Who’s the Referee? Private Standards Initiatives in Agri-food Chains

1. Who’s the Referee? Private Standards Initiatives in Agri-food Chains Anne Tallontire Natural Resource and Ethical Trade Programme Natural Resources Institute a.m.tallontire@gre.ac.uk Beyond CSR: Business Poverty and Social Justice 22 May 2006

2. Overview • Background • Private standards initiatives (PSIs) • Concerns • Theories and concepts • Initial framework • Conclusions and where next?

3. PSIs in Agri-food Chains • Proliferation of private standards • Food scares and other consumer concerns • Growing influence of supermarket supply chain models • Changing governance of agri-food • Quality and ‘sustainability’ standards part of competition in tough retail markets become de facto conditions of market entry

4. Categorisation of Private Standards • Company Examples: Tesco, Body Shop, Cadbury • Collective • Industry • Multi-stakeholder Examples: ETI, SAI, FSC, MSC, IFOAM, EUREP GAP, Utz Kapeh, FLO • South • EUREP GAP benchmarked codes & bodies, • e.g. Kenya GAP, Chile GAP • Labour codes of practice initiatives • Wine Industry Ethical Trade Association, WIETA (South Africa) • Horticulture Ethical Business Initiative, HEBI (Kenya) • Agricultural Ethics and Accreditation Association of Zimbabwe, AEAAZ

5. Enthusiasm for Southern PSIs • Why ? • Opportunity for southern voice in northern driven standards • Responsible competitiveness • Lowering cost of compliance • By-pass government (structures and rent-seeking) • But several issues • Who pays for regulation? Costs pushed down the supply chain • Who is included and excluded from norm setting and regulating? • In sum, what are the implications for governance?

6. Implications for the State? • Are they a useful complement to the regulation established and implemented by state bodies? • They may be more effective and efficient than state bodies, having greater capacity and resources • Do they supplant and over-ride state bodies that ‘ought’ to take responsibility for regulation? • Are there opportunities for creative synergies between private and public standards development, inspection and sanctions systems?

7. Concerns in Literature • Stakeholder relations in PSIs • Power relations rarely acknowledged • Institutional change and displacement • Inter-governmental and governmental regulation • Traditional social partners • Rent capture, barriers to the market, exclusion and marginalisation

8. Governance in PSIs:Needs of Framework • North-South chain dimension • Understanding standards with respect to governance • Clarification of dimensions of governance in state-society relations • Questioning of the universality of northern-dominated (CSR) standards and approaches • Richness and reach

9. Theories Used Convention analysis: Norm setting; spheres of influence Value chain analysis: Chain governance Governance Regulation: Theoretical approaches Regulation: Policy analysis

10. Value Chain Analysis • Chain governance: buyer driven chains • Institutional dimensions of chains • Limitations: • Concept of governance not broad enough • It has a predominantly vertical focus • Limited ability to explain standards • Gibbon and Ponte (2005) note that some forms of GVC analysis imply that value chains operate in ‘an institutional and regulatory vacuum’, separate from international trade policy and the values and views of society, including consumers

11. Convention Analysis • Focus on written and unwritten norms that govern behaviour • Emphasis on networks • Distinguish between different ‘worlds’ and corresponding norms/ co-ordinating principles • Market - competitiveness • Industrial - productivity • Civic -welfare • Domestic -loyalty And more….. • Limitations • Ever expanding categorisation of ‘worlds’ • Power rarely acknowledged • Difficult to apply empirically • Some discussion of ‘worlds’ seems over-drawn

12. Combining GVC and Convention Analysis • Adding conventions to GVC • Understanding standards in value chains • Broadens analysis to networks as well as chains • Adding GVC to conventions • Power dimensions • Is this sufficient? Also need to draw on regulation theory

13. Regulation Approaches • Policy oriented analysis – including lessons from CSR • Theoretical discussions on governance, especially in context of (new) political economy • Broadly concerned with process by which power is exercised • Relations between state, civil society and private sector

14. Policy Issues • Effectiveness of ‘voluntary’ approaches • Lack of common interpretation • Are there credible disclosure requirements and oversight mechanisms and sanctions for non-compliance? • Opportunities for free-riders • Do they ensure performance as well as process? • Bias towards larger firms; tendency to create barriers to entry • Range of stakeholders included and legitimacy • Engagement in the south • Accountability • Assumptions • Universality • Nature and capacity of civil society

15. Governance principles Participation Fairness Decency Accountability Transparency Efficiency Political arenas Civil society Political society Government Bureaucracy Economic society Judiciary ODI (2006) Governance Principles and Political Arenas

16. Governance and PSIs • Different conceptions of governance • GVC: chain governance • Convention analysis: governance is all about the way in which norms, including unwritten rules and understandings affect behaviour, i.e. ‘conventions’ condition behaviour. • Regulatory theory/ policy: nature of rules that regulate the public realm • How to bridge the gap?

17. Governance Implications of PSIs in Agri-food Chains Governance Implications Legislative • Participation • Fairness • Decency • Accountability • Transparency • Efficiency Judicial Executive Private Standards Initiative Global Value Chain Government (and intergovernmental organisations) Civil Society (local and national)

18. Mapping the evolution of standards and initiatives and their application with respect to: Legislative, executive and judicial (chain) governance State-society governance principles Analysis of change over time (before and after initiative) Participation Across sectors Along chains Where next? Case Study approach: Comparative analysis of PSIs with Southern body using the framework

19. Governance of Agri-food and the State • PSIs have emerged in context of limited state regulation in response to asymmetrical value chain driven concerns • Proposals to bring PSIs and state regulatory institutions closer together, largely in interests of efficiency • Too hasty – PSIs especially in a southern context are not tested • May have poorer governance outcomes than state-led processes

20. Selected References Bendell, Jem (2005) In whose name? The accountability of corporate social responsibility. Development in Practice. 15(3-4) 2005 June, 362-374 Blowfield, M. (2005) Corporate Social Responsibility: reinventing the meaning of development? International Affairs 81, 3: 515-524 Braun, R. and Gerhart, J. (2005) Who should code your conduct? Labor Unions and NGO differences in the fight for workers’ rights, in Eade, D. and Leather, A. (eds) (2005) Development NGOs and Labor Unions; terms of engagement, Bloomfield CT :Kumarian Press Cordova, C. and Webb, K. (2005) Alternatives to public sector inspections: public-private partnerships and Corporate Social Responsibility, Jacobs and Associates report for FIAS World Bank Group, June 2005 Dolan, C. and Opondo, M. (2005) Seeking Common Ground: Multi-stakeholder processes in Kenya’s cut flower industry, Journal of Corporate Citizenship 18 FIAS (2005) Presentations at the workshop on Alternatives to public sector inspections: public-private partnerships and Corporate Social Responsibility Fukuda-Parr, S. and Ponzio, R (2002) Governance: Past, Present, Future Setting the governance agenda for the Millennium Declaration, UNDP Bergen Seminar Series 2002/2003: “Accountability and Responsiveness” Gibbon, P. and Ponte, S. (2005) Trading Down. Africa, Value Chains and the Global Economy, Philadelphia: Temple University Press. Kaplinksy, R., and Morris, M (2002) A Handbook for value chain research, prepared for IDRC. O’Rourke, D (2003) Outsourcing Regulation: Analyzing Nongovernmental Systems of Labor Standards and Monitoring, The Policy Studies Journal, 31 (1) pp1-29 Overseas Development Institute (2006) Governance, Development and Aid Effectiveness: a Quick Guide to Complex Relationships, ODI Briefing Paper, March 2006 Switzer, J. and Ward, H. (2004) Enabling Corporate Investment in Peace: An Assessment of Voluntary Initiatives Addressing Business and Violent Conflict, and a Framework for Policy Decision-making, Discussion Paper, IIED and IISD, Discussion Paper prepared for the Department of Foreign Affairs and International Trade (DFAIT), Canada Utting, P (2005) Re-thinking business regulation: from self-regulation to social control, Programme paper Technology, Business and Society Research Programme, UNRISD