Balancing voluntary sustainability standards and public regulation

To date the market shares of sustainable products have increased, but, depending on the product at hand, no product markets have become fully sustainable. As some research suggests voluntary sustainability standards (VSS)... [ view full abstract ]

To date the market shares of sustainable products have increased, but, depending on the product at hand, no product markets have become fully sustainable. As some research suggests voluntary sustainability standards (VSS) might not be able to perform this task independently and government support might be indispensible. For example, the shape of a producer market (organizational rate) is important for the uptake of VSS. Governments in producing countries might play a role to incentivize. Furthermore, western governments may support VSS through public procurement, subsidies and tax exemptions. Beyond that, public regulation might support VSS.
However, it is of importance for governments to ascertain whether particular VSS (effectively) meet their sustainability objectives in order to decide whether or not to support (specific) VSS. Unfortunately, to date no international agreement has been reached on the criteria against which governments should benchmark VSS (also in connection with WTO trade issues. If every government uses its own criteria for such benchmarks and favors certain VSS mainly used by domestic retailers, this might be considered to be discriminatory against foreign products). Therefore an endeavour to shape such a benchmark would be welcome and incentivize the uptake of VSS.
In the meantime several governments promulgate regulation on a duty of care in supply chains, for example in connection with orgin of products (forestry) or child labor, worker conditions and safety (e.g. apparel). Sometimes a due diligence requirement is implemented but other mechanisms are implemented as well. The questions is whether such public regulation supports VSS, might even replace them or is rather counterproductive and might hamper the uptake of VSS. Therefore, governments should examine which type of measures in public regulation might be feasible (considering the effects of specific VSS) and, if any, how VSS and public regulation could be aligned in order to support sustainability or whether governments should abstain from regulation and support VSS in other ways. The paper will address these issues.