CO- REGULATING CORPORATE SOCIAL RESPONSIBILITY: GOVERNMENT RESPONSE TO FOREST CERTIFICATION IN CANADA, THE UNITED STATES AND SWEDEN

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1 CO- REGULATING CORPORATE SOCIAL RESPONSIBILITY: GOVERNMENT RESPONSE TO FOREST CERTIFICATION IN CANADA, THE UNITED STATES AND SWEDEN by Jane Evelyn Lister B.A., Trinity College, University of Toronto, 1987 M.B.A., University of British Columbia, 1995 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in The Faculty of Graduate Studies (Resource Management and Environmental Studies) THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) April 2009 Jane Evelyn Lister, 2009

2 ABSTRACT The emergence of private environmental governance has been interpreted in the policy and global governance literature as a retreat of the state or governance without government. However, the most established example of a corporate social responsibility (CSR) standard, forest certification, reveals governments endorsing, enabling and even mandating certification. Forest certification demonstrates that the state is not in retreat, but has simply shifted its role towards co-regulation. Despite the increasing evidence, scholars have largely ignored the significance of this transformation. This dissertation addresses this critical knowledge gap by developing the governance concept of CSR co-regulation, which serves to explain how governments are harnessing private rule-making authority alongside state regulation. Through a comparative case study drawing on more than 120 interviews, the research evaluates how and why governments within the world s leading certified nations (Canada, the United States and Sweden) have responded to forest certification, and the implications for forest governance. The results show that these governments are increasingly engaging in certification through a range of co-regulatory approaches that complement, rather than substitute for forest laws. While the rationale for co-regulation are similar across the case study jurisdictions, government coregulatory responses have differed as influenced by socio-political, economic and environmental factors within the local context. The cases also highlight how certification co-regulation benefits forest administration, decision-making processes, and policy outcomes and suggest that governments are engaging in certification for other than market-driven reasons. The evidence challenges the theory of non-state market-driven governance, demonstrating that certification is more accurately classified as a co-regulatory forest governance mechanism. Three new analytical tools are presented to evaluate the co-regulatory arrangements, and establish a framework to facilitate future research in this area. As well, the findings offer practical guidance to policy makers seeking new adaptive governance approaches to address complex sustainability challenges. ii

3 TABLE OF CONTENTS ABSTRACT... ii TABLE OF CONTENTS... iii LIST OF TABLES... vii LIST OF FIGURES... viii ACRONYMS... ix ACKNOWLEDGEMENTS... xii DEDICATION... xv 1.0 INTRODUCTION FOREST CERTIFICATION & CSR CO-REGULATION RESEARCH APPROACH & METHODOLOGY Research Design & Objectives Case Study Rationale Case Selection Data Collection & Analysis RESEARCH PARAMETERS STRUCTURE OF THE DISSERTATION CO-REGULATING CORPORATE SOCIAL RESPONSIBILITY INTRODUCTION CSR & THE EMERGENCE OF PRIVATE AUTHORITY CSR Definition CSR Development The Institutionalization of CSR Initiative CLASSIFYING PRIVATE ENVIRONMENTAL GOVERNANCE From Government to Governance Environmental Governance Typology CO-REGULATORY GOVERNANCE SYSTEMS Prescriptive versus Voluntary Policy Tools Classifying Self-regulatory Policy Instruments Co-regulatory Policy Mix EVALUATING PRIVATE ENVIRONMENTAL GOVERNANCE PUBLIC SECTOR ROLE IN CO-REGULATING CSR CSR Co-regulation Rationale Government Role in CSR SUMMARY GOVERNMENT ROLE IN FOREST CERTIFICATION INTRODUCTION THE EMERGENCE OF FOREST CERTIFICATION The War in the Woods & Tropical Deforestation The Failure to Establish a Global Forest Convention Competing Forest Certification Programs Certification Effectiveness Certification Drivers Credibility & Mutual Recognition CLASSIFYING FOREST CERTIFICATION GOVERNANCE Non-state Market-driven Governance iii

4 3.3.2 Certification as a Global Governance Mechanism Forest Certification as Domestic Forest Law FOREST CERTIFICATION CO-REGULATORY GOVERNANCE Certification & Forest Law Certification & Self-regulation Certification & Regulated Self-regulation THE SPECTRUM OF GOVERNMENT ROLE IN CERTIFICATION The Rationale & Benefits of Government Engagement Challenges of Government Role in Certification Direct & Indirect Government Co-regulatory Approaches Government Positions on Certification SUMMARY CANADA: GOVERNMENT AUTHORITY IN FOREST CERTIFICATION INTRODUCTION FORESTRY & CERTIFICATION IN CANADA Certification Development & Adoption National Level Provincial Forestry Administration & Certification Uptake BRITISH COLUMBIA The Provincial Context Forest Certification Uptake Forest Company Certification Response Government Certification Response NEW BRUNSWICK The Provincial Context Forest Certification Uptake Forest Company Certification Response Government Certification Response QUEBEC The Provincial Context Forest Certification Uptake Forest Company Certification Response Government Certification Response ONTARIO The Provincial Context Forest Certification Uptake Forest Company Certification Response Government Certification Response THE SPECTRUM OF PROVINCIAL GOVERNMENT ENGAGEMENT Standards Development Implementation Enforcement FACTORS INFLUENCING CERTIFICATION CO-REGULATION Background Conditions & Government Rationale Factors Influencing Certification Co-regulation Variance SUMMARY THE CERTIFICATION OF U.S. STATE-OWNED FORESTS: ENHANCED STATE FOREST GOVERNANCE CAPACITY INTRODUCTION THE VARIANCE IN U.S. FORESTRY REGIMES U.S. Forests & State Forest Tenure Multi-level Forest Administration U.S. Forestry Regimes iv

5 5.3 CERTIFICATION DEVELOPMENT & ADOPTION U.S. Certification Status U.S. Certification Adoption & Evolution Government Role in Forest Certification THE CERTIFICATION OF U.S. STATE-OWNED FORESTS State Certification Drivers State Certification Implementation Debates Rationale for Certifying State-owned Forests GOVERNANCE IMPLICATIONS OF STATE FOREST CERTIFICATION Implementation Challenges The Benefits of State Forest Certification SUMMARY CERTIFICATION-POLICY INTERACTION IN SWEDEN: PRIVATE- PUBLIC FOREST GOVERNANCE SYNERGIES INTRODUCTION THE SWEDISH FOREST REGIME Intensively Managed Secondary Boreal Forest Family Forest Ownership Fragmented Fiber Supply EU Export Dependence The New Forest Regime Freedom with Responsibility SWEDEN S FOREST CERTIFICATION LEADERSHIP Certification Status Certification Development & Adoption GOVERNMENT ROLE IN CERTIFICATION The Government s Position Expectations of Government Role The Range of Government Certification Role CERTIFICATION-POLICY INTERACTION The Window of Co-regulatory Opportunity Enhancing SFM Targets Supplementing the SFM Discourse SUMMARY CONCLUSION CO-REGULATING FOREST CERTIFICATION The Spectrum of Government Engagement The Rationale & Drivers The Governance Implications THE CO-REGULATORY OPPORTUNITIES & CHALLENGES Policy Design Policy Targets Institutional Durability CERTIFICATION CO-REGULATION IN PRACTICE FUTURE RESEARCH v

6 REFERENCES APPENDICES Appendix A Research Interviews Appendix B The Leading Global Forest Certification Programs Appendix C U.S. State Forest Agency Interview Summary Appendix D U.S. State Forest Certification Audit Outcomes Appendix E Sweden Interview Questions Appendix F Certification Co-regulation A Non-partisan Policy Approach Appendix G Ethics Review Board Approval vi

7 LIST OF TABLES 1.1 Case Study Forest Regimes CSR Codes & Standards Hard Law vs. Soft Law Regulatory Approaches Theoretical Perspectives on Private Environmental Governance Government Role in CSR Co-regulation Forest Certification Programs Forest Certification Private Governance Classification NSMD Authority Forest Certification State-based Drivers & Public Authority Overlap Forest Certification Self-regulatory Governance Classification Summary of Government Forest Certification Positions Provincial Forestry Comparison, British Columbia Major Forest Certification Holders Positive and Negative Certification Policy Value New Brunswick Major Forest Certification Holders Certification Audit & Crown Land Monitoring Program Alignment Quebec Major Forest Certification Holders Ontario Major Forest Certification Holders Provincial Government Role in Certification Enforcement, Canadian Forest Company Expectations of Government Role, Industry-government Certification Alignment, U.S. Forest Ownership Comprehensive State Forest Practice Acts Certified State-owned Forests ( State Certification Drivers Certification Drivers by State State Certification Private Funding Industry Perspectives on State Certification Market Uncertainties and Justifications of Certification Expense U.S. State Dual-Certification Status State Certification Rationale Summary of State Forestland FSC Corrective Action Requests Sustainable Forestry Objectives & National Targets Sweden Forest Certification Status, Living Forest Protection Programs & Status Government Forest Certification Co-regulation Strategies Government Rationale for Certification Engagement Certification Co-regulation: Regional Considerations & Drivers Certification Co-regulation Governance Outcomes Certification Contribution to Forest Policy Process Certification Co-regulation Opportunities & Challenges Certification & Regulation: Complementary Governance Attributes vii

8 LIST OF FIGURES 1.1 Case Study Target Sample The Top Certified Countries, Shifting Modes of Governance Authority Scale of Policy Coercion Co-regulatory Policy Mix Regulatory Enforcement Strategies Government Role in CSR - Spectrum of Engagement Percentage Certified Forest Area by Region, Certification Drivers, Forest Certification as a Non-state Market-driven Policy Instrument Forest Certification Co-regulatory Governance Forest Certification Overlap with Forest Law Forest Certification Overlap with Self-regulation Forest Certification & Regulated Self-regulation Certification Costs by Ownership Size ($/ha/yr Spectrum of Government Role in Forest Certification Forest Certification Uptake in Canada ( Provincial Government Certification Approach Provincial Government Certification Response Influence of Industry Expectations on Certification Enforcement Provincial Forest Policy Cycles The Temporal Dynamics of Certification-Policy Cycle Alignment State-owned Forestland versus Total State Timberland Area The Range of U.S. Forest Policy Regimes U.S. Forest Regions Certified U.S. Forests (Acreage by Program U.S. FSC and SFI Forest Certification Uptake ( State Government Role in Forest Certification Certified State Forests, State Certification Timeline Evolution of State Certification Drivers State Forest Certification Implementation Challenges State Forest Certification Benefits Sweden Forest Ownership Regions of Sweden Certified Forest in Sweden (by ownership category), Forest Certification Uptake in Sweden ( Swedish Government Role in Certification Co-regulatory Forest Governance in Sweden Summary of Government Response to Forest Certification The Politics of Certification Authority: A Virtuous Cycle Optimizing the Policy Target viii