June 2, 2008

The Growing Influence of Eco-certification

Cofounded in 1997 by the World Wildlife Fund and Anglo-Dutch Unilever, the Marine Stewardship Council has become a model for how eco-certification programs can promote sustainability of natural resources. But while the MSC continues to grow, CEO Rupert Howes says there's far more that everyone can do. 

By: Bob Searle

Cofounded in 1997 by the World Wildlife Fund and Anglo-Dutch Unilever, the Marine Stewardship Council has become a model for how eco-certification programs can promote sustainability of natural resources. But while the MSC continues to grow, CEO Rupert Howes says there's far more that everyone can do. (Rather listen? Download the podcast.)

Bob Searle: Hello, and welcome to The Bridgespan Group's podcast, The Growing Influence of Eco-certification. I’m Bob Searle, and today we’ve invited Rupert Howes of the Marine Stewardship Council to discuss the growing trend of eco- and social certification programs and the impact they’ve had on creating more sustainable practices across a variety of industries. Rupert, welcome.

Rupert Howes: Many thanks, Bob, pleasure to be here.

Bob Searle: Can you tell us a little about the Marine Stewardship Council, what it does and it’s specific goals?

Rupert Howes: The Marine Stewardship Council operates the world’s leading marine eco-labeling and certification program for wild-capture fisheries. What we want to do is to encourage a race to the top in global fisheries management by creating market incentives to the best-managed fisheries in the world. And we do that by operating a third-party, evidence-based and science-based certification program.

Bob Searle: What progress have you seen both for the MSC and maybe for other certification programs that you’ve looked at?

Rupert Howes: We’ve seen phenomenal growth, particularly over the last two or three years. We’ve seen a rapid uptake in terms of fisheries around the world coming in to the program to the point now that we estimate [that] eight percent of the global wild edible harvest is either certified or under assessment.

If you actually look at key species like the ground fish—the cods, the haddocks, the lings, and the hakes—we have 40 percent of the entire global catch certified or under assessment. If you look at wild salmon, we have 42 percent of every wild salmon being pulled out of the ocean that’s either certified or under assessment, and about one in five, or 20 percent, of spiny lobster.

And as we’ve overcome this barrier of "no supply, no market; no market, no supply," we’ve seen more and more retailers around the world strategically engaging with the MSC as part of their drive to demonstrate good corporate governance and social responsibility. Most notably Wal-Mart, the world’s largest retailer, last year made a commitment to source only MSC certified labeled seafood for their wild capture purchases for the North American markets.

MSC is really working with pretty much all of the major retailers in North America, increasingly in Canada, throughout Europe, and interestingly, an expansion in Australia and Japan. And some of these retailers, for example, Sainsbury’s in the UK, in their guidelines to their seafood buyers, the very first question says, “Is this fish from an MSC certified fishery. If yes, buy, subject to price and quality.” This is really quite remarkable.

We [also saw another] strategic engagement just before Christmas 2007: The entire Dutch retail sector, represented by their trade association, issued a press release saying that they would go for 100-percent MSC within five years, pretty much matching the Wal-Mart commitment. That trade association represents 99 percent of all Dutch retailers.

And just a few weeks ago the Dutch fishing industry, which I think is responsible for 80 to 90 percent of total landings in Holland, announced in partnership with the Dutch government and the Dutch marine conservation organizations that they will match the retail commitment by seeking certification for all of their main fisheries. This is absolutely fantastic and it’s really a perfect illustration of what a market-based program tries to achieve.

Bob Searle: It sounds like you’ve got tremendous momentum, which is fantastic. I am struck, though, by how complex this process is and some of the challenges you talked about in terms of balancing the environmental community's interest with the interest of industry. I’d love you to talk a little bit about some of those challenges.

Rupert Howes: There are challenges, and I think in part it’s down to communication and education. We are trying to engage with the global fishing industry. We have one global standard for all fisheries. And understandably, when a fishery in a particular area or country comes forward to be assessed, there may be a local NGO who would set the bar for certification at a very, very high level. If the MSC was to adopt that standard, it would probably mean that the program would lose it’s ability to engage more broadly with the global industry and therefore to deliver significant change on a global scale.

I hasten to add, the MSC standard was developed over a two-year period. It is based on the FAO Code of Conduct for Responsible Fisheries. In brief, it looks at the overall stock health, it looks at the wider environmental impact for that fishery on the marine ecosystem, and it looks at the quality of the management regime.

There is a degree of complexity below that. The independent certifier pulls together an assessment team, which typically includes a fisheries biologist, a legal expert to assess the management regime, and stock assessment experts. The process is fully consistent with guidelines issued by the United Nations FAO in terms of what a credible program needs to look like. And that really revolves around the fact that it has to be third-party; it has to look at science and be based on evidence; be transparent, accountable, and have a very high degree of stakeholder engagement.

From the consumer’s perspective, they don’t need to know this amount of detail. They need to see the eco label and know that that fishery has been through an incredibly rigorous, often lengthy certification and assessment process.

Bob Searle: You’ve mentioned a lot of different stakeholders, including nonprofits, corporations and government. Let me ask, what do you think the most important thing nonprofits and NGOs can do to help push certification forward?

Rupert Howes: It’s important for other marine conservation organizations and the nonprofit sector in general to raise awareness about the importance of third-party certification. It’s only through a third-party process like the MSC that you create the structures and opportunities for broader stakeholder engagement and dialog. These organizations often have mass memberships. It’s a fantastic opportunity for these groups to communicate to their members and supporters that they should be looking to certify their labeled product as an effective mechanism to put their money where their mouth is and to buy fish and fish products [from those] fisheries [that have] been identified as being among the most sustainable and environmentally responsible in the world.

Bob Searle: Obviously, corporations and government are key players in this. How can they help?

Rupert Howes: Fisheries come forward on a voluntary basis [so] we often don’t hear about it until they enter full assessment, because they might approach one of 20 accredited certifiers around the world. One section of the seafood value chain that has a huge influence is the retail sector. If they stipulate that they want third-party assurance on the sustainability of their seafood choices, that sends a very strong signal down the supply chain to encourage fisheries into the program. Now that to me is supply chain pressure of the best kind.

Bob Searle: Turning more broadly to certification, there literally are dozens of eco- and social certification programs around the world, from fisheries and forests to rugs and chemicals. What’s driving this trend in your opinion.

Rupert Howes: Consumers, particularly in North America and Europe, are becoming more aware. They want to know about the provenance of the products they’re buying, not just food but nonfood products such as timber and clothing.

I think the Internet has helped greatly here that people recognize that their purchasing power can actually be a force for good and can encourage and indeed capitalize more of a sustainable approach to economic development. Or if not used wisely, their purchasing power can do the exact opposite. And I think this is really almost a collective consciousness change going on in some of the major markets around the world. And once this starts it’s not going to stop.

We’ve seen huge growth in the European market for organic products and trust in third-party certifications and labels. We’ve seen that with timber and in Europe, where we're most developed, we’ve seen this with seafood. It estimated in the UK market now that there is 20-percent end-consumer recognition for the MSC label and a number of retailers have said that their consumers recognize it and ask for it in store. I think this is going to spread, it’s going to become more widespread in North America and Asia and the markets are going to have to take sustainability into account.

Bob Searle: The MSC certainly has seen that same kind of growth with 30 certified fisheries, another 72 undergoing assessment, and an estimated 30 to 50 in confidential pre-assessment. You’ve seen an acceleration of fisheries, particularly commercially important ones, coming forward. To what do you attribute that growth?

Rupert Howes: It’s sort of chicken-and-egg. Is it the market and the demand pull from the retail sector? Is it the supply push from growing amounts of sustainable seafood supplies becoming available to the market? I think it’s a bit of both, and it’s reflecting the corporate social responsibility debate and the fact that commercial entities around the world are recognizing increasingly that sustainability is a business risk issue, it’s a business opportunity, and that ultimately economic activity has to take place within ecological limits. And whether you’re developing waste management and energy reduction programs or carbon mitigation measurement and offset programs—sustainable seafood procurement is just another facet of that broader design to shift our economic systems on to a more sustainable footing.

In relation to seafood, I think there’s been a huge interest and growing awareness, in part from a lot of media coverage on the plight of global fisheries. Some pretty worrying statistics from the United Nations Food and Agriculture Organization on the states of global fisheries over recent years. And the recognition that as we head from a population of six billion to nine billion people, this wonderful, renewable resource is under more pressure than it’s ever been before. And therefore, it’s imperative that we do ensure that these fish stocks are managed sustainably for this and future generations.

Bob Searle: Now in our 2004 white paper, Moving Eco-certification Mainstream, we identified three critical steps that successful certification programs were engaging in. First, meeting—not creating—a receptive market. Second, pushing—not just setting— the standards. And three, creating an attractive value proposition for suppliers. In what ways has your experience at MSC been consistent with or contrary to those findings?

Rupert Howes: It’s quite hard to answer because I think the specifics matter in different countries and regions. MSC, in contrast to groups like the Forest Stewardship Council, you know, we have one standard. We have a global standard for sustainably managed fisheries, and seafood is the most highly traded primary commodity in the world. Half of that is coming from the developing world where, really, there are no receptive markets—eco labels are in their infancy if in existence at all. But we started in Europe, in Northern Europe, and I think you’re point one about having a receptive market is very true. German, Dutch, and British consumers are seen as being some of the most demanding when it comes to the social and environmental credentials of their purchasing decisions. And having that receptive market and some leading seafood businesses who could read the writing on the wall as it were in which way this trend was going, I think helped bring the initial fisheries into the program and to bring the initial products to market.

Now it has taken us a decade really of hard work, of learning by doing, of improving our processes, and slowly growing and outreaching and engaging to see the sort of exponential growth that we’ve had in the last two or three years. But clearly that receptive European market was a strong factor.

In many senses a lot of the MSC's outreach is about advocacy. It is about raising awareness of issue in terms of the state of world fisheries and explaining about the standard and how the program works. So there is very much a sort of outreach, communication, awareness-raising function that isn’t so much pushing the standard but its engaging people, getting them to understand what the program is about. That in turn builds support for suppliers.

The theory is that the label will confer an advantage in the marketplace, and I think we’re now seeing that. But it’s taken us a decade to get here. We now have certified fisheries that are charging a premium for certified product over non-certified products. That hasn’t always been the case and clearly certification on its own is no guarantee that you’ll get a price advantage. But there is a strong evidence base to suggest that with more and more buyers saying "We want third-party verification," that at the very least, certification enables you to meet your existing buyers' demands and expectations.

All of this has contributed to the growth that we’re seeing. There's a growing business case, we’ve got far greater support now from a broad range of NGOs who can now see that MSC is driving and catalyzing real change as the ecological case becomes more apparent. So our hope is that we'll create this self-sustaining momentum of demand pull from the market and supply push as more fisheries come forward.

But this is really a project for decades. It is about trying to catalyze a shift in an entire economic sector to get us onto a more sustainable footing. I think the MSC has demonstrated over the last ten years, but over the last three years in particular, that a credible, robust stakeholder-engaged certification labeling program can make a difference. But we cannot buy ourselves out of any environmental issues. We will still always need sound public policy and enforcement of that policy and a range of activities from other entities involved in awareness raising, campaigning, and promoting policy advocacy.

Bob Searle: Well, Rupert, it’s been great to hear about your experience at MSC and get your perspective on what’s going on in the certification area and also to hear about the momentum that MSC is experiencing. Last question: Where do you see the certification concept evolving from here?

Rupert Howes: I think we’ve seen in North America, in Europe and in Japan a real thirst and understanding of the concept of labeling and certification. Consumers understand the concept and are very, very supportive. In my own country in the UK, we’ve seen the Soil Association grow from a very small, fringe group to really becoming mainstream with very high levels of sales and a huge brand recognition and support and loyalty. I think third-party certification is going to become embedded across the product portfolio from food to nonfood products. And it’s going to become part and parcel of doing business. I think that there’s a danger if we see proliferation of too many labels that you get confusion, particularly in relation to a single product. So we might see, further down the line, some sort of attempts to consolidate and have a sort of super eco- or sustainability label that encompasses number of facets. But we’re not there yet, bearing in mind the diversity of labels and programs and the sorts of things that they’re trying to assess and certify against. But that might be something that comes along down the track.

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