Page 1 Overview on Co-Regulation the use of private certification in government regulation BMZ Conference Forests for Future Generations – Public and Private Responsibility for Sustainability 11-June 2013 Philipp Schukat, GIZ Programm for Social & Environmental Standards

Page 2 The concept of co-regulation: at least three different co-regulation pathways: 1.Governments set binding sustainability goals and assure compliance with those sustainability requirements by recognizing private verification or certification schemes 2.Legal adoption of private standards into legislation 3.create conducive legal and regulatory frameworks (e.g. EU-TR) or by directly supporting implementation of market based standard systems (e.g. by providing loans)  Private standards initiatives can complement public regulation -> expand the repertoire of governmental regulatory instruments  Private schemes cannot substitute public regulation

Page 3 Co-regulation can combine the strengths of both private and public regulatory capacities: Strengths of government regulation: State (democratic) legitimacy Applicability to all firms within its jurisdiction Enforceability through state supervisory agencies Weaknesses: Slow (further) development Not applicable to firms outside its jurisdiction Strengths of private standard systems: as market based instrument often flexible, quick and innovative Internationally applicable beyond national boundaries linked to economic incentives Weaknesses: limited sanctions to certificate holder -> lose of certificate and membership Proliferation of regulation on standards

Page 4 Opportunities of Co-regulation: National regulation to promote sustainable economic activity beyond national boundaries in line with WTO; particularly in the context of globalized supply and value chains, with transnational companies Private standards systems can help promote change processes to improve government regulation Regulation with private standards provides interesting avenues to engage private sector and civil society

Page 5 Risks of Co-regulation: varying and even contradictory demands on private schemes by different governments – proliferation trap Protectionist misuse Insufficient selection criteria of private schemes entail risk of government-supported 'greenwashing.'

Page 6 Quality Check of private schemes Our objective is to provide a tool that businesses and government agencies can use to find environmental and social standards that meet their needs We provide a method for evaluating performance of standard systems; users are enabled to choose best suited system We aim to inform stakeholders about key elements, to be considered when evaluating the credibility of standards and their suitability to certain contexts (industry / region / sustainability hot spots). Scope: all sectors; front ends can be customized for different sectors Jointly led by BMAS, BMELV, BMU and BMZ Level of advancement: Winter 2013 – prototype for testing

Page 7 Thank you for Your Attention! BMZ Conference Forests for Future Generations – Public and Private Responsibility for Sustainability11 June 2013 Contact: Philipp Schukat Head GIZ Programme Social and Environmental Standards