Private Sustainability Governance Research Articles

A theory of credible cross‐temporal corporate commitments as goal‐based private sustainability governance

AbstractGoal‐based corporate supply chain commitments to zero‐deforestation, carbon neutrality, or sustainable sourcing have become important elements of businesses' sustainability and reputation management practices. However, we still know little about the conditions under which such cross‐temporal commitments are likely to be successful. This article introduces commitment credibility as a crucial but understudied antecedent of success. Drawing on the economic theory of imagined futures, it shows how cross‐temporal signaling via commitments may change suppliers' expectations and related actions and thereby co‐create more sustainable futures. By using insights from credible commitment theory, it argues that this pathway relies on high motivational and/or imperative credibility of the committed company. Contrasting the example of zero‐deforestation commitments in the palm oil sector with commitments to sustainable seafood and no farmworker exploitation, it highlights that the involvement of critical stakeholders (as external accountability partners or third‐party implementing agents) is of particularly high importance for on‐the‐ground success.

Goal-Based Private Sustainability Governance and Its Paradoxes in the Indonesian Palm Oil Sector

In response to stakeholder pressure, companies increasingly make ambitious forward-looking sustainability commitments. They then draw on corporate policies with varying degrees of alignment to disseminate and enforce corresponding behavioral rules among their suppliers and business partners. This goal-based turn in private sustainability governance has important implications for its likely environmental and social outcomes. Drawing on paradox theory, this article uses a case study of zero-deforestation commitments in the Indonesian palm oil sector to argue that goal-based private sustainability governance’s characteristics set the stage for two types of paradoxes to emerge: performing paradoxes between environmental, social, and economic sustainability goals, and organizing paradoxes between cooperation and competition approaches. Companies’ responses to these paradoxes, in turn, can explain the lack of full goal attainment and differential rates of progress between actors. These results draw our attention to the complexities hidden behind governance through goal setting in the corporate space, and raise important questions about the viability of similar strategies such as science-based targets and net-zero goals.

Private sustainability governance, the Global South and COVID-19: Are changes to audit policies in light of the pandemic exacerbating existing inequalities?

The COVID-19 pandemic has disrupted global economic relations. Transnational private regulatory programs, such as sustainability certification and eco-labeling schemes that set standards for responsible production practices in global markets, have had to react. Private regulation’s market credibility is partially built on audits, which include field visits used to assess whether participating operators conform with a program’s standard. But COVID-19-related health and business restrictions have forced adjustments to field-audit policies. Literature on private governance has identified several barriers to participation of Global South operators, including the costs of certification, the availability of qualified auditors, and uncertain socio-economic benefits. Are audit policy changes made because of the COVID-19 pandemic exacerbating these barriers? We examine this question through a dataset constructed between April and November 2020 that contains information on COVID-19-related audit policy responses of 98 transnational private sustainability regulators. We describe the mixed transparency of these adjustments to date and five ways in which the adjustments create explicit and implicit barriers to operators from Global South countries. The changes create barriers through (1) the conditions set on when and how adjustments to audits are permitted, (2) the limited flexibility of substantive standards, (3) the potential costs of shifting to remote audits, (4) the focus on accommodating existing participants over new applicants, and (5) the potential challenges of accessing auditors to conduct assessments. We conclude with implications for research on private regulation post-COVID-19.

Disaggregating public‐private governance interactions: European Union interventions in transnational private sustainability governance

AbstractTransnational private sustainability governance, such as eco‐certification, does not operate in a regulatory or jurisdictional vacuum. A public authority may intervene in private governance for various reasons, including to improve private governance's efficient functioning or to assert public regulatory primacy. This article argues that to properly understand the nature of public‐private governance interactions—whether more competitive or complementary—we need to disaggregate a public authority's intervention. The article distinguishes between four features of private governance in which a public authority can intervene: standard setting, procedural aspects, supply chain signaling, and compliance incentives. Using the cases of the European Union's policies on organic agriculture and biofuels production, the article shows that public‐private governance interaction dynamics vary across these private governance features as well as over time. Furthermore, the analysis highlights the importance of active lobbying by private governance actors in influencing these dynamics and the resulting policy outputs.

Private sustainability governance in the making – A case study analysis of the fragmentation of sustainability governance for the gold sector

Governance is needed to address sustainability challenges along global value chains. Yet, the multiplicity or fragmentation of public and private sustainability governance resembles a potential hurdle for coping with sustainability challenges. This fragmentation is also intriguing from a research perspective, as little is known about the drivers of governance fragmentation in specific commodity sectors. This study assesses the fragmentation of sustainability governance in the global gold sector. Four general factors for fragmentation are derived from the literature: contextual factors, intra- and inter-organizational factors as well as scope of governance. A comprehensive case study, including a qualitative analysis of 26 in-depth interviews with experts in the gold sector, is used to investigate these general factors in the case of gold and to derive gold-specific factors for fragmentation. The five key findings are that, first, specific industry characteristics of the gold sector create actor-specific governance needs that lead to a multiplicity of governance schemes. Second, key governance references exist in the case of gold, but leave room for interpretation, thus encouraging a multiplicity of governance. Third, intra-organizational factors considerably impact the fragmentation of governance for gold, regarding different governance initiators and members, organizational logics, missions and ‘business models’ and the framing of sustainability. Fourth, the scope of governance strongly explains fragmentation in the gold sector. Fifth, competition between governance makers for gold provides only weak explanations for the resulting fragmentation. A conceptual framework is introduced that encapsulates general factors of fragmentation from the literature and gold-specific factors from the empirical findings. It serves to refine, enrich and display factors of fragmentation in their interaction in the gold sector. Insights from this study expand the scholarly knowledge on fragmented sustainability governance and provide a starting point for further cross-case and comparative studies of fragmented sustainability governance.

Transnational Private Governance as a Developmental Driver in Southeast Asia: The Case of Sustainable Palm Oil Standards in Indonesia and Malaysia

abstractThis paper explores why and how voluntary private sustainability governance initiated by corporations and non-governmental organisations (NGOs) extends its regulatory purview to incorporate developmental strategies aimed at upgrading smallholder practices. Using the case of palm oil in Indonesia and Malaysia and by extending insights from club theory, global production networks, and developmental states, the paper identifies the conditions under which private regulatory standards catalyse private developmental interventions that are nevertheless analogous to the industrial policies, financial incentives, and institutions of the classic developmental states. It was when the credibility of private sustainability standards was challenged by the low-yielding and environmentally-unsustainable cultivation practices of smallholder growers of palm oil that private governors and globally-oriented palm oil corporations who depend on smallholder suppliers worked with NGOs to support smallholder agricultural upgrading, in turn enhancing productivity, sustainable cultivation practices, and livelihoods. Such private developmental interventions involve supply chain mapping, knowledge service partnerships, and brokered overarching meta-partnerships that may be regarded as functional analogues of classic developmental state practices and institutions, namely performance monitoring, technological support, and coordination of multiple actors to form wider innovation networks.

Assessing the institutionalization of private sustainability governance in a changing coffee sector

AbstractThe potential of transnational private governance initiatives to constitute effective alternatives to state‐led regulation of global value chains rests on their ability to scale up and become institutionalized in a given sector. This study examines whether such institutionalization has occurred in the coffee sector, the commodity with the most widespread adoption of certified products and over 30 years’ experience of private governance, and tests hypotheses on facilitating and inhibiting conditions. It finds that while norm generation around responsible supply chain management and the organizational institutionalization of standard‐setting bodies is well advanced, the practice of internalizing social and environmental externalities through the routinized production and purchase of higher priced certified goods continues to be questioned by industry actors. Indeed, conditions that favored normative and organizational institutionalization, such as high levels of industry concentration, product differentiation, and deliberative interaction, are shown to represent barriers to the practice‐oriented institutionalization of market‐driven regulatory governance.

Beyond Regulatory Governance? On the Evolutionary Trajectory of Transnational Private Sustainability Governance

Three narratives predominate about what drives change in the governance of private sustainability-standards in global supply chains. All three narratives present a pathway of change in which standard-setting as a form of regulatory governance is likely to remain relevant for the politics of sustainable production. This commentary proposes a fourth narrative of change. It argues that in some prominent sectors firms develop new policy instruments that strip sustainability interventions in supply chains from their regulatory governance qualities. Standard-setting organizations themselves meanwhile expand functions that are not of a regulatory governance nature. In this pathway, standard-setting organizations move in a different direction than the other three: away from certification and regulatory governance as core business.

Emerging markets and private governance: the political economy of sustainable palm oil in China and India

ABSTRACTPrivate governance programs are now an important source of regulation in global value chains – particularly in context of North–South trade. But can these programs play a similar role in the value chains feeding into fast-growing emerging markets like China and India? Most scholars doing research on the topic draw a pessimistic picture. They argue that the scope conditions for private sustainability governance are not yet present in these markets. Our analysis of the Roundtable on Sustainable Palm Oil – a leading non-state certification program – in China and India partially confirms this view. At the same time, however, we find that emerging markets are not a unified category. We observe that sustainable palm oil is beginning to gain momentum in China, whereas uptake in India remains much weaker. We trace this back to a number of key market conditions, which we show are more favorable in China. In addition, our analysis highlights the role of the Chinese state in creating awareness of and shaping firms’ interests in sustainable palm oil.

The politics of resonance: Transnational sustainability governance in Argentina

AbstractWhy do private governance initiatives trigger greater participation in one country than another? This article examines the domestic dimension of transnational regulation through a case study of private sustainability governance in Argentina. Drawing from theories of contentious politics, the argument poses that the resonance of transnational private governance is shaped by the semantic compatibility of “incoming” sustainability programs against national political culture. Analyzing the limited participation of Argentine actors in contemporary sustainability initiatives, the article claims that the validity and relevance of sustainability programs is affected by three dimensions of national political culture accentuated over the last decade: a politicized model of state‐society relations, the low visibility of environmental matters, and a widespread anti‐corporate culture. By examining the ideational fundamentals of the “politics of resonance” in Argentina, the article makes a relevant and original contribution to transnational regulation literature, highlighting the need for theoretical accounts and empirical analyses that address domestic and cultural variables as fundamental pieces in transnational norm diffusion and effectiveness.

The politics of meta-governance in transnational private sustainability governance

In order to address challenges resulting from interactions between transnational private sustainability standard organizations, initiatives emerge that meta-govern these standards. Contrary to prevailing understandings in public policy literature, such meta-governance initiatives are mostly run by nongovernmental rather than governmental actors. While literature presents the sustainability standards field as predominantly governed by one meta-governor, ISEAL, it is hardly recognized that, alongside ISEAL, rival meta-governance initiatives are proliferating. These initiatives occur in similar sectors and issue fields, use quite similar modes of meta-governance and interact with each other. This paper explains the multiple emergence of meta-governance in the governance of sustainability standards in agriculture. It shows how meta-governance efforts are developed by political coalitions of nongovernmental actors with divergent views on and priorities in making production more sustainable. It therefore reveals the mechanism through which meta-governance of coordination problems among cross-border self-organizing governance arrangements may end up reproducing these coordination problems, rather than addressing them.

Engaging the public and the private in global sustainability governance

Negotiators preparing for Rio+20 are missing an important opportunity. Private sustainability governance (PSG) is thriving: organizations created by business and civil society groups, as well as public‐private partnerships, adopt and apply significant regulatory standards and undertake valuable operational activities, including pilot projects and financing. However, even though reforming the institutional framework for sustainable development is a central part of the Rio+20 agenda, negotiators are focusing almost exclusively on inter-governmental organizations such as the UN Environment Program (UNEP), the Commission for Sustainable Development and the Economic and Social Council. This public‐private engagement gap isolates international governance from the energy and innovation of PSG, and impedes efforts to coordinate the bifurcated and decentralized system of sustainability governance. This article argues that states, and especially international organizations, should actively support PSG as part of the institutional framework for sustainable development, while steering private and public‐private schemes towards good organizational practices and the pursuit of public goals. Engagement with PSG would help international institutions pursue their sustainability missions more effectively, promote the emergence of effective and legitimate private schemes, manage fragmentation, promote experimentation and learning, and enhance citizen participation. The article outlines two fruitful modes of engagement pioneered by UNEP: regulatory cooperation, in which international authorities engage directly with business firms, industry groups and other ‘targets’, influencing them to adopt more sustainable behaviors; and orchestration, in which authorities engage with intermediary organizations, such as multi-stakeholder private governance schemes, catalyzing, supporting and steering them as they seek to influence the ultimate targets of policy.

Engaging the Public and the Private in Global Sustainability Governance

Negotiators preparing for the 2012 UN Conference on Sustainable Development (Rio 20) are missing an important opportunity. Reforming the institutional framework for sustainable development is a central part of the Rio 20 agenda. In the run-up to Rio 20, negotiators have extensively discussed institutional reforms, but have focused almost exclusively on inter-governmental organizations such as UNEP and the Commission for Sustainable Development. At the same time, however, private sustainability governance (PSG) is flourishing. Since 1992, numerous organizations created by business, civil society groups, multi-stakeholder coalitions and other private actors, as well as diverse public-private partnerships, have adopted important regulatory standards and implemented significant operational programs, including financing and project support. Rio 20 negotiators remain almost wholly disengaged from these innovations.This public-private engagement gap is both puzzling and troubling. PSG has arisen primarily in response to the inadequacies of inter-state governance; it has provided momentum on many environment and development issues while inter-state negotiations have stalled. Embracing PSG would bring this valuable engine of activity into the international system. Indeed, public engagement would be even more beneficial than this 'comparative statics' analysis suggests: supportive engagement would enhance the ability of PSG – and thus of the system as a whole – to address the daunting challenges of sustainability.This paper first contrasts the inter-state focus of Rio 20 preparations (Section 1) with the growth of PSG (Section 2). Section 3 examines the public-private engagement gap in practice and in scholarship. Section 4 considers why states and international organizations (IGOs) have been loath to engage more actively with PSG. Section 5 identifies six broad benefits of public engagement: helping IGOs to carry out their sustainability missions; improving the distribution of PSG schemes; maintaining the incentives that support PSG; managing fragmentation; promoting experimentation; and enhancing participation and democracy. Finally, section 6 outlines workable mechanisms to strengthen public engagement, under the headings of orchestration and regulatory cooperation. These techniques can move the international system towards truly global sustainability governance.