Other roles for governments needed in sustainable supply chain management?

31-12-2010 | Publication

Sustainably produced goods are growing in popularity. The share of sustainable coffee and wood on the Dutch market is approaching 50 p. Producers in developing regions have to meet the requirements set in certification systems that underpin the claim of ‘sustainability’.

These requirements cover both environmental and socio-ethical issues. In the past, private initiatives have played an important role in developing, managing and implementing these systems, while governments have only offered support from the sidelines. Moreover, the Dutch Government considers sustainable supply chain development largely the responsibility of social partners (private companies, citizens, non-governmental organisations).

Shortcomings in self-regulating markets, such as confusion caused by different certification systems, and a possible levelling-off of the demand, make it necessary to reflect on the role of government. Alternatives for this role are proposed by the PBL and the Copernicus Institute in the report ‘Roles of Governments in Multi-Actor Sustainable Supply Chain Governance Systems and the effectiveness of their interventions’. Alternatives roles that may increase sustainable product market shares could include a stronger government regulation of sustainable production, or, on the opposite side, further strengthening of self-regulating markets.

Stimulating sustainably produced goods

During the last decade, we have seen a strong increase in the number of certification systems for sustainably produced goods. These goods enter the European and Dutch markets through global supply chains. Certification systems have been developed that set standards for production processes at the beginning of the supply chain. These encompass environmental issues as well as social ones, such as income and labour conditions. This development is in accordance with government policy on sustainable supply chain development to reduce negative impacts of production (Biodiversity Policy Programme 2008-2011 (PDF, 3,9 MB). Private partners, nevertheless, continue to play an important role in developing, managing and implementing these certification systems.

Several shortcomings can be identified around the self-regulation of these markets, including, most importantly, the confusing effect of the various certification systems, for both consumers and producers, differences in transparency about company performance, insufficient monitoring of market effects, and the possibility of market saturation for sustainable products. These shortcomings question the effectiveness of voluntary certification and indicate that reflection in needed on the most promising role for (national) governments in sustainable supply chain management. The PBL and the Copernicus Institute for Sustainable Development propose three alternative strategies for new government policies:

  • a return to a regulating government;
  • strengthening of self-regulating markets;
  • or a middle way, optimising the market.

The first strategy contains more regulations for producers and importers (minimum binding requirements, or even a ban on non-certified products). The second strategy contains setting rules of the game for competing markets, and facilitating fair competition between systems (for instance, by controlling the alleged claims, and stimulating transparency about the results of alternative systems).

This study is the result of a collaboration between the PBL Netherlands Environmental Assessment Agency and the Copernicus Institute for Sustainable Development (Faculty of Geosciences, Utrecht University).