Sustainability Certification for the Public Good

Foreword

As a non-profit organization that promotes the preservation and enhancement of public knowledge, the Knowledge Futures Group is devoted to building technology and digital infrastructure in service of the public good. For this mission, we frequently use the term 'sustainable' when discussing knowledge infrastructure that is aligned with public interest. As such, we advocate for open research / open science badges and other certification protocols that indicate an adherence to transparent, sustainable processes in research and publishing. In other words, we see the value in establishing certification methods to not only incentivize best practices amongst governments, corporations, and consumers, but to further amplify public awareness and participation to this end.

As the climate crisis has been called the 'great equalizer' of our generation (although, in many respects, it is the 'great magnifier' for it exacerbates global socioeconomic and resource disparities), it is paramount that we foreground our discussions around sustainable knowledge ecosystems and 'badging' with regard to the adoption of these protocols for consumerism writ large. The KFG understands knowledge-as-capital (including rights to personal and public data) to be the defining struggle of our time. Sustainable consumerism therefore underscores the stakes of open knowledge advocacy and reveals the mutual affinities of such undertakings.

As synchronicity would have it, I reached out to Impakter earlier this week about the necessity of sustainability badging, not realizing they were in the process of finalizing a sustainability index that has been two years in the making. To celebrate the launch of the Impakter Index today (!), Claude Forthomme has composed for the Commonplace an overview of the Index, namely how it empowers the public to use their purchasing power for planetary and social benefit. With a longue-durée view of her experience as former Director of the Food and Agriculture Organization of the United Nations and now as Senior Editor at Impakter, she reflects, “because at the end of the day, that is what working in the interest of the public good is all about.”

- Quincy Childs

How can sustainable certification and consumerism be turned into a force for the public good?

A complex question, but first, a few definitions are needed. In this context, sustainability certification refers to the certification of consumer products as “sustainably” produced, i.e., respecting the environment (the ecological component of sustainability) and the dignity of workers (the social justice component).  The consumer goods are what most consumers spend their income on, such as fast-moving consumer goods (FMCG). Examples are non-durable household goods such as packaged foods, beverages, toiletries, candies, cosmetics, over-the-counter drugs, clothing (including fast fashion), and other consumables. 

An argument often put forward is that consumerism could become a “force for good” as consumers are individuals “voting” with their wallets. But a question arises: how informed is even the most well-intentioned, eco-conscious individual about her consumer choices? How can she be sure that the products she acquires are sustainable? Here is where sustainability certification comes in.

The objective of sustainability certification is simple: To build trust in consumers in the FMCG market - so that they are confident that what they are purchasing is sustainable. As a result, companies publicly recognized as producing sustainable products outsell their (non-sustainable) competitors. Likewise, investors are more likely to invest in them. The expected impact is positive across the economy, from Main Street to Wall Street, and is measurable on three fronts: Consumers, producers, and investors. 

Unfortunately, the real world is more complicated. A daily avalanche of products and a plethora of sustainability claims, ranging from certificates, labels, and badges to benchmarks and indices that rank companies on an (often ill-defined) sustainability scale, confuse consumers. They have no basis for judging the validity of the claims and don’t know which to trust. As a result, they ignore most certification systems, even the better ones like the GRI standards, which undoubtedly represents best practice in sustainability reporting.  

The problem has a name: Greenwashing.

There is a genuine fear among consumers that businesses make baseless claims of sustainability to push their products. And that fear is fed by numerous reports of greenwashing scandals over the years.

The cause of the problem is clear: A lack of third-party verification. Only with independent expert evaluation can one be confident that there is no greenwashing afoot. Yet the reason why so few certification systems use third-party verification is apparent: It is a costly and time-consuming process. It requires investment into an evaluation structure with a budget for independent experts and field trips to verify whether businesses claiming they operate sustainably really do so.

Many certification systems are well-known and encourage socially responsible investing, notably the Dow Jones Sustainability Index, MSCI (helping ESG investing), CDP (measuring environmental impact), etc. But they are also problematic: They are based on self-assessment and self-reporting by businesses. In short, they don’t use third-party verification. 

GRI, based on a complex independent governing body and expert monitoring structure, stands out in this respect. Its sustainability reporting standards are laudable but unfortunately not simple enough for the public to understand. There is a clear need to implement a proper sustainability index linked to the concept of sustainability as agreed to by the UN General Assembly in 2015 when it unanimously voted Agenda 2030 and the 17 Sustainable Development Goals. 

The Impakter Index

Such an index should be widely accessible to the public and reflect the reality: to what extent business operations are really sustainable and socially responsible. And that is what the Impakter Index does. Developed over two years by a team of 37 experts, under the able guidance of two Italian experts, Prof. Roberto Reali, a CNR data scientist and Prof. Raffaele Maiorano, a ConfAG sustainability specialist, it was launched on 31 July 2020, with an initial assessment of the sustainability performance of 100 of the Forbes’ Global 2000 companies. Over time, more will be added to the Index until all relevant businesses are covered. 

The Impakter Index, unlike other ESG benchmarks and indices, does much more than capture publicly available data as “voluntarily disclosed” by companies. It reviews a company in light of its linkage to the UN/SDGs and the validity of the certificates it holds. As a result, the Index ranks where businesses stand on their way to sustainability. It utilizes a simple letter system that follows the credit rating agency model. 

Businesses that have earned the “best” certificates, those with third-party verification, are awarded the letter A. At the other end of the spectrum, F goes to those whose operations automatically preclude sustainability, like the fuels and gas industry. Such an Index publicizes to the general public (consumers, business entrepreneurs, investors) the road that still needs to be covered to achieve sustainability. As of now, estimates are that 90 percent of the Global 2000s are likely to earn a C or less. Clearly there is still a long way to go.

The expectation is that both businesses and certification-awarding agencies will compete for top ranking. It will be in their interest to improve the credibility and reliability of sustainability certification.

Ultimately, the Impakter Index, in guiding consumers towards more sustainable choices, empowers the public to use their purchasing power for planetary and social benefit. Because, at the end of the day, that is what working in the interest of the public good is all about.