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A Beef with Competition

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By Jason Potts, May 2, 2016

The arrival of ethical beef at Earls restaurants should be considered good news. But the Canadian chain’s controversial decision to snub humane producers in Canada and only buy from U.S. sources points to the disruptive potential of competitive forces within ethical labelling.

There are currently more than 400 voluntary sustainability standards operating across the planet. That makes it hard for consumers and businesses like Earls to make informed choices about what the labels mean and which ones they can trust. And it’s not clear that competition is helping to resolve the confusion.

Competition among different private standards is often touted as a driver of innovation and efficiency. The recent decision by Earls to source its beef only from the Humane Farm Animal Care’s Certified Humane program underscores one of the downsides of an over-reliance on competition—and market forces more generally—for the advancement of public welfare objectives.  

Presumably, most Canadians, and all of the diverse initiatives involved in certifying “ethical beef,” agree on the basic principle that the humane treatment of livestock is an important value to be protected and promoted. And while the values behind different initiatives such as the Humane Farm Animal Care’s Certified Humane program and the Animal Welfare Approved seal may be similar, the very fact that their survival depends on how much market share they are able to attract individually also means that they often have very little interest in seeing other would-be allies—that is to say other initiatives promoting “ethical beef”—actually succeed. 

Competition among private standards can incite labels to invest in expensive marketing campaigns designed, among other things, to squeeze out other labels. Competition also has the potential to fuel duplication and inefficiency in the market through secrecy and non-cooperation. Under conditions where the market itself struggles to provide sufficient resources for the credible operation of public-good oriented private standards, it is fair to ask whether unfettered competition represents an optimal use of voluntary standards and the consumer dollars supporting them. 

Voluntary standards typically carry an unbearably heavy load. They are responsible for organizing a multitude of stakeholders to carry out the identification, implementation, monitoring and enforcement of a complex set of requirements across equally complex supply chains. The market, on the other hand, is normally only willing to pay nominal fees for such processes, leaving the entire conformity assessment system under pressure. The limited resources available expose such labelling initiatives to significant reputational risks which, in turn, threaten the credibility of the entire labelling market. 

Governments have an important role to play in setting baseline rules on transparency, data sharing, harmonization and cooperation, with a view to ensuring that initiative self-proclamations of service to the public good are more than complicated forms of greenwashing aimed primarily at ensuring the livelihoods of those they employ. Rules requiring harmonization and mutual recognition could go a long way to avoiding the current private and public beefs with the ethical beef labelling industry.

Jason Potts is an expert in voluntary standards and the lead author of The State of Sustainability Initiatives, a project run by the International Institute for Sustainable Development that provides a bird’s-eye view of market and performance trends across the most prevalent standards initiatives. His latest report on the seafood industry will be published on May 11.