Abstract
Voluntary Sustainability Standards (VSS) might develop into a viable alternative to public regulation. However, it turns on the (regulatory) circumstances whether that holds true in practice. If public regulation on CSR topics is lacking, governments are unable to agree upon certain topics on a global level or diverging public regulation exists, VSS can be helpful to set global standards. Obviously, private standards will especially be helpful if they are commensurate with local public legislation (and e.g. treaties) and/or are accepted by local governments. If one neglects this, numerous domestic structures might exist that frustrate VSS. Furthermore, governments have to remain vigilant as to whether these private regimes do not result in market disruption, consumer detriment or hamper trade. VSS might also compete with public arrangements which might limit the uptake of VSS. However, if public regulation exists VSS might be a viable alternative if compliance with not too compelling public norms by market participants is rather poor and the public policymaker is aiming to incentivize the better performing part of the market to embark on higher standards and thus only desires to regulate the less performing part of the market. However, of paramount importance is the effectiveness of VSS in order to be a viable alternative to public regulation. The effectiveness of VSS should be assessed using an integrated multi-disciplinary (comparative) approach entailing legal, impact-assessment, legitimacy, governance and behavioural aspects. Only effective VSS in the aforementioned sense are a true alternative to public regulation. Beyond that, the legal perspective in connection with (the effectiveness of) VSS is discussed, featuring FSC and UTZ Certified as an example. It is important from this perspective that VSS have a clear and sufficiently selective objective and sufficiently specific norms, are regularly evaluated, entail ‘conflict of law rules’ and an effective grievance mechanism, provide sufficient means for monitoring and enforcement and contribute to a more balanced risk attribution between producers and (ultimate) buyers.
Highlights
Introduction of the effectiveness ofVoluntary Sustainability Standards (VSS) vis-à-vis public regulationOne might favour public regulation because VSS are often associated with a high sense of freedom to opt in or out of a certain sphere.[24]
I focus on a specific kind of international private regulation: Voluntary Sustainability Standards (VSS)
Private standards will especially be helpful if they are commensurate with local public legislation and/or are accepted by local governments as a proxy to compliance with their own laws or an improvement of the local situation.[40]
Summary
VSS are usually implemented in supply chains through a contractual mechanism which entails certification by third parties.[8]. Martijn Scheltema obliges a contractual party to implement the relevant contractual requirements which it has to meet vis‐à‐vis its buyer in the contracts it concludes with its suppliers.[12] Certification is implemented in connection with the production of, for example, coffee, cocoa, tea and wood and in the supply chains to prevent an unauthorised diffusion of certified and non-certified commodities.[13] The certification body has contractual relationships with the producers and traders it certifies. These entities remunerate the certification body for its services. 4C is considered to be a baseline standard whereas UTZ Certified is considered to be a best practice standard.[22]
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