Mindful Markets, Value Revolution and the Green Economy:
EPR, Certification and the New Regulation
Under the radar of mass media and mainstream academia, a value revolution is taking place that is promising to transform humanity’s very notions of wealth and economic development. Expressed in an explosion of both traditional academic indicators and innovative new quality-of-life and sustainability measures, this value revolution is not simply revealing previously invisible “full costs” of production, but also “redefining progress” more positively—from quantity to quality. Economically, our ways of growing and distributing food, providing & using energy, building buildings, making and exchanging clothing, etc. are being reexamined not only to reduce their negative impacts, but also to more fully express their social and ecological potentials. They are geared not simply to the sustainability of communities and ecosystems, but to their regeneration—to make economic development, as eco-architect Bill McDonough would say, “not just less bad, but good.”
Of the expanding “family” of alternative wealth measures, sustainable community indicators are probably the most comprehensive expression of qualitative wealth and community development generally. At their best, they synthesize a range of quantitative and qualitative data, including people’s subjective preferences. In this article, however, I want to focus on more specifically on the economy, and the two key shapers of “market transformation,” both of which are based on the value revolution currently underway: extended producer responsibility (EPR) and non-governmental third-party certification systems.
Both phenomena are good examples of how a green economy is the ultimate knowledge-based economy: by definition, it replaces materials and energy with human intelligence. Both EPR and the non-governmental certification systems are based on the life-cycle approach and, increasingly, rigorous life-cycle assessment (LCA). But qualitative development involves far more than simply new values and information; it also demands a market and regulatory revolution, entailing a gradual—but fundamental—shift in the form, content and drivers of economic development. For a growing number of green thinkers, the main elements of this restructuring come down to (1) an increasing focus on producing services rather than products, and (2) reorganization of production and consumption in closed-loops, either integrated with, or imitating, ecosystems—what’s been called “economic biomimicry.” This cannot be achieved simply by beefing up environmental protection against nasty brown markets and production processes, but by a transformation that increasingly establishes social and ecological values as the prime driving forces of a new kind of market.
EPR and the Purpose of Production
EPR and the green product certification are both cutting-edge expressions of the value revolution on the regulatory front, intended to create this new kind of market.
Extended producer responsibility is the most prominent regulatory principle based on the life-cycle approach, and aims to implement ownership patterns that encourage stewardship and conservation of resources. It responds to one of the most insidious characteristics of capitalism, in which a producer’s responsibility for toxicity and waste ends with a product’s sale, thus dumping externalized costs onto society. EPR simply extends the producer’s liability (typically via extended ownership) through a product’s entire life cycle. For a “product of service,” for instance, like a carpet or television, the customer would lease rather than own, with servicing and eventual disposal (i.e. replacement) handled by the producer-owner. Facing these internalized costs, producers usually get very creative about reducing them. EPR thus has major effects both on product design—preventing problems—and on overall resource consumption. While an application of the “polluter pays” principle, EPR can offer as many regulatory carrots as sticks, since it provides smart producers new opportunities for materials and energy saving, toxics reduction and service markets.
back” programs are the most well-known example of EPR in the existing
economy. While such programs in
Probably the first needs-oriented green economic strategy was Amory Lovins’s “end use” approach to the soft energy path in the mid-seventies, which insisted that policy should focus on “hot showers and cold beer” instead of fossil fuels, power plants and energy supply generally. Attention to end-use could allow policy-makers to work backwards to find the most elegant and efficient ways of meeting these needs—simultaneously meeting people’s needs more comprehensively and saving vast quantities of resources. In the last decade, industrial ecologists have applied the same principle to “service needs” in the entire economy: for nutrition (rather than junk foods), entertainment (not DVD’s), access or mobility (not cars), education (not books), homes (not buildings), clean water (not chlorine), pest control (not chemicals), illumination (not lamps), and so on. Yet today most capitalist markets are still focused on producing and selling as much stuff as possible—making the satisfaction of real need, at best, a spin-off or side-effect of open-ended material production.
Xerox, which now sells document services rather than machines, has become the poster child for the service approach among industrial ecologists. The company has been inspired to design-for-disassembly as part of its voluntarily extended responsibility, and it has profited handsomely from its conservation efforts. But the question remains: can all producers, and capitalism as a whole, reorient itself to both extended liability and to a strategic emphasis on end-use and human need? For mainstream business, a focus on real need is tantamount to socialism; and, over the past 50 years, both cultural and communications industry (which properly should be engines of dematerialization) have been thoroughly subordinated to the quest to create artificial needs and sell every possible kind of junk that industry can produce. The “consumer society” has really been a system of production-for-production’s-sake—with the accumulation of money and material its essential raison d’etre. EPR, with its focus on service, thus represents a fundamental means/ends revolution that constitutes a major break in the trajectory of economic development. This is related to other aspects encouraged by EPR—like a shift in emphasis from labour- to resource-productivity ; more concern with local/regional self-reliance, etc.—which are beyond the scope of this article.
Mindful Markets and Stakeholder-based Regulation
To most, EPR suggests a major role for state intervention in the economy—as is certainly the case in government-mandated product stewardship systems, requiring take-back legislation, precautionary product and substance bans, etc. But, as noted above, EPR can take various forms in order to close loops and to dematerialize/detoxify the economy. What Lindhqvist calls “informative responsibility” in particular can, when coupled with new forms of green and community markets, take powerful, though decentralized, forms. This more decentralized EPR, however, can work only with comprehensive valuation systems, based in sophisticated knowledge which can be readily available to consumers.
Economic complexity and development seem to beget decentralization and undermine external control—one big reason for the eclipse of state socialism and giant energy generation utilities. Qualitative wealth and value tend to be place-based and context-specific, suggesting the need for community- and industry-specific forms of regulation. Government certainly has an essential rule-making role to play in a service-based closed-loop economy, but civil society seems to be generating new forms of economic regulation—in particular, the rapidly expanding non-governmental stakeholder-based third-party certification systems. These systems—for sustainably-harvested wood, green energy, organic food, green buildings, and the like—tend to be connected with the rise of new enterprise networks, establishing new relationships not just between producers, but between producers, consumers and everyone along the product life-cycle. The most well-known examples are the Green Building Councils, associated with LEED building certification, and the Forest Stewardship Council, which organizes wood and forest certification. These networks are not simply business associations pushing market expansion. They are more interested in deriving their financial reward from delivering social and environmental value. For this to actually work, they must be equally valuation, marketing and regulatory systems. Thus, while they may be concerned with growing their markets, their net effect may be a net reduction in the amount of material stuff sold.
The by-word of most of these initiatives is “market transformation.” Many academic and media commentators are hypnotized by this market terminology, and often lump these initiatives in with a host of other neoliberal “market innovations” that have coincided with globalization, privatization, capital flight, and a general undermining of government regulatory power. In the name of flexibility and efficiency, transnational corporations have sought to capitalize on weakened governments to loosen forms of social and environmental accountability established by the postwar welfare state.
The new enterprise and certification systems may be “voluntary,” in that companies have a free choice as to whether to join or not. But these new networks are not undermining accountability; they are increasing it. The standards enforced by these certification systems are by no means arbitrary, or optional, and typically have been stricter than equivalent governmental standards. What is involved, contrary to popular impressions, is not regulation by the “invisible hand” of the market, but the gradual creation of new kinds of markets—“mindful markets” in David Korten’s words—that actually build social and environmental values into market operations and increasingly become the key market drivers. While all these systems must concern themselves with the profitability of the firms involved and move in an incremental way, they are not simply putting dollar values on externalized costs or social benefits. The profit motive remains a dynamic force, but it can be a progressive force only because of the integrity of the certification standards. To the degree that these systems can involve broad and authentic stakeholder participation, they also are expressions of evolving economic democracy.
Collective Consumerism and Transformative Markets
The ultimate effectiveness of the new valuation and certification systems depends on their success as market systems. While certification and labelling systems try to make positive choices as easy as possible for consumers, ultimately their success depends on greater knowledge and participation on the part of end-users. Marketing must become not simply a form of propaganda, but a vital source of education and eco-literacy. To date, too many forms of eco-labelling have remained forms of advertising, targeted at private consumers. They have failed to connect individual consumers, harnessing their aggregate power and raising horizons for community transformation as well as individual quality of life. Various forms of collective buying—from renewable energy coops to Local First campaigns—can be tremendous drivers of conservation and economic renewal. Governments, particularly at the local level, can play influential roles through green procurement, and even influence the creation of new industry in their jurisdictions. The new certification systems can also provide important elements of local community indicator projects, which synthesize quantitative data from many sources.
The new certification systems may be among the cutting-edges of green economic development, but they are young unfinished projects in need of continual improvement and expansion. LEED certification for buildings, for example, has just recently moved into the residential and existing building sectors; and more holistic local food certification is just beginning to emerge from the organics movement. Movements are also afoot to shift some point/checklist-style certification systems to a more rigorous grounding in life-cycle assessment (LCA).
Despite the youth of these systems, however, their early successes have attracted a host of phoney industry-sponsored certification and labelling systems, seeking to avoid real extended responsibility and to promote greenwashing. By the same token, even the most authentic and reputable networks—like the Forest Stewardship and the Green Building Councils—have been torn by controversy and struggle between progressive and not-so-progressive forces seeking to co-opt, dilute or pollute standards. This in no way discredits the certification efforts, but highlights what an important terrain of struggle these systems are.
The next decade will likely see an explosion of market transformation initiatives based on social and ecological knowledge and value systems. Today we are already seeing new enterprise networks like the Business Alliance for Local Living Economies (BALLE) organizing Local First campaigns, based on sophisticated local economy research comparing the relative impacts of local independent and global businesses, laying the basis for certification and support of local products and enterprises. Far from undermining positive government action, this kind of market transformation will support it. Most importantly, by building social and environmental values into new mindful markets, it can help restore positive community development to everyday exchange.
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