Labels such as Fairtrade, Green Seal and Utz claim that a product was produced in a socially and environmentally sustainable way. However, new research by Associate Professor Frank Wijen of Rotterdam School of Management, Erasmus University (RSM) reveals that putting such labels on products – and trying to adhere to the principles and practices underlying standards to pursue sustainability – can deliver unintended negative consequences.
This can happen because it is difficult to monitor and regulate all the social and environmental effects during production processes in foreign countries. Also, a direct interrelation of causes and wider consequences is not easy to tell. For example, will a ban on child labour lead to better working conditions for children – or force them into child prostitution instead?
Failing to meet expectations
Ultimately, the setters of standards want these labels to mean more to companies than just a label with symbolic value that will attract certain customers, so that standard adopters are able to charge a premium price or obtain privileged access to niche markets. It cannot be assumed that producers who want to achieve certification will rightfully fulfil their set of responsibilities. Producers might deliberately not live up to the duties being imposed upon them or simply not understand how to comply. Whatever the reason, this failure undermines the credibility and effectiveness of the labels themselves.
In conclusion, while sustainability and other standards may seek to create clarity, full transparency is not feasible without overshooting goals. But standards can be much more effective when they duly consider wider effects, adopter motives, and regional differences.
Maatschappelijk verantwoord ondernemen is een belangrijk onderdeel van de Parttime Master Bedrijfskunde, Rotterdam School of Management, Erasmus University. Meer informatie over deze deeltijd opleiding treft u hier of bezoek een voorlichtingsavond.