|
Brian Milani 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.
“Take
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.
Baker,
L. (2004). What Makes the US Green Building Council Tick. Sustainable Industries Journal, Northwest(22). Benyus, J. M. (1997). Biomimicry:
Innovation inspired by nature. New York: Quill/William Morrow. Cashore, B. W. (2004). Governing
Through Markets: Forest certification and the emergence of non-state
authority. New Haven: Yale University Press. Commoner, B. (1990). Making
Peace with the Planet. New York: Pantheon Books. Counsell, S., & Loraas, K. T. e.
(2002). Trading in Credibility: The
myth and reality of the Forest Stewardship Council: Rainforest
Foundation-UK. Davis, G. A. (2002, September 30, 2002). Overview of Extended Producer
Responsibility. Paper presented at the Workshop on Extended Producer
Responsibility, Toronto. Environment Canada. (1995). Ecocycle 1: History of LCA, from
http://www.ec.gc.ca/ecocycle/en/issue1.cfm?tmpl=p6 Erdmenger, C. (Ed.). (2003). Buying
into the Environment: Experiences, opportunities and potential for
eco-procurement. Sheffield UK: Greenleaf Publishers. Fishbein, B. (1994). Germany,
Garbage and the Green Dot: Challenging the throwaway society. New York:
INFORM. Fishbein, B. (2000). The EPR Policy Challenge for the United
States. In B. Fishbein, J. Ehrenfeld
& J. E. Young (Eds.), Extended
Producer Responsibility: A materials policy for the 21st century: Inform. Gardner, G., & Sampat, P.
(1998). Mind Over Matter: Recasting the
role of materials in our lives. Washington DC: Worldwatch
Institute. Geiser, K. (2001). Materials
Matter: Towards a sustainable materials policy. Cambridge MA: MIT Press. Goedkoop, M. v. H., C., te Riele, H., & Rommens, P.
(1999). Product Service Systems:
Ecological and economic basics. The Netherlands: Pricewaterhouse
Coopers / Pre consultants. Gunningham, N., Phillipson, M., & Grabosky, P. (1999). Harnessing Third Parties as
Surrogate Regulators: Achieving environmental outcomes by alternative means. Business Strategy and the Environment, 8,
211-224. Gunningham, N., & Sinclair, D. (2002). Leaders and Laggards: Next-generation environmental regulation.
Sheffield UK: Greenleaf Publishers. Heaton, K. (2001). An
Analysis of the Sustainable Forestry Initiative(SFI)
in comparison with the Forest Stewardship Council (FSC): FERN. Jackson, T. (1996). Material
Concerns: Pollution, profit and quality of life. London/New York: Routledge. Lindhqvist, T. (2000). Extended
Producer Responsibility in Cleaner Production: Policy principle to promote
environmental improvements of product systems. Unpublished Ph. D., Lund
University, Lund Sweden. Malin, N. (2002). Life-Cycle Assessment for Buildings: Seeking
the Holy Grail. Environmental Building
News, 11(3). Mastny, L. (2004). Purchasing for People and the Planet. In L.
Starke (Ed.), State of the World 2004.
New York: W.W. Norton. McDonough, W., & Braungart,
M. (2002). Cradle to Cradle: Remaking
the way we make things. New York: North Point Press. Milani, B. (2000). Designing
the Green Economy: The postindustrial alternative
to corporate globalization. Lanham MD: Rowman
and Littlefield. Mont, O. (2002a). Clarifying the Concept of
Product-Service System. Journal of
Cleaner Production, 10(3), 237-245. Ozinga, S. (2001). Behind
the Logo: An environmental and social assessment of forest certification
schemes: Forests and the European Union Resource Network (FERN). Seldman, N. (2003). The
New Recycling Movement. Washington DC: Institute for Local Self-Reliance. Shuman, M. H. (1998). Going
Local: Creating self-reliant communities in a global age. New York /
London: The Free Press. Stahel, W. R. (1998). From Products to Services: Selling
performance instead of goods. Institute
for Prospective Technological Studies (ITPS) Report(27). Thorpe, B. (1999). Citizen's
Guide to Clean Production. Lowell MA: Lowell Center for Sustainable
Production. Trusty, W., & Horst, S. (2002). Integrating LCA Tools
in Green Building Rating Systems. In Environmental Building News (Ed.), The Austin Papers: Best of the 2002
International Green Building Conference (pp. 53-57). Brattleboro VT: BuildingGreen Inc. Wheeler, D., & Sillanpää,
M. (1997). The Stakeholder Corporation : A blueprint for maximizing stakeholder value.
London / Washington, DC: Pitman. WWF. (2001). The
Forest Industry in the 21st Century: WWF (formerly World Wildlife Fund
and Worldwide Fund for Nature). Young, J. E. (2000). The Coming Materials Efficiency
Revolution. In B. Fishbein, J. Ehrenfeld
& J. Young (Eds.), Extended
Producer Responsibility: A materials policy for the 21st century: Inform. |
