The ISEAL (International Social and Environmental Accreditation and Labeling) Alliance is a membership organization for international voluntary standards systems (VSS). ISEAL sets standards for standards groups and has been working on impacts codes. ISEAL members include the Forest Stewardship Council, the Marine Stewardship Council, Fairtrade Labeling Organization, UTZ Certified, Rainforest Alliance/Sustainable Agriculture Network, and many other standards groups that have been at the forefront of what Michael Conroy calls the ‘certification revolution.”

International voluntary standards systems (and ISEAL Alliance members in particular) are reshaping international markets through numerous ways. They help companies “compete up” on social and environmental impacts by offering credible market signals for what economic theory used to call externalities. These standards help governments enforce environmental regulations like the Lacey Act that prohibits importation of unsustainable wood in the US. They can hep companies and governments procure goods and services sustainably.

The conference was very interesting in that for the first time in my experience, multiple stakeholders from business, government, and the standards community were in the same room. Wal-Mart’s representative in charge of sustainable procurement had only heard the week before that standards organizations have such an important role. Standards groups had presentations on life-cycle analysis from leading actors like Greg Norris.

My presentation in London focused on China and voluntary standards. I got into this area through research on a “Sustainable Trade Strategy” for China with AccountAbility, the International Institute for Sustainable Development, the Chinese State Council’s think tank the Development Research Center. That researched focused largely on the role of voluntary standards in shaping the future competitiveness of China’s transnational corporations. The paper touched only lightly on the role China would have on voluntary standards systems. (Read more about that here). My presentation in London filled some of the gaps.

Here’s a link to my powerpoint on “International Voluntary Standards in China: Present Conditions and Future Possibilities”.

Here’s a quick summary of my presentation:

(I apologize that I write bare-bones powerpoints and I don’t have a transcript of my presentation).

1) Context: International voluntary standards developed largely at the “end of history” under US-dominated international market conditions and now face BRIC challengers.

2) China is doing a lot to develop its own standards and has the power to influence markets to benefit Chinese corporations and Chinese standards bodies (indeed, any other strategy would be illogical)

3) Prospects for the uptake of standards in China, ie, what Chinese consumers want, and which standards have already been taken up, etc.

4) Thoughts on MNC success in China and similar industry development, ie, the history of business registration in China, development of international accounting standards in China, and the recent rapid development of China’s Corporate Social Responsibility policy environment and company actions.

5) A common strategy for international VSSs: local interface/global consistency,

6) Priorities on achieving a move toward converging local and international standards in China so as to avoid setting back the development of standards in China.

After my presentation, I had two major takeaways:

1) International standards bodies know that China is a game-changer and they take it as a given that they must adapt quickly and in a coordinated way.

2) International stakeholders recognize that China is one of the few developing countries that can actually achieve relatively high success in getting international organizations and corporations to respect local norms, customs, and business environment. Or, in one participant’s words, (I paraphrase), “lots of developing countries ask companies to respect local development priorities, but only China can actually make this happen.” We were discussing this in the context of Google’s recent actions in the China market.

There’s a lot more work to be done in this area and the landscape is shifting fast.

The World Guide to CSR:
A Country-by-Country Analysis of Corporate Sustainability and Responsibility
Edited by Wayne Visser and Nick Tolhurst

Fifth annual Golden Bee Conference: Regional Responsible Competitiveness Panel, image courtesy of WTO Tribune

Here is a summary of my remarks at the fifth annual Golden Bee conference in Beijing, speaking on a panel about how governments, companies, and civil society are working together to shift markets to reward responsible business action and make development more sustainable.

The session was chaired by the head of the Sino-German CSR Project, Rolf Dietmer, and had representatives from four provincial and district CSR initiatives, including Shandong, Shanghai Pudong, Jiangsu and Sichuan, plus a representative form China Unicom. My work with Chinese provincial economics planners has centered on the textiles and medicines sectors in Zhejiang through Responsible Competitiveness work with AccountAbility.

WTO Tribune wrote an article here (“Government duty-bound “responsibility”….in Chinese: ??“?”???) about the session here and captured some of my main points, but which I summarize here. (The entire transcript of my remarks in Chinese can be found here.

My main points:

1) Shifting markets to reward responsible business action requires a level playing field that no single sector (civil society, government, or business) can provide;

2) Chinese government officials at the provincial level are unsurpassed globally in their level of innovation and activity to promote new ways ;

3) Each provincial system is unique and there is need for coordination amongst local governments, the center and international stakeholders;

4) This unique approach to promoting sustainable development is both an asset and a liability, because if Chinese stakeholders do not coordinate properly, their market signals will be ignored by international buyers, ie, Chinese standards may not be recognized;

5) Chinese government officials, working with businesses, and using the power of the government bureaucracy, the media and civil society to promote  good company practices and punish the bad, have the chance to clarify the way voluntary sustainability standards (such as the SA8000, GRI, ISO, AA1000, CSC9000T, FSC, etc) mature at the national and international levels;

6) Rather than create additional hoops for companies to jump through, governments can achieve economic, social environmental objectives by leveraging existing market mechanisms such as voluntary sustainability standards.

I add a point 7) International voluntary sustainability standards systems should see the power of Chinese stakeholders to pick winning standards as a wake-up call to be more serious about engaging in China and as an opportunity to scale up the impacts of their standards, since China plays such an integral part in so many global supply chains.

This issue also has great inside shots of a BYD car factory floor.

Read the English version here and the Chinese version here.

Read the 2009 version and 2008 version.

On November 30, I joined colleagues at the EU China Business Summit in Nanjing, Jiangsu, which dovetailed with the EU-China political meeting.

That day in Nanjing, under support from the Sino-Swedish Corporate Social Responsibility cooperation, AccountAbility launched the report Responsible Competitiveness in China 2009: Seizing the low carbon opportunity for green development.

This from AccountAbility:

Businesses in China are increasingly working with government and civil society to shift markets to reward sustainable development. These responsible business practices are becoming more and more embedded in the country’s emerging green industrial policy and low carbon development pathways. In some areas, China is set to leapfrog into the elite group of global green innovators.

These are some of the highlights from the report ‘Responsible Competitiveness in China 2009: Seizing the low carbon opportunity for green development’, launched at the 5th annual EU-China Business Summit as part of the Swedish EU presidency on 30 November in Nanjing, China.

• Download English report
• Download the Chinese version

The analysis presented in this report shows that China is developing a distinctive low carbon, responsible pathway, namely that:

• Low carbon industrial policies offer Chinese businesses and consumers huge opportunities
• Responsible business ventures in China are now impacting global markets relaunching China’s brand
• Strong government leadership, incentives and supportive policies are playing key roles

The report was independently researched and written in a unique collaboration between AccountAbility and the China WTO Tribune, with support from the Sino-Swedish CSR Cooperation Project. Learn more about the report’s key findings.

The Joint Statement of the 12th EU-China Summit specifically “decided to strengthen high-level dialogue and exchanges between think-tanks from both sides, and to promote and support regular exchanges.” Read the Joint Statement in full. AccountAbility’s partnership with the China WTO Tribune is an example of this kind of knowledge and collaboration exchange.

Guardian: A green call to arms (Chinese)

ChinaDialogue: Obama’s China moment (Chinese)

AccountAbility’s Managing Partner, Simon Zadek, launched this report at the Boao Forum this year in Hainan and at the China Entrepreneur Club’s Daonong Green Companies Forum in Beijing. This paper is part of a two-year study with the State Council’s Development Research Center on “China’s sustainable trade strategy” working with several central-level Chinese research organizations and three international think tanks.

This paper examines how the Chinese business community can best use international sustainability standards to enhance their competitiveness in global markets and more effectively place themselves on a sustainable economic pathway.

It highlights the opportunity for Chinese businesses, supported by enabling public policies, to become a force in shaping the next generation of sustainability standards in global markets as a competitive strategy consistent with China’s broader interests. Doing so will require deeper engagement in existing standards initiatives, and a more explicit role amongst the communities that have developed and now govern them. Effective engagement in such standards is a means of off-setting competitive disadvantages, and creating competitive advantages when businesses and nations choose a more sustainable development path.

This paper sets out both strategic options for businesses and policy options for the Chinese government to realise sustainable development and competitiveness goals.

Download the full English version, full Chinese version, or the bilingual executive summary.

• Download the full English version.
• Download the full Mandarin version.
• Download the bi-lingual Executive Summary.

Read the press release.

Mentioned in the Harvard Business Review blog here.

Video interview with me on NetEase discussing link between sustainability and Chinese competitiveness (in Mandarin Chinese).

Download the full English version here.

The Chinese version is on Fortune China’s website here.

I spoke on the Corporate Social Responsibility (CSR) panel at the 2009 Harvard Asia Business Conference about the evolution of “CSR” in China and what it means for both China and the rest of the world. I presented my own rather premature model of the evolution of the concept in China in four overlapping, mutually-reinforcing stages:

I. Hesitant engagement: (1993-2005): Chinese stakeholders see calls for greater social and environmental responsibility by foreign companies, governments, and civil society groups as largely discriminatory (technical barriers, cultural barriers, development stage differences, political differences, manifestation of the “China threat”, etc.).

II. MNC- and SOE-led: (2005-2008): CSR starts to become accepted in the popular Chinese press when major companies start publishing specific China regional reports like the first MNC’s (Shell’s) in 1999 or the first State-Owned Enterprise’s (State Grid Corporations’s) in 2006.

III. Government-led: (2008- 20??): SASAC’s 2008 #1 document and the Chinese Banking Association begin to articulate clear government positions on CSR. Government maintains strong leadership in domestic voluntary standard-setting process, begins to engage in voluntary standards initiatives internationally, such as the ISO26000 process. The Chinese Banking Association issues its first CSR Report (2009, link in Chinese)

IV. Hybrid: (20??-): Realizing the limits that international stakeholders have in understanding “country-specific” or government-initiated models of assuring social and environmental action, government agencies, enterprises, and other actors create new cooperation through overlapping standards. These new and unique social capital exchanges bridge barriers of trust while maintaining domestic interests in the voluntary and statutory standards setting process.

There are of course many other models for understanding the development of CSR in China, namely that collective enterprises in the 1950s-70s before Reform and Opening Up were fully taking care of workers’ and society’s needs (including workers’ wedding arrangements).

Others like Yin Gefei of the WTO Tribune models Chinese CSR development aligned to an ISO progression. ISO 9000: quality and price competition; ISO 1400: competition based on environmental attributes; ISO 2600: comprehensive social and environmental basis for competitiveness.

The degree of internationalization of the fourth stage and whether this prediction holds true depends on a number of factors, such as the trends of globalization in general, shifts in Chinese imports and exports, and the degree to which Chinese domestic and international stakeholders seek common means of understanding sustainable development actions and claims.