Kapitel 3: Governance

Topic: Governance

A.03 - Governance body accountability

CRITERIA QUESTION

Is there a mechanism by which the top decision-making body is accountable to its stakeholders?

 

RESPONSE OPTIONS

No / Yes

 

REQUIREMENTS

A clear accountability mechanism (e.g. elections with voting members, accountability through deeds of trust, appointment by boards that are in turn elected, stakeholder advisory body).

 

GUIDANCE

Stakeholders in this case mean any parties who are directly or indirectly affected by the decisions of the top-decision making body (e.g. producers, consumer organizations, members, etc.).

Kommentare (4)

TA

ID: 249 24.02.2021 15:02

There are fundamental differences between different certification schemes as to the rights and responsibilities of the "governance body"/"top-decision making body". In some schemes, the "governance body"/"top-decision making body" have the ability to fundamentally impact standard content, while in other schemes, they cannot impact on standard content. It would be important to better understand and transparently present the differences. Is the top-decision making body only responsible for the management of the scheme as an organization, or is does it also have the ability to modify scheme standards?

OEKOTEX(R)

ID: 247 22.02.2021 11:14

Most companies base their objectives on the shareholder value model. The main focus of companies is, therefore, still on the investors, meaning that the business of business is business. In the last past decades, the accurate view has prevailed that businesses are more complex than displayed in in this model. The perspective of stakeholders of all spheres is relevant for the purpose of business. This requires increased communication, and it has become clear that dialogue is key here.

We recommend to be careful, though, to not blur the lines of the numerus clausus of legally permitted company structures. If we would allow stakeholders to hold scheme owners accountable or even have voting power, we would be in the legal form of an association, where every stakeholder is permitted to join, regardless of their investment.

While it is important to implement the stakeholder value model via a general stakeholder consultation and an advisory board, shareholders still have to be protected, otherwise the model would collapse.

We, therefore, think that this criterion is not suited for corporations and would blur the lines of legally permitted company structures. Accountability to stakeholders as defined is the criterion goes too far and is not practical. However, consultation of course is a necessity.

NICLASRYDELL

ID: 171 04.02.2021 13:33

I propose that this criterion is removed as it does not prove credibility but instead determines two fundamentally different approaches of running a certification.

This is a question about what is the goal of the certification. Some of the most important tasks of the top decision-making body are to determine how easy it is to get the certification and what the certification shall cover. There are different approaches that will affect the certification system, the choice of criteria and the criteria levels. The following are the two most common approaches:

1. Decisions are made by a consensus-based decision process where the stakeholders can influence the decision-making process either by voting themselves or by electing decision-makers.

For these labels, the certification system, the choice of criteria and their levels will be what the majority of stakeholders prefer.

For example, in order to achieve consensus, if the industry is in majority it is common that there is a lot of flexibility and options to fulfill criteria so that most products on the market will pass in order to satisfy all stakeholders. It is also common that test methods are vague so that each stakeholder can interpret them to their own benefit. Often independent testing is not mandatory and each brand owner can declare compliance and register products themself. This could result in a label that gives the impression of being strict but in reality, there are so many options and loopholes in the test methods that almost everything can pass.

If instead, the industry is in minority the risk is that the criteria become unrealistic, and too few products can pass. This will result in that it is not possible to require the label in public procurement as there are not enough options to chose between.

2. Decisions are made by an independent decision-making body controlled by the organization owning the label. Stakeholders are invited to provide comments on decisions such as the certification system, choice of criteria, and criteria levels.

For these labels, the independent decision-making body decides what long term goal and pass rate the label shall have and then weight the comments between all the different stakeholders to achieve that.

Comments from the industry that criteria are too strict or comment from NGOs that criteria are too easy are compared with scientific studies of real-life scenarios.

Decisions are made based on facts rather than political influence over the decision making process.

Decisions are made to achieve certain long-term goals and a certain pass rate even if that means that maybe 50% of the products on the market won't be able to pass initially.

Martin Schüller

ID: 167 01.02.2021 14:26

What about ownership of scheme by voting members? Fairtrade is 50% co-owned by producers organisations, and assigns 50% of voting rights to their representatives in the GAM.