The Essay Part 1: Which label? An introduction

Businesses embraced ethical labels as soon as they realised that many of us are inclined to look favourably on a product if it purports to meet higher environmental or ethical standards.

Indeed, they were embraced so enthusiastically that some firms ended up using marks which lacked credibility or rigour, were downright confusing, or sometimes wholly bogus. Against this backdrop, FSC, IFOAM, Fairtrade, and MSC came together in the late 90s. They sought to determine whether, through collaboration, they could ensure their marks remained as robust as possible, and be differentiated as such. What followed was the creation of the ISEAL Alliance in 2002, the global membership association for sustainability standards.

All the labels and marks profiled in this article, and many businesses which use them, came together in July this year to explore best business practice in the use of social and environmental marks and labels. Amy Jackson, Senior Credibility Manager at ISEAL presented some of the work they do, including a recently launched Challenge the Label campaign and tool.

ISEAL have created Credibility Principles: sustainability, improvement, relevance, rigour, engagement, impartiality, transparency, accessibility, truthfulness and efficiency. Further details of these, a range of excellent videos introducing their work and comprehensive best practices guidelines for mark owners are available on their website. There was general agreement at our meeting that the labels we wanted to create, use and see succeed had to be credible and fit for purpose and, ideally, run in accordance with ISEAL guidelines.

There can be little doubt that a mark or label which relates to a credible, robust, meaningful certification is superior to one that does not. Nonetheless, as I will seek to explain, even the best labels can be used to thwart progress towards a sustainable future.

Businesses in the meeting included Harriet Kelsall Bespoke Jewellery, KYOCERA Document Solutions (UK), Matter&Co, Neal’s Yard Remedies, Odylique, Seacourt, and The Crowd. These are companies which, between them, use dozens of sustainability labels. We heard from each of them about their experiences, what they do in respect of labelling and why.

Neal’s Yard Remedies explained that while it pursues organic certification for all of its product range where organic certification is available, the tactics of other businesses led to confusion. It has a long standing relationship with the Soil Association whose mark is one of the best recognised and respected in the UK. Despite this commitment to organic and to rigorous certification, Neal’s Yard Remedies cannot prevent competitors from promoting themselves as organic brands yet only certifying a very small fraction of their product ranges as such. Despite the advent of best guidelines from ISEAL, we are still bombarded with dodgy claims and businesses both willing and able to adopt various tactics to sew confusion amongst consumers.

On getting together on almost twenty separate occasions we have brought a wide range of different businesses and stakeholders into a room to attempt to identify and agree good, better and best practice standards. Labelling has been by far the most challenging topic on which we have done that. Nonetheless, in the course of the discussion, and in a number of bilateral conversations since, a classification of sorts has begun to emerge for this topic.

Poor practice is using labels or marks which are not credible, nor fit for purpose, and which the consumer is or may be confused or misled by. Okay practice is an ad hoc approach to labelling and/or very limited use of robust marks, or providing justification for why no labelling is undertaken. Good practice is using various robust labels and avoiding doing anything which may confuse the consumer. Excellent practice adds to good in that the business communicates which choices it make in terms of which labels it adopts, and which it does not, stating the reasons. Please note, this is only a summary of our developing scorecard and how far it has developed at the time of writing. The development process is ongoing and open to all, as with all our questions. If you would like to add your views, please click here.

I am grateful to the other labelling schemes for being involved in the discussion and in agreeing to be profiled for this article. We suggested they filled out six sections, in 50 words or less as shown, to enable the reader to easily compare and assess what we all have in common and how and where we differ. This has also been enormously helpful to me. Time again, in helping to write the first draft of our labels and certifications question, in organising and chairing July’s roundtable meeting, and in writing this article, I have questioned if and how labels are part of the problem, if and how they are part of the solution, and if and how Responsible 100 measures up.

The business model underpinning the scheme is important, especially given some companies have told us they have been approached by labels that seem to offer higher ethical ratings if they pay a premium rate. Such conflicts of interest clearly erode credibility. But as my colleagues and I are acutely aware, you cannot get far without adequate financial resources. Without sufficient income, no scheme will properly deliver on the promises it seeks to make to the businesses it certifies, their consumers or the interest groups, environmental causes and/or social issues it seeks to promote. This stated, seeking that income in an inappropriate way can destroy credibility and thus the value of your mark in no time at all.

How much do we have to pay? Companies asked us to include fee information in the profiles. Fairness and affordability matter when it comes to costs, irrespective of whether a business as a whole is certified or whether it is some of its products or sourced ingredients only. One smaller business told us that larger firms got preferential treatment from certain labelling scheme because of their deeper pockets. Cost certainly limits the number of schemes smaller firms can join, but even the biggest companies are limited by budget and time constraints. Cost of carrying the mark, and time spent in meeting the requirements, need to align with value to the business. Label owners let that get out of balance at their peril.

The “successes to date” section enables comparison by the numbers and a means to highlight those, like the Fairtrade Mark, which have wholly entered the mainstream. “Problem(s) addressed” I hope provides a useful, alternative perspective to the others.

This point of the story marks a milestone in Responsible 100’s journey. Thirteen and a half years into this, you would be hard pressed to find someone more enthusiastic about the ability of the consumer to drive up ethical standards in business. All the schemes profiled seek to address incredibly important problems. We are all kindred spirits. However, having done all this work, having compiled these profiles and having stepped back for a while, it is obvious to me that labels can be very much part of the problem. They can not only fail to take us forward, they can actually take us in the wrong direction.

The challenges facing people and planet are enormous and require that businesses step up and own them

Partners Blend coffee still serves as the best example to illustrate my points. Ten years ago I wrote an article for this magazine’s predecessor about the unexpected launch of a Fairtrade certified coffee from food giant Nestlé. It was called ‘A Wolf in Sheep’s Clothing’ and can be found on the Profit through Ethics website.

By launching Partners Blend, Nestlé joined the Fairtrade family. It was able to wrap itself in an ethical veil and boast about its support for trading fairly and for paying a fair price to growers. However, it only made the tiniest of changes to its operations. Indeed, the article prompted the following response from Rodney North of Equal Exchange, a Fairtrade pioneer in USA, who illuminated just how little Nestlé had effectively done: "The small scale farmers in the Fairtrade system are very unlikely to harvest more than 2,000 pounds of coffee a year. Nestlé says it is working with 200 farmers. In the unlikely event that Nestlé is buying 100% of these farmers' crops, that is still only 400,000 pounds at the very most. That equals less than 0.03% of Nestlé’s annual global coffee purchases."

Ever since, I have been asking whether “paying a fair price to growers in developing nations” is a legitimate claim if we are only talking about three growers in every 10,000. One assumes the other 9,997 continue to suffer under the unjust, unfair, unsustainable, exploitative buyer-seller relationships which, some 40 years ago, prompted the creation of fair trade in the first place some.

The “you have to start somewhere” argument is a reasonable response, but only if a tiny fraction converted to fair trade is a start and there are meaningful targets going forward, especially for businesses such as this one. Might Nestlé have been required to set targets to convert to 1%, 2% or 5% fair trade, after a year, or after ten years? Was it? Did it? Surely it would have wanted to in order to address the accusations of greenwash it attracted.

All the labels profiled for this article have been responsible for many positive impacts. Not least by raising important issues up the consumer, political and business agendas, and shifting public expectations as to what is acceptable. Fairtrade deserves particular credit for this. But, we must be honest with ourselves, ethical labelling, like corporate social responsibility (CSR), can be used to perpetuate the problems they were conceived to alleviate.

The challenges facing people and planet are enormous and require that businesses step up and own them. Responsible 100 identifies three humdingers. Firstly, that we have created a market system, which while extraordinarily brilliant in many ways, fiercely promotes irresponsible behaviour. 

Consider these four truths:

1. It is often legal to offload costs onto the environment, for example by depleting or downgrading precious natural resources such as soil and water or by emitting greenhouse gases;
2. It is often legal to offload costs onto society, for example by forcing employees onto zero hour contracts or going to extraordinary lengths to prevent governments from collecting fair tax revenue;
3. It is not only legal but often the fastest, surest way to profit to offload costs and exploit stakeholders in these ways; and
4. Less scrupulous competitors are always ready to step in and steal market share from firms that are reticent to operate in these ways.

Consider, then, the inevitable consequence: companies are subject to massive pressure to compete with each other in a “race to the bottom”.

Secondly, our collective response is akin to denial. Doing a little bit of good here and there falls a long way short of being net positive as a business. Ethical labelling and “doing CSR” has boomed in recent decades yet, at the same time, we seem to have travelled in the wrong direction, and at what often feels like an increasing rate. It is understandable that businesses want to present their best side. That they prefer to provide a good news story, highlighting their charitable acts, support for community groups or progress in promoting greater diversity in the workforce, for example. While practices such as these, and countless others, do have tangible, positive impacts, they are often dwarfed by the magnitude of the negative impacts from other parts of the business or its operation.

Doing a little bit of good, here and there, while continuing to have a huge net negative impact on people and planet has become normalised business behaviour. Yet it is the antithesis of sustainability.

Thirdly, public trust in business has collapsed. Many people firmly believe the only reason businesses talk about being ethical, sustainable, responsible, values-driven, on our side and part of the solution, etcetera, is to disguise and distract from the unfair, unsustainable, exploitative practices that predominate, in an attempt to maintain their precious social licence to operate, so they can simply carry on being “net negative” into the future. A lack of trust in business is everyone’s problem because it leads people to think that all businesses are the same and, as individuals, we are powerless to effect change. When apathy reigns, we cannot identify and reward genuinely good businesses as none appear to exist. As such, we cannot create the vital incentives and economic drivers we need. Distrust breeds cynicism and apathy where we need belief, motivation and empowerment.

These three problems are grave and interlinked. And they combine in what, for us, is the daddy of all the problems: responsibility does not drive profitability and irresponsible behaviours do not automatically erode it. 

At least not yet. The good news is that we do now have real choices. There are now businesses which want to share ownership of these mighty problems and do everything they can to be part of the solution. Further, they are the very businesses most of us wish to see succeed.

I believe we are finally entering an age when all companies will be forced to take a moral position. You have to stand for something. When some successful businesses accept a moral duty to create and be part of a better business for a better world, those which resist following suit diminish their licence to operate.

Responsible 100 requires that a specific set of requirements are met for businesses to join. But, in addition, we seek a general commitment from each business to tell the truth about how it operates, right across its organisation; to take ownership of the huge global challenges we face and fully commit to work towards their solution; to minimise its negative impacts, and maximise its positive impacts, as fast and far across its operations as possible. In short, to leave people in no doubt. A business is either doing all it can to help bring about a fair, peaceful and sustainable future – while delivering the goods and services we need at the right price and quality – or it is not.

These are the moral positions I would ask any certifier or labelling scheme to seek from a business from which it receives an application or renewal request. Indeed, these are the morals I would ask certifying organisations themselves to commit to. Focusing on doing a little bit of good in respect of the thing right in front of you is not enough. This is especially so if it results in bad bubbling up elsewhere, or requires turning a blind eye to unfair, unsustainable or exploitative practices and business models where there is no appetite or impetus to change.

Whether communicated through labelling, CSR or expressive dance, if you encounter a business presenting evidence of how ethical or responsible it is, offer congratulations and praise. Then ask if this is a one off, relevant to only one part of the business or its operations, or whether such behaviour is exhibited right across the organisation. Businesses can benefit themselves, and everyone else, by reaching much higher. All that is needed is the growing public expectation that they choose to compete in a race to the top instead of the race to the bottom.

To read part two of The Essay: Which Label? please click here.

This article was originally published in Pioneers Post Quarterly, the printed edition of this magazine. To find out more about PPQ, including how to subscribe, click here.

Photo credit: Dave Crosby