Definition of responsible production

1. Developmental Relevance of Fair Trade and CSR Peter Knorringa Institute of Social StudiesSeptember 2008, The Hague, 17th AEEE Conference

2. Definition of responsible production • Includes both Fair Trade and CSR (Corporate Social Responsibility) initiatives • ‘..where lead-actors in supply chains implement labour and environmental standards that go beyond the existing minimum requirements’ • Paying ‘above market rates’

3. Responsible Production Value creation Risk Minimization Compliance with (inter-)national regulation Semi-formal and Informal sectors

4. Two basic questions to assess developmental relevance of responsible production • ‘Reach’: Consumer Demand Will it become increasingly mainstreamed? • ‘Depth’: Local Impacts Will it increasingly be used to enhance local development, benefit more vulnerable workers?

5. Mainstreaming Reach? (1) • Norm Life Cycle model: pyramid dynamics • Norm emergence: pioneers, idealists • Norm cascading: critical mass, reputation • Norm internalization: accepted new standard • Two processes: • Companies moving up or down in pyramid • Societal expectations change partitions inside pyramid

6. Responsible Production Value creation Risk Minimization Compliance with (inter-)national regulation Semi-formal and Informal sectors

7. Mainstreaming Reach? (2) • 1 billion new ‘middle class’ consumers in the Global South • Need to investigate effective demand for responsible production • Do ‘new’ and ‘old’ consumers really care? • OECD research: less than 5% really cares • In 2030: 92% of global middle class in developing countries

8. From Reach to Depth • Increased awareness of complementarities in broadening reach can help to enhance developmental relevance • Raising ‘floor’ of legal and societal compliance is key to increase reach: small improvements for many workers • But, do higher standards lead to enhanced local development: Depth?

9. Responsible Production Value creation Risk Minimization Compliance with (inter-)national regulation Semi-formal and Informal sectors

10. Enhancing Depth (1) • So far, localised developmental relevance limited by: • Codes follow supply chain logic in setting, implementing and monitoring standards (focus on individuals and tangible indicators) • Only small numbers of workers covered by codes A-brand suppliers (who already ‘enjoy’ relatively better working conditions by local standards)

11. Enhancing Depth (2) • Strengthening developmental relevance through: • Including local sub-sub-contractors in monitoring protocols • Move from individual to add collective and localised priorities: new social contracts • Embedding in local realities: What matters most is not the higher the standards the better, but their leveraging effect at local level • Brings State actors back into the game

12. Conclusion: New Research Questions • Reach: How to measure - and enhance - effective demand for responsible production? What triggers new middle class consumers? • Depth: How to support pockets of responsible production and how to make them a catalytic element in a broader development strategy? • Profits of Partnership: Complementary roles of private, civil and public actors. Development is a struggle.