of implemen-tation of

standards

3.Building and promotion of

strategic (innovative)

alliances, e.g. PPPs

Promotion of implementation of international conventionsIntroduction of legislation and design of policy strategies

TC activities for capacity building TC activities for institution buildingKey :


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net.de). This not only helps raise awareness, but also helps provide clear information on the different goals of various standards initiatives.

• Awareness raising among commercial enterprises: the sensitisation of commercial enterprises to sustainable management takes place through both broad-based discussion events, and through sector or enterprise-specific awareness-raising work. For instance, an expert conference was held under the slogan "Corporate social responsibility in a globalised economy – the European debate", at which representatives of the European Parliament, the EU Commission, European enterprises and initiatives to promote corporate social responsibility (CSR) were able to hold joint discussions. One example of sector-specific awareness-raising work is that of the textiles industry. This work succeeded in taking the sector an important step forward towards compliance with core labour standards, and helped improve safety and protection at work, hygiene, health, remuneration and leave arrangements. Activities focused on providing various actors with information and suggestions, based on positive examples, as to how corporate social standards could be improved cost-effectively, and which positive secondary impacts (quality, marketing) might thereby be achieved. Despite the very different standpoints, the conference succeeded in bringing all actors to the table, generating mutual understanding and initiating concrete improvements.

• Awareness raising among development cooperation organisations and their staff: to integrate the instrument of social and ecological standards into development policy strategies, development cooperation staff will require training. The Programme Office for Social and Ecological Standards offers units for both GTZ Head Office and field staff members, and for development cooperation staff undergoing preparation in Germany for an assignment overseas. To influence development policy, which sets the frameworks for development cooperation staff, advisory services are being delivered to BMZ on how the instrument can be integrated into the aforementioned strategy papers. As regards international policy, position papers for the integration of social and ecological standards are being drafted and discussed within international organisations such as the WTO.

• Awareness raising of partner governments at government negotiations: governments of other countries are key partner organisations for TC. Concrete activities of TC in this context include training for sustainable development and sustainability strategies. Secondly, if BMZ receives the appropriate advisory services, then the theme can be integrated more closely into government negotiations.

Support in Standard Setting for Sustainable Development

A single stick can break easily, if there is only one. But if there are many, they will not break so easily.

(Chinese proverb)

This proverb emphasises the importance of consensus. The setting of standards which – as described in Section 4.3 – should be a participatory and consensual process, is a relatively novel approach for quite a few private sector and state actors. Inadequate methodological expertise and experience with such processes, as well as a habit of top-down managerial decision-making, explain why these often arduous and long-winded processes in which all relevant stakeholders are involved can provoke resistance or even alienation. Due to its many years of experience with participatory methods, and its positive experiences as to why a consensus among different interest groups is desirable and helpful, TC can play a


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supporting role that enables the individual groups of actors to embrace such a process. Activity areas that arise in such a process include:

• Support of standards initiatives: the support of standards initiatives through financial or human resource inputs to help establish and develop participatory structures and rules is designed to provide the initial impetus to launch such processes. For instance, national FSC working groups established to formulate national standards are being supported.

• Support in the design of corporate codes of conduct: the willingness of commercial enterprises to commit to socially and ecologically sound behaviour is not in itself sufficient to guarantee an effective contribution towards sustainable development. Words must be followed by deeds, and not just lip service in the company PR materials. The key question is which standards are appropriate to the specific circumstances that prevail within the enterprise, and would allow economically efficient production. This issue is currently being developed in a living document of the Round Table on Codes of Conduct. Various codes are being reviewed to ascertain their effectiveness and efficiency. Furthermore, the Programme Office for Social and Ecological Standards also offers enterprises consultancy services on various standards systems that might then serve as a basis for a corporate code.

Analyses of actors that identify the key actors also help promote participation. These analyses are an integral component of project appraisals, for instance. The country-specific expertise and neutrality of development cooperation personnel are highly advantageous in preventing discriminatory methods of selection.

• Promotion of studies: the analysis and documentation of good practices in the design and implementation of social and ecological standards offers a good and sound basis on which to continuously improve standards initiatives. Studies have been supported for instance on the role of participation in standard setting, on various forms of verification, and on the impacts of certification.

Building and Promoting Strategic Alliances

It has been emphasised more than once that sustainable development can only be achieved if the private sector is also committed to making it a reality. Private enterprises invest in developing countries by acquiring plant, and transferring expertise and modern technologies. They contribute to economic development, and thus help directly reduce poverty. In doing so, enterprises develop a growing interest in improving health and social provision for their workforce, in environmental protection, and in fair trade. Since these concerns are also shared by development cooperation, broad scope is created here for cooperation between the private sector, civil society, the state and Technical Cooperation. Improved cooperation can lead to more responsible resource management, to more rapid dissemination of innovations, and to a reduction in transaction costs. Public-private partnerships (PPPs) are projects which both serve the business interests of the German or national enterprise, and generate development policy benefits. The self-interest of these enterprises – the desire to turn their investments into long-term economic success – is conducive to these enterprises pouring their own resources of capital and expertise into "their" project, and assuming ownership of it. The Programme Office for Social and Ecological Standards supports and facilitates such strategic alliances from their identification phase through to their first activities, and evaluates initial experiences.


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• The initiation and promotion of strategic alliances between state, private sector and civil society actors is designed to facilitate the process of negotiation between different interest groups. Here, TC plays an observing, monitoring or moderating role, as with the joint definition of quality criteria for Codes of Conduct at the Round Table. The Round Table, which is led by BMZ and organised by GTZ, "[...] aims to improve the implementation of labour and social standards in developing countries through corporate codes of conduct. To this end, the participating groups of the Round Table seek to develop a joint understanding of how voluntary Codes of Conduct can be introduced and implemented effectively, transparently and on a participatory basis (cf. RUNDER TISCH

VERHALTENSKODIZES 2003). The Programme Office also offers advisory services to the GTZ coffee sector project, whose aim is to develop, jointly with coffee sector enterprises, NGOs and producers, basic standards for the entire sector.

• Public-private partnerships for development: in PPP projects, representatives of TC utilise their country-specific and sectoral expertise and play a key advisory role. They also perform an important reputation-enhancing function, linking the actors along the chain of custody. This includes making sure that, within the scope of cooperative arrangements, asymmetrical power relations are not used to assert particular interests. In other words they perform a mediating and monitoring role, by acting to help ensure that the agreements made are kept. Having said that, this monitoring function should not be confused with the monitoring or verification of compliance with standards. Since advisory services on the implementation of standards, and compliance verification, cannot be performed by the same organisation, GTZ staff members came to the conclusion at an expert meeting that monitoring cannot be a core task of TC. On the other hand, the moderating and mediating function is a kind of monitoring mechanism for the process. Here, the focus is on the extent to which agreements between actors are being broken or exploited by particular interests due to incomplete and asymmetrical information distribution. It is a task of TC to create social capital in order to place institutional constraints on power imbalances so that, as BARTMANN (1999: 6) rather provocatively puts it, "negotiated solutions" do not turn into "fine weather events".


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Supporting the Implementation of Standards

Since the history of the introduction of social and ecological standards is still a young one, enterprises usually have no experience of implementing these standards. The Programme Office for Social and Ecological Standards has already gained some experience, and is able to process and transfer that experience on a context and enterprise-specific basis. In the long term, it is planned to enable local advisory and consultancy agencies to transfer that knowledge.

• Professional facilitation of pilot projects: thanks to the multisectoral approach of the Programme Office, enterprises can be advised as to which standards initiatives might generate synergy effects. The Faber Castell company for instance not only implements the ILO core labour standards, but has also converted its production operations to FSC-certified raw materials. As the AVE (foreign trade association of German retailers) project demonstrates, the Programme Office can advise enterprises on how to deal with the difficulty created by the fact that the entire chain of custody must be subjected to standards. Here too, experiences gained in the forest certification component provide helpful insights and stimulating ideas for developing effective and efficient procedures.

• Designing guidelines and training materials: in its projects, GTZ supports the conversion of cooperatives, farms and enterprises to sustainable production. Particularly in the case of conversion to organic agriculture, farms lack knowledge of the fundamentals, and of the practical application of production methods. To remedy this, experiences from numerous GTZ projects – for instance involving sustainable agricultural soil management or integrated pest control - can be utilised. In organic agriculture, the need for extension inputs is especially high during the conversion period. Consequently, producer cooperatives often have their own "promoters" trained, who then deliver extension services to smallholders on the ground on cropping and quality issues. The GTZ-commissioned cropping guidelines prepared by Naturland for 18 major tropical and subtropical crops provide concrete guidance on how to begin organic crop farming. The training modules provide an overview of the principles of organic agriculture in the tropics and subtropics. Extensive training materials have also been developed for forest certification, and utilised internationally in workshops.

• Training: the training courses on offer are designed particularly for multipliers. To institutionalise expertise, an economically viable extension and consultancy system must be implemented, as access to (low-cost) information is often an insurmountable problem for small enterprises in particular. This problem should be alleviated by introducing an operational, countrywide extension or consultancy system.

Supporting the Commercialisation of Standards

Although numerous ideas exist for commercialisation strategies for standards (cf. Section 4.3), most commercialisation experiences to date involve quality labelling to increase value added. Activity areas in which TC promotes commercialisation include:

• Management of contacts between actors in the chain of custody: conversion to sustainable production can only become a commercial option for an enterprise if and when a market and distribution channels exist for the product in question. An improved information flow and trust between market participants can lead to economic activities that without the existence of social capital would not be implemented, due to the higher


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information and monitoring costs. Since the transaction costs for new market contacts, especially in specific markets such as those for certified products, are relatively high, TC can help reduce costs through appropriate contact management. It is therefore very important for TC to identify existing social capital, and promote synergy effects between the state, the private sector and civil society organisations, e.g. in the supply of public goods. TC can act as a link between actors in the chain of custody, by working within information networks, such as the green trade net, to help enable small producers in particular gain access to information on sector and product-specific business contacts and market activities, free of charge (www.green-tradenet.de). Until 1998, for instance, GTZ's ProTrade project promoted the sales fair for organic products in the capital of Costa Rica, and still invites producers to the world-famous "Bio-fach" fair in Germany.

• Marketing consultancy: what price will I get for my product, and is it worth switching to sustainable production? These are questions often put by enterprises interested in conversion. Inadequate access to information on world market prices and complicated cost accounting systems make it difficult for small farmers in particular to develop and pursue a clear marketing strategy. There are plans to change the terms of trade to the benefit of producers and enterprises, through information and consultancy projects on measures to raise quality and increase the share of value added, or to develop market strategies. If producers and exporters in developing countries can be successfully enabled to comply with the social and ecological standards of the industrialised countries, their export opportunities will be improved. TC supports producers and enterprises in reducing the initial risks associated with conversion, by performing market studies, and assuring financial services for the market launch of new certified products. Yet the orientation is by no means confined to export markets. Marketing strategies at the national level with corresponding product ranges, as well as wholesale and retail structures, are also being promoted.

Establishing Consulting, Monitoring and Service Organisations

The key constraint to the application of standards is the relatively high costs of compliance verification. To reduce these costs, occasional injections of financing are required, as are the establishment of local structures and training opportunities for inspectors.

• Assumption of certification costs: in organic agriculture in particular, where producers do not obtain higher prices during the conversion phase, but do have to live with the risk of reduced yields, the costs of certification are indeed steep. Support to help finance these costs during the conversion phase reduces the risk borne by those producers who have opted for this sustainable mode of production.

• The establishment of local standards institutions occurs for instance via the support of local monitoring agencies for certification pursuant to EU Ordinance 2091/92, or via the setting up of national FSC working groups for forest certification.

• Training of inspectors: in Chapter 4 the weak point of inadequate human capacities, or more specifically the shortage of local inspectors, was identified as a constraint to the efficient use of the instrument of standards. Now that FLO, with GTZ support, has explored the potentials of a textile label, and on that basis developed the corresponding


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criteria, a next step will be the training of inspectors who will verify compliance with the criteria within enterprises, and thus guarantee conformity with the label standards.

If an enterprise is to maintain credibility, then as well as pursuing numerous activities with state, private sector and civil society actors, it will also need to make corresponding changes to its own structures.

5.1.3. Setting an Example: Standards within GTZ

"A woman approaches Mahatma Gandhi and says: 'Please stop my son from eating too much sugar.’ Gandhi replies: 'Come back in two weeks'. When the woman asks after 14 days why he did not wish to grant her request, Gandhi replies: 'Because your request made me realise that I eat too much sugar myself. So first of all I had to make do with less sugar myself. Only now can I speak to your son.'"

This example clearly demonstrates the need for coherence between a person's own behaviour, the goals they themselves (claim to) pursue, and the goals they advise others to pursue. Without this coherence there is a lack of credibility, which is a basic prerequisite for effective cooperation with partners. This means that development cooperation organisations should themselves comply with the principles of sustainable development that they recommend to their partners. At GTZ, this is reflected in the debates on the following themes:

• Public contracting: especially where public contracts are awarded within the scope of development cooperation financing, standards that reflect social and ecological goals must be set and complied with. Since respect for core labour standards is a major problem in many developing countries, for instance, and compliance with the respective conventions ratified by some countries is not guaranteed, a report is planned to establish whether and to what extent the institutionalisation of the call for compliance with core labour standards in the instruments of bilateral development cooperation is possible, feasible and appropriate.

• Training of staff: activities in this category include the sensitisation of consultants to also assess whether standards are being violated within projects. Failure to comply with standards in projects, whether it involves the payment of sub-standard wages to local staff, or action that conflicts with international conventions, must have appropriate consequences.

• Principles of conduct: GTZ's principles of conduct include the principle of integrity, which provides guidance for action to prevent corruption, or our HIV/Aids policy.

5.2 Conclusion

TC can support the use of standards as instruments of sustainable development by performing a number of different roles and functions in a variety of activity areas. It is crucial in this context that individual measures should not be undertaken on an unsystematic basis, but should be implemented programmatically, and coordinated at the various levels with the respective actors. Bilateral political dialogue and heterogeneous sectoral TC measures to support the development and application of social and ecological standards in various sectors of the economy must be more closely harmonised. In this context, the entire process – from awareness raising through to impact monitoring – must be borne in mind. In other words, support should not be confined to awareness raising, but should also be extended to


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include monitoring and evaluation of the impacts of standards initiatives. Attention should also be focused on sector-wide standards, in order to reinforce the structural impacts and reduce the risk of competitive disadvantages.

There are a sufficient number of points of departure for appropriate interventions. First experiences are also available with possible types of intervention. To address these tasks, development cooperation staff will require technical and methodological expertise.

An awareness of the fact that sustainable development is a path now demands a high degree of flexibility, combined with a firm commitment to basic values, as well as a strong motivation to undergo arduous processes, without losing stamina and compromising too soon. It also means occasionally calling one's own perceptions into question, and acknowledging, as D. MEADOWS puts it so succinctly, that: "sustainable development is not a point that we can or cannot reach. It should rather be compared to a long journey. To feel safe on that journey, we must learn to travel together, and deal with surprises along the way. We must learn to constantly review our mental models. Above all, we need a clear idea of where we are going."


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CHAHOUD, T. (1998): Handel und Umwelt: Förderung umweltfreundlicher Prozess- und Produktionsverfahren in Entwicklungsländern; Deutsches Institut für Entwicklungspolitik 12/1998, Berlin

CONROY, M. (2001): Can Advocacy-led Certification System Transform Global Corporate Practices? Evidence and Some Theory. Political Economy Research Institute (PERI), University of Massachusetts, Boston

DEUTSCHE BUNDESSTIFTUNG UMWELT (2001): Konzeptionelle Überlegungen zu Begriff und Praxis Nachhaltigen Wirtschaftens: Nachhaltigkeit als Lernfähigkeit; Zwischenbericht eines Forschungsprojektes der Deutschen Bundesstiftung Umwelt. http://www.officecologne.de/zebis/projekt/material/zwischenbericht_kap2.pdf; Stand 10/2002

DEUTSCHER BUNDESTAG (1998): Konzept Nachhaltigkeit. Vom Leitbild zur Umsetzung. Abschlußbericht der Enquete-Kommission ”Schutz de Menschen und der Umwelt- Ziele und Rahmenbedingungen einer nachhaltig zukunftsverträglichen Entwicklung” des 13. Deutschen Bundestages, Bonn

References

119

GRAY, I et al. (2002): Modular Implementation and Verification (MIV). A tool for phased application of forest management standards and certification. Discussion draft 1.1 November 2002. www.proforest.net

ISO/IEC (1991): ISO/IEC Guide 2- General terms and their definitions concerning standardisation and related activities, Geneva

ISO/IEC (1996a): ISO/IEC Guide 61- General requirements for assessment and accreditation of certification/registration bodies, Geneva

ISO/IEC (1996b): ISO/IEC Guide 62- General requirements for bodies operating assessment and certification/registration of quality systems, Geneva

ISO/IEC (1996c): ISO/IEC Guide 65- General requirements for bodies operating product certification systems, Geneva

LANDMANN, U. (1999): Nationale Nachhaltigkeitssiegel im Zuge der Globalisierung von Wirt-schafts-, Umwelt- und Sozialpolitik Analyse und Perspektiven von Nachhaltigkeitssiegel-programmen mit ergänzender Untersuchung von ethischen Warenzeichen; Dissertation ein-gereicht beim Fachbereich Politische Wissenschaft der Freien Universität Berlin

NUSSBAUM, R. et al. (2001): Assessing Forest Certification Schemes: A Review Draft. http://www.proforest.net

VALLEJO, N. / HAUSELMANN, P. (2000): Institutional Requirements for Forest Certification. A Manual for Stakeholders. GTZ, Forest Certification Project Working Paper 2, Eschborn

WINDFUHR, M. (1999): Durchsetzung sozialer und ökologischer Standards im Welthandel - Ökologisches und soziales Labelling. In: GTZ-Reader: Soziale und ökologische Standards, Frankfurt a.M.

Chapter 5:

BARTMANN, H. (1999): Kooperationslösungen aus umweltökonomischer Sicht; Beiträge zur Wirtschaftsforschung Nr. 61; Johannes Gutenberg-Universität Mainz; Frankfurt a.M.


BRAUN, v. J. et al. (2000): Zukunft der Entwicklungszusammenarbeit - Diskussionspapier des Zentrums für Entwicklungsforschung, Nr. 24, Bonn

BUNDESREGIERUNG (2002): Perspektiven für Deutschland - Unsere Nachhaltigkeitsstrategie, Bonn

DEUTSCHER BUNDESTAG (2000): „Globalisierung der Weltwirtschaft“ - AU 14/35 - Vortrags-begleitende Unterlagen des BMZ für die Anhörung der Enquete-Kommission „Globalisierung der Weltwirtschaft - Herausforderungen und Antworten“ am 06.11.2000 zum Thema „Globale Ressourcen“ auf Grundlage der das BMZ betreffenden orientierenden Fragestellungen der Enquete Kommission (23.10.2000)


120

EBERLEI, W. (2001): Nachhaltige Entwicklung der Beitrag der deutschen Entwicklungs-zusammenarbeit; In: Deutsche Welthungerhilfe / terre des hommes Deutschland (Hrsg.) Die Wirklichkeit der Entwicklungshilfe; Bericht 2000/2001. Eine kritische Bestandsaufnahme der Deutschen Entwicklungspolitik. Bonn/Osnabrück

HAUCHLER, I. et al. (eds) (2001): Globale Trends 2002, Stiftung Frieden und Entwicklung, Sonderauflage für die Bundeszentrale für politische Bildung, Frankfurt a. M.

MERTENS, J. (2001): Die Zukunft der Entwicklungsfinanzierung; In: Heinrich-Böll-Stiftung (Hrsg.) (2001): Entwicklungspolitik als internationale Strukturpolitik - Dokumentation des Ersten entwicklungspolitischen Forums der Heinrich-Böll-Stiftung am 19./20. Mai 2000 in Berlin, Berlin

NUSCHELER, F. (1995): Soziale Menschenrechte und Entwicklungspolitik :Worum geht es beim Kopenhagener Sozialgipfel? http://www.fes.de/interntl/humanr/pub_UN95/nusch.html; Stand 07-06-03 Neubau der internationalen Finanzarchitektur

RUNDER TISCH VERHALTENSKODIZIES (2003); http://www.coc-runder-tisch.de/rundertisch/frame_rt.htm; Stand 03/2003

URGEWALD (2003): http://www.urgewald.de/kampagnen/hermes/index.htm; Stand 03/2003

WINDFUHR, M. (2002): Sozialstandards in der Technischen Zusammenarbeit; Publikation des Programmbbüros Sozial- und Ökostandards, GTZ, Eschborn

References

121

Publications of the Programme Office for Social and Ecological Standards (available)

ECO´92: Different visions (2002). University of Peace; Earth Council; IICA; GTZ; OmCED. 2ed. San José, Costa Rica

ECO´92: Visiones Diferentes (2002). Universidad para la Paz; Consejo de la Tierra; GTZ; IICA; OmCed. 2 ed. San José, Costa Rica

Social Labelling and Codes of Conduct Component:

WINDFUHR, M. (2002): Sozialstandards in der Technischen Zusammenarbeit. GTZ, Eschborn

REICHERT, T. (2002): Sozialstandards in der Weltwirtschaft. GTZ, Eschborn

Forest Certification Component:

GTZ (1998): Forest Certification: Status Report and Overview. GTZ-Forest Certification Project Working Paper 1, February 1998

VALLEJO, N./ HAUSELMANN, P. (2000): Institutional Requirements for Forest Certification. A Manual for Stakeholders. GTZ-Forest Certification Project Working Paper 2, Eschborn

POSCHEN, P. (2000): Social Criteria and Indicators for Sustainable Forest Management. International Labour Office/GTZ-Forest Certification Project Working Paper 3, Eschborn

POSCHEN, P. (2000): Criteria e indicadores sociales para el manejo forestal sostenible. Una guaia para los textos de la OIT. Oficina Internacional del Trabajo/GTZ-Proyecto Certificación Forestal Documento del Trabajo 3, Eschborn

POSCHEN, P. (2000): Critères et indicateurs sociaux pour une gestion durable des forêts. Un guide pour l’exploitation des textes de l’OIT. Bureau International du Travail/GTZ-Projet Certification Forestière. Document de Travail 3, Eschborn

APPANAH, S./ KLEINE, M. (2000): Auditing of Sustainable Forest Management. A Practical Guide for Developing Local Auditing Systems Based on ITTO's Criteria and Indicators. GTZ- Forest Certification Project. Working Paper 4, Eschborn

KREBS, K./ GREINER-MANN, V. (2001): Forest Certification. A Brief Introduction for Stake-holders. GTZ, Eschborn

KREBS, K./ GREINER-MANN, V. (2001): Certification forestière. Une brève introduction pour tous les acteurs concernès. GTZ, Eschborn

KREBS, K./ GREINER-MANN, V. (2001): Certificação Florestal. Uma breve introdução. GTZ, Eschborn

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