Ecolabels and fish trade: Marine Stewardship Council certification and the South African hake industry

Transcription

1 Ecolabels and fish trade: Marine Stewardship Council certification and the South African hake industry by Stefano Ponte * tralac Working Paper No 9/2006 August 2006 * Senior Researcher, Danish Institute for International Studies spo@diis.dk

2 Abstract Protecting consumers from unsafe food, the environment from overexploitation of resources and pollution, and workers and producers from unjust labour and trade relations are generally considered objectives worthy of intervention whether through regulation or, increasingly, through the establishment of voluntary standards and codes of conduct. Yet, abstract principles are eventually applied in concrete situations and have a variety of effects on differently endowed countries, groups and individuals. Developing countries have been generally reluctant to participate in ecolabelling initiatives. They have highlighted the embedded protectionist elements of some of these initiatives, and the naiveté of some standards in assuming that certain models of environmental management can be exported tout court to the South. This reluctance has been countered by assurances of transparency, nondiscrimination and technical assistance. In essence, ecolabels are assumed to be good for the global commons and their justification has been offered within a discourse of science, objectivity, independent certification, transparency and systems management. If shortcomings arise, they can be fixed technically and managerially. Yet, the case study of Marine Stewardship Council (MSC) certification of the hake industry in South Africa illustrates that ecolabelling is sought in the context of competitive pressures, political economies, and specific interpretations of conservation, not simply on the basis of value-free science or systemic management alone. Although couched in impartial readings of conservation and competition, MSC certification in South Africa was employed as one of the tools against the redistribution of fish quotas away from white-owned companies to the possible benefit of black-owned companies. Developing country fisheries, and small-scale ones in particular, have been marginalised in the MSC system. This is not surprising if one looks at comparative evidence from other new wave sustainability initiatives in timber and coffee. Entry barriers to sustainability entail economies of scale and scope that require managerial resources and access to networks. Because managerial and systemic objectives are harder for developing country actors to match, this creates a hidden imbalance in favour of the better-endowed participants. The paper concludes that independent auditing, transparency of standard-setting, accountability, and the need for standards to be based on good science, are not enough to facilitate certification 1

3 in small-scale developing country fisheries. What is needed are special systems of compliance and verification that cater to their needs. Until this happens, and until premiums are not paid at the producer level, MSC and similar initiatives will keep putting sustainability at the service of commercial interests. 2

4 Table of contents List of Abbreviations... 4 Acknowledgements Introduction Ecolabels and fisheries The Marine Stewardship Council initiative General features Early criticism of MSC New challenges MSC and the South African hake industry Main markets for South African hake Industry structure Motivations for the adoption of MSC certification The certification process Verification after certification MSC, hake and beyond Comparative analysis: timber, fish and coffee Conclusion Appendix 1: Ecolabels and WTO rules

5 List of Abbreviations ANC African National Congress ASHQI Association of Small Hake Quota Industries COFI FAO Committee of Fisheries CTBT Committee on Technical Barriers to Trade CTE Committee on Trade and Environment EEZ Exclusive Economic Zone EUREP-GAP Euro-Retailer Produce Working Group - Good Agricultural Practices FAO Food and Agriculture Organization FSC Forestry Stewardship Council GAA Global Aquaculture Alliance GATT General Agreement on Tariffs and Trade HDI Historically-Disadvantaged Individual ICSF International Collective in Support of Fishworkers ISEAL International Social and Environmental Accreditation and Labelling Alliance ISO International Standards Organization MAC Marine Aquarium Council MCM Marine and Coastal Management MLRA Marine Living Resources Act MSC Marine Stewardship Council npr-ppms non-product related process and production methods pr-ppms product-related process and production methods RFMO Regional Fisheries Management Organization SACIFA South East Coast Inshore Fishing Association SADSTIA South African Deep-Sea Trawling Industry Association TAC Total Allowable Catch TBT Agreement on Technical Barriers to Trade USEPA United States Environmental Protection Agency WTO World Trade Organization WWF World Wildlife Fund for Nature 4

6 Acknowledgements Fieldwork for this project was funded by the Danish Social Science Research Council (SSF). I would like to thank the Program on Land and Agrarian Studies (PLAAS) at the University of the Western Cape and the Trade Law Centre for Southern Africa (tralac) where I was affiliated while in South Africa. Thanks also to various officers at Marine and Coastal Management for their openness and collaboration during fieldwork. Special thanks go to Trudi Hartzenberg, Moenieba Isaacs, Jesper Raakjær, Lance van Sittert and Andries du Toit for their intellectual and moral support. Valuable feedback on earlier versions of this paper was also received from Jennifer Bair, Simon Bolwig, Constance Douglas, Steen Folke, Peter Gibbon, Stine Jessen Haakonsson, Dave Japp, Peter Kragelund and Niels Jon Mortensen. All mistakes, misinterpretations and undue omissions are my own. 5

7 1. Introduction Protecting consumers from unsafe food, the environment from over-exploitation of resources and pollution, and workers and producers from unjust labour and trade relations are generally considered objectives worth intervention in development circles whether through regulation or, increasingly, through the establishment of voluntary standards and codes of conduct. Yet, abstract principles are eventually applied in concrete situations and have a variety of effects on differently endowed countries, groups and individuals. What may seem a good idea to consumer groups or government agencies in a Northern setting, may not turn out to be so advantageous to producers in the South even though the initial stimulus in the North may have been exactly to safeguard these producers. Food safety, environmental and social standards have become key features in the trade of agro-food products in the last 15 years. International organisations, government agencies, industry associations, and NGOs behind the formulation of these standards were initially defensive of efforts aimed at critically examining their effects in different settings. Questioning the inherent justness of these initiatives was considered reactionary and necessarily intended to discredit them. This may still be the case in certain circles, but recently there has been a more open attitude towards reaching a better understanding of the contradictions, limitations, and differential impact of these standards. From a defensive phase, these organisations and NGOs have now moved into a constructive dialogue phase, where they are making efforts to be more inclusive (sometimes for public-relations reasons), and to reflect upon past experiences to improve the content, monitoring and management of their standards. In other words, they are trying to make their system management right. This means that standards development procedures, governance structures, indicators, monitoring, verification and management systems have become much more sophisticated than even a decade ago. Where there has been little movement so far has been in acknowledging that standards are developed and applied in specific political economies, within complex power relations, and in extremely diverse local conditions and politics. In a sense, an increased focus on systems management brings these initiatives even further away from a politico-economic understanding of their effects. 6

8 The growth of market-based instruments such as ecolabels or other sustainability labels reinforces a systems management approach to food safety and environmental and social protection. The legitimacy of these instruments in a neo-liberal setting is based on non-discrimination and equality of opportunity. In this line of thought, if the system has been devised openly, is monitored transparently, and is administered properly, standards simply perform a market-lubricant function of providing full(er) information to those involved in transactions. Where clear disadvantages are highlighted for certain countries, groups or individuals, technical assistance and capacity building instruments are provided, or simply suggested, as solutions. This paper is mainly empirical in nature and is based on original fieldwork material collected for the second in a series of three studies on the political economy of standards on food safety, social and environmental impact, quality management and geographic origin. The three case studies examine the impact of these standards on developing country agro-food export industries in Africa (coffee, fish and wine) and on small operators in these. A first case study was dedicated to sustainability standards in coffee (Daviron and Ponte 2005; Giovannucci and Ponte 2005; Ponte 2004; Ponte and Kawuma 2003). The second and current case study covers standards in two export-oriented fish industries: Nile perch in Uganda (food safety and quality management standards) (see Ponte 2005; 2007); and hake in South Africa (Marine Stewardship Council standard). A third case study will focus on quality management and geographic origin standards in the wine industry, also focused on South Africa. Finally, comparative and more theoretical work will follow in the context of recent theoretical discussions on governance and upgrading in global value chains (Gereffi, Humphrey and Sturgeon 2005; Ponte and Gibbon 2005). 1 Fieldwork for the MSC case study was undertaken in London at the offices of the Marine Stewardship Council (May 2004) and in South Africa (July-August 2004; June-December 2005). In addition to secondary data and documentary collection, a total of 51 semi-structured interviews were carried out. These included interviews with MSC officers, members of the certification team that worked on MSC certification 1 This paper does not include a detailed analysis of global fish markets and trade rules, and has only limited coverage of the local context in which the South African hake industry operates. For a broader understanding of these issues, this paper should be read in relation to: (1) an article on the role of subsidies, tariff and non-tariff barriers in shaping market access to the EU for African fishery products (Ponte, Raakjæar and Campling 2005); and (2) two papers on Black Economic Empowerment and other processes of transformation in South African industrial fisheries (Crosoer, Ponte and Van Sittert 2006; Ponte and Van Sittert 2006). 7

9 for hake in South Africa, South African hake industry association officers, officers of the regulatory agency (Marine and Coastal Management, MCM), quality management companies, fisheries consultants, interest groups, conservation NGOs, and representatives of twelve companies/groups holding hake quotas. These included the top five companies by size of quota allocation (representing 75% of total allocated quota in 2005) and seven medium and small quota holders. To maintain confidentiality, the identity of individuals and companies covered during fieldwork has been concealed (interviews are coded MSC1 to MSC4 if they took place in London at MSC; and SAH1 to SAH47 if they took place in South Africa and refer to the hake industry). MSC, South Africa and the hake industry were selected an instructive combination for a case study for the following reasons: (1) MSC is the main ecolabel in the global fish market; (2) only two developing country fisheries have been certified, in South Africa and Mexico; (3) MSC certification in South Africa concerned the hake industry; hake is also the largest fishery in the country, accounting for approximately 50% of total value of catches and 40% of total value of exports; and (4) South Africa is the largest exporter of fishery products from Africa by value (Ponte, Raakjær and Campling 2005). Much of the burgeoning literature on the effects of standards, labels and certifications in agro-food trade focuses on two aspects: (1) standard setting (development of principles, indicators, measurement devices and compliance systems) and (2) standard implementation (compliance and certification). Two areas that have been relatively neglected are: (1) standard adoption (decision to attempt compliance and certification); and (2) standard verification after certification (routine monitoring, auditing, and recertification). This paper, while covering some ground in relation to standards setting and implementation, places particular emphasis on standard adoption and verification after certification. On what basis do industry actors and associations decide to implement a standard? What are their motivations? What are the expectations and political/economic calculations? What is routine verification achieving? Under what circumstances is it possible to fail after certification? What are the commercial and political pressures under which verification takes place? 8

10 Section 2 of the paper provides a taxonomy of ecolabels in fisheries. Section 3 discusses the history and general characteristics of the Marine Stewardship Council (MSC) initiative, and the criticism that has been levied against it. Section 4 examines the political economy of adoption, implementation and further verification of the MSC standard in the South African hake industry. Section 5 places the MSC case study in a comparative setting, drawing from other sustainability initiatives in timber and coffee. This is followed by a conclusion and by Appendix 1, which examines whether ecolabels are in breach of WTO disciplines. 2. Ecolabels and fisheries In the last couple of decades, FAO and conservation groups have repeatedly highlighted the plight of over-exploitation of fish stocks around the world, and the impact of intensive fishing efforts on the overall aquatic environment. To address these challenges, several fishery management systems have been devised, such as: (1) legal instruments, including global conventions and national/local fisheries laws; 2 (2) soft instruments, such as the FAO Code of Conduct for Responsible Fisheries; and (3) market and civil society initiatives, such as the ISO series of standards and the MSC label (Allison 2001: 942). Due to the perceived failure of international and national law to control fishing behaviour, governance of fisheries is increasingly carried out through voluntary codes of conduct and market-based instruments (Allison 2001). Environmental labelling initiatives in fisheries can be of voluntary or mandatory nature (see Box 1). They include ecolabels, single-attribute certification, report cards, and information disclosure on hazard warnings (USEPA 1993; Wessells et al. 2001). 2 The need for improved fisheries management and conservation of biodiversity were recognised as early as the 1982 UN Convention on the Law of the Sea. Further political support and increased visibility were given to fisheries management at the UN Conference on Environment and Development in Rio de Janeiro in 1992, including a specific call to expand environmental labelling. Marine conservation and biodiversity objectives were embedded in the 1992 Convention on Biological Diversity (CBD). The 1995 FAO Code of Conduct for Responsible Fisheries and the 1972 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) provide additional instruments for conservation and fisheries management efforts (Wessells et al. 2001: 2). 9

11 Box 1: Environmental labelling initiatives in fisheries (1) mark of origin, used to draw attention to the origin of fish (sometimes this is mandatory); (2) product certification and catch documentation, sometimes used in relation to import and export controls, or by Regional Fisheries Management Organizations (RFMOs) to promote compliance with conservation and management objectives; (3) EU requirements to mark or label the commercial designation, production method and area of capture of fish; (4) dolphin-safe and turtle-friendly labels on tuna and shrimp respectively, designed to minimize by-catch (see Appendix 1); (5) current development of standards and certification systems for organic seafood, especially for aquaculture products; (6) Nordic Technical Working Group on Fisheries Ecolabelling Criteria, adopted by Nordic Ministers of Fisheries in 2001 for use in the North-eastern Atlantic region; (7) Marine Aquarium Council (MAC) certification for ornamental marine life, aimed at conserving coral reefs; (8) Global Aquaculture Alliance (GAA) codes of practice and certification on environmentally responsible aquaculture products; (9) ISO series standards on environmental management performance, and ISO series standards on designing and implementing environmental labelling programs; (10) MSC label on sustainable fisheries. Source: Wessells et al. (2001: 5-10). Ecolabels are seals of approval that transmit environmental information to consumers. They are normally based on life-cycle analysis that is devised to determine the environmental impact of a product or service from point of production to point of disposal. These labels are awarded to products that are deemed to have a more friendly impact on the environment than functionally-equivalent or competitively similar products (Wessells et al. 2001: 10; see also Appendix 1). Fishery ecolabels tap into a perceived growing consumer demand in developed countries for environmentally friendly products and production processes (Ibid.). They can be categorised in three broad groups: (1) First party labels: they are developed by individual companies, are based on their own standards, and transmit information about environmental management to consumers or other operators via a self-declared label. (2) Second party labels: they are developed by industry associations, sometimes with inputs from conservation and consumer groups, and are applicable to the members products; they can be verified internally or through an external auditor or certifier. 10

12 (3) Third party labels: they can be developed by public, private, or public-private initiatives; they are theoretically independent from market players; a third-party certification system is in place, and the use of a label is licensed to the producer or retailer for use on- and/or off-product; chain of custody certification is usually required to assure traceability of the product and separation from non-labelled products; accreditation of certifiers is provided either by the initiator of the label or, increasingly, by an independent organisation (cf Wessells et al. 2001: 11). Wessells et al. (2001: 54) state that voluntary ecolabelling provides one of the leastcoercive market-based mechanisms to improve conservation outcomes. They highlight the potential commercial benefits of ecolabelling for fishery industries, which include: (1) gaining access to new premium markets; (2) adding value to existing products; (3) expanding presence in existing markets; (4) maintaining market share in competitive markets; (5) achieving product differentiation and export earnings; (6) providing opportunities for attracting capital investment and new joint venture in developing countries; and (7) maximising long-term competitiveness (Ibid.). At the same time, a number of concerns arise from the adoption of ecolabels in fisheries: possible lack of transparency and participation in standard-setting; underlying protectionist motives; high potential costs of complying with required management practices and data collection; high costs of certification in developing countries relying on expensive imported experts; inadequate institutional and technical capacity in developing countries (Ibid.: 55-57); and the de facto mandatory nature of ecolabels when a majority of market players require them. Voluntary ecolabels in fisheries are a recent phenomenon, and their coverage of products and markets has been so far limited. Their potential for future expansion can be linked to three main factors: (1) market/consumer acceptance; (2) whether or not they are recognised as being actually beneficial to the sustainability of fisheries resources; and (3) whether or not they comply with WTO rules. The first two factors will be analysed in some detail in the next section of the paper. A discussion on WTO compatibility can be found in Appendix 1. 11

13 3. The Marine Stewardship Council initiative 3.1 General features Ecolabelled products are a small but growing segment of the fish industry. Their rise relates to increasing concern with environmental issues, including the management of natural resources, and to increased competition in the retail sector, thus the search for additional properties in products to add profitability and/or market share. The history of voluntary labels before the advent of MSC was limited to two single-issue labels, aimed at reducing by-catch of dolphin in tuna fishing and of turtles in shrimp fishing. In both cases, the main issue was not one of over-fishing and over-capacity, but one of animal rights and the protection of endangered species (Allison 2001: 945; see Appendix 1). Current efforts in developing organic certification of fishery products are mainly focused on aquaculture (Mansfield 2004). The Marine Stewardship Council is the main third-party certified ecolabel that covers wild-catch fisheries. 3 It was established in 1996 as a joint initiative of the World Wildlife Fund for Nature (WWF), the world s largest private non-profit organisation, and Unilever, the world s largest frozen fish buyer and processor. Unilever operates its own internal evaluation system on sustainable fisheries 4, but also actively promotes MSC certification among its suppliers. At the MSC launch, Unilever committed to buy fish only from sustainable sources by the year MSC became an independent initiative in In the words of a representative of MSC half of the fishery world hated Unilever; the other half hated WWF; continuing the original setup would have been crazy (MSC2). The idea behind the initiative is to address worldwide decline in fish stocks by awarding sustainably-managed fisheries with a certification and a label that could be affixed to retail products (MSC2). The underlying claim is that governments and international organisations on their own have failed to implement sustainable management in fisheries. 3 Other minor fishery ecolabels include: (1) Carrefur s own Pêche responsible, a first-party label introduced in 2004 in France and Belgium, covering only a frozen product line consisting of Icelandic cod fillets; and (2) the Friend of the sea label (a project of the Earth Island Project Network), which covers both farmed and wild-caught fish and shellfish products; this label is presently used only in Italy by Carrefur for farmed seabass and seagram, and by Coop Italia for a range of canned seafood products (Globefish 2005). 4 Source: Fishing for the future: Unilever s fish sustainability initiative (FSI). [Online]. Available: Fish%20Sustainability%20Initiative_tcm pdf (accessed February 2006). 12

14 MSC certification is administered through a chain of custody system that keeps sustainable and other fish separate from each other from catch to supermarket shelf or ice display (MSC1). In the view of its promoters, MSC allows consumers to promote sustainable fishing through a market-based (rather than regulation-based) mechanism (MSC2). Certification is granted against a specific standard called the Principles and Criteria for Sustainable Fishing (thereafter the MSC standard ). Assessment is carried out on voluntary basis by accredited third-party certification bodies. The MSC standard is based on three principles, which are elaborated by a number of criteria (MSC 2004b: 4): 1. The status of the target fish stock A fishery must be conducted in a manner that does not lead to over-fishing or depletion of the exploited populations and, for those populations that are depleted, the fishery must be conducted in a manner that demonstrably leads to their recovery (Ibid.: 14). 2. Impact of the fishery on the eco-system Fishing operations should allow for the maintenance of the structure, productivity, function and diversity of the ecosystem on which the fishery depends (Ibid.: 15). 3. Performance of the fishery management system The fishery is subject to an effective management system that respects local, national and international laws and standards and incorporates institutional and operational frameworks that require use of the resource to be responsible and sustainable (Ibid.: 16). The third principle is where the socio-economic aspects of a fishery are considered. However, explicit reference to equity concerns, and the impact on fisheries on local communities are vague and defined without reference to historical dynamics. MSC has actively avoided including social aspects in its certification system, as they would be too difficult and complex to comply with (MSC2). Management system criteria include provisions for transparency and the involvement of stakeholders, a design that is appropriate to the cultural context, scale and intensity of the fishery (MSC 13

15 2004b), the observation of legal and customary rights, and the provision of incentives (economic and social) that contribute to sustainable fishing. At the catch level, certification is awarded to a fishery, not to individual operators. Individual operators in the trade, processing and retail sectors can apply for chain of custody certification and for the use of the MSC logo. Certification is carried out by independent bodies that are accredited by the MSC Accreditation Committee. In the future, accreditation will be carried out by an independent organisation. The certification process starts with a confidential pre-assessment by a certification body for a client or client group. Clients are usually associations of fishing operators that catch and handle one or more species in a specific area. If the results of the preassessment are such that the client decides to go ahead with a full assessment, an expert team is appointed. This team develops performance indicators and scoring guide-points (MSC1). Stakeholders can at this point provide feedback on the suitability of these indicators. The fishery is then scored against these indicators, which are aggregated to obtain a score for each of three principles. Depending on the score, a fishery can be: (1) rejected; (2) asked to fulfil some pre-conditions before obtaining certification; (3) certified with conditions that need to be addressed within a certain period; or (4) certified with no conditions. Fisheries that are certified are subject to annual audits. After five years, a new assessment has to be carried out (MSC1; MSC 2004a). Box 2: MSC s view on the benefits of its certification: For the Fishing Industry: - Evidence and recognition of good fisheries management - Improved fishery management - Preferred supplier status and potential for increased returns particularly in niche markets For Retailers: - Demonstrates commitment to buy from well-managed, sustainable sources - Increased confidence in sustainability of product - Maintaining or increasing market share - Stability of supply For Consumers: -Confidence that buying MSC-certified products will not contribute to overfishing or harm marine ecosystems - Empowers consumers to influence management of fisheries Source: Peacey (2000: 4) 14

16 In Box 2, we can see that MSC lists a number of benefits of its certification for the fishing industry, retailers and consumers. Noticeable is the lack of reference to a premium for the fishing industry in these statements increased returns are of more generic nature and could refer to a larger market share. This is consistent with most new wave certification schemes on sustainability such as Forestry Stewardship Council (FSC) certified timber (Klooster 2005; Taylor 2005), and Utz Kapeh and Rainforest-certified coffees (Giovannucci and Ponte 2005; Muradian and Pelupessy 2005; see Section 5; Table 7). These schemes, while offering preferred supplier status to certified suppliers, rarely offer a premium. In time, the standards that underpin them may become the new minimum standards for the market, effectively redesigning the nature of market access. This has already happened to food safety and good agricultural practice standards such as EUREP-GAP (Hanataka, Bain and Busch 2005). Old wave coffee certification schemes, such as fair trade and organics, do offer premiums over non-certified coffees at the production level. 3.2 Early criticism of MSC The set-up of MSC s governance structure and the elaboration of its standard drew a heated debate in fish industry circles in the second half of the 1990s. Many of these early discussions can be found in various issues of SAMUDRA, a publication of the International Collective in Support of Fishworkers (ICSF), and are summarised in Constance and Bonanno (2000). In short, ICSF and other critical stakeholders questioned the MSC initiative on the basis of: (1) the motivations of Unilever in starting it; (2) the centralised and corporate structure of MSC; (3) a bias in favour of industrial fisheries, and developed country fisheries in particular; (4) the lack of consultation with fishers in general, and developing country representatives in particular; (5) the perception in developing countries that ecolabels constitute technical barriers to trade; (6) the financial and human resource costs that achieving certification would entail in developing country and especially artisanal fisheries; and (7) the recognition that the current state of scientific knowledge is no guarantee of sustainability one contributor argued that the Newfoundland cod fishery would have been awarded the label just before its collapse (see also the New Zealand hoki story below) (SAMUDRA, various). 15

17 In the 1990s, MSC and other supporters of the initiative responded to these criticisms in the pages of SAMUDRA, assuring that workshops and consultations were being carried out around the world. MSC also argued that their certification system was being field-tested in various settings, including small-scale fisheries and fisheries in the developing world. It assured that because the scheme was voluntary, it would not be imposed on anyone, and that it would be market-neutral and non-discriminatory. Finally, MSC claimed that their standard was not going to work against the interests of small-scale fishers because it would promote, among other things, sociallyresponsible fishing. 5 As a matter of fact, an argument was made that MSC could actually result in a market advantage for Southern fisheries (Ibid.), and that the experience of FSC supported such a proposition as if managing fish and forests were similar processes. 6 The comments summarised above show that the original governance structure of MSC was not perceived to be sufficiently inclusive. As a result, alongside the Board of Trustees, the executive decision-making body of the MSC, two groups reporting to it were created in 2000: the Technical Advisory Board and the Stakeholder Council. The Technical Advisory Board provides advice on technical, scientific and quasijudicial issues to the Board of Trustees; it has some delegated decision-making authority over the technical and methodological guidelines used by certification bodies when assessing fisheries and chain of custody (Cummins 2004: 88). The Technical Advisory Board is comprised mostly of fishery and ecological scientists, and of experts on chain custody and processing; there is only one natural resource economist in the Technical Advisory Board, and no other social scientist. The 5 Interestingly, in one contribution, WWF argued that they had invited social scientists and experts on Southern fisheries (SAMUDRA, January 1998: 28; emphasis added), rather than from Southern fisheries, to make sure that their standard was non-discriminatory. 6 Opposition to MSC in the 1990s also came from a very different source. In 1998, the Nordic Council sponsored a FAO Technical Consultation on the Feasibility of Developing Non-Discriminatory Technical Guidelines for Ecolabelling of Products from Marine Capture Fisheries. The argument put forward by the Nordic Council was that fishery ecolabels (read MSC ) do not fulfil the requirements of transparency and credibility set by the 1995 FAO Code of Conduct for Responsible Fisheries. The Council further claimed that global reach and credibility could only be achieved under the guise of FAO (SAMUDRA, December 1998: 22). This arose from the deep suspicion among Nordic fishery industries and governments of the motivations of the other partner in MSC, namely the WWF, with whom they had earlier conflicts on the protection of marine living resources (SAMUDRA, April 1999: 27). This attempt at sidelining MSC was not thwarted by supporters of MSC, but rather by countries, especially in Latin America and Asia, that saw ecolabels of any kind as a form of discrimination against their fishery products. This position was forcefully put forward by Mexico, which had lost significant export earnings as a result of the dolphin-friendly tuna dispute with the US, despite having won the formal case at the GATT/WTO level (see Appendix 1). More recently, a sign of a possible turn-around in Nordic countries has been the announcement that the Norwegian saithe fishery has started an assessment with MSC. 16

18 Stakeholder Council represents specific interests, grouped under eight categories, 7 among which we find a developing nation group represented by three academics (from Brazil, Mexico and Nigeria) and a Canada-based organisation of fish harvesters and workers. Half of the members of the Stakeholder Council are appointed by the Board; from 2004, a Stakeholder Council Steering Group has been created to ensure more coordination between the Council and the Board. Even though MSC has been fashioned after the Forest Stewardship Council (FSC, established in 1993, also with input from WWF and other conservation groups), the latter is an open-member organisation, while the MSC structure is significantly different and more corporate. Its managerial structure is designed to insulate the Board of Trustees from the political influence of civil society actors The Stakeholder Council can only advise the Board of Directors on its views, it cannot compel them to take action; and there is no equivalent of FSC s biennial General Assembly where stakeholders put forward resolutions to alter the organization s very constitution (Gale and Haward 2004: 28-29). Gale and Haward (Ibid.) tentatively argue that WWF, having learnt from the FSC experience, decided to promote a less inclusive and more efficient governance structure for MSC that could keep up with a fast-moving business environment. This very insulation, however, meant that MSC in its formative years was blind to the needs of developing country fisheries, and smallscale ones in particular. 3.3 New challenges In the 2000s, criticism of the MSC initiative coalesced around three main issues: (1) limited market coverage; (2) the actual sustainability of certified fisheries; and (3) the failure of certifying a significant number of developing country fisheries and of adapting the standard to small-scale, data-poor fisheries. Limited market coverage In the first few years of operation, MSC certified a number of fisheries of limited commercial importance to Unilever and other industrial processors and came under 7 The eight groups are: scientific, academic and resource management interests; general conservation NGOs and interests; marine conservation NGOs and specialist interests; general interests and organisations; catch sector interests; supply chain and processing interests; retail, catering and processing interests; and developing nation and fishing community interests. 17

19 fire for it. This prompted MSC to pay more attention to commercial interests and volume requirements of certified fish. To some extent, this has been achieved. By early 2006, MSC had certified 15 fisheries, among which large fisheries such as Alaska pollock, Alaska salmon, New Zealand hoki, and South African hake. Alaska Pollock is the largest fishery in the world, supplying most of the raw fish material to fast food chains, including McDonald s. Four of the certified fisheries in 2006 were going through re-assessment. There were also 21 fisheries undergoing first assessment and dozens more in the confidential pre-assessment stage (Fish4Thought, March 2006). The most important fisheries undergoing assessment are North Sea herring and Chilean hake, although the assessment of the latter seems to have been in a dormant phase since In 2004, MSC estimated that certified and under-assessment fisheries represented four per cent of global wild edible supply of fish (MSC1; MSC2). If we consider only certified fisheries, however, this proportion in 2004 was less than one per cent. Within some sub-categories, MSC seems to be much stronger. According to 2006 estimates, fisheries that have obtained or are undergoing MSC certification represent 32% of the global prime white fish catch and 42% of the wild salmon catch (Fish4Thought, March 2006). MSC-certified products have significant commercial presence at the retail level only in the UK, Switzerland, and Germany with some presence in the US, France and other European countries (MSC2). In 2003, Sainsbury was the first retailer that committed to source fish only from sustainable sources (Cummins 2004: 93). According to MSC, 223 labelled products are marketed in 23 countries worldwide. Eighty-nine per cent of these products contain Alaskan salmon or New Zealand hoki. The MSC logo is used by 12 European retail chains under their own private label on more than a total of 70 products. Two-thirds of these products are found in two Swiss retail chains. 8 In key fish markets such as Spain and Italy, however, very few MSClabelled products are available to the public. As mentioned above, in 1996 Unilever had committed to purchase all its fish from sustainable sources by Most of the fish Unilever sells comes from groundfish species, specifically Alaskan and Russian pollock, Russian and Norwegian cod, saithe and haddock, South African and Chilean hake, and New Zealand hoki. These 8 Source: [Online]. Available: (accessed March 2006). 18

20 are sourced in the form of frozen blocks from around 100 suppliers and sold mainly as frozen products under Unilever s own brands, such as Iglo, Birds Eye, Findus, Frudesa and Knorr. By the end of 2004, Unilever was buying about 50% of fish used in Europe (not the overall volume) from MSC sources, 9 and expected this figure to rise to 60% by the end of Unilever s turnover on frozen fish products in Europe is USD 1.25 billion a year (The New Zealand Herald, 18 July 2005). One of the main setbacks Unilever experienced in relation to MSC-labelled products was the marketing disaster of New Zealand hoki in the UK. It heavily promoted sustainable New Zealand hoki in an attempt to break British consumers preference for cod and haddock. The campaign started in 2002, pitching MSC hoki products under the Birds Eye brand at one-third discount under the price of unsustainable cod a hoped for win-win situation of cheaper and more sustainable fish. 11 The uptake from consumers, however, was less than satisfactory. In addition, Unilever suffered from a retailer price war on cod, a big seller where margins are normally low. Cod prices soon became lower than those for MSC-labelled hoki. By 2004, all supermarket chains had delisted hoki products (Ibid.). In addition to highlighting the limited power that even giant branded food processors have vis-à-vis supermarket chains, the hoki story suggests that marketing sustainability is tricky in an environment of competitive pricing. Given that a typical European hypermarket or medium sized supermarket sells several hundred seafood products, the incidence of MSC is still small, with the exception of Switzerland (where 70 different products carry the MSC label). This situation may change dramatically, however, following the announcement that Wal- Mart has committed to sell only MSC-labelled fresh and frozen seafood in North America within 3-5 years. Metro, the world s third largest retailer, and Deutsch See, Germany s leading seafood supplier, have announced that they will increase the availability of MSC-certified seafood in Germany (Fish4Tought, March 2006). The certification of Alaskan pollock is also having an impact in terms of the number of products carrying the MSC label, especially in the UK. Finally, traditional and 9 Alaska pollock, South African hake and New Zealand hoki are MSC-certified; Chilean hake is undergoing certification. 10 Source: [Online}. Available: (accessed March 2006). 11 Incidentally, the first cod fishery (Pacific freezer longline cod) started an assessment with MSC in January

21 important fish markets, such as Portugal, Spain and Italy, are slowly adopting a small number of MSC products (under the South African brand I&J) (Fish4Thought March 2006). As an MSC officer stated (MSC2) certification is driven not by consumers, but by supermarket chains and branded processors based in developed countries. MSC is used by these corporations as one of the tools in their Corporate Social Responsibility portfolio Selling fish is about three things: (1) white quality; (2) price/quality ratio; and (3) as an afterthought, sustainability (MSC2). MSC is sought by retailers and branded processors also because of its chain of custody system, which ensures traceability from vessel to point of sale (MSC2). MSC has had some difficulties in gaining consumer recognition and market acceptance in the first few years partly because it did not certify fisheries that could supply large volumes. Large processors and retailers seek high volumes and continuity of supply. This is particularly important for retailers to avoid stock-outs (see also Gibbon and Ponte 2005). In a sense, the certification of South African hake (see below) was an important step for MSC to ensure adequate volumes of white fish to large fish processors and supermarkets chains (MSC2). Sustainability A second line of recent criticism has come from conservation groups arguing that certified fisheries are not sustainably managed in reality. The New Zealand hoki fishery is, again, at the centre of this criticism. The seafood industry in New Zealand is the fourth largest export earner, and 25% of fish exports are represented by hoki. Forest and Bird, a conservation group based in New Zealand, appealed against the certification of the hoki fishery in 2001 arguing that the fishery was clearly unsustainable. A formal dispute panel was formed in 2002 and confirmed the certification outcome, although it raised issues in relation to the impact of the fishery on the surrounding environment. 12 In 2001, the total allowable catch (TAC) for hoki was 250,000 tons. By 2004, the New Zealand Ministry of Fisheries had to cut down the TAC to 100,000 tons following reports of rapidly decreasing stocks. Forest and Bird called on MSC to withdraw its certification of the hoki fishery, due to the dramatic decrease in stocks and also because the fishery kills hundreds of absolutely 12 Source: [Online]. Available: (accessed March 2006). 20

22 protected seals, petrels and albatross every year (Ibid.). The Hoki Fishery Management Company responded that it was actually a sign of proper management that the TAC had been cut, and that poor recruitment was due to environmental factors. 13 Whatever the reason for poor recruitment, the hoki saga raises the issue of what a fishery can possibly do to lose MSC certification. One of the MSC principles states that fishing activities need to be conducted in a manner that does not lead to depletion of exploited populations (Principle 1). If good management takes place, and the fishery is depleted, this is still sustainable. Apparently, only nonmanagement and depletion would lead to decertification. The hoki story is even more peculiar, as the fishery went through reassessment in the period March 2005-March 2006 a result of which it was recommended for recertification. This happened despite a peer-reviewer noting that The fishery 1) has been or is very likely to have been experiencing overfishing for some time, 2) is depleted or very near depleted, and 3) is not likely to experience significant recovery based on the model projections and lack of a rebuilding plan. Therefore, I would suggest that a passing score on Principle 1 is largely unjustified (Ibid.: 62). 14 To this, the evaluation team responded that: Principle 1 relates to avoiding over-fishing and depletion of the exploited population, but also to modifying fishing practices so that there is demonstrable recovery. In its evaluation of the fishery, the team provides standards in relation to the level to which recovery should occur (both target and limit). Furthermore, the team notes that the catch limit has been reduced and fishing practices modified to promote recovery, although it is much too soon to determine whether recovery is occurring at a reasonable rate and there is no formal recovery plan. (Ibid.) 15 These events should be read in connection to internal discussions at MSC that took place in 2004 on whether the term sustainability should be removed from the 13 Source: [Online]. Available: (accessed March 2006). 14 Source: New Zealand Commercial Hoki Fishery MSC Fisheries Certification: Final Report. [Online]. Available: (accessed May 2006). 15 Source: Ibid. 21

23 claim. 16 At a joint meeting of the Stakeholder Council and the Technical Advisory Board in May 2004, a decision was made to stick to the term. Developing country, small-scale and data-deficient fisheries A third line of criticism against MSC concerns the failure of certifying developing country fisheries, especially artisanal ones. Linked to this concern are issues of compliance, certification costs, and shortcomings of scientific data (MSC4). So far, only two developing country fisheries have been certified (South African hake and Mexican Baja California Red Rock Lobster) and two are undergoing certification (Chilean hake and Patagonian scallops [Argentina]). All four fisheries are located in more advanced developing countries. Especially in the early years of operation, MSC did not pay much attention to developing country needs (MSC2; MSC4), despite the warnings raised as early as 1996 in the pages of SAMUDRA by ICSF. Representatives from developing countries were only invited to one consultative meeting in London. Out of about ten workshops that were carried out to present the initiative to various fisheries, only one took place in a developing country (South Africa). Barriers to achieving MSC certification in developing countries range from institutional weakness (lack of know-how) to financial costs (MSC does not provide funding, although it facilitates contacts). Now a Sustainable Fisheries Fund has been set up, independently from MSC, to help developing country fisheries to go through the certification process (MSC4). However, the fund can only make small grants to help ensure broadbased stakeholder input into fishery assessments... It will not be in a position to support large-scale research projects (SAMUDRA July 2002: 25). The costs of MSC certification to the client industry can be broken down in three components: (1) pre-assessment; (2) fishery assessment; and (3) annual audits. Preassessment costs range from a few thousand USD to over 20,000 USD. Direct costs for a full assessment have varied between under USD 35,000 for a small, simple 16 New Zealand hoki is not the only MSC-certified fishery where doubts persist on sustainability. An article in The Guardian (21 February 2004) mentions a series of investigations funded by five large US foundations on MSC certification of Alaskan salmon, South Georgian toothfish, Alaskan pollock and New Zealand hoki. These revealed serious flaws, especially in relation to hoki and toothfish. 22

24 fishery to almost USD 350,000 for a large, complex fishery (MSC1; MSC2). 17 The overall cost of obtaining certification depends on the nature of the problems uncovered in the assessment and the corrective actions that have to be undertaken. Most MSC products are processed seafood preparations. Retailers are generally able to push chain of custody and licensing costs upstream to processors. Therefore, retailers are generally supportive of what is for them a cost-free initiative (MSC2). However, in the food service sector, where margins are small, chain of custody costs make a difference. This explains why MSC has made limited inroads in this sector, together with the problem of visibility of the logo and a more complicated management of traceability (MSC2). Market penetration has also been small in the fresh fish sector. Placing labelled fresh fish on ice presents challenges as operators may not be aware of where to put the logo (MSC2). In terms of cost reduction initiatives, MSC is cooperating with the British Retailer Consortium to coordinate auditing, so that processors can go through a joint audit for both certifications (MSC1). 18 The last article on MSC that appeared in SAMUDRA (July 2004: 41-42) highlights that financial arrangements for certification are left to private negotiation between clients and certification agencies. The same article calls for MSC to channel such negotiations, which would allow discounts and soft payment options for selected fisheries. It also calls for a revision of principles and criteria, either amending them to fit developing country fisheries and small-scale fisheries, or devising a separate set of principles and criteria for these fisheries. Another problem with certification costs is that only three certifiers are currently accredited to carry out fishery certification, providing a small base for competitive pricing. 19 At the same time, the Technical Advisory Board has registered concerns by some certification bodies about fishery assessment clients shopping around for an easier assessment See also: MSC. Information sheet 4 Costs explained. MSC: London. [Online]. Available: (accessed February 2006). 18 Other costs related to MSC certification are the cost of chain of custody assessment and logo licensing. The cost of chain of custody certification varies with size and complexity of the supply chain. MSC estimates range between USD 1,000 and 5,000 (Peacey 2000: 4; MSC4). Off-product use of the logo is granted under a licence agreement with MSC s trading company, MSCI. The fee for on-product use of the logo is USD 2,000 for companies under a 1 million turnover, otherwise 0.1% of value of sales. Agreements are signed between MSCI and retailers or their suppliers, mostly the latter (MSC4). 19 Three more agencies are accredited for chain of custody certification only; six agencies are undergoing accreditation for fishery and/or chain of custody accreditation. 20 Source. MSC Technical Advisory Board, public summary, meeting No. 7, 6-7 June 2005, p.2. [Online].Available: 23