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Programme Office forSocial and Ecological Standards

Making SustainableDevelopment aReality: the Role of Social andEcological Standards

Eschborn 2003



ii

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 ofSustainable 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 SameCoin .................................................................................................................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 Achievementof 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



iv

Figures

Fig. Title Page

Fig.1 a: Social and ecological standards are a serious attempt to make develop-ment 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 .......................................................... 17Fig. 2.2 c: Principles of sustainable development (“guiding star”) .................................. 18

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

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

Fig. 2.2.5: Coherence of a sub-system with its neighbouring or ambientsystems......................................................................................................... 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 moresimplistic 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 ........................................... 50Fig. 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 declarationsof 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



vi

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 OrganizationIOAS 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 PartnershipPR 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



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

2

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

The present publication will explore options for promoting sustainable development throughsocial 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 forsupporting 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 belaunched by state and/or private sector and/or civil society organisations. The initiatives mayfocus on the setting, verification or enforcement of standards. The standards themselvesmay be legally binding, or may be voluntary undertakings.

The target group: the work is designed to make it easier for development cooperationexperts to effectively support standards initiatives. The experts in question are first andforemost the staff of the GTZ Programme Office for Social and Ecological Standards, whosupport a wide variety of standards initiatives and who need this 'position paper' – which theyhave discussed at numerous meetings - to provide them with a joint conceptual basis. Attheir 'expert meetings' with staff of other projects to support standards initiatives, and staff ofGTZ'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 variousdevelopment cooperation organisations, as well as consultants and scholars working in the

Rio Visionof SustainableDevelopment

GlobalisationDeregulation

Social andEcologicalStandards

Rio Visionof SustainableDevelopment

GlobalisationDeregulation

Social andEcologicalStandards



1. Introduction

3

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

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 furtherhandouts covering case examples of organic agriculture, social labelling and forestcertification.

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 isboth the point of departure, and the point of reference, for the present work. Following apresentation of the history of the vision, five guiding principles for action are identified anddescribed: the resource management for inter-generational equity principle, the efficiencyprinciple, 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 naturalresources, the economy and social issues can never be fully realised. Sustainabledevelopment must be understood as an ongoing process of adjustment and readjustment.Two aspects are particularly important here: the process of adjustment always affectsvarious interests, and must be thought of as a process of negotiation; when seeking paths tosustainable development, no aspect relevant to development may be left out altogether. Thesustainable 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 canperform.

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 3describes the major challenges associated with a real orientation towards the sustainabledevelopment 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 paradigmof economism, 3, accepting co-responsibility for building frameworks conducive tosustainable development, and 4, developing co-governance structures that steer actorstowards sustainable development. The chapter concludes by summarising the challengingimplications that embracing the sustainable development vision entails, and the help thatstandards 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 bydesigning concrete standards. They often involve a wide variety of actors. The initiatives canalso differ widely in terms of their four components, which are: standard setting, complianceverification, accreditation and commercialisation strategy. Possible characteristics aredescribed in detail, in order to create a basis on which to judge standards initiatives from adevelopment-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 ismodified) or structural impacts (the structure and composition of the resources aremodified).

From a development policy perspective, the impacts of standards initiatives that are ofinterest are not just those within standard-compliant companies, but also those on the widerframeworks. Standards initiatives can make a significant contribution towards capacitybuilding 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, aresource 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 andStandards

are 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 andStandards

are 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 newalliances, 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 practicaldevelopment cooperation, and how development cooperation can support the introduction ofstandards as an instrument of sustainable development.



2. The Vision of Sustainable Development

7


“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 S ECRETARY G ENERAL K OFI ANNAN )

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

For a long time, development was understood as an exclusively economic process that couldbe adequately described in terms of growth in gross national product (GNP). Thus the UnitedNations 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: economicgrowth (+5% GNP)

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

1968 UNESCO Biosphere Conference term "sustainable development" usedfor the first time

1971 2nd UN Development Decade(1971 – 80)

goal of development: economicgrowth (+6% GNP)

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

limited resources and the capacity ofthe earth to withstand burdens setlimits to growth

1972 UN Conference on theHuman Environment (Stockholm)

environment or development

1983 World Commission forEnvironment and Development(Brundtland Commission)

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

1992 UN Conference onEnvironment and Development (Rio de Janeiro)

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

In his 1949 address to the nation, President Truman spoke of “underdeveloped” areas thathad 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 ideaof “catch-up development”, which long dominated the discourse of development, was basedon 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 gonebefore 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 wasbeing exposed by the chemical industry. In particular, the report to the Club of Rome entitledThe Limits to Growth , submitted by Donella and Dennis MEADOWS in 1972, aroused keeninterest. This report illustrated very clearly that exploitation of the environment poses a threatto economic growth. The relationship between economic growth and the environment wasdiscussed in detail at the 1972 United Nations Conference on the Human Environment heldin Stockholm, albeit at that point still in terms of the dichotomy of environmental or economicdevelopment.

The one-dimensional idea of catch-up development was gradually superseded by a more

holistic, multi-dimensional concept of development. The term “sustainable development” wasfirst used at the UNESCO Biosphere Conference held in Paris in 1968 (IUCN/UNEP/WWF1980). In 1980, the World Conservation Strategy of IUCN, WWF and UNEP defined the termas follows:

“For development to be sustainable, it must take account of social and ecologicalfactors, as well as economic ones; of the living and non-living resource base; and ofthe 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 andDevelopment (WCED) set up by the United Nations in 1983 and led by Gro HarlemBrundtland, laid special emphasis on responsibility towards future generations, and gave thefollowing definition:

“Sustainable development is development that meets the needs of the present withoutcompromising 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 178industrialised and developing countries from a whole range of regions and cultures agreedon 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, thisconcept represents a completely new paradigm. It is also far more comprehensive than thatof the Brundtland Commission.

Sustainable development, understood as a process to harness potentials, is at the same timeconstrued as a normative or ethical principle. The development interests and opportunitiesof 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 socialresources, such that future generations encounter a stock of resources that saves them from




9

poverty and offers them opportunities to satisfy their needs and undergo development thatare 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 allspheres 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 prerequisitefor sustainable development. In terms of location, sustainable development embracesthe entire globe. Global sustainability in turn embraces and presupposes regional,national, sub-national and local sustainability. In human terms, all people, social groupsand governments participate in sustainable development, both as actors and asstakeholders.

• A situation-specific process: The subjects of the development process must alwaysfind 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 atechnocratic basis, but needs to be negotiated between the civil society, the privatesector 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 emptyformula". It has been suggested that the general nature of the vision of sustainabledevelopment 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 toascribe to them an orienting capability for day-to-day business. A local politician inGermany's Land of Hesse is quoted as having said, "People who have visions should go andsee a doctor".

In other words, the action-guiding potential of visions is underestimated. This may be due tothe fact, often overlooked, that human behaviour in general requires orientation at variouslevels: the basic orientation provided by values and norms that must be respected, theorientation generated by situation-specific goals, and the orientation provided by concreteaction directives. The degree of abstraction of these levels of orientation varies as widely asthe 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 showingwhich road leads from village A to village B. Figure 2.1 b shows different levels of orientationfor 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 suitedto 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-specificgoals.

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

Vision

Guidelines orPrinciples

Operational Goals /

Standards

Action Directives

Vision

Guidelines orPrinciples

Operational Goals /

Standards

Action Directives




11

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, valuesand norms are subject to a certain degree of change. Visions must also take account of thisfact, 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 andeconomic 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 aconsensus between 178 culturally, politically, economically and geographically extraordinarilydiverse 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 isthat decisions affecting the development process must always take into account the social,economic and ecological dimensions (IIED 2001: 25). The economy, the environment andsociety are inseparably linked (see Fig. 2.1 d).

None of these three domains can undergo sustainable development unless due account istaken 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!"

I t w o n' t k e e p s ti l l !

I t w o n' t k e e p s ti l l !




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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 casesustainability is seen as one goal amongst several, including poverty reduction and food

security. By contrast, the present publication construes sustainable development as acomprehensive vision for development that embraces all the other development goals. Thiscorresponds to the BMZ's conceptual understanding of development as declared in October1996 (BMZ 1997). The Protection of Humanity and the Environment – Objectives and

General Conditions of Sustainable Development Study Commission of the 13th electoralperiod 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 1998called 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




13

the sustainability debate. Whereas that debate had initially focused on resource scarcity as aconstraint to development, and then on the limited burden-carrying capacity of theenvironment, the capability of economic and social frameworks to withstand pressure in thelong 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 waspresented and further elaborated in five documents (see Fig. 2.1 e). Two of thesedocuments, the conventions on biodiversity and climate protection, are legally binding on thesignatory states, while the other three documents are self-imposed obligations with no legalforce, even though they do possess political clout. A highly readable, abridged version ofthese documents has been published by the NGO Earth Council under the leadership ofMaurice 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 humanbeings are at the centre of concerns for sustainable development (Principle 1). Principle 2emphasises both the sovereign right of states to exploit their own resources, and theirresponsibility to ensure that activities under their jurisdiction do not cause damage to theenvironment of other states. Principle 7 underlines the fact that “states have common but

differentiated responsibilities” in protecting and restoring the health and integrity of theEarth's ecosystem. Principle 8 calls for the elimination of unsustainable patterns ofproduction 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 astrategy 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 vitalresources for the poor and for disadvantaged minorities. Agenda 21 pinpoints key aspects ofthe management of all resources needed for development.

Chapter 2 deals specifically with the tensions between trade and the environment. It isassumed 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 addressthe relationship between trade and the environment within the framework of multilateral foraand international organisations (see Section 2.2). A process of continuous and constructivedialogue is designed to guarantee that solutions to global problems are jointly sought.Governments from the North and the South committed themselves to a democratic andparticipatory 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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countries. The principles adopted emphasise the importance of forests for sustainabledevelopment. They underline the responsibility of the state to protect forests and ensuresustainable forest management. The sovereign right of countries to manage their forests isacknowledged, 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 shouldcreate a framework conducive to participation by all stakeholders within a society in forestmanagement. In particular, the culture, interests and rights of indigenous populations andforest inhabitants are to be respected. At the same time, the participation of women in allaspects of sustainable forest management is to be supported. Sustainable forestmanagement must take into account the social, economic, ecological, cultural and spiritualneeds of present and future generations. The vitally important role of forests in maintainingthe equilibrium of ecological processes needs to be acknowledged at the local, regional,national and global levels. National forest policy formulation must take into account thepressure on forests, and the demands placed on forests by factors outside of the forestrysector.

2.2 Guiding Principles of Action for Sustainable Development

The five Rio documents outline a complex vision of sustainable development, which wasfurther elaborated at the Rio follow-on conferences. Presented below is a structuredinterpretation of the complex vision that identifies five guiding principles for action which, inaccordance with the vision, are designed to orient both the management of all types ofresource, 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 tobe 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 sustainabledevelopment cannot claim to be universally valid. It is rather the case that a variety of guidingprinciples can be drawn from different interpretations:

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

• The council of experts on environmental issues has identified the following "strategicprinciples" 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 datesback 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 wasentitled "Thoughts on Sustainable Development". The first three principles of inter-generational resource management, efficiency and social justice are basic principlesunderlying decisions on the management and utilisation of all types of resources. Havingsaid that, these principles cannot all be optimised simultaneously, as from a certain pointonwards 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 anorienting 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 (seeFig. 2.2 a). In accordance with the sustainable development vision, the five principlesidentified 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 forsustainable development: each principle must be applied in all three dimensions, i.e. in themanagement 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 for

life. These are:• Environmental resources

biosphere, 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 forbehaviour. Nevertheless, it is not possible to follow all five rules in all three dimensions at theglobal, regional, national and local levels at the same time without restriction. Observing all

the principles, dimensions and levels would make each resource management decisionunmanageably complex. Therefore, practical decision-making usually focuses on segmentsof 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 tofocus on a few is often termed "pragmatic", in contrast to the holistic view, which is oftendescribed as "unrealistic". Yet because reality tends to be very complex, omitting key aspectsoften 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 thetheoretical orientation of the (social) sciences. In the effort to formulate theories and drawconclusions that remain valid independently of time and space, entire spheres of reality areleft out. Those formulating or using the theories then often overlook or forget all the aspectsthat have been left out, and claim a validity for the theory which for that very reason it cannotpossess. By contrast, sustainable development calls for a different culture of complexitymanagement:

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 thevalue of materialcapital

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

The EfficiencyPrinciple

efficient, soundnatural resourcemanagement

economic, market-driven resourcemanagement

efficient manage-ment of knowledgeand skills

The SocialJustice Principle

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

just distribution ofreturns, risks andparticipation

access to edu-cation, solidarycommunity, goodgovernance, forafor conflict trans-formation

The PartnershipPrinciple

alliances for en-vironmental andnature protection

economic alli-ances

political alliances

The CoherencyPrinciple

adjustment to naturalenvironmental condi-tions, environmentallycompatible action

adjustment to and ne-gotiation of economicframeworks

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

Resourcesof

The Environment

The Economy

Society

The ResourceManagement for


Principles

maintenance of thecapability of naturalresources to functionand regenerate

maintenance of thevalue of materialcapital

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

The EfficiencyPrinciple

efficient, soundnatural resourcemanagement

economic, market-driven resourcemanagement

efficient manage-ment of knowledgeand skills

The SocialJustice Principle

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

just distribution ofreturns, risks andparticipation

access to edu-cation, solidarycommunity, goodgovernance, forafor conflict trans-formation

The PartnershipPrinciple

alliances for en-vironmental andnature protection

economic alli-ances

political alliances

The CoherencyPrinciple

adjustment to naturalenvironmental condi-tions, environmentallycompatible action

adjustment to and ne-gotiation of economicframeworks

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 adirective prescribing the full application of all principles in all dimensions and at all levels. Nordoes it describe a target state, but is rather designed as a tool to be used in the ongoingquest for possible improvements. The matrix is designed to help identify imbalances in

resource management, take account of compelling needs and possible responses, andprevent aspects that are temporarily left out from being completely overlooked. Regardless ofthe disciplines or sectors concerned, a review of this kind should be conducted for allmeasures of natural, economic or social resource management, as this enables specificquestions to be addressed in the wider context of sustainable development.

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

ResourceManagement for


Social JusticePrinciple

CoherencyPrinciple

PartnershipPrinciple

EfficiencyPrinciple

Environment

Economy

Society

ResourceManagement for



CoherencyPrinciple


EfficiencyPrinciple

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 theexpense of our grandchildren. Measures should be taken now to conserve the resource baseof future generations, so that a capital stock is available to them in the form of a resourcebase which, although not identical to the resources on hand today, is nevertheless of equalvalue. Compliance with this principle is designed to create opportunities for present andfuture generations to enjoy the same quality of life. This "quality of life" goal goes beyond theidea of merely preserving the integrity of the natural environment. It also includes jobsatisfaction, 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 withrespect 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 wasalso 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 mustalso be applied with respect to economic and social resources (GERMAN BUNDESTAG 1998:43).

Resource

Management forInter-Generational

Equity Principle

EfficiencyPrinciple



CoherencyPrinciple

Sustainabledevelopment: globalpartnership for economi-cally viable, socially just,

ecologically sound devel-opment, not just today butalso in the future

regeneration rule

substitution ruleburden intensity ruleprecautionary hazard containment ruleintegrated resource budget management rule

technical rationalisation, efficient allocation ofresources 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 conflicttransformation

- 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

Resource

Management forInter-Generational

Equity Principle

EfficiencyPrinciple



CoherencyPrinciple

Sustainabledevelopment: globalpartnership for economi-cally viable, socially just,

ecologically sound devel-opment, not just today butalso in the future

regeneration rule

substitution ruleburden intensity ruleprecautionary hazard containment ruleintegrated resource budget management rule

technical rationalisation, efficient allocation ofresources 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 conflicttransformation

- 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 StudyCommission on the Protection of Humanity and the Environment, the following more generalrules 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 notexceed their regenerative capacity. This means first of all that the quantity extracted must beless than the regeneration increment up to the next extractive intervention. Having said that,a purely quantitative comparison of quantity extracted and incremental increase cannotguarantee 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 quantitiesof high-quality timber are harvested, the volume extracted may well be quantitatively lessthan the growth increment up to the next harvest. Yet because the trees removed are oftenreplaced by fast-growing, lower quality pioneer species, the customary selective utilisation ofthe 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 tomaintain the full functional value of the forest for the environment (e.g. erosion control), theeconomy (e.g. timber merchant) and society (e.g. cultural value), as well as its regenerativecapacity, it is also necessary to preserve species diversity, natural structures, and thedynamics of growth and rejuvenation.

The regeneration rule should be applied not only with respect to natural resources. It shouldalso be applied in the economic context (depreciation), and with respect to social resources.Traditions are repositories of knowledge stored over generations. Where abandonedtraditions 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 managementmechanisms, must be reproduced at a rate at least commensurate with the rate at which it isbeing eroded or depleted by changed framework conditions, otherwise assets will be lost.

The substitution rule: The substitution of resources, and especially natural resources, withmaterial capital ("weak sustainability") has generated considerable controversy in thesustainability debate, as it can easily lead to a depletion of resources. Where non-renewableresources are utilised, a maximum rate of recycling needs to be ensured. Where theseresources 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 ofconsumption. "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 lossesto be reduced, and future depletion to be prevented through timely substitution, e.g. in thenuclear energy and genetic engineering sectors (see also the precautionary hazardcontainment 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 functionof 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 withstandemission 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 ofunequal 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 representnecessary, though certainly not sufficient conditions for the protection of resources for futuregenerations. To prevent wealth from being consumed, and countries or the entire world frombecoming poorer, regular budgeting is imperative. It is crucial in this context that keyelements 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'sconventional parameter of national economic performance, national product, fails to capturechanges in environmental capital, human resources or social capital. By contrast, the WorldBank has now begun to calculate the "genuine saving" made by each country: to obtain avalue 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 forenvironmental damage are then subtracted. The World Bank describes these adjustments tothe parameter of savings that take into account human and natural resources as a firstapproach 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, naturalcapital and material capital (THE WORLD BANK 1997: 19ff). The country rankings based onthis understanding of wealth differ considerably from the conventional rankings based ongross national product (GNP).

2.2.2 The Efficiency Principle

This principle of managing resources as effectively as possible is known in the economiccontext as the "economic principle", and in the technical and organisational theory contexts

as the "rationalisation principle". According to this principle, resources should be managed sothat a certain impact is achieved with the minimum possible input of resources or financialexpenditure.

There are indications that the efficiency of resource management can still be considerablyimproved, 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 ifprices and competition are not distorted (e.g. by non-internalised costs, subsidies orincomplete 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 leftunrestrictedly to the market, because the efficiency principle would then be entirelyundirected, 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 byconsensual, negotiated systems of objectives, can the efficiency principle help bring aboutsustainable development.

2.2.3 The Social Justice PrincipleThis principle requires that the benefits and drawbacks of resource use, in other words profitsand costs, as well as opportunities and risks, be distributed fairly among the concernedsocial 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 andrisks. 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 oatssome may pass through onto the road for the sparrows, does not apply in practice. As theStudy Commission on the Protection of Humanity and the Environment states, social justiceis 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, threethematic 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 inaccordance 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 accessto 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 ofSeptember 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 pursuestrategies to avert risks that could threaten their livelihood. At first glance, an observer mightsee such strategies as hostile to innovation. For instance, small farmers in BrazilianAmazonia are very reluctant to substitute the financially less attractive cassava crop withcash 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 alsoneed 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 byforest clearance above the village. Traditional forms of risk spreading in solidary communitiesare often not easy to recognise and understand. Dismantling them can lead to a loss ofsocial capital.

c) Forms of power wielding and conflict management

As the sustainable development vision becomes more tangible, the conflicts of interestswhich make it more difficult or impossible to achieve compromise come to light. Anemployers' 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 notdisguise these conflicting interests or make them go away. However, a discussion of whatthe various actors would understand sustainable development to mean in their concrete casewould make it possible to at least seek a compromise. Whether rights of access to resourcescan be effectively exercised, and whether opportunities are allocated fairly across differentsocial strata, will depend not least on the quality of governance and forms of conflictmanagement. Figure 2.2.3 lists criteria applied by various organisations to measure thequality of governance or political frameworks for development.

The status of the three above-mentioned thematic spheres of social justice in a given countrywill depend largely on that country's culture and history. It would certainly be wrong to applythe same value system universally in all contexts. Nevertheless there is a broad internationalconsensus on some themes, for instance those provided for in the United National UniversalDeclaration of Human Rights in 1948, or in conventions and other international agreements.When jointly designing development processes, especially within the framework ofdevelopment cooperation, it would seem appropriate to refer explicitly to internationalconventions 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, becausepoverty is seen as the main constraint to sustainable development. German developmentcooperation has made poverty alleviation its first priority area. All projects are required to




25

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 manyplaces 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, butin the sense of sharing and participating in a whole that should in principle be preserved andfurther developed. Partnership goes beyond common experience, requiring that the visionsthat give orientation be at least shared to some minimum degree. The visions of the partnerscan certainly differ, but must contain a certain overlap of common values. If, for instance, aGerman municipality enters into a partnership with an indigenous village in Amazonia, theirvisions can be very different, but they must at least share some notions such as that theforest is worthy of conservation. Partners need to have a minimum of mutual knowledge andcommunication. Partnerships also require a certain, though not necessarily formal, level ofagreement concerning mutual expectations and definition of roles.

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

Participation can vary widely in scope. There are often major discrepancies between the waythe 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 wherenon-governmental organisations are involved by the private or public sectors; the onlyappropriate response to it is to regularly establish transparency of perceptions andexpectations concerning the participation. Sound partnerships rarely emerge on the spur ofthe 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 ofpublic funds

Transparency of decision-making

Predictability of behaviour ofpublic sector representatives

Openness of information for alleconomic actors

Rule of law

Rule of law

Efficiency of public administration

Stemming of corruption

Restriction of excessive militaryexpenditure

Respect for human rights

Popular participation in decision-making

Rule of law and guaranteed legalcertainty

Introduction of a social marketeconomy

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 concerningquestions of common interest, then increasingly also concerning themselves (where thepartners anticipate more extensive participation, this first stage is occasionally jokinglyreferred to as the “invite - inform - ignore” phase).

• In the communication phase additional feedback is given, including feedback onmutual perceptions, although at this stage the relevance of that feedback to concretedecision-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 includeparticipation in decision-making (co-determination).

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

The importance of formal agreements for a partnership is often overestimated. They only saysomething about the quality of a partnership insofar as they reflect common ground that hasbeen 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'sChancellor 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 alsospotlights the Achilles heel of the global sustainable development vision: it has Europeancultural 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 jointcommitment to the vision, as was demonstrated in Rio. Yet it is certainly advisable forEuropeans engaged in negotiation for development to remember that their negotiatingpartners 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 ultimatelong-term aim of the vision is to harmonise the sub-system of human economic activity withthe 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.




27

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 withcomplexity: people are only able to perceive and address sub-systems, which are segmentsof 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 wellas the contradictions and risks which those interrelationships entail.

One way out of the dilemma created by the fact that holistic perception is impossible, andreductionism dangerous, is offered by a constant switch of perspectives. This means that, atintervals, 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 repeatedswitch of focuses from the inside to the outside, the outward perspective must take variousdirections: to the right and left to the adjacent sectors, in order to check horizontalconsistency, 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 pastand 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 withinand between the various sub-systems. Perception must extend far beyond the boundaries ofthe sub-system within which the subject is operating. The approach of switching perspectivesmay appear trivial, and indeed, it means nothing else than “looking beyond the end of one’snose”. However, the implementation of this approach is by no means trivial, because forsomeone to raise his/her sight beyond the sub-system in which they are working generallymeans 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 asocial system; s/he will need to enter into an exchange with the specialists in theneighbouring disciplines.

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




28

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. betweenagriculture and forestry, arise very frequently in land-use planning. Efforts are often thenmade to solve the problem by means of better, in many cases very expensive data collectionand mapping, but this regularly fails. Conflicts between different perspectives and interestscan 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 possiblefrom which both sides profit.

• Possibly, one view can be enforced at the expense of the other; this, however, entails arisk 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 orvisions to be in place that are supraordinate to the conflicting goals. In planningprocesses, investing time and money in forums to elaborate common visions oftengenerates higher returns than the effort put into additional data collection. Having saidthat, planning experts are usually much less well acquainted with the techniques ofconflict management than with those of data collection.

In the event of vertical incoherencies between planning and implementation bodies atdifferent levels, an agreement to observe the subsidiarity principle can be helpful. In theConstitution of the Federal Republic of Germany, this principle regulates the relationship

between the federation and the individual federal states. In the context of decentralisationprocesses, this can also be helpful in resolving potential conflicts between central anddecentral authorities. The principle states that the higher community or body may only

adjacentsectors/ areas

previoussystems

futuresystems

spatially/hierarch.supraordinatesystems

spatially/hierarch.subordinate

systems


sub-system

verticalcoherence

temporalcoherence

verticalcoherence

temporalcoherence

horizontalcoherence

horizontalcoherence


previoussystems

futuresystems



systems



previoussystems

futuresystems



systems


sub-system

verticalcoherence

temporalcoherence

verticalcoherence

temporalcoherence

horizontalcoherence

horizontalcoherence




29

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 toprovide assistance”: to assist the decentral unit in realising its potentials, appropriateframeworks (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 astemporal incoherencies. Their importance for the development process is particularlydifficult to assess. On the one hand, development necessarily implies change, and thuscertain breaks with the past; on the other hand, there is a danger that the breaks broughtabout by change will cause damage, e.g. if elements are substituted without an awareness oftheir 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 canhave serious consequences for sustainable development. For instance, a new social securitysystem 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 haveenough time to learn how to handle the new system, the innovation may be ineffective ordamaging.

Possibly the most serious errors in development planning have been committed byinadvertently attempting to introduce innovations without giving enough attention to temporalincoherencies, to dangerous discontinuities between the past and the future, particularly inthe social sphere. Such discontinuities that might occur during change processes can beavoided 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 areintroduced because they appear to be more efficient in terms of generating marketableproduce, without the ecological and social functions of the existing land-use practiceshaving been examined and understood.

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

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




30

∗ The development of innovations always commences with hypotheses that need tobe subjected to theoretical or practical verification, i.e. tested. It is dangerous,although not unusual, for innovations to be introduced before the test or learningexperience 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 tothe 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, themore intensively those users actively participated in the development of theinnovations. The participation of target groups in the development of innovations isundoubtedly 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 allthe more slowly, if at all.

Applying the coherency principle involves performing two operations. The first, which mightbe termed the "searchlight component", involves illuminating the development process in alldirections in search of incoherencies. The second, which could be termed the "roundtablecomponent", involves addressing and analysing the incoherencies thus detected, anoperation which can lead to a change of course. From the perspective of a sub-system, thereare two options for changing course with a view to reducing incoherencies with the ambientsystem: 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 theincoherencies and their impacts on sustainable development, i.e. the changes needed, butalso the elasticity of the other partners in negotiation and their willingness to change.

Understood thus, the coherency principle performs the function within the developmentprocess analogous to that performed by the central nervous system in the body. It detectsdisturbances in the form of incoherencies, processes this information, and instructs theimplementing organs to change course accordingly. Because we are unable to perceive andoptimise the development process on a holistic basis, the coherency principle needs to betranslated into rules that can reduce the incompatibilities between sub-systems. It is of

paramount importance for the development process that the coherency principle beinstitutionalised and further elaborated. This will require various competences:

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

• communicative competence, as the negotiation process may otherwise not runsmoothly,

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

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

course.




31

Institutionalisation of the coherency principle is a key indicator of sustainability, and providesa 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 andindirectly by a very large number of actors, which means that framework conditions areconstantly changing. Development as complex as this cannot be designed sustainably byplanning a programme on a one-off basis. Implementing the vision of sustainabledevelopment rather calls for an ongoing process of adjustment and learning, because newand different threats to sustainability will constantly keep arising. At the same time, newopportunities 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 keyaspects of development as a whole, and especially risks and opportunities for sustainability,without focusing exclusively on more specific, individual aspects. For instance, the efficiencyprinciple is designed to help focus attention on aspects of efficient resource use, while at thesame time providing a reminder that this perspective is incomplete, and that the principles ofinter-generational equity and social justice should also be considered. In other words, theprinciples should help development planners focus on key specific aspects of sustainabledevelopment, without losing sight of the wider sustainable development process.

Similarly, the principles are designed to help evaluate key aspects of development byestablishing a link to the norms and values on which consensus was achieved in the vision ofsustainable 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 appropriatevalue 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 tosustainable development? By helping identify how the key aspects of development can beshaped in order to move closer to the vision of sustainable development, e.g. partnershipsthat can be intensified. In other words, the principles should not be understood as operationaldirectives, but as a framework to guide planners in perceiving, evaluating and designingcomplex 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 developmenthas given rise to serious misunderstandings and controversies. Given that the vision claimsto embrace all people, life domains and biotopes, it is then concluded that the vision claimsto be able to resolve all tensions and conflicts between and within societies and sectors, andto establish clear and consistent directives for action by all countries and social groups. Inother 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




32

between urban and rural populations, or conflicting goals, such as those between short andlong-term profit, between private and macroeconomic profit, or between agricultural andforestry production goals. Nor can it, or is it designed to, relieve countries and social groupsof 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 designedneither to resolve conflicts, nor to prescribe developments on a deterministic basis. Havingsaid that, it can serve as an orientation aid to help identify solutions to conflicts and paths todevelopment.

Given that the vision of sustainable development contains no precise prescriptionsdetermining the actions of individual actors, but only relatively general directives, theconclusion tends to be drawn that it is an empty formula, i.e. that any action whatsoeverwould be compatible with the vision. This conclusion is wrong, because general directivesalso guide people's actions. Section 1 of the German Road Traffic Regulations requires eachroad 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, butdraws a line between action which is not allowed, and action which is – in other words it actsas a guiding framework. Calling a vision an empty formula is particularly inappropriate wherea number of directives are put in place that, although non-specific, nevertheless relate todifferent dimensions, as is the case with the sustainable development vision. Just as insurveying or especially shipping, where triangulation is used to obtain highly precise data oncoordinates 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 beseen 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 withpartners in development.

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

Focusing function: while the vision of sustainable development presented here cannot beachieved in full, it does help focus attention on key elements, and helps those seekingsolutions form a clear understanding of what they are looking for. The vision’s principle thatsustainable development is based on partnerships, for instance, can be helpful in identifyingpaths to development for a specific region, in that it focuses attention on alliances betweenkey 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 destabilisationtendencies can be detected, and options for improvement identified.




33

Legitimisation function: sustainable development cannot be prescribed or planned bytechnocrats, but must be negotiated between key actors. Here, the vision of sustainabledevelopment can serve as an aid to negotiation by recalling to the actors’ minds theconsensus achieved in Rio. For instance, negotiations on development cooperation

measures can be facilitated by making explicit reference to the basic consensus alreadyagreed on by the partner countries which adopted the vision of sustainable development atthe Rio Conference and at subsequent events, including aspects such as participation byminority groups, gender and development, or the principles of sustainable forestmanagement. If goals and measures are clearly linked to the vision agreed on by 178countries, 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 suchdevelopment proposals be thoroughly explored.

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

VISION OFSUSTAINABLEDEVELOPMENT

The vision eliminatesconflicts and deter-mines the correct

behaviour of all actorsin all situations

Any action at all canbe justified by citing

the vision

Magic formula Empty formula

Orienting framework

When identifying paths todevelopment in negotiationsbetween partners in development:

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

VISION OFSUSTAINABLEDEVELOPMENT

The vision eliminatesconflicts and deter-mines the correct

behaviour of all actorsin all situations

Any action at all canbe justified by citing

the vision

Magic formula Empty formula

Orienting framework

When identifying paths todevelopment in negotiationsbetween partners in development:

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




34

Identification function: where the actors in a development process, e.g. the staff of acompany, 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 predictableand reliable. This can make negotiations easier, and reduce their transaction costs. Secondly

– and importantly – a joint vision causes a convergence of minds, generates motivation andenergy to act, and mobilises creative learning capabilities (SENGE 1990: 206). A joint visioncan “give meaning and direction to action for a social system that generates benefits” (BLEICHER 1996: 95). Finding meaning and direction, and achievement, are closelyinterconnected: “Anyone demanding greater achievement, must offer meaning ” (W.BÖCKMANN, quoted in BLEICHER, 1996: 97). The identification function of a vision – itscapacity 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-permissibleaction. They can also point action in a basic direction, which is then always defined moreprecisely through principles, goals, criteria and indicators. These orientations can beorganised hierarchically (cf. LAMMERTS VAN BUEREN /BLOM 1997). As we move further downthe hierarchical order, the measurability (degree of operationalisation) and degree ofspecificity increase, while the validity of the orientation decreases (cf. Fig. 2.3 b): thesustainable development vision is designed to provide universal orientation at the local andglobal levels, for all spheres of life and for an unlimited period, yet it remains non-specific anddifficult to measure. By contrast, an indicator describes a spatially, temporally and materiallycircumscribed 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

V a

l i d

i t y

s p

a c e ,

t i m e

, c

o n

t e n t

D e g

r e e o

f S

p e

c i f

i c i t

y

Hierarchy of Orientations for Action

vision principles goals criteria indicators

V a

l i d

i t y

s p

a c e ,

t i m e

, c

o n

t e n t

D e g

r e e o

f S

p e

c i f

i c i t

y

Hierarchy of Orientations for Action




35

The different levels of orientation do not conflict with each other, but are mutuallycomplementary. 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 thatmay 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 identifyingoperational 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 atrisk 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). Thedemands placed on orienting frameworks increase with the performance capability of thetools for their realisation. The force of our interventions into ecological, social and economicprocesses has increased to a much greater extent than the quality of our tools for steeringand controlling the processes thus unleashed. Figuratively speaking, this is like flying asupersonic plane using the navigation instruments of a glider. In practical terms, the Riovision 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, thusreleasing energy for action. By orienting the process of identifying objectives, it helps focusand direct that energy. Of course it goes without saying that this only applies where thesustainable 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 toundergo positive change.

Having said that, the vision is not a blueprint for "making development happen". It is a tool tohelp support the process of negotiating paths to sustainable development. One preconditionfor this is that objectives and activities are still to some extent open, as negotiation wouldotherwise 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 willnever be possible to satisfy all the principles of sustainable development on an optimal andpermanent basis.




36

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

(want to)

( s h o u l d , m a y )

( c a n )

*(Objective)

V a l u e s

F r a m e

w o r k

c o n d i t i o

n s

Needs(want to)

( s h o u l d , m a y )

( c a n )

*(Objective)

V a l u e s

F r a m e

w o r k

c o n d i t i o

n s

Needs



3. Challenges for Sustainable Development

37


"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 principlesare sacrificed. Many people consider the sustainable development vision more appropriatefor the "Sunday sermon" than for the everyday world of economics. They believe that otherlaws apply in that world, that it is not wishful thinking and visions that the market needs, butclever old Homo economicus, who knows everything, and who makes use of the liberty hehas to do all that he is capable of doing. They believe it is not the sustainable developmentvision, 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 intoaccount jointly, and mutually networked, on the grounds that it would be much toocomplicated and impossible to put into practice. And others believe that the given "objective

constraints" leave no scope for sustainable development. Finally, the broad-based civilparticipation in decision-making processes called for at Rio (e.g. by Principle 10 of the RioDeclaration) is criticised for being unrealistic and incompatible with the sovereign role of thestate.

It is indeed the case that, since the Rio Conference, the sustainable development vision hasfallen 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 forharmonious Sunday sermons after all. Nor should the vision be trivialised andunderestimated as an "empty formula for consensus-building“ (KREIBICH 1996). Takingsustainable development seriously means addressing several difficult challenges, whichrequires courage. Many therefore see sustainable development as a tall order (cf. Fig. 3). Inthe following sections, four challenges will be presented: the challenges of networkedthinking, the complexity of the vision, the shaping of frameworks, and the development ofsustainable co-governance structures. Against this background, the importance of standardsinitiatives becomes clear. Those initiatives, and how they can help overcome the challengesfor sustainable development, will then be dealt with in Chapter 4.




38

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 ofactors with highly divergent interests, potentials and backgrounds who are directly orindirectly involved in tropical forest management. They form a network of actors in whicheach 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 complywith;

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

In Technical Cooperation, attempts have often been made to influence the behaviour ofactors, e.g. through training, without taking appropriate account of their networking with otheractors. 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 courageto 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

Sustainable development

requires the courageto embrace :

• complexity

• transparency

• responsibility

• cooperation

A tall order!




39

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 possiblecontribution to, sustainable development, basically each individual actor would need to orientits actions towards the Rio vision. Actors by no means do so, either in the forestry sector orin other sectors, and this applies equally at the local, national and global levels. There aretwo 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 tobehave in accordance with the sustainable development vision.

Economic actors who interact in a variety of ways in the production of goods and the deliveryof services may differ widely in terms of their interests, values, experiences, knowledge andskills, as well as their access to resources and their influence on other actors. For thesediverse yet closely networked actors to move jointly in one direction, and help rather thanhinder each other in doing so, two things are required: an understanding and an acceptanceof 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 "structuralpolicy" 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

Shiftingcultivators

Hunters,gatherers

Tourists

Power genera-ting companies

Energy andminingcompanies

Timber tradeand industry

Traders andprocessorsof forestproducts

Large-scalearable andlivestock farms

Constructioncompanies

Touristindustry

WorldBank

Regionaldevelopmentbanks

Settlementauthorities

Planningauthorities

AgriculturalauthoritiesAgricultural

trade andindustry

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

Beneficiariesand 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

Researchinstitutes

Actors

Direct users of the forest

Consumers, beneficiaries,interested parties

Tropicalforest

Prospectors

Loggers

Shiftingcultivators

Hunters,gatherers

Tourists

Power genera-ting companies

Energy andminingcompanies

Timber tradeand industry

Traders andprocessorsof forestproducts

Large-scalearable andlivestock farms

Constructioncompanies

Touristindustry

WorldBank

Regionaldevelopmentbanks

Settlementauthorities

Planningauthorities

AgriculturalauthoritiesAgricultural

trade andindustry

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

Beneficiariesand 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

Researchinstitutes

Actors




40

behaviour is guided on the one hand by a rational desire to reach their destination, and onthe 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 asfavourable as possible.

Both requirements demand that appropriate account be taken of both the diversity and thenetworking 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 beseen as a network incorporating flows and counterflows in various directions.

Conceptualising networked systems, or in other words "networked thinking", is considerablymore difficult than thinking about segments of a system where cause and effect relationshipsflow in just one direction. Many processes, however, only become comprehensible when thesystem 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, generateself-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 andinfluence such processes, and monitor the effectiveness of interventions, it is imperative thatthese systems be viewed not (only) in segments, but holistically and as a networked whole.

Actors

Vision

Guiding

frameworks

Actors

Vision

Guiding

frameworks




41

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

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

• Impact monitoring: just as the point of intervention and point of impact need not beidentical in a networked system, an appropriate monitoring window onto only one part ofthe networked system may also permit access to changes at another point in thesystem. The monitoring window may even be outside the monitored system entirely. Thisis the case for instance when the level of oil in a car engine is measured. Using theprinciple of communicating pipes, the oil level is measured at a point outside the poorlyaccessible 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 zonesnecessarily being congruent.

The vision alone will not guarantee that the highly diverse actors move in the direction ofsustainable 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 inthe establishment and development of such frameworks in a variety of ways. Yet no matterhow they are created, these frameworks can only be efficient and effective if and when theytake appropriate account of the networking of actors. The fact that some standards initiativesthat seek to help build guiding frameworks for sustainable development are far moresuccessful than others is no doubt largely due to the fact that they take better account of keyaspects of networking between actors. For instance, standards initiatives that take account ofthe networks between producers, processors, traders and consumers have often prove farmore effective than those which leave out a large section of the network, and seek throughnormative 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 betempted to ignore aspects or entire dimensions of reality, and to adopt a simplified vision astheir orienting framework (cf. Fig. 3.2 a). For instance, nature conservationists occasionallypursue approaches that leave out economic and social aspects of development, and areoriented exclusively towards species and biotope conservation. Similarly, groups working for

the protection of minorities may make the preservation of a certain culture an absolutepriority, and ignore aspects of economic development or changed environmental conditions.




42

The sustainable development vision is currently being put under particular pressure by analternative, simplifying vision that focuses exclusively on economic aspects, while social andenvironmental aspects are left entirely to the state, and its regulatory frameworks for theprivate 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-winnerM. FRIEDMANN (1970), who published an article in the New York Times Magazine with theprogrammatic title The social responsibility of business is to increase its profits . A view of thiskind 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 simplisticvisions

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 meansaddressing 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 aspecific input of scarce resources, or how can a specific impact be achieved through aminimum input (economic rationale)?

• Questions of purpose, in other words, why pursue economic activity, which valuesshould 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?

Sustainabledevelopment

Economism

A b s o l u t e n a t u r e

c o n s e r v a t i o n O n

e - d i m

e n s i o

n a l

s o c i a l v i s i

o n s

Sustainabledevelopment

Economism

A b s o l u t e n a t u r e

c o n s e r v a t i o n O n

e - d i m

e n s i o

n a l

s o c i a l v i s i

o n s




43

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 ethicalquestions. Yet they are often left out of the picture, so that the economic sphere addressesonly the question of efficiency.

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

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

• The "common good argument" states that the liberalisation (deregulation) of marketforces 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 rhetoricof objective constraints and common good" ignores the questions as to the purpose andlegitimacy 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 theconstraint of leaving out other normative aspects is often itself generated by a rationale ofprofit maximisation.

Purpose

W h a t f o

r ? F o r w

h o m ?

Creatingvalues

Efficiency

JusticePurpose

W h a t f o

r ? F o r w

h o m ?

Creatingvalues

Efficiency

Justice




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In contrast to economism with its idiosyncratic economic logic, the sustainable developmentvision does not exclude questions of purpose or justice, but provides for them to benegotiated between partners. This also corresponds to the principles of "integrative economicethics" – 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 strengthof superior arguments, as opposed to excluding non-economic aspects. Exclusiveeconomism 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 Americanpublic 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 glanceappear to possess comparative advantages that make it much more difficult for morecomplex visions, and especially the sustainable development vision, to compete with them:

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

• They are much easier to put across.

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

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




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• The management instruments for pursuing and possibly optimising efficiency aspectshave 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 socialand ecological issues.

It would be wrong to conclude that this critical attitude to economism, and its presentation asa danger to sustainable development, is based on an underlying rejection of economics andthe efficiency principle. This critique is directed only at the exclusive and reductionist focuson 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 ownvision. Applying such a blanket criticism to all economists would be absurd, in view of theworks 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 areorientation aids that reduce complexity. Yet the simplifications needed must not be allowed tobecome reductionist simplifications that jeopardise the life-conducive character of the visionpursued. Those who are serious about building sustainable development must resist thetemptation of visions that simplify, and above all the vision of economism, even though thatvision is being promoted by influential forces and is very much in keeping with the spirit of theage.

Having the courage to embrace complexity, either through networked thinking or by resistingthe temptation of simplistic visions, often forces an individual or group to make moretransparent 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 ecologicalstandards, then it must make the social and ecological impacts of its activities transparentboth to the top management, and to the workforce, shareholders and civil societystakeholders. Creating transparency of this kind obviously requires much greater couragefrom 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 socialresources (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 developmentare those which both create the scope needed by actors to make a positive contribution tosustainable development, and prevent actors from acting against the interests of sustainabledevelopment ("guiding frameworks").

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

• view the three categories of resource (environmental, economic and social) from anintegrated 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 bethree-dimensional; this is to say that they must guarantee access to sufficient

environmental, economic and social resources. The presence of natural and economicresources 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 traditionalknowledge on natural resource management, e.g. in medicine or hunting, becomes devoid ofvalue where the plants or animals concerned are no longer present. The value of a road forthe sustainable development of a region can only be measured with reference not only to thenatural and economic resources accessed as a result, but also to the social frameworksguaranteeing that those resources are managed sustainably and not plundered with a viewto maximising short-term gains. A forest stand inventory enriches a society's state ofknowledge, i.e. creates social capital. Yet this creates new scope for action only for thoseactors with access to the economic resources needed to manage those forests.

Although action for sustainable development does need to be guided by the appropriateframeworks, the resource categories should be viewed not in isolation, but from an integratedperspective. The changes needed in behaviour do not necessarily have to be brought aboutthrough new imperatives or prohibitions, but can be achieved through changes in access toeconomic or natural resources, as the following example demonstrates. Where populationdensity is low in the humid tropics, the burning of forests is an ecologically and economicallyappropriate 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 formof slash-and-burn agriculture would severely impoverish both the ecosystem and the farmersthemselves. Legislation prohibiting burning will remain ineffective unless and until farmers

are offered alternative options. Where farmers are given access to the financial and technicalresources 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 beachieved, acknowledged or capitalised upon not only through binding imperatives orprohibitions, but also through a variety of measures creating scope for action conducive tosustainability. In particular, this includes measures which help facilitate access to economicor natural resources.

3.3.2 Taking the Framework Dynamics into AccountThe frameworks for all three dimensions are subject to change, both intentional andunintentional. The dynamic nature of these frameworks creates an even more difficult andnever-ending challenge: ensuring that the actors enjoy the scope needed to facilitate theircontribution to sustainable development, while imposing certain constraints to keep themfrom straying from the desired path.

The natural frameworks can be modified in various ways, e.g. through afforestation, dykeconstruction or seawater desalination. The rate of access to natural resources can beaccelerated or slowed down through economic measures such as price adjustment, or

through social measures such as land redistribution. In recent decades, environmentaldamage and the degradation of non-renewable resources have increased exponentially. Themost pressing problems include global warming, marine pollution, advancing desertification,




47

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

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. throughtaxation or lending), or through economic incentives (e.g. favourable prices or costs).

Present global economic trends are characterised by autonomy and increasing volatility offinancial flows, an increase in the global integration of trade, investment and productionstructures that are disproportionate to growth, a shift in production from tangible to intangiblegoods, and last but not least an increase in transnational enterprise activity. Particularly faradvanced is the globalisation - the "de-territorialisation" - of financial markets. Buyers andsellers the world over have access to similar information, and are able to swiftly capitalise onprice differences thanks to low transaction costs. Companies are motivated tointernationalise their activities by the incentive of increased profits. These higher profits canbe generated either by entering new markets and/or expanding existing ones, or by tappingcheaper sources of labour or semi-products.

With respect to social resources, economic globalisation is being accompanied by aprocess of deregulation. Not infrequently, this deregulation of the political agency of thenation 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 poordeveloping countries, a widening gap between the haves and have-nots of development bothbetween and within states, and the continued exploitation of natural resources.

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

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

• Attitudes and expectations motivate actors to perform their roles, and society in turnexpects them to play certain roles. Opinion-making and awareness-raising can modifythese role expectations considerably, e.g. can lead to a situation in which corruption isno longer seen as a "peccadillo".




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• Once it has become an established practice or habit to allow interest groups toparticipate in a certain way in tasks, decision-making processes or successes, this caninfluence 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 throughincreased transparency and publicity.

• Infringements of the rules may entail a whole range of sanctions, including penalties orloss 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 varywidely in composition and representation of interests, and may involve a broad spectrumof procedures.

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

• Finally, new or changed organisations can influence behaviour.

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

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

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

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

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

3.3.3 Utilising ScopeActors often behave like a bird that has flown into a room by mistake and keeps flappingagainst the window pane in an increasingly desperate attempt to get out, without noticing thatthe 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 certaindistance and peace of mind.




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• The actor must recognise the potential of the resources that s/he sees. Degradedecosystems are often considered worthless, even though, as the example of secondaryforests demonstrates, they can make significant contributions to sustainabledevelopment. 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, fromwhich a red pigment is obtained that indigenous people use to paint their faces, is oftencultivated today to obtain colourings for foodstuffs. What often goes unnoticed or getsforgotten is the fact the bush was traditionally cultivated at the margins of fields toprotect against leaf-cutting ants, and that indigenous women have obtained an effectivecontraceptive from the leaves. The fact that the potential of natural resources is often notfully recognised leads to them being, as MYERS put it so appropriately when speaking ofthe topical rainforest, "overexploited and underutilised". Something similar could be saidof the unemployed and underemployed, who often possess a high degree of unutilisedpotential. 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 arethose of the mind.

• Once the potential of a resource or an opportunity for action has been recognised, theactor 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 besufficiently legitimate.

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

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

Where frameworks are to be shaped so that actors are steered towards sustainabledevelopment, planners must take care to ensure that actors are able to successfullynegotiate all steps on the path towards utilising the scope created. Support measures oftenfail to generate the desired impact because the target groups did not receive support for thisor that step. Shaping frameworks requires, amongst other things, effective governancestructures, 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, thoughdistinct from, "government". According to Rosenau (quoted GOMEZ 2000: 3f), the term"government" denotes a formal, legally sanctioned authority empowered to enforcecompliance, whereas "governance" denotes a system of rules at all levels of humanbehaviour 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 followingdefinition: "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 "globalgovernance” or at the regional, national, local or corporate levels, which is termed "corporategovernance". It is not clear as yet how these various levels of governance can becoherently 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 ofnational governments alone, but one that should be jointly addressed by governments, theprivate 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, andindeed 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 thestate 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 valuecreation chains, has led to a situation in which transnational enterprises are increasinglymoving beyond the reach of state control, constraining states' scope for action (e.g. bythreatening 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 stategovernance. 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 lastingbasis.

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

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

Without an effective global regime bolstered by real sanctions, competition between nationstates for the world's resources will continue to be exacerbated by increasing scarcity andrising costs. The effectiveness of international agreements as instruments of governance isalso being undermined by the fact that the world's mightiest nation, the USA, is not party tomost of the conventions, but rather induces other countries to vote in its interests bypressurising them or by offering them financial incentives to do so. Global governance is thusat 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 managementtowards sustainable development, boils down to the fact that both prices and competition aredistorted, 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 commensuratewith the degree of information specificity on the product concerned. Price formation on thebasis of supply and demand for instance is inconceivable without some idea of what wouldbe an appropriate price for a certain good (BERND 1999: 307). The internalisation of externalecological and social effects could lead to a state of equilibrium achieved by balancingconsiderations of supply and demand with integrated standards of environmental quality andsocially compatible working conditions. However, a pseudo-market solution of this kind mightgenerate qualities that are ecologically and socially untenable, since only demand-drivenquality would be realised. Working on the assumption that each individual is motivated tomaximise his or her own benefit, this need not be equivalent to that quality which would alsoguarantee the survival of future generations (cf. BONUS 1996: 33).

The neo-classical premise of market transparency as a precondition for undistortedcompetition is untenable. More recent conceptual approaches, such as that of institutionaleconomics, assume that there is no market transparency, and that profit-seeking interestsmotivate actors to seek advantage through asymmetries of information and power. Theinformation requirement is even higher in the sustainably produced goods trade, becausemore information is required on the manufacturing process itself. The market mechanismalone, however, does not create this transparency. New information and monitoring systemsneed to be established to deliver this additional knowledge on sustainable modes ofproduction. Even in influential economic circles, there is a growing awareness that withouthealthy competition, a minimum of social protection and conscious efforts to protect the

natural environmental, sustainable economic development will be at risk. The words ofGermany'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 ecologicalframeworks being lost, that would mean a globalisation of the exploitation of humankind andthe natural environment.

These structural governance deficits mean that standards initiatives have an especiallyimportant contribution to make to sustainable development in support of governancestructures.

3.4.3 New Co-governance Structures

As explained above, governance for sustainable development must be performed jointly bythe state, the private sector and civil society. Actors from all three spheres must cooperate inbuilding co-governance structures, and must do so at all levels, from the global to thecorporate. 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 ifs/he suddenly grabs the steering wheel without warning, it can become a very dangerousride.

Of particular interest here is the governance of value creation chains, in which numerousactors 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 pointsfrom which a value creation chain can be dominated, i.e. from which the rules for all otheractors 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 alongthe product chain comply with the standards agreed on by all in environmentally-aware andethical business contexts, the actors and decision-making structures in the private and publicsectors, and civil society, are usually very closely networked (GEREFFI et al. 2001).

HAUFLER (2003) distinguishes four forms of governance, according to who lays down therules and standards: "traditional regulation, co-regulation, industry self-regulation and multi-

stakeholder regulation" . The behaviour of economic actors is steered by numerousframeworks. The state, the private sector and civil society are all involved – to differingdegrees – 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 andcivil 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 ifthat involvement is not immediately evident. Indeed, all three spheres are involved in amultiplicity of ways in establishing a system of frameworks to guide economic actors towardssustainable development. This creates a multifaceted architecture of co-governance, asillustrated in Figure 3.4.3 a.

The actors involved in governance must coordinate their actions. Though the differentcategories of actor are each presented separately here, this is designed merely to help thereader 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

Privatesector

PSPSCivil

society

CS

CS

Standards initiative A

Standards initiative D

Standards initiative B

Standards initiative C

PS

CS

State

S

SS

Privatesector

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 leveldown to the municipal. Its sovereign steering functions are complemented by steeringinstruments of civil society and the private sector. The sovereign functions of fixingstandards, controls, incentives and sanctions are supplemented by socially negotiated

rules, through the monitoring of transparency, and through stakeholder incentives andsanctions. As well as being involved in these frameworks, the state is also a key actor inhuman resources development, especially in the health and education sectors, as well as ininfrastructural development (especially road, rail and port infrastructure). The range offrameworks which the state can be involved in putting in place is a broad one. Yet the state'sscope for decision-making and enforcement continues to be eroded by the forces ofglobalisation.

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

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

• The framework of legitimacy created by the state is crucially important for thegovernance activities of civil society and private sector actors. This is particularlyrelevant in the case of transboundary regulatory frameworks. Without some basis oflegitimacy 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 andregulations 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 thedramatic advance of tropical forest destruction, in 1993 non-governmental organisations,together with representatives of the private sector, established the Forest StewardshipCouncil (FSC). This organisation defines globally applicable standards of good forestmanagement, accredits certifiers, and lays down rules for national working groups andrecognises 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) governancesystems". This characterisation seems problematic in two respects, first of all because it wasthe state which supplied the FSC system with its legitimacy at Rio through the internationalagreements Agenda 21 and the Forest Principles, to which the FSC makes explicitreference. Secondly, it remains an open question whether and to what extent the FSCsystem can be considered "market-driven", since neither the FSC nor certification issufficiently well known among end consumers. The system does not draw its legitimacy fromthe 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 sustainabledevelopment in accordance with the internationally accepted vision.




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Through private sector and civil society actors, the FSC standards initiative attempts totranslate the principles of sustainable development and sustainable forest management, onwhich governments agreed in Rio, into a consensual, verifiable and binding form. Thoughgovernments 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 theirlegal systems, economic infrastructure, training and research, the frameworks without whichthe certification systems could not develop. Rather than calling this a non-state governancesystem, 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 standardsdefined by civil society groups are translated into a law by the state, in order to guarantee thequality of the "certified organic" label. The labour standards of the International LabourOrganization (ILO) are also produced through co-governance arrangements, because notonly states but also trade unions are represented on the decision-making committees of theILO. 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 activeparticipant in governance at all levels, from the global to the corporate. Interestingly, there isstill no consensus as to the precise definition of the term "civil society". According toMEIDINGER (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 increasinglybeing filled by civil society. Having noted that profits are increasingly being privatised, whilelosses are being socialised as "external costs", "emancipated" citizens are voicing theiropinions and assuming responsibility for public tasks that previously were often delegated tothe 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 enhanceits effectivity it avails itself of new potentials created by globalisation. This involves less thesphere of de-territorialised financial flows, and more the global information andcommunication networks, and the potentials which these create for civil society to act as anew "major power" and influence public opinion. Civil society forms, and is formed by, acomplex network of non-governmental organisations (NGOs) that cooperate, or possiblycompete, with each other in certain areas and at certain times. Occasionally, NGOscoordinate their cooperative or confrontative roles. MCNICHOL (2003: 255), for instance,reports a "good cop, bad cop coordination strategy" between the NGOs Worldwide Fund forNature (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 publicconcern. 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 certainrestrictions, 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 asbeing in the public interest. This would mean that NGOs working for sustainabledevelopment would also need to take into account the social and economic impacts ofenvironmental campaigns in which they were involved, and to include an ethical componentin any investments they might make.

The impartiality of NGOs is difficult to assess. The composition of decision-makingcommittees is hardly an accurate reflection of the society whose public interests theyrepresent. However, this criterion is of only very limited significance as an indicator of theimpartiality of NGOs. NGO decision-making structures often lack transparency. Informationon 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 thenbecomes difficult to establish whether the NGO is retaining its impartiality, even though it isbeing sponsored, or whether it is being instrumentalised by the sponsoring agency.

Some NGOs are financed largely through donations, and some from a mixture of donationsand returns on investments. Increasingly, NGOs are financing themselves through their owneconomic activities. These hybrid forms of NGO-cum-commercial enterprise (e.g. sale ofgoods, consultancy or certification services against payment) offer NGOs the advantage ofgreater financial independence, but increase the risk of conflicts of interest. The watchdogfunction 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 bestruck 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 beyondtheir corporate mission in the narrow sense, and

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

Both aspects are related to the enormous increase in influence over the environment andsociety gained by the private sector, i.e. over the frameworks within which it operates, notleast as a result of globalisation. That influence has also moved further and further beyondthe reach of the state.

Co-responsibility of the private sector for frameworks: The de-territorialisation of theprivate sector brought about by globalisation can easily be interpreted by private sectoractors as exonerating them from co-responsibility for the well-being of their social and naturalenvironment. 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.




57

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

By contrast, corporate social responsibility (CSR) or the more recent term corporatecitizenship implies that corporations, like good citizens, should also assume responsibility forthe development of their natural and social environments, i.e. should not only utilise, but alsonurture the frameworks within which they operate. CSR is not an innovation but an age-oldobligation 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 lossof legitimacy, enterprises are responding by making a corresponding commitment.

Stakeholder participation in corporate governance: Today, enterprises are influenced bya variety of individuals and groups. Large enterprises in particular must increasingly satisfythe 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 complexsystem of interests and possible influences, the significance and possible impacts of whichneed to be carefully considered, and harmonised with corporate goals. Civil society actors,especially NGOs, are also gaining increasing influence over enterprises and their economicnetworks (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 policymakingcan be broken down as follows (BÖHI 1995):

• internal stakeholders: proprietors, management, staff

CorporatePolicy

state

marketeconomic

theory

proprietors, shareholders

s t a f f , m a n a g e r s

b u s i n e

s s p a r t n

e r s

s t a k

e h

o l d e r s

c i v i l s

o c i e t y

CorporatePolicy

state

marketeconomic

theory

proprietors, shareholders

s t a f f , m a n a g e r s

b u s i n e

s s p a r t n

e r s

s t a k

e h

o l d e r s

c i v i l s

o c i e t y




58

• external stakeholders:

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

∗ public sector and civil society: the state, local authorities, the media, social interestgroups, 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 thestakeholder dilemma (cf. Fig. 3.4.3 b):

• A permanent, general stakeholder monitoring process could include all groups ofactors 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 beused 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 thatshould 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

Possibleopportunities:transaction,corporatepolicymaking

Phases:stakeholderdiagnosis,stakeholdernegotiation

Possible impacts:availability andefficiency of resources,damage containmentreputation,legitimation

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

General stakeholder monitoring

Stakeholder dialogue

Possibleopportunities:transaction,corporatepolicymaking

Phases:stakeholderdiagnosis,stakeholdernegotiation

Possible impacts:availability andefficiency of resources,damage containmentreputation,legitimation

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




59

interests and their capability to assert their expectations within the corporation.According to MINTZBERG, stakeholders with low interest and weak influence should beonly minimally involved. Groups with strong interest but weak influence should beintegrated 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 closercooperation 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 oftheir general patterns of behaviour;

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

∗ Through stakeholder negotiations, the stakeholders' claims would need to beharmonised 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 thesustainable development vision).

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

- Failure to take due account of conflicts of interest (agreements are worded sogenerally, and above all are not concretised through standards, that they end upbeing 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




60

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 ofstakeholder concerns in fundamental corporate policymaking. The participants involved andthe 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, rawmaterials, semi-products, funds, social capital such as knowledge and regulatorysystems), 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 andstakeholder 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 orientationsatisfies the two criteria of ethically appropriate corporate conduct that are the result ofThomas 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 moremorally 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 orientedtowards the sustainable development vision will be oriented more strongly towardsstakeholders than shareholders, and more strongly towards social responsibility than itsavoidance.




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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)

Addr

esseesoforien

tatio

n

Temporal dimension of orientation

• exploitation of potentialbenefits and results

• quality-based,extrapolative planning

• corporate policy optionsdetermined on the basisof existing potentials

• development of potentialbenefits and results

• visionary, missionaryplanning

• successful options arederived from the desiredgoals

• one-sided orientation of corporate policy goalstowards capitalised market value

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

• an attempt is made to gain social acceptance bymeeting minimum social requirements

• objectives are negotiated between interested groups• multi-dimensional policy embracing the market,

politics and morality

• social acceptance solicited through socialresponsibility of capital

short term long term

monistic

pluralistic

Addr

esseesoforien

tatio

n

Temporal dimension of orientation































short term long term

monistic

pluralistic

stakeholder

shareholder

stakeholder

shareholder

Orientationtowa

rdsecologicalg

oals

strong weak

s t

r o n g

weak

Orientation towards social goals

• satisfaction of social demands isseen merely as a means to enhanceperformance

• the inclusion of social goals isexploited for personnel marketingpurposes

• social concerns are perceived as anobstacle on the corporate policy path

• the personality of the staffmember is desired andpromoted

• human resources are placed atthe core of corporate policy

• the inclusion of social concernsdrives corporate action

• ecological goals are a product of legal

standards• ecological goals are defined at best

implicitly, that verification of conformity isimpossible

• achieving ecological goals is understood aspart of the corporate mission

• ecological goals are a logical consequenceof corporate social responsibility

• ecological goals are explicitly mentioned incorporate policy documents, and conformityis verified

Orientationtowa

rdsecologicalg

oals

strong weak

s t

r o n g

weak

Orientation towards social goals







• the personality of the staffmember is desired andpromoted

• human resources are placed atthe core of corporate policy

• the inclusion of social concernsdrives corporate action

• ecological goals are a product of legal

standards• ecological goals are defined at best

implicitly, that verification of conformity isimpossible

• achieving ecological goals is understood aspart of the corporate mission

• ecological goals are a logical consequenceof corporate social responsibility

• ecological goals are explicitly mentioned incorporate policy documents, and conformityis verified

policy ofavoiding socialresponsibility

corporate policyof social

responsibility

policy ofavoiding socialresponsibility

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 theprinciples of sustainable development are almost self-evident, anyone embarking on the path

to sustainable development will be confronted with major challenges. Tackling thosechallenges is an ambitious venture. The ambitious venture of sustainable developmentbegins in the mind: seeing things in context, thinking in terms of networked systems ratherthan isolated segments, calls for the courage to embrace complexity. It also calls for thecourage to develop resource management strategies that at the same time take into accountas comprehensively as possible the constellation of cooperating, competing and affectedactors, or strategies to fight terrorism that not only meet violence with violence, but also seekto identify and address the possible root causes. The same thing applies to a life-conduciveorientation which, in contrast to the highly simplistic vision of economism, does not simplyignore key social and environmental problems or treat them as "externalities", but explicitlyaddresses them. This too requires the courage to embrace complexity. When fictions of

economics such as that of complete market transparency, or of prices being determinedexclusively 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 assumptionsof economism. In other words, an orientation towards a comprehensive vision such as that ofsustainable development also requires the courage to embrace transparency.

Actors can only possess the will to help shape frameworks and discover scope for action, asopposed to passively accepting the so-called "objective constraints", which in reality areoften just in the mind, if they also have the courage to assume responsibility. Actors of thestate, the private sector and civil society do not find it easy to establish or further developframeworks 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 ineach 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 theterm a tall order. The first two challenges are of a predominantly cultural nature. Thechallenges of shaping frameworks and erecting the architecture of co-governancedemonstrate the eminently political character of the sustainable development vision. Tacklingand 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 GermanBundestag, formation of the social capital that determines a society's capability to adapt andgenerate 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. Theseinitiatives are regulatory frameworks that are put in place and enforced through co-governance mechanisms. They not only promote compliance with social and ecologicalstandards in production operations, but also help modify guiding frameworks. They helpactors embark on the ambitious venture of sustainable development, and realisticallyaddress the aforementioned challenges, by

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

• creating incentives for compliance and sanctions for non-compliance with thestandards;




63

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



4. Implementing the Vision – the Instrument of Standards

65


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 andlocal. 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 theabstract 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 themselvesunreservedly to concretisation. In doing so, however, they overlook the fact that bothprocesses are essential to any conceptual engagement with reality that also seeks to changethat reality, and that therefore those processes belong together like inhalation andexhalation. Any fixed term is an abstraction. The term "tree", for instance, is an abstraction ofa cluster of attributes such as height, age or leaf shape, attributes which every tree thatexists possesses, and possesses concretely. Yet it is precisely because every realphenomenon displays such a wealth of concrete attributes that reality could not be graspedin its full complexity without some strategy for complexity reduction, such as that ofconceptual abstraction. To deal with real trees, the abstract term "tree" needs to be fleshedout 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. Therecan be no such thing as an absolutely correct or absolutely complete concretisation. Thereshould, 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: theessentials are identified by leaving out the situation-specific aspects. To provide orientationfor a specific situation, the vision needs to be rendered specific by filling in the gaps left bythe process of abstraction. The abstract, general vision must be concretised for a specificcontext. The fact that the abstract vision always needs to be contextualised is not a weakpoint 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 twosides of the same coin.

The UN Conference Rio+10 in Johannesburg planned to concretise the voluntarycommitment to the vision of sustainable development that had been made by countries atRio, by precisely identifying common goals, at least for selected themes. Only limitedsuccess was achieved in this respect. It would, however, be premature to conclude from thisthat the vision is, generally speaking, useless. Although the global concretisation of thevoluntary undertakings made at Rio was not quite as successful as many had hoped, itremains indisputable that the vision does indeed provide orientation for action in manysituations, 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 reachingagreement on the relevance of certain themes in itself may already represent progresstowards concretisation, even though no verifiable goals habe been agreed upon. For




66

instance, the fact that the USA conceded the relevance of state-imposed regulatoryframeworks for the environment, thus moving away from its earlier categorical call forreliance 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 forconcretising the vision. Of particular relevance here are production standards, i.e. standardsfor products and production processes. To aid concretisation of the vision through standards,Section 4.2 provides a definition of standards, and describes their characteristics andfunctions. Section 4.3 outlines the broad scope for designing and applying standards. Thisoffers a basis for planning new standards initiatives, and assessing existing ones. Thisconstructive engagement with standards can generate changes that reach beyond theproduction sites where the standards are introduced. These impacts will be dealt with inSection 4.4. Finally, Section 4.5 will identify aspects of standards initiatives that seemabsolutely essential from a development policy perspective if a standards initiative is to beconsidered 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 ofliving). Standards are widely applied in international trade, especially where prices areagreed on for goods when the goods cannot be examined. Prices are agreed on for clearlydefinable standards, i.e. quality types or grades, possibly before the good is produced orharvested (e.g. the futures market for grain, cotton, coffee). Standards also play a major rolein mass production: suppliers must comply with certain standards so that the parts suppliedcan 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 bedefined 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 productsare to meet specified criteria, then it must be clear whether those criteria must be met atall stages of development or processing of the product, or only at certain stages; whereprocesses are to satisfy the criteria, the beginning and end of the phase during which theprocess 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 andindicators. This can be illustrated for example with reference to the standard "humansize". The criterion for this standard would be ambiguous, because it could beunderstood to mean a number of very different things. Only by specifying themeasurement 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 oftheir head to the soles of their feet seems obvious. Yet for many criteria the parameter ofmeasurement is far from self-evident. Without that parameter, the criterion may well lack




67

precise definition. The indicator for the parameter "height" states which height, e.g. 1.8metres, an individual should display. Indicators can be measured along different kinds ofscale: on a nominal scale (yes/no), on an ordinal scale (e.g. large, medium, small), or ona 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 inthe 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 satisfiedpermanently, 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 havebeen jointly agreed on by the concerned actors. Yet on closer inspection, imprecise orextenuating clauses come to light that show the agreement to be more equivocal than firstassumed. The most recent and perhaps most complete list of such "softeners" was providedby the resolutions adopted at Johannesburg. The extenuating clauses formulated thereinclude:

• "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 lakesand 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.) W hat should meet

• the criterion plus parameters for the measurement thereof W hich criteria

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

• the indicators H ow ?




68

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

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

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

Standards perform a wide variety of functions:

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

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

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

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

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

• reducing transaction costs: the costs of information procurement when contracts arebeing entered into can be reduced considerably where clearly defined standards areagreed 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 correspondingmonitoring 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 andapply standards that concretise the sustainable development vision, thus making it morebinding. These activities are referred to here collectively as standards initiatives forsustainable development. The term “standards initiatives” is deliberately broad in scope. Itincludes both legislative initiatives, such as the EU Directive on Bioproducts, certificationsystems such as forest certification by the Forest Stewardship Council (FSC), voluntary

undertakings by corporations to comply with prescribed standards, such as the GlobalCompact proposed by UN Secretary-General Kofi Annan, and standards put in place and




69

monitored by companies themselves, such as the standards which the retail chain C&Arequires 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 bywhom compliance with the standards is verified, how and by whom the certifying or verifyingagencies are accredited, and finally how and by whom compliance with standards isrewarded through incentives, and non-compliance penalised through sanctions(commercialisation strategy). In other words, standards initiatives display a range ofcharacteristic features that may assume a variety of forms (cf. Fig. 4.3). When standardsinitiatives are compared, e.g. with respect to the possibility of mutual recognition, it thenbecomes very important to compare the entire range of features, including both thoseintended 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 - mightbe interpreted as a sign of arbitrariness. Yet this impression would be incorrect, becauseboth the relevant international conventions and agreements, and especially the InternationalStandardization Organization (ISO), have laid down numerous rules governing how certainaspects of standards initiatives must be arrived at. For instance, standards have to bedesigned on a participatory and consensual basis. It is true that these rules do not possessbinding legal force, and that no standards initiative can be forced to comply with them. Yet aninitiative that did not comply with such generally acknowledged rules would run the risk offailing to gain acknowledgement by other initiatives, losing public credibility, or being classedby the World Trade Organization (WTO) as a barrier to trade.

Commissioned by the Forest Certification component of the GTZ Programme Office forSocial and Ecological Standards, VALLEJO / HAUSELMANN (2000) prepared a compendium ofsuch 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 policyperspective. Quality criteria designed to be used as tools for decision-making on the eligibilityof standards initiatives for development policy promotion are then identified on that basis.This guarantees that development organisations are able to pursue a coherent approach.




71

To illustrate the wide range of options for designing standards initiatives, the GTZProgramme Office for Social and Ecological Standards is currently preparing case studiesthat describe standards initiatives in several countries and sectors, with reference to the tableof 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 thatensure commensurate participation by stakeholder groups. In other words, the structures andprocedures should guarantee plural participation in the development of standards. Theprocedures for decision-making and selection must be transparent, and the correspondingresponsibilities of actors and groups of actors allocated accordingly. The goals of standardsetting must be clearly defined, and potential fields of conflict identified.

The process of dialogue to define and continually improve standards is also affected byconflicts of interest. When social and ecological goals are laid down, power is alsonegotiated, as the issues at stake usually include access to, control over and the allocation ofresources. To effectively prevent certain interest groups from being excluded, all stakeholdergroups should enjoy real participation in decision-making processes affecting the formulationof goals and the setting of standards. The more interest groups that participate, the greaterthe certainty that all relevant information will be fed into the process. When standards arebeing defined, the input of relevant technical, scientific and practical knowledge must beguaranteed. 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 dialoguestandards should be defined, and new insights and ideas gained by piecing together items ofknowledge. To ensure that standards are accepted by all as binding rules, they should bedeveloped and adopted on a consensual basis. Actors must be guaranteed opportunities toraise 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, andintegrates external claims into the frame of reference (GELLRICH et al. 1997: 543 ff., quoted inDEUTSCHE BUNDESSTIFTUNG UMWELT 2001). This procedure guarantees that all stakeholdersand actors identify with the vision, and take the necessary steps towards achieving it withintheir own immediate sphere. Commercial enterprises in particular must act as fair partners indemocratic will-forming and decision-making processes, and seek to help facilitate areconciliation of interests process. This means providing their workforce with information andtraining, 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 aretermed 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 theunderlying question of what direct hazards a product poses to humans and theenvironment. In other words they relate to properties of the product, and usuallyprescribe minimum or maximum values that the product must display. Productionstandards are a response to the underlying question of whether the production processposses hazards to humans and the environment. The definition of these standards takesinto account not only the impacts of the process on the product, but also the ecologicaland 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 theproduction process, social standards usually only relate to production processes, theiraim being to improve labour conditions and terms of trade.

b) Criteria: for standards to function as an instrument for sustainable development, theymust broadly incorporate the principles listed in Chapter 2. This means on the one handthat requirements concerning the social, ecological and economic dimensions of tradebe formulated in full, and on the other hand that that the standards guaranteecompliance with national and international laws, conventions and agreements. Thesedemands mean that standards have to strike a balance between breadth andspecialisation. If they focus too narrowly on one dimension, they may not serve theinterests of sustainable development. Ecological balance, social justice and economicprosperity must be pursued as equally important objectives, and the dominance of onedimension must be avoided. A one-sided focus of standards programmes can forinstance mean that the idea of biodiversity is accorded priority, while producers are givenno economic incentive, or it may mean that the a product is pollutant-free, while resourceconsumption during the production process goes unchecked.

Where standards incorporate a very broad range of criteria, switching an operation tocompliance with those standards can be a very difficult and protracted process.Consequently, it has recently been suggested that comprehensive standards should bebroken down into modules, which should then be introduced and monitored gradually, inaccordance with company-specific conversion programmes. Compliance with theconversion 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 theindicators used to measure the criteria, e.g. performance standards that specifymaximum or minimum limit values that must be complied with, and process standardsthat merely require the criteria in question to undergo a process of improvement.Examples of process standards are ISO 9000 and ISO 14000. These require theintroduction of a management and monitoring system to guarantee a process ofimprovement. One aspect of this approach that might be criticised is the fact that animprovement process is not sufficient to guarantee that the criteria actually satisfyminimum or appropriate indicator values, as opposed to being a little less bad than theywere before. This kind of typology is not very helpful, as many standards initiativesdemand 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 ona variety of levels: moral, legal, contractual or corporate.

d) Legitimacy: standards are considered "legitimate" if and when they comply withgenerally accepted rules of behaviour, e.g. culture-specific moral values. When thesestandards are applied internationally, cultural differences between countries may meanthat the same standard is seen as legitimate in one country, but not in another. If thestandards reflect European values, they are liable to be criticised as instruments of"Eurocentric cultural imperialism". Consequently, international conventions andagreements are more suitable for providing a base of legitimacy than culture-specificprinciples 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 bevoluntary: it is important to understand what the legal regulation actually refers to. Forinstance, EU Ordinance 209/91 on organic agriculture states that foodstuffs may only betraded as "bio" or "organic" if they comply with certain standards. Whether or notproducts are actually marketed as "bio" or "organic" is a voluntary decision. But if theyare, 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 theFSC logo, the prescribed standards are binding.

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

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

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

• Voluntary standards can support and unburden state institutions in the performanceof 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 contractualpartners, in which case the partners have the right to demand compliance with theagreed standards. The transaction costs for business deals of this nature are reducedconsiderably where the partners make use of established standards initiatives, especially

certification systems.

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

Scope of Application

Whether and how standards are applied will depend on how precisely and completely theyare worded, what concrete demands they make, how appropriate those demands are to the

given social, economic and ecological circumstances, and the complexity and costs ofcompliance verification.

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

b) Appropriate targets: when defining the indicators that measure whether and to whatextent 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 towardsthe vision of sustainable development, i.e. an improvement in compliance with oneor more of the five principles of sustainable development, in an ecological and/oreconomic and/or social context. On the other hand, the targets (indicators) must berealistic. Neither a continuation of the status quo nor utopian demands wouldconstitute a real step towards realising the vision. With applicable standards, theindicators for the respective criteria are agreed on through negotiation, in whichcontext some interested parties will seek a result closer to the status quo, whilstothers will seek an outcome closer to their own (perhaps unrealistic) ideals.

• Global vs. situation-specific prescriptions: on the one hand, standards should beunderstood and accepted on as global, cross-cultural and cross-sectoral a basis aspossible. On the other hand, standards that seek to be realistic and to constitute areal step towards sustainable development must take due account of the specificecological, economic and social circumstances. For instance, they must considerwhether or not the skills required of workers and managers in order to ensurecompliance with certain standards can be transferred or not. What is realistic in oneregion might be utopian in another, and what might constitute major progress in oneregion might have long since become the norm in another region. Since the vision ofsustainable development – as opposed to that of catch-up development – providesfor 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 acompromise here, in that all FSC standards must incorporate the same principlesand 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. Thiscompromise, which does indeed do justice to the sustainable development vision,leads to a situation in which FSC-certified timber from one country is produced inaccordance with different regulations than FSC-certified timber produced in another

country.

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

Transparency of Standards

g) Comprehensibility: the wording of a standard when it appears as a technical documentmust be precise and fully comprehensible. The more imprecise or ambiguous thewording, the more difficult it will be to verify compliance on a replicable and transparentbasis. At the same time, the scope for interpretation when implementing standards mustbe sufficient to allow context-specific adjustments. In order that complex and precisestandards 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 suitspecific target groups.

h) Desirability: the history, content and editing of standards should be such as to convinceusers that it makes sense to apply those standards. Therefore, it must be apparent tothe user that the standard is a contribution towards sustainable development, which inturn presupposes that the user him/herself also values sustainable development highly.Standards cannot be promoted without explicit reference to the values on which they arebased. The same principle also applies to those individuals who are supposed to rewardcompliance 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 whichindependent monitoring agencies verify whether or not the standards in question have beencomplied with, and then formally confirm compliance by issuing a certificate. As well ascertification there are also numerous other forms of review, such as auditing, verification andinternal monitoring systems.

Who Is the Verifying Party?

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

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




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Qualifications of Inspectors

Key qualifications of the inspectors include not only the training background of the team, andespecially 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 beingverified. Teams should include not only experts in the respective field, but also specialists insocial issues and ecological problems. It would seem especially important that the teamshould also include local experts who are sufficiently familiar with the culture, history andnatural environment of the region. One serious problem in verifying compliance today is thefact that, especially in developing countries and countries in transition, and very few qualifiednational far less local, personnel are available to perform verification. At best, developmentcooperation 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, betweenbusiness partners or in the context of third-party verification, can only be placed on asustainable 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 verifyingcompliance: documents, interested and affected stakeholders, and production plants.

Of the documents that might be accessed, those produced by the in-house monitoring andcontrolling system are especially important. This is because when compliance is beingverified, especially by a third party, it is not possible to conduct a primary inventory ofcorporate 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 legitimacyof the institution whose compliance is being verified, and that reflect its strategic andoperational planning.

The stakeholders of a company may include its own workforce, riparians, localorganisations, clients, suppliers, banks, insurers and public authorities, provided that they areconnected 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 integralaspect of the verification process, and may draw the attention of the inspectors to relevantfacts.

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 ofcorporate documents.

Verification Methods

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




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Evaluation of Findings

The comparison of target and measured values in compliance verification must also befollowed 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 takenas to whether the discrepancy is still within the tolerance limits, and whether correctivemeasures are required. Such value judgements and decisions are especially necessary incases where some criteria are met, and others not.

Compliance verification, especially when carried out by third parties, is often organised inthree 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, anddeliver proposals for decision-making.

• Further decisions, e.g. as to whether or not to issue a certificate, which may be madeconditional upon the imposition of further regulations, are usually not taken by externalspecialists but, on the basis of the verification report, by members of the verifyinginstitution 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 clearwhich rules are being applied in the verification and evaluation process, and that those rulesare really being adhered to. Furthermore, it is not sufficient to establish transparency only fordirectly affected stakeholders. If compliance verification is to enjoy public credibility, then abroad public must at least have an opportunity to see for itself what the rules are, and thatthey are being applied. The Internet has vastly improved opportunities for creating publictransparency.




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The quality of compliance verification is also heavily dependent on the presence ofopportunities 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 accreditedby that agency.

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

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 ofcertifiers can also be termed certification of certifiers (VALLEJO /HAUSELMANN 2000: 20). Theaim 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, theseare not monitored by any other body. Most accrediting bodies are organised in theInternational Accreditation Forum (IAF). Three categories of accreditation body should bedistinguished:

1. National accreditation bodies; in many countries, an accrediting organisation isrecognised by the state, the private sector and certifiers as the sole nationalaccreditation 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 andEnvironmental Accreditation and Labelling (ISEAL) Alliance, which include the FairtradeLabelling Organizations (FLO), the Forest Stewardship Council (FSC), the InternationalOrganic Accreditation Services (IOAS) as the accreditation body of the InternationalFederation 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 recognisedone. IOAS for instance is recognised neither within the EU nor in the USA or Japan, whichmeans 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 thecertification process. ISO/IEC Guides 61, 62 and 65 (ISO/IEC 1996a, 1996b, 1996c)

describe general requirements that an (impartial) third party operating a certification systemmust 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 thecontext 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. thestrategy they employ to motivate actors to reward compliance with standards. Figure 4.3.4aillustrates 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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from producers' conformity. To activate these passive beneficiaries, promoters of thecommercialisation strategy explain to them why compliant producer behaviour is in theirinterests (explanations of quality), and raise the beneficiaries' awareness of how they canhelp 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 aspromoters by requiring their member firms to demonstrate their responsibility as actors forsustainable development by encouraging their clients and suppliers to comply with certainsocial 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 canthemselves be promoted, e.g. by the press, teachers, trainers, or the staff of developmentcooperation 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 rewardand support standard-compliant behaviour by producers. The most likely target groups arethe "silent" or "dormant" beneficiaries; however, the interest in compliance of thosebeneficiaries already awakened must also be kept alive. Commercialisation strategies areoften 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 thecheapest goods, while other quality features are pushed into the background;

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

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

In many commercialisation strategies the end consumers therefore only appear to be thetarget 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 asresponsible actors for sustainable development and, of course, because they are moreresponsive to the threat of sanctions.

Promoters attempt to reach the target groups in two ways: through declarations – andexplanations – 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 targetgroup 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




83

group. Depending on the target group, the explanation of quality will need to highlight verydifferent 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 drawnbetween product quality in the strict sense, which can be ascertained by examining theproduct itself, e.g. by measuring the pollutant content, and the quality of the productionprocess (production quality or product quality in the broad sense), which is often notreflected by properties of the product itself, as in the case of compliance with core labourstandards. If the intention is to declare that a product originates from a productionprocess in which certain standards were complied with, then it will be necessary todemonstrate 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 ofprocessing and marketing. This can be illustrated by the example of FSC forestcertification. FSC certification of conformity guarantees a quality of production in whichthe timber was produced in a manner not injurious to the environment or humankind, butdoes not tell the consumer anything about the quality of the timber itself, e.g. its pollutantcontent. In order that the purchaser can be certain that the timber comes from a forestwhere FSC standards are upheld, the consumer requires a certificate of forest origin. Atthe same time, the end consumer also requires a CoC certificate confirming that theproduct has passed through the entire chain of custody, from the forest and through thehands of all the downstream processors and distributors, without being substituted orinappropriately mixed with other timbers. Since the end consumer is usually not so wellinformed about product properties or the conditions of production, or for that matterabout the chain of custody, further explanation is required to enable the end consumer to

C o n d u c i v e t o

d e v e l o p m e n t

Developmentcooperation

organisations

C r e d i t -

w o r t h

i n e s s

Distributors,processors

C o n v e r s i o n ,l e g a l i t y ,m a r k e t

P r o d u c

t

q u

a l i t y

ConsumersLegality

State authorities

Riskreduction

Banks,investors

Compliance

Insurance companies

C o n d u c i v e t o

d e v e l o p m e n t

Developmentcooperation

organisations

C r e d i t -

w o r t h

i n e s s

Distributors,processors

C o n v e r s i o n ,l e g a l i t y ,m a r k e t

P r o d u c

t

q u

a l i t y

ConsumersLegality

State authorities

Riskreduction

Banks,investors

Compliance

Insurance companies




84

fully comprehend the significance of compliance with certain standards. It must beexplained to consumers how and why compliance with certain standards is relevant tothem, and consumers' awareness of the need to actively support compliance must beraised.

b) Declaration of conversion: converting to production in conformity with certainstandards can be an arduous and costly process. Consequently, for various standardsinitiatives ways are sought to support, monitor and facilitate the conversion process. Aproduction plant can, for instance, undertake to implement a conversion plan, and haveimplementation 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 aproduction plant to convert, e.g. through purchasing guarantees. Incentives forconversion to sustainable production can be very helpful; having said that, they shouldnot 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 inthe production, processing and distribution of products can be a first step or part of onetowards a declaration of full compliance and conformity. Processors and distributorsshould have a strong interest in such declarations, to avoid being accused of illegalpractices and penalised. Where standards initiatives include a declaration of legality, itseems appropriate that state monitoring bodies should reward this practice, as it relievesthem of part or all of their monitoring burden. The state forest department in Bolivia, forinstance, rewards FSC certification by significantly reducing the reporting obligations ofcertified forest enterprises.

d) Explanation of market conditions: information on the supply of and demand forproducts in compliance with specific standards is very important for judging the dynamicsof standards initiatives, and for sensitising potential promoters. Having said that, marketstudies should always be examined with great care, as they can easily mislead usersinto drawing premature conclusions. If it emerges for instance that end consumers arenot familiar with a certain standards initiative, this does not necessarily mean that thepotential 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 canreduce considerably the risk of accidents, environmental damage and perhaps alsosocial unrest in a plant. Insurance companies might reward such compliance whencalculating their premiums.

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




86

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

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 wellbelow demand, the higher price is certainly not the only incentive and not the only motive forconversion to sustainable management. Securing market share and gaining prestigeevidently play a major role alongside the higher price.

Studies increasingly show that compliant production can lead to cost reductions, on the onehand 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 astandards initiative, i.e. the costs for drafting and concluding contracts, are lowered. Thelatter occurs for instance where purchasers or producers form associations, and last but notleast 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. Inmany countries, however, penalties do not constitute effective sanctions. Often, standardsinitiatives organised by the private sector or especially civil society possess more effectivesanctioning mechanisms than legally prescribed penalties, when they either threaten topunish or actually punish non-compliance by producers or distributors with demonstrationsand disruptions. This kind of disruption backed up by awareness-raising work can easily leadto 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 necessarilycongruent with the scope of intervention. This is especially true of initiatives that setstandards to be complied with by production, processing or distribution enterprises:compliant enterprises should be considered the sphere of intervention of such initiatives. Thesphere of impact of standards initiatives may, however, extend far beyond the compliantenterprises in cases where not only conditions within the enterprises, but also national orglobal frameworks are modified by the initiative. The range of impacts may include nationalframeworks, for instance, where the standards initiative leads to the creation of new fora forparticipation in political decision-making or conflict transformation; where the standards

initiative leads to the formation of new international alliances, its impacts may even becomeglobal in range.

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

Finally, a third dimension of impacts is the issue of functional or structural impacts. Whenas a result of the standards initiative the behaviour, function or mode of utilisation ofresources is modified, this can be termed a functional impact. On the other hand, standardsinitiatives also generate structural impacts when the structure or composition of resources,

i.e. their quantity, quality or availability, are modified. Structural and functional impacts areoften closely interrelated, as structural changes can create the preconditions for functionalchanges.




87

The distinction between the structural and functional impacts of standards initiatives cannotbe an absolute one, since the structure and function of resources mutually interact. This canadversely affect the utility of the distinction for purposes of impact monitoring. On the otherhand, the distinction is important because actors often attempt to solve functional problems,

such as the effectivity or efficiency of organisations, through structural means. Yet wherestaff or units are transferred without changing their behaviour, these structural measuresoften fail to generate the desired functional impacts.

Figure 4.4 a shows the possible impacts of standards initiatives, illustrated by selectedexamples. Functional and structural impacts on environmental, economic and socialresources, 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 harvestingmethods prescribed for FSC certification cause little damage to soils during transport of thetimber, 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 reducetransboundary sludging of weirs, increase the efficiency of hydropower plant utilisation andreduce global fossil fuel consumption.

Structural impacts on environmental resources: compliance with the FSC rules forsustainable 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 thenational level and, due to the increased binding of CO2 in the forest, to a lower atmosphericconcentration of this greenhouse gas.

preservation of trad.knowledgeunion reps oncommittees

national sign. oftraditional rightsunion reps oncommittees

local respect oftraditional rights

proportion unionmembership

socialsocial functional

capital structural

social

human functional

res. structural

economic

functionalstructural

environmentalfunctional

structural

Range

Resources

Global FrameworksNationalFrameworksCompliantEnterprises

poverty reduction

gender equality

training level oflabour pool

proportion offemales inworkforce

reduction of childlabour

proportion offemales in workforce

global economicperformanceglobal structure ofsector

increased valuecreationsectoral structure

corporatedepreciationcorporate coststructure

reduced fossil fuelconsumptionatmospheric CO2concentration

reduced waterpollutionproportion of landunder forest

low soil damagenear-natural forest

preservation of trad.knowledgeunion reps oncommittees

national sign. oftraditional rightsunion reps oncommittees

local respect oftraditional rights

proportion unionmembership

socialsocial functional

capital structural

social

human functional

res. structural

economic

functionalstructural

environmentalfunctional

structural

Range

Resources

Global FrameworksNationalFrameworksCompliantEnterprises

poverty reduction

gender equality

training level oflabour pool

proportion offemales inworkforce

reduction of childlabour

proportion offemales in workforce

global economicperformanceglobal structure ofsector

increased valuecreationsectoral structure

corporatedepreciationcorporate coststructure

reduced fossil fuelconsumptionatmospheric CO2concentration

reduced waterpollutionproportion of landunder forest

low soil damagenear-natural forest

Standards

Initiative




88

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

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

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

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

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

Structural impacts on social capital: compliance with the ILO core labour standard offreedom 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 oncommittees at the national and international levels.

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

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

• Apart from the impact chains generated by the implementation of standards, theprocesses leading up to the agreement, verification and commercialisation of standardscan also generate change beyond the enterprises concerned: standards initiatives canalso 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 ofstandards initiatives have barely received any systematic study or been systematicallyutilised 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, thewhole is greater than the sum of the parts (i.e. standards initiatives as a whole make a largercontribution 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, providevaluable assistance and orientation to enterprises willing to convert. Enterprises that arealready in conformity are extraordinarily important as demonstrative examples of the

practical implementation of standards, and as proof of the fact that sustainablemanagement is possible, and not just a dream entertained by idealists. At first glance,these orientation aids seem to resemble the traditional TC approach. Yet thedemonstrative examples of compliant enterprises may differ in two respects fromexamples demonstrating traditional TC approaches: in many standards initiatives, thestandards 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 demonstrativeexamples, but generate changes both within compliant enterprises and within thenational (and perhaps global) frameworks simultaneously.

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

• Collective expertise on resource management for sustainable development: incompliant enterprises, in the country in question and beyond, standards initiativesgenerate an accumulation of expertise concerning how resources can be managedsoundly (i.e. taking into account economic, ecological and social aspects) andsustainably (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 managementprocess. In Bolivia, for instance, indigenous groups hitherto largely marginalised byforest policy have, by obtaining FSC certification, gained access to active participation inforest policy decision-making. The fact that this participation takes place not justoccasionally or by chance, but has been institutionalised according to fixed rules,represents a growth in social capital. Institutions such as public hearings before andafter 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: foraestablished for the purpose of agreeing on national standards, e.g. national workingparties for FSC certification, can become sectoral or national institutions capable ofdischarging tasks extending far beyond their original mandate.

• Innovative forms of co-governance: within the scope of standards initiatives, theprivate sector and civil society often participate in the setting of standards that werepreviously exclusively the domain of state policymaking institutions. This change of rolesis rarely friction-free, yet it does create scope to re assign the roles of the state, privatesector 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 performanceof 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), andmore of an aim to develop complementarities.

• Informative and cooperative networking of actors: standards initiatives whosecommercialisation strategy provides for standard-compliant producers to be rewarded bythe sellers or buyers of end products, must network the actors along the value creationchain with each other, in order to create a closed chain of custody including theproducer, the processors and distributors, and the retailer of the end product.Information must be exchanged between these actors, and a minimum level of commoninterest, 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 valuecreation chain, can result in alliances with formalised mutual agreements. Such alliancesare formed for instance within groups of producers or purchasers, or between sociallyand ecologically-aware banks and standard-compliant borrowers.

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

• Transparency as a barrier to corruption: the greater transparency usually associatedwith a standards initiative, e.g. transparency of the flow of timber and timber products, orthe inspection of forestry operations by independent inspectors within the scope of FSCcertification, places considerable constraints on corruption. Conversely, for hithertocorrupt enterprises, certification by a recognised standards initiative such as the FSCmay 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 requirecompliance with national laws. Furthermore, standards initiatives also promote the ideaof 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 thattheir existence cannot yet be considered proven. Only appropriate impact monitoring will beable to demonstrate to what extent the possible impacts of a standards initiative actually doresult 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 changesand the "learning" from experience gained will make it possible to answer the followingquestions: Can we carry on in the same way as before? Or: What can and should we dodifferently to bring about the desired changes? In other words, impact monitoring creates thebasis for adjusting standards initiative activities so that they are better oriented towards theintended 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, couldrelate to very different criteria. It would therefore seem inappropriate to begin the impactmonitoring 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 ofdata to confirm or refute hypothetical impacts such as those mentioned above, and thereafterto 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 whichnumerous factors come into play at the same time that also influence the impacts beingmonitored, it is barely possible or appropriate to attempt to determine what proportion of theimpact is attributable to the standards initiative or an actor supporting it. Any such attemptwould 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 totheir 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 orderthat these changes are desirable from a development policy perspective, i.e. in order thatthey help create conditions conducive to sustainable development, standards initiatives mustmeet certain requirements. These are illustrated in Figure 4.5, and described in the sectionsbelow. Standards initiatives alone, however, cannot guarantee sustainable development.Consequently, at the end of this chapter we will discuss the limits to their development policyeffectiveness.

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 essentialthat 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 madetransparent, and accepted by the actors concerned. Since participatory procedures must belearned, and indeed are a novelty for many actors, it can be a task of TC to facilitate aprocess of this kind. Having said that, a willingness to seriously comply with participatory

structures, and improve them continuously, is absolutely essential if standards initiatives areto be considered eligible for development policy support. This is the only way that the needs

Breadth anddepth of impact


Coherency andcomplementarity withstate policy


Social justice ofcommercialisation


Participation inand transparency ofstandard setting


DemandsDemands

Credible monitoringCredible monitoring

Learning processwith impact measurement

and opportunities forcorrection



Clearly definedand measurable

criteria


criteria

Support for conversionto conformity










DemandsDemands

Credible monitoringCredible monitoring






criteria


criteria






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of those sections of the population currently discriminated against can be incorporated intothe 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 fordealing with dissent and objections. In order that disputes arising during the standard settingprocess can be resolved, the decision-making processes and rules of procedure must betransparent and well-documented.

Clear, Measurable Criteria for Sustainable Development

The indicators of standards and the rules for measuring them must be clearly defined, andcapable of unequivocal, objective verification – also with regard to the specified time framefor achievement of the desired targets. This is the only way that conformity or non-conformitywith standards can be ascertained. Criteria and indicators describing the intended targets

must be transparent and comprehensible. Possible scope for interpretation must be includedin the definition, and accepted by the actors.

If standards are to point the way forward towards sustainable development, the demandsplaced on the social, ecological and economic dimensions of action must becomprehensively formulated, i.e. it must be clearly defined for the respective sphere ofapplication of the standards to what extent the principles of sustainable developmentdescribed in Section 2.2 must be complied with in the management of environmental,economic and social resources. In particular, the standards should provide guidance forcases where the individual principles conflict, i.e. where more rigorous compliance with oneprinciple 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 beconsidered all the more effective, the more enterprises that are in principle able to apply it. Astandard that cannot be complied with in principle by certain categories of enterprise must beconsidered discriminatory against those enterprises. The GATT system prescribes thatinternational trade should respect the principles of most-favoured nation status and non-discriminatory treatment. The principle of most-favoured nation status (Article I) obliges WTOmembers to extend any benefits, favourable arrangements, privileges or immunities granted

for one import or export product unconditionally and forthwith to all comparable products tobe 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 productmanufactured nationally. Compliance with these principles combined with the promotion ofenvironmental and social standards involves the following inherent problems: according toWTO/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 environmentalburdens that arise during the production process in the country of manufacture, except wherethose 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 bedistinguished:

• 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-basedfeasibility of the standard is unclear, and possibly even open-ended. However, if allenterprises could in principle be described as being in conformity with a standard, thatstandard would become meaningless.

• Due to geographical circumstances, the indicator defined is unachievable for certainenterprises. In a case of this kind, the required conformity can be discriminatory. Somestandards initiatives, e.g. the FSC, have solved the problem of achieving globalfeasibility without being either imprecise or discriminatory by setting different national orregional standards that differ only at the level of the indicators, while all FSC standardsincorporate the same principles and criteria. The national working parties that decide on

the national standards must comply with certain rules concerning participation andmodus operandi, and must be recognised by the FSC. The verifying agencies must beFSC-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 forenterprises. Often, small or local enterprises face greater obstacles to theimplementation of standards than do large enterprises, e.g. because their documentationor the training of their managers do not comply with the requirements of the standardsinitiative, or because they do not have the funds needed to invest in conversion, and/orbecause they do not have access to corresponding loans. This kind of exclusion ofdisadvantaged producers, which is undesirable from a development policy perspective,can be alleviated or prevented through targeted measures to support conversion toconformity (see below). The exclusion of disadvantaged producers can also becounteracted through target group-specific adjustment or editing of standards, or of theconditions for verification - especially the documents to be presented, through gradualverification 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 enterprisesand in the wider frameworks are. The two categories of breath and depth of impacts are intheory 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 nodepth of impact, but is very broadly applicable. In practice, however, the commercialisationstrategy also needs to be taken into account. For a standard with a very shallow depth ofimpact, it is very difficult to mobilise actors to reward compliance with this standard. Withoutincentives, however, producers are not willing to undergo conformity assessment, whichmeans 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 aproduct of the impartiality of the verifying party, transparency of the verification process, and

public participation. A well-documented, impartial (third-party) conformity assessment with ahigh degree of stakeholder and public participation is desirable, first of all to facilitate theidentification 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 populationare 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 theassessment tasks. Where possible, interdisciplinary teams should be formed that includeexperts from both the branch concerned, and from the social, environmental and naturalsciences. Extremely important in this context are local experts who are sufficiently wellacquainted 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 rulesof procedure for dispute settlement must be established.

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

• It must be ensured that different inspectors, auditors or verifying agencies come to thesame 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 ofthe inspectors. The standards themselves and the accredited verification methodsshould comply with ISO requirements.

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

Support for Conversion to Conformity

Standards initiatives can only encourage actors to orient their actions more strongly towardsthe sustainable development vision if and when enterprises willing to convert receive therequired 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 thiscontext).

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 enterprisewilling to convert, and of alliances, e.g. long-term purchasing agreements, possiblyincluding 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-compliantproducers are easily disadvantaged if they have no access to those markets, either becausethey lack the appropriate contacts or marketing expertise, or because they cannot meet thequantitative or qualitative demands of those markets. To make the commercialisationstrategies more just for the various categories of producer, first of all barriers to access tocommercialisation mechanisms - such as certain markets - need to be dismantled. Secondly,further commercialisation strategies need to be developed. As well as accessing furtherexport markets, and especially national markets, an attempt must be made to mobilisehitherto passive beneficiaries and potential beneficiaries of standard-compliant production toreward such production, e.g. banks, insurance companies, development cooperationorganisations 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 seenas complementing and alleviating the pressure on it. Therefore, standards should becoordinated and harmonised with state policy.

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

To avoid false rivalry between state policy and standards initiatives, it would seemappropriate to explain the contribution made by national and international policy towardslegitimisation of the standards initiative. This could emphasise the complementary characterof standards initiatives vis-à-vis state policy. Any standards initiative must be built on thelegal and institutional framework created by the state, on its economic and transport andcommunications infrastructure, and on the skills and expertise created by the state educationsystem. In other words, the state always exerts a key influence on the wider frameworks thatco-govern standards initiatives.

Regulatory frameworks that help enterprises and require them to discharge theirresponsibility as actors for sustainable development must, as explained in Section 3.4, beestablished jointly by the state, the private sector and civil society, in co-governance. Suchregulatory frameworks are established and enforced by various standards initiatives, and thestate, the private sector and civil society are involved in each of these initiatives to a differentdegree, and in different roles. The commercialisation strategies of initiatives are also highlydiverse. Where the state is heavily involved, compulsory standards are often imposed, andthe commercialisation strategy is comprised largely of penalties; initiatives that are largelydriven by the private sector and civil society, on the other hand, usually include voluntarystandards, and their commercialisation strategies tend to be based on economic and social

(image) benefits and drawbacks. The appropriateness of the division of roles within aninitiative can only be judged in context. Whether or not a standards initiative is to beconsidered 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' orientationtowards 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 toa learning process to ensure that the instrument is employed in a manner appropriate to therespective situation, and generates the maximum impact. To this end, an impact monitoringprocedure must be institutionalised that captures not only the intended, but also theunintended impacts, including the negative ones. The monitoring and evaluation (M&E) ofimpacts should be performed by an institution independent of the standards initiative. The fullbreadth and depth of impacts should be monitored.

In order that the learning process can improve the standards initiative, there must be scopefor 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 complianceverification, including accreditation of the inspectors, and/or to the commercialisationstrategy. Stakeholders should participate in the measurement and evaluation of impacts, andin the corrective measures, in order both to utilise their experience and knowledge, and toensure maximum effectiveness of the corrective measures.

Limits to the Development Policy Effectiveness of Standards Initiatives

Standards initiatives can make an important contribution towards sustainable developmentby influencing enterprises and frameworks so that actors orient their actions more strongly

towards the principles of sustainable development. Nevertheless, standards initiatives are noguarantee of sustainable development, since the frameworks within which enterprisesoperate may not permit effective standards initiatives, or because production units areimmune to the incentives and sanctions of standards initiatives.

Standard-unfriendly frameworks: in all standards initiatives, the private sector, as well asthe state and civil society, must play a certain role. Standards initiatives generate no impactsat 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 Africancountries, 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 standardsinitiatives. Yet an overpowerful and uncontrolled state may also allow despotism andcorruption to become so strong that standards initiatives cannot be developed due to the lackof credible verification.

In the private sector standards initiatives can only strengthen orientation towardssustainable development if and when a certain scope for development and a will to undergodevelopment are in place. Yet if the private sector frameworks do not permit access to theresources needed for further development, such as modern technologies, investment,modern labour legislation or new forms of cooperation, then standards initiatives too may failto 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. wherethe 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 amonitoring watchdog, as an electoral constituency co-determining the regulatory activity ofthe state, as a group of shareholders exercising their shareholder rights, or as responsibleconsumers. 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 wherepoverty prevails, civil society may not be able to play its roles in standards initiatives to thesame extent, if at all. Nevertheless, it would be wrong to conclude that civil society cannot bemobilised for standards initiatives in poor countries. As the growing national marketing ofFSC-certified timber in Brazil demonstrates, in poor countries too there exist sections of thepopulation with purchasing power who can be sensitised to the importance of standards.

Private sector actors resistant to standards: certain categories of economic actor areparticularly difficult, or even impossible, to win over for standards initiatives. This includes theentire informal sector, actors who are gainfully employed without having formalised thatactivity 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 anyrecord of working conditions and resource consumption in the informal sector, as theseactivities are not registered. A first step may then be to gradually develop methods andexpertise either to formalise this sector, or to ensure by some other means that the sectorcomplies with central environmental and social standards. Monitoring of the value creationchain must also be such as to ensure that suppliers in the informal sector are included in themonitoring process. Since state regulatory frameworks do not cover the informal sector, it isup to enterprises themselves to ensure that this monitoring takes place. It has also emergedthat not all standards can simply be transferred to the informal sector, as their point may belost in non-formalised work situations.

A further segment of the private sector that is very difficult to win over for standards initiativesare those actors who avoid transparency. Actors may have very different reasons forshying 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 activityaffects public interests, for fear of claims being raised in public that may compromiseeconomic activity;

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

Finally, actors who mistrust outside intervention are also difficult to win over forstandards initiatives. It is true that the sustainable development vision was negotiated indetail by 178 countries with different cultures and political systems. Nevertheless, it is closelyrelated to European ideas, and especially those of the Enlightenment, and is therefore oftendescribed as "Eurocentric". When industrialised countries that advocate both the vision andcorresponding standards initiatives then favour their own agricultural or textile sectors byintroducing protectionist measures at the expense of developing countries, this feeds thesuspicion that Western countries seek to impose the vision and appurtenant standards

initiatives on other countries, in order to protect their own interests.



5. Standards of Sustainable Development in Practical Development Cooperation

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5. Standards of Sustainable Development in PracticalDevelopment Cooperation

As an instrument for sustainable development within the scope of German development

cooperation, standards appeared only quite recently. Roles that development cooperationcould 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 yetexhausted. Cooperation with the private sector is of key importance here because – asdescribed in Chapter 3 – private enterprises are key actors in the shaping of paths tosustainable development. The present chapter will identify examples of both proven andpotential roles and cooperations of GTZ, and especially of the Programme Office for Socialand Ecological Standards, with actors of the state, the private sector and civil society. We donot claim that the list is complete. The chapter will begin by outlining recent trends indevelopment cooperation, so that the relevance of social and ecological standards can bebetter 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 ofdevelopment 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 policymeasures for the developing countries, but also a policy to change structures andframeworks – not only in the developing countries themselves, but also at the internationallevel, as well as here in Germany.

Through its global structural policy for sustainable development, German developmentcooperation is responding to a difficult challenge. It seeks explicitly to help solve globalproblems, and steer globalisation. Conceptually, it seeks to systematically implement theresolutions adopted at Rio, as well as the International Covenant on Economic, Social andCultural Rights, and thus the indivisibility of human rights within the framework ofdevelopment cooperation. The indivisibility of human rights in particular was stronglyemphasised 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 Summitfor Social Development in Copenhagen, the Western donor countries had not acknowledgedsocial 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 undertookto implement the 20/20 initiative. This initiative provides for interested developing countriesand developed partner countries to make a mutual commitment to allocate 20% of theirnational 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 Assemblyof the OECD states either voted against the laboriously negotiated Declaration on the Rightto Development or abstained, they subsequently accepted both Principle 3 of the RioDeclaration 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 ofthe "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 Declarationof Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work of1998, 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 todraw on an adequate normative base of international standards, and the agreementsreached now need to be implemented through development policy. The systematicimplementation of these agreements is key to the credibility of development cooperation. Theonly appropriate response to the blanket criticism frequently heard - why bother trying to helpwhen 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 fundingpolicy decision-making.

What are the implications of this for German development policy? First of all, it implies adeparture from the traditional logic of North-South cooperation as a policy field largelydetached from other policy fields. This means there is a need to implement the coherencyprinciple described in Chapter 2, making it an integral component of the global structuralpolicy concept, in order to meet the relevant obligations. It means there is a need to networkBMZ with other Federal German Ministries more closely than was the case during the periodof 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, theFederal Foreign Office, and the Federal Ministry of Education and Research). BMZ can helpfacilitate greater coherence of German policy in a multitude of ways, by seeking to influencethose policy spheres that are particularly important for realisation of the goals agreed on withpartner countries within the scope of development cooperation. Secondly, it implies effective

implementation of the partnership principle. This will require a concentration of financialresources on global problems, the development of a culture of global learning, and theformation of new alliances between states, enterprises and civil society.

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

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




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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 animportant instrument in its strategy for sustainability, with a view to harmonising the structuralchange and growth process associated with globalisation, protecting of the natural resourcebase on which life depends (GERMAN GOVERNMENT 2002). Social and ecological standardsare an instrument with which governmental, private sector and civil society actors cannegotiate development in (strategic) partnerships, and simplify implementation of theprinciples already negotiated at the Rio Conference. The Study Commission of the German

Bundestag sees the following strategic points of departure for an appropriate deployment ofthe instrument at the corporate level, and at the level of international policymaking:

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

• [...] stronger emphasis on environmental aspects in international trade and investmentcommittees (especially within the World Trade Organization – WTO), in internationalfinancial institutions such as the World Bank or the European Investment Bank, and ininternational 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 inthe promotion of social and ecological standards. Development cooperation actors areworking to bring about a situation in which debates within WTO concerning a multilateralinvestment agreement can only be conducted in the context of such an agreement being tiedto the OECD guideline. The institutionalisation of social and ecological standards in anagreement of this kind is absolutely crucial to the pursuit of a path to sustainabledevelopment. The significance of this approach is evident not least from the fact that, in1999, annual foreign investment in developing countries totalled US$ 198 million, which wasmore 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 toimplement the coherency principle. The efforts of BMZ to steer German government policyas a whole onto a course that coheres with development policy have often collided with "hardinterests", chiefly those of the ministries for economics, agriculture and finance. This wasevident for instance in the compromise reached by the ministries in early 2001 concerningthe reform of the Hermes instruments (foreign trade sureties and guarantees). In its 11 th 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 newHermes 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 numberof back doors open to German exporters to export their products. These aspects would notstand 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 includethe 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 againin 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 EcologicalStandards, Windfuhr identifies further policy fields of governmental development cooperationin which social and ecological standards play an important role (W INDFUHR 2002: 28-56).

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

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

• Integration of the debate on paths to sustainable development into political dialogue withpartner countries. This includes the sphere of government advisory services for labourlegislation, organic agriculture, forest management, etc. For instance, in severalcountries environmental or labour ministries, or their subordinate agencies, havereceived advisory services. Another form of advisory service is support in the formulationof corresponding national strategies or action plans for the ecological and socialstandards associated with TC measures.

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

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

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

Seeing standards as an instrument for implementation of the Rio resolutions, human rightsand 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 developmentcooperation since 2000, and that call for the cross-cutting themes of good governance,gender, environmental protection and natural resource management, and poverty orientationto be incorporated into project design. In other words the various dimensions of developmentmust 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 sothat the project impacts can be measured. When this approach is taken seriously throughoutproject cycle management, then all development cooperation projects that make acontribution towards sustainable development constitute a kind of standards initiative. Withthe 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 forsustainable 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 ecologicalstandards were high. For the instrument to do justice to the complexity of today's chains ofcause-and-effect, competent individuals are required who can create and utilise scope foraction. However, since strategies for action are dependent not only on the expertise ofindividuals, but also on the actions of other actors and on the prevailing frameworks, theappropriate sphere of intervention for Technical Cooperation is the shaping of frameworks,and in particular the creation of social capital (institutional development), and the enabling ofactors to utilise changing scope for action (capacity-building). Support in the sense ofcapacity development, i.e. intervention to change frameworks and to enable state, privatesector and civil society actors to apply their expertise, must occur simultaneously and on aproportionate scale (cf. Section 3.3). These two spheres of intervention are mutuallycomplementary, because improved frameworks are only helpful when competent actors areable to utilise them, and an increased competence of individuals and organisations is onlybeneficial – 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 barelyincluded 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 networksof this kind have the potential to bring together different positions, and generate results thatperhaps 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 variousactivity areas through pilot projects, generate lessons learned for future developmentcooperation interventions and process experience to make it available to others. Questionshigh on the agenda are how the market and trade can be utilised to positively influenceframeworks for sustainable development, and to guarantee the participation of key interestgroups 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 bedescribed 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 SustainableDevelopment

A necessary, though not sufficient, condition for the broad-based implementation of socialand ecological standards is first of all an awareness among actors of the potentialsignificance of this instrument on the path to sustainable development. Given the largenumber of actors (cf. Section 3.1) involved in a sustainable mode of production andconsumption, there is a need for a variety of target group-specific awareness-raisingmeasures. These may involve either information transfer (facts and figures), or the

stimulation of processes of reflection on values and ideas about human coexistence inharmony with nature. In seeking to create this awareness, GTZ is becoming involved in anew area of activity by targeting actors within Germany, be they consumers or Germanenterprises.

• Information campaigns for consumers: by supporting organisations that sensitiseconsumers to sustainably produced products, sustainable consumer behaviour ispromoted. By disseminating information brochures and participating in eco-fair events onproducts, activities and organisations, and by at the same time networking a range ofactors, GTZ is helping consumers make more informed and aware purchasing decisionsbased 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 consumersinterested in sustainable consumption, as well as for multipliers (www.eco-fair-trade-

Expert advisoryservices

Enablement ofparticipation

Moderation, platform

S

t a t e

C i vi l s o ci e t y

P r i v a t e s e c t or

6.Establish-

ment ofadvisory,

monitoringand serviceenterprises

2.Support ofstandard

setting forsustainable

development

4.Support ofcommer-

cialisation

1.Awarenessraising on

standards forsustainable

development

5.Support ofimplemen-tation of

standards

3.Building andpromotion of

strategic(innovative)

alliances, e.g.PPPs

Promotion of implementation of international conventions

Introduction of legislation and design of policy strategies

TC activities for capacity building TC activities for institution buildingKey :

Expert advisoryservices

Enablement ofparticipation

Moderation, platform

S

t a t e

C i vi l s o ci e t y

P r i v a t e s e c t or

6.Establish-

ment ofadvisory,

monitoringand serviceenterprises

2.Support ofstandard

setting forsustainable

development

4.Support ofcommer-

cialisation

1.Awarenessraising on

standards forsustainable

development

5.Support ofimplemen-tation of

standards

3.Building andpromotion of

strategic(innovative)

alliances, e.g.PPPs

Promotion of implementation of international conventions

Introduction 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 onthe different goals of various standards initiatives.

• Awareness raising among commercial enterprises: the sensitisation of commercialenterprises to sustainable management takes place through both broad-based

discussion events, and through sector or enterprise-specific awareness-raising work. Forinstance, an expert conference was held under the slogan "Corporate social responsibility in a globalised economy – the European debate" , at which representativesof the European Parliament, the EU Commission, European enterprises and initiatives topromote corporate social responsibility (CSR) were able to hold joint discussions. Oneexample of sector-specific awareness-raising work is that of the textiles industry. Thiswork succeeded in taking the sector an important step forward towards compliance withcore labour standards, and helped improve safety and protection at work, hygiene,health, remuneration and leave arrangements. Activities focused on providing variousactors with information and suggestions, based on positive examples, as to howcorporate social standards could be improved cost-effectively, and which positive

secondary impacts (quality, marketing) might thereby be achieved. Despite the verydifferent 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 policystrategies, development cooperation staff will require training. The Programme Office forSocial and Ecological Standards offers units for both GTZ Head Office and field staffmembers, and for development cooperation staff undergoing preparation in Germany foran assignment overseas. To influence development policy, which sets the frameworksfor development cooperation staff, advisory services are being delivered to BMZ on how

the instrument can be integrated into the aforementioned strategy papers. As regardsinternational policy, position papers for the integration of social and ecological standardsare 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 activitiesof TC in this context include training for sustainable development and sustainabilitystrategies. Secondly, if BMZ receives the appropriate advisory services, then the themecan 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 – asdescribed in Section 4.3 – should be a participatory and consensual process, is a relativelynovel approach for quite a few private sector and state actors. Inadequate methodologicalexpertise and experience with such processes, as well as a habit of top-down managerialdecision-making, explain why these often arduous and long-winded processes in which allrelevant 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 whya 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 andrules is designed to provide the initial impetus to launch such processes. For instance,national FSC working groups established to formulate national standards are beingsupported.

• Support in the design of corporate codes of conduct: the willingness of commercialenterprises to commit to socially and ecologically sound behaviour is not in itselfsufficient to guarantee an effective contribution towards sustainable development. Wordsmust be followed by deeds, and not just lip service in the company PR materials. Thekey question is which standards are appropriate to the specific circumstances thatprevail 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 ofConduct. Various codes are being reviewed to ascertain their effectiveness andefficiency. Furthermore, the Programme Office for Social and Ecological Standards alsooffers enterprises consultancy services on various standards systems that might thenserve as a basis for a corporate code.

Analyses of actors that identify the key actors also help promote participation. Theseanalyses are an integral component of project appraisals, for instance. The country-specific expertise and neutrality of development cooperation personnel are highlyadvantageous 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 onwhich to continuously improve standards initiatives. Studies have been supported forinstance 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 achievedif the private sector is also committed to making it a reality. Private enterprises invest indeveloping 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 theirworkforce, in environmental protection, and in fair trade. Since these concerns are alsoshared by development cooperation, broad scope is created here for cooperation betweenthe private sector, civil society, the state and Technical Cooperation. Improved cooperationcan lead to more responsible resource management, to more rapid dissemination ofinnovations, and to a reduction in transaction costs. Public-private partnerships (PPPs) areprojects which both serve the business interests of the German or national enterprise, andgenerate development policy benefits. The self-interest of these enterprises – the desire toturn their investments into long-term economic success – is conducive to these enterprisespouring their own resources of capital and expertise into "their" project, and assuming

ownership of it. The Programme Office for Social and Ecological Standards supports andfacilitates such strategic alliances from their identification phase through to their firstactivities, and evaluates initial experiences.




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• The initiation and promotion of strategic alliances between state, private sector andcivil society actors is designed to facilitate the process of negotiation between differentinterest 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 theimplementation of labour and social standards in developing countries through corporatecodes of conduct. To this end, the participating groups of the Round Table seek todevelop a joint understanding of how voluntary Codes of Conduct can be introduced andimplemented effectively, transparently and on a participatory basis (cf. RUNDER TISCH

VERHALTENSKODIZES 2003). The Programme Office also offers advisory services to theGTZ 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 TCutilise their country-specific and sectoral expertise and play a key advisory role. They

also perform an important reputation-enhancing function, linking the actors along thechain of custody. This includes making sure that, within the scope of cooperativearrangements, asymmetrical power relations are not used to assert particular interests.In other words they perform a mediating and monitoring role, by acting to help ensurethat the agreements made are kept. Having said that, this monitoring function should notbe confused with the monitoring or verification of compliance with standards. Sinceadvisory services on the implementation of standards, and compliance verification,cannot be performed by the same organisation, GTZ staff members came to theconclusion at an expert meeting that monitoring cannot be a core task of TC. On theother hand, the moderating and mediating function is a kind of monitoring mechanism forthe 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 asymmetricalinformation distribution. It is a task of TC to create social capital in order to placeinstitutional constraints on power imbalances so that, as BARTMANN (1999: 6) ratherprovocatively 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 ableto process and transfer that experience on a context and enterprise-specific basis. In thelong term, it is planned to enable local advisory and consultancy agencies to transfer thatknowledge.

• Professional facilitation of pilot projects: thanks to the multisectoral approach of theProgramme Office, enterprises can be advised as to which standards initiatives mightgenerate synergy effects. The Faber Castell company for instance not only implementsthe 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 tostandards. Here too, experiences gained in the forest certification component providehelpful insights and stimulating ideas for developing effective and efficient procedures.

• Designing guidelines and training materials: in its projects, GTZ supports theconversion of cooperatives, farms and enterprises to sustainable production. Particularlyin the case of conversion to organic agriculture, farms lack knowledge of thefundamentals, and of the practical application of production methods. To remedy this,experiences from numerous GTZ projects – for instance involving sustainableagricultural soil management or integrated pest control - can be utilised. In organicagriculture, the need for extension inputs is especially high during the conversion period.

Consequently, producer cooperatives often have their own "promoters" trained, who thendeliver extension services to smallholders on the ground on cropping and quality issues.The GTZ-commissioned cropping guidelines prepared by Naturland for 18 major tropicaland 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 thetropics and subtropics. Extensive training materials have also been developed for forestcertification, and utilised internationally in workshops.

• Training: the training courses on offer are designed particularly for multipliers. Toinstitutionalise expertise, an economically viable extension and consultancy system mustbe implemented, as access to (low-cost) information is often an insurmountable problem

for small enterprises in particular. This problem should be alleviated by introducing anoperational, countrywide extension or consultancy system.

Supporting the Commercialisation of Standards

Although numerous ideas exist for commercialisation strategies for standards (cf. Section4.3), most commercialisation experiences to date involve quality labelling to increase valueadded. Activity areas in which TC promotes commercialisation include:

• Management of contacts between actors in the chain of custody: conversion tosustainable 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 improvedinformation flow and trust between market participants can lead to economic activitiesthat 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, TCcan help reduce costs through appropriate contact management. It is therefore veryimportant 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 publicgoods. TC can act as a link between actors in the chain of custody, by working withininformation networks, such as the green trade net, to help enable small producers inparticular gain access to information on sector and product-specific business contactsand 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 ofCosta 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 tosustainable production? These are questions often put by enterprises interested inconversion. Inadequate access to information on world market prices and complicated

cost accounting systems make it difficult for small farmers in particular to develop andpursue a clear marketing strategy. There are plans to change the terms of trade to thebenefit of producers and enterprises, through information and consultancy projects onmeasures to raise quality and increase the share of value added, or to develop marketstrategies. If producers and exporters in developing countries can be successfullyenabled to comply with the social and ecological standards of the industrialisedcountries, their export opportunities will be improved. TC supports producers andenterprises in reducing the initial risks associated with conversion, by performing marketstudies, 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 atthe national level with corresponding product ranges, as well as wholesale and retailstructures, are also being promoted.

Establishing Consulting, Monitoring and Service Organisations

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

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

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

• Training of inspectors: in Chapter 4 the weak point of inadequate human capacities, ormore 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, hasexplored the potentials of a textile label, and on that basis developed the corresponding




112

criteria, a next step will be the training of inspectors who will verify compliance with thecriteria 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 changesto 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 dayswhy 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 ownbehaviour, the goals they themselves (claim to) pursue, and the goals they advise others topursue. Without this coherence there is a lack of credibility, which is a basic prerequisite foreffective cooperation with partners. This means that development cooperation organisationsshould themselves comply with the principles of sustainable development that theyrecommend 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 ofdevelopment cooperation financing, standards that reflect social and ecological goalsmust be set and complied with. Since respect for core labour standards is a majorproblem in many developing countries, for instance, and compliance with the respectiveconventions ratified by some countries is not guaranteed, a report is planned to establishwhether and to what extent the institutionalisation of the call for compliance with corelabour 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 toalso assess whether standards are being violated within projects. Failure to comply withstandards in projects, whether it involves the payment of sub-standard wages to localstaff, or action that conflicts with international conventions, must have appropriateconsequences.

•

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 byperforming a number of different roles and functions in a variety of activity areas. It is crucialin 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 therespective actors. Bilateral political dialogue and heterogeneous sectoral TC measures tosupport 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 otherwords, 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 shouldalso be focused on sector-wide standards, in order to reinforce the structural impacts andreduce the risk of competitive disadvantages.

There are a sufficient number of points of departure for appropriate interventions. Firstexperiences 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 highdegree of flexibility, combined with a firm commitment to basic values, as well as a strongmotivation to undergo arduous processes, without losing stamina and compromising toosoon. It also means occasionally calling one's own perceptions into question, andacknowledging, 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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RAU, J. (1998): In Rückfällen nach vorn oder: Rio beginnt bei uns. Über Sachzwänge undDenkzwänge. Frankfurter Rundschau 16.1.1998

SEN, A. (2000): Ökonomie für den Menschen- Wege zu Gerechtigkeit und Solidarität in derMarktwirtschaft, Hauser, München, Wien

ULRICH, P. (2001): Integrative Wirtschaftsethik. Grundlagen einer lebensdienlichen Öko-nomie. 3. Aufl. Bern, Stuttgart, Wien

ULRICH, P. (2002): Der entzauberte Markt. Eine wirtschaftsethische Orientierung. Freiburg,Basel, Wien

WIELAND, J. (1999): Die Ethik der Governance. Marburg

Chapter 4:

BRUGGER (1988): Philosophisches Wörterbuch, 19. Aufl. Freiburg, Basel, Wien

CHAHOUD, T. (1998): Handel und Umwelt: Förderung umweltfreundlicher Prozess- undProduktionsverfahren in Entwicklungsländern; Deutsches Institut für Entwicklungspolitik12/1998, Berlin

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

DEUTSCHE BUNDESSTIFTUNG UMWELT (2001): Konzeptionelle Überlegungen zu Begriff undPraxis Nachhaltigen Wirtschaftens: Nachhaltigkeit als Lernfähigkeit; Zwischenbericht einesForschungsprojektes 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 undRahmenbedingungen einer nachhaltig zukunftsverträglichen Entwicklung” des 13. DeutschenBundestages, Bonn



References

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GRAY, I et al. (2002): Modular Implementation and Verification (MIV). A tool for phasedapplication of forest management standards and certification. Discussion draft 1.1 November2002. www.proforest.net

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

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

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

ISO/IEC (1996c): ISO/IEC Guide 65- General requirements for bodies operating productcertification 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. AManual 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 zurWirtschaftsforschung Nr. 61; Johannes Gutenberg-Universität Mainz; Frankfurt a.M.

BMZ (1997): Grundlagen der Deutschen Entwicklungszusammenarbeit. Entwicklungs-politische Konzeption und Zusammenfassung der Sektorkonzepte. Bundesministerium fürwirtschaftliche Zusammenarbeit und Entwicklung. Materialien Nr. 97, Bonn

BRAUN, v. J. et al. (2000): Zukunft der Entwicklungszusammenarbeit - Diskussionspapierdes 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 „GlobaleRessourcen“ auf Grundlage der das BMZ betreffenden orientierenden Fragestellungen derEnquete Kommission (23.10.2000)




120

EBERLEI, W. (2001): Nachhaltige Entwicklung der Beitrag der deutschen Entwicklungs-zusammenarbeit; In: Deutsche Welthungerhilfe / terre des hommes Deutschland (Hrsg.) DieWirklichkeit der Entwicklungshilfe; Bericht 2000/2001. Eine kritische Bestandsaufnahme derDeutschen 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 desErsten entwicklungspolitischen Forums der Heinrich-Böll-Stiftung am 19./20. Mai 2000 inBerlin, Berlin

NUSCHELER, F. (1995): Soziale Menschenrechte und Entwicklungspolitik :Worum geht esbeim Kopenhagener Sozialgipfel? http://www.fes.de/interntl/humanr/pub_UN95/nusch.html;

Stand 07-06-03Neubau 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 desProgrammbbüros Sozial- und Ökostandards, GTZ, Eschborn



References

Publications of the Programme Office for Social and EcologicalStandards(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 CertificationProject 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

making sustainable development a reality the role of social

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