T

he 2006 movie Blood Diamond starring Leonardo DiCaprio, based on a true story, showed how the diamond trade in Africa led to smuggling, war and child abuse. The story inspired a trading system called the Kimberley Process (KP) that is committed to eliminating conflicts in the diamond trade in the global supply chain.

The KP system actually follows the ecolabel certification process. The ecolabel campaign was developed at the Earth Summit in Brazil in June 1992 and emphasizes sustainable production and consumption. Endorsements by NGOs following the summit strengthened its position.

This scheme has evolved as a market mechanism with premium price incentives for producers. The growing awareness of sustainability led to the increased use of ecolabels, leading the scheme to become a lucrative business.

The cost of certification applied to the applicant company is usually quite high. Eventually, trade sustainability became a more prominent issue than farmers and fisherfolks’ welfare in developing countries.

Many studies have proven that the scheme failed to improve the welfare of farmers or fisherfolk in developing countries, such as the 2013 study by M. Pérez-Ramirez and other researchers, and another in 2016 by Maria Hadjimichael and Troels Hegland on the inherent risks of ecolabeling in fisheries in Indonesia.

My own study along with colleagues last year showed that the multinational ecolabel scheme failed in Indonesia’s tuna fisheries because it largely ignored support from local stakeholders, especially small-scale fishermen. This prompted Indonesia to initiate a fishery ecolabel scheme at ASEAN level, namely ASEAN Tuna Ecolabeling (ATEL). It pays more attention to social justice, especially for small-scale tuna fishermen, and encourages better regional cooperation.

Developing countries need market access for their products, but remain unaware of entrapment by primary product cartels. The parties to be most concerned about are international buyers and retail networks or global corporations who often use environmental and health issues as tools in their mission.

As environmentalist Vandana Shiva said, “[…] corporate globalization is really about aggressive privatization of the water, biodiversity, and food systems of the Earth.” Her statement is in line with the post-1992 Earth Summit trend of ecolabels.

Interestingly, we find similar initiators for the ecolabel initiative for some of the most important products in international trade. These include the Forest Stewardship Council (FSC) for wood products, the Marine Stewardship Council for fish products, and the Roundtable on Sustainable Palm Oil for palm oil products, initiated by Unilever and the World Wild Fund for Nature (WWF).

Unilever is a multinational corporation ranking 50th in the world in market value in 2017 at US$143.9 billion according to statista.com, with its global market of food and drinks, home care and personal care.

This indicates that the multinational business needs to ensure the distribution network of its primary products and thus needs ecolabels on those products.

Meanwhile, the WWF was established in 1961 as an international fundraising organization for the conservation movement on a worldwide scale. Its home page shows the largest source of funds in 2017 came from individuals at 32 percent, followed by 25 percent in-kind and others, 18 percent in government grants, and the rest from foundations, firms, networks and other sources. Its proximity to multinational companies makes its funding access extremely robust, ensuring the smooth running of conservation programs. Nevertheless, it can lead to partisanship to favor certain business groups.

Furthermore, ecolabels shift the government’s role to that of executor of its programs. This clearly shifts sovereignty from the state to the market, as supported in research conducted by Magnus Bostrom, which was published in 2006. He said the success of the standardization organization in building credibility and authority requires the support of as many actors as possible in the certification process.

This will strengthen the creation of governance without the government. Outside Europe, the challenge for ecolabels is thus harder given the necessary government role in developing countries to protect the public, especially small business actors.

The main concern of the ecolabel scheme is not sustainability itself but the sustainability-based certificate business.

Ecolabels have developed into a certification business rather than environmental protection.

Unfortunately, any dispute over ecolabels cannot be taken to the World Trade Organization (WTO); private labeling matters are still being discussed at WTO committee level.

The ecolabel scheme of a product developed by multinational companies and international NGOs thus marginalizes the government. How should we respond to these conditions?

Actually, Indonesia has had a best practice example through the Timber Legality Verification System (SVLK), where the Environment and Forestry Ministry encourages the sustainable management of forest products. The SVLK has become Indonesia’s national certification system, which has been accepted by 28 European Union member countries. This clearly proves EU recognition of Indonesia’s efforts to protect the environment. The scheme makes private ones such as the FSC unnecessary in Indonesia.

The successful implementation of the SVLK should be followed by other sectors such as agriculture, fisheries, and others. In fisheries, Indonesia has initiated and supported the above ATEL as the world’s first regional seafood ecolabel scheme. Both the SVLK and ATEL are proof that environment-based development can go hand in hand with state sovereignty.
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