Multi-stakeholder initiatives (MSIs) have become a vital part of the organizational landscape for corporate social responsibility. Recent debates have explored whether these initiatives represent opportunities for the “democratization” of transnational corporations, facilitating civic participation in the extension of corporate responsibility, or whether they constitute new arenas for the expansion of corporate influence and the private capture of regulatory power. In this article, we explore the political dynamics of these new governance initiatives by presenting an in-depth case study of an organization often heralded as a model MSI: the Forest Stewardship Council (FSC). An effort to address global deforestation in the wake of failed efforts to agree a multilateral convention on forests at the Rio Summit (UNCED) in 1992, the FSC was launched in 1993 as a non-state regulatory experiment: a transnational MSI, administering a global eco-labeling scheme for timber and forest products. We trace the scheme’s evolution over the past two decades, showing that while the FSC has successfully facilitated multi-sectoral determination of new standards for forestry, it has nevertheless failed to transform commercial forestry practices or stem the tide of tropical deforestation. Applying a neo-Gramscian analysis to the organizational evolution of the FSC, we examine how broader market forces and resource imbalances between non-governmental and market actors can serve to limit the effectiveness of MSIs in the current neo-liberal environment. This presents dilemmas for NGOs which can lead to their defection, ultimately undermining the organizational legitimacy of MSIs.
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The term MSI has come to be used in recent management literature to refer to multi-stakeholder forums which are multi-sectoral rather than business-dominated, and which serve a “soft law” or civic regulatory function organization (Rasche 2012; Mena and Palazzo 2012; Fransen and Kolk 2007). MSIs are to be distinguished from corporate-led and -directed efforts, such as those in which a single corporation convenes stakeholders to advise and confer about its practices, or to help devise a proprietary CSR policy or label, such as Starbucks’ Coffee and Farmer Equity (C.A.F.E.) standards, devised in cooperation with Conservation International (Conservation International 2013). Scholars also distinguish MSIs from “business-led corporate responsibility coalitions” such as the Sustainable Agriculture Network or the Equator Principles (Grayson and Nelson 2013). A number of recent studies have identified four different types or levels of MSI, which vary in the strength of their soft-law functions, ranging from those which merely provide learning platforms for best practice, to those that involve more stringent regulatory mechanisms, such as certification schemes with third-party verification (Mena and Palazzo 2012, p. 536; Rasche 2012, p. 683).
Advocates are not sanguine about the ease of designing institutional processes that can maximize organizational learning and epistemic transformation. As Risse points out, simply providing arenas for communication will not be sufficient to inspire reflexive processes of deliberation; incentives usually must be provided if actors are to re-evaluate their own interests and preferences. Moreover, basic trade-offs must be considered: for example, transparency of proceedings is crucial for democratic legitimacy, but closed-door negotiation usually improves conditions for persuasion and re-evaluation of parties’ own interests (Risse 2004, p. 311).
Mena and Palazzo (2012) identify eight distinct legitimacy criteria for MSIs. Four relate to what they call “input legitimacy”: (a) stakeholder inclusion, (b) procedural fairness of deliberations, (c) promotion of a consensual orientation, (d) transparency of structures and processes. Four relate to what they call “output legitimacy,” or regulatory capacity: (a) high coverage, (b) efficacy, and (c) good enforcement and monitoring of rules (pp. 536–537). They identify the FSC as a scheme that should be expected to be highly credible and effective in terms of both input and output legitimacy (pp. 543–547).
It is worth mentioning, however, that our final analysis did not, in the end, perfectly reflect the perspectives of all of the NGO participants we consulted.
The PEFC dropped the word Europe from its name in 2003, renaming itself the Program for the Endorsement of Forest Certification. Reconfiguring itself as a global umbrella organization, composed of national-level certification schemes from all over the world, it took both the CSA and SFI into its fold, along with a number of newer national schemes from the developing world (e.g., Certflor Chile, Brazil’s CERFLOR and various regional units of the Malaysian MTCC scheme).
Many of the national schemes that joined the PEFC were originally “systems based,” rather than “performance based” schemes. Rather than setting concrete sustainability-oriented minimum standards, “systems based” schemes require only that forestry operations commit to particular measurement and book-keeping procedures, in order to “review their objectives” (Humphreys 2008, p. 117).
Donors in 2002 included U.S. foundations such as the MacArthur Foundation and Moriah Fund; large environmental organizations like the WWF and National Wildlife Foundation; national development agencies like the German GTZ and British DFID; companies like B&Q, IKEA and AB Gustav Kahr; and the City of Gothenburg (FSC 2002).
In 2006, the FSC founded a new limited liability company, Accreditation Services International, GmbH (ASI) to take responsibility for administering and monitoring accreditation of its certifiers (ASI 2001). In 2008, three dedicated ASI Accreditation Program Managers were responsible for overseeing 8,000 certificates; at the time, stakeholders expressed concerns that this was not nearly enough staff to allow for proper investigation into the backlog of complaints about problematic certifications, or to begin to implement a program of regular on-site audits of the certification process (Harkki and Greenpeace-Finland 2008; FERN 2008). By 2011, while FSC certifications, according to its own website, had expanded to over 22,000, ASI still had only three dedicated FSC Accreditation Program Managers (ASI 2001).
Based on personal observation and communication with NGO activists at Forest Movement Europe meetings in 2003 and 2004.
While, according to some measures, rates of primary forest loss appear to be slowing somewhat at the global level, compared to figures from the 1990s (Flynn 2010; though see Hoare 2005 for a more skeptical view), the FAO nevertheless reports that 40 million hectares of primary forest have been lost worldwide since 2000; primary forest loss in tropical regions has been “alarmingly high” during this period in Central and South America, and parts of South and Southeast Asia and Africa (FAO 2010).
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The authors would like to thank Michael Burawoy, Marcus Colchester, Jane Hindley, David Levy, Birke Otto, and Saskia Ozinga for their engagement with earlier versions of this article. We thank Peter Gerhardt, Jutta Kill, László Maráz, Hermann Edelmann, Chris Lang, and other members of the Forest Movement Europe for sharing their perspectives and their archives, and for allowing Sandra Moog to attend various network meetings and strategy sessions over the years. We are also very grateful to three anonymous reviewers for their suggestions, which significantly improved the content and coherence of this article.
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Moog, S., Spicer, A. & Böhm, S. The Politics of Multi-Stakeholder Initiatives: The Crisis of the Forest Stewardship Council. J Bus Ethics 128, 469–493 (2015). https://doi.org/10.1007/s10551-013-2033-3
- Civic regulation
- Deliberative democracy
- Global governance
- Multi-stakeholder initiatives
- Non-governmental organizations
- Transnational politics