Corporate Social Responsibility

By Shyamain Wickramasingha

How can an entire industry flourish during a crisis, yet plunge its workers into precarity? 

As Sri Lanka is battling its worst economic crisis for 70 years, this blog looks at the crisis’s paradoxical effects on the firms and workers in the Sri Lankan apparel industry. 

Sri Lanka: economic crisis and the apparel industry

Sri Lanka is currently battling with what is being described as the worst economic crisis since the country’s independence in 1948. In March 2022, Sri Lanka declared itself bankrupt, having defaulted its foreign debts of over $55bn. Without adequate foreign reserves, the government has been struggling for over a year now to provide its citizens with the most basic needs such as fuel, electricity, gas, essential drugs, and foods. The food security is severely threatened by the ongoing fertilizer problem in the country which has destroyed and slowed the growth of crops including rice, vegetables, and fruits. 

Against this turbulent economic backdrop, the fate of the apparel industry has been a major concern. The apparel industry is the most significant contributor to the economy, accounting for over 45% of the country’s export earnings. Media, researchers, and industry stakeholders predicted and continue to express their concern that the country’s economic turmoil and political instability could adversely affect apparel exports. On the one hand, stakeholders were concerned that the lack of steady supply of fuel and electricity would affect the smooth operations of the industry. On the other, it was noted that brands and retailers have started to move sourcing orders from Sri Lanka to neighboring countries to mitigate the risks. As JustStyle reported in mid-2022, some of the expected consequences were loss of business and revenue and re-location of production to other countries. Furthermore, given that Sri Lanka’s apparel production relies on imported raw material, an increased concern was the ability of Sri Lankan manufacturers to afford the foreign currency reserves required to purchase raw material to fulfil orders. 

Winners and losers: the remarkable performance of the apparel industry 

As the crisis evolved through 2022 to 2023, contrary to these initial concerns, the apparel industry has been performing surprisingly well. A closer look at the crisis response reveals that the industry is cushioned by concessions granted by the government and advantages of foreign trade that are not available to local businesses. Power cuts, at times extended to 10-13 hours per day, did not apply to export processing zones and the garment factories located in other areas. Recognising the importance of export production, the government excluded the locations of garment factories in their electricity demand management schedule. Similarly, even though there has been a severe shortage of fuel – with fuel stations shut down for weeks – the apparel industry saw a steady supply of fuel. As quoted by a key apparel manufacturer “I think as an industry we have been fairly insulated throughout the crisis because there was a recognition that the only way out of the crisis is to focus on apparel and tourism. So, there were certain changes made by the government that allowed us to source raw material and operate factories without any interruptions”. In addition, with the US Dollar value going up 100% against the Sri Lankan rupee overnight in March 2022, the industry gained significantly from the exchange rate depreciation, especially since the workers’ salaries and some production costs remained unchanged. Furthermore, manufacturers have been able to keep some of the revenue in offshore accounts, a practice currently being debated and criticised by media and activists. 

Despite the ongoing political and economic turbulence in the market, investors have continued to show interest in the sector. The Board of Investment Sri Lanka reported that it has signed agreements worth $76m for new investments and expansions in the sector in 2022. The industry’s remarkable resilience against the economic challenges were shown with an all-time high revenue of exports in 2022. As per the Joint Apparel Association Forum, June 2022 recorded the highest performance for a month ever reported in the industry, with a 39.45% growth of export revenue. By December 2022, Sri Lanka reported $5.6bn revenue from apparel exports, a 10% increase from 2021 and a 5.6% increase from 2019, the pre-pandemic context. Thus, contrary to the mainstream opinion that the economic crisis would set-back the apparel industry, the industry has shown not only resilience but a significant growth. 

Growth of exports revenue in the Sri Lankan apparel industry: 2004 – 2022

Winners and losers: where are the workers?

The resilience of the capitalist economic system is such that even against unprecedented disruptions, capitalists emerge as stronger than ever. The moment a crisis strikes, the foremost concern of nation states and capitalists is the resilience and recovery of business. To this end, governments prioritise the needs and wants of businesses, with greater concessions granted to business owners to deal with the crisis. Existing strategies are strengthened, new strategies are drawn, and new plans are made. Yet, this latest example of the Sri Lankan economic crisis shows that workers who are toiling at the bottom end of the businesses are left behind. 

While the apparel industry has grown from strength to strength, apparel workers are being pushed to further precarity. As a manufacturer himself admitted, “the real people who felt the crunch of the economic crisis are workers”. Since March 2022, living costs have increased at an unprecedented rate, with prices of essential goods going up by 400%. In contrast, existing standards of the industry are eroded, with workers having to deal with loss of financial and material benefits such as overtime, bonuses, increments, transport, and free or subsidized meals. This has left over 350,000 apparel workers who were already living on subsistence income struggling to survive with their monthly salary. Their salary falls between $45 – $90, with $45 being the minimum wages in the industry and $90 being the total take home salary including overtime and production incentives that are available for workers. With salaries remaining the same and some of the incentives removed, apparel workers are struggling to fulfil even their basic needs. Even though a monthly Emergency Relief Allowance (ERA) around $27 for workers has been established to counter the effects of currency devaluation and skyrocketing inflation on workers’ livelihoods, the Clean Clothes Campaign found that apparel workers have not been receiving the full ERA. With the absence of any support mechanisms, local civil society organisations in the Katunayake Export Processing Zone revealed that they are currently running soup kitchens every weekend to provide meals for the most vulnerable segments of workers such as pregnant and lactating mothers. How does one reconcile this paradox: while the industry is thriving, its workers are starving?

Images of soup kitchen operated by Dabindu Collective, Katunayake Free Trade Zone

Making sense of the paradox that does not make sense… 

Externalising the costs of business has been the modus operandi of capitalists, where these costs are often born by the society and environment at large. In this vein, has the resilience and recovery of the Sri Lankan apparel industry been achieved partly at the cost of the financial, material, and emotional wellbeing of workers? Do the apparel workers lives matter less? These workers, integral to the Sri Lankan economy, are largely part of the hidden workforce of global supply chains and already face poverty wages and very few if no social protections. The economic and social disruption of crises – both the Covid19 pandemic and the economic crisis –  have threatened the long-term livelihoods and wellbeing of hundreds of thousands of Sri Lankan apparel workers, predominantly women and primary caregivers in their families. 

In an industry where ethical sourcing is supposedly playing a central role, how ethical is it to leave the workers behind in the capitalist agendas of resilience and recovery? As the Clean Clothes Campaign (CCC) revealed in early 2023, many attempts to engage with brands urging them to take actions to safeguard the livelihoods of their workers have been futile so far, except for ASOS, Patagonia, and Victoria’s Secret who have reacted positively. Throughout the year of the crisis, CCC has been calling upon brands to ensure that the workers in their Sri Lankan supply chains are paid the ERA unconditionally while securing workers right to organise. As a trade union quoted, “Sri Lankan garment workers have contributed to making these brands rich. Therefore, the least these brands can do is to ensure their workers get through the crisis”.  The story of Sri Lankan apparel workers in crisis has laid bare the systemic failure of brands’ ethical codes. Ethical codes have barely been able to protect apparel workers at the best of times, but they have been little to no use when the crisis struck. Brands can no longer continue to pretend that their regulatory interventions are working on the grounds. This leaves us with an important question. How can decent work really be ensured in global supply chains? Who should and can take the responsibility to protect workers’ interests? Where do we go from this point? 

Operation in crisis mode now seems to be the ‘new normal’ for global supply chains.  For Sri Lanka, economists predict that it will take at least ten years to reverse the effects of the crisis. Precisely because of this, the Sri Lankan apparel industry is in urgent need of an inclusive, just, and equitable plan that will ensure not just the resilience and the growth of the industry, but also the material and emotional wellbeing of its workers. If a commitment to such a plan is not forthcoming from brands and manufacturers, then it is the responsibility of the government to safeguard the rights of workers. 

If the government is also not capable of stepping up to do what it should have been doing in the first place, then the only realistic solution is a collective intervention delivered through a multi-stakeholder initiative. Such an approach can be similar to the Bangladeshi Accord (the Accord on Fire and Building Safety), with legal teeth to hold brands and manufacturers responsible for living wages and fair working conditions in the industry. A focused and targeted intervention like this can only be driven at the global scale by workers representatives, where enforcement is grounded on a chain of market sanctions, seeking first to influence consumer decisions and apply pressure on brands, with the brands transferring this pressure to manufacturers through their purchasing decisions. Like in the case of the Accord, such a collective effort may have the potential to protect workers interests and ensure that workers are not left behind. It will help workers cope as the economic crisis and the resultant inflation escalate at an unprecedented rate in the country, creating havoc on their lives and livelihoods for years to come. 

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Shyamain Wickramasingha is a Research Fellow at the University of Sussex Business School, and a Visiting Fellow at CBDS, within the Department of Management, Society and Communication at Copenhagen Business School. Her work focuses on the political economy of global production networks with an emphasis on inter-firm relations, uneven development, and labour regimes. 

Additional resources on the Sri Lankan apparel export industry by the author:

• CBDS Podcast: Informality in the Sri Lankan apparel industry – choice or no choice? CBDS Podcasts with Prof. Lindsay Whitfield and Dr. Shyamain Wickramasingha (Episode 2).
• Wickramasingha, S. (2023). Re-imagining vulnerabilities: The Covid-19 pandemic and informalised migrant apparel workers in Sri Lanka. Research Paper, International Center for Ethnic Studies, Colombo.
• Wickramasingha, S., & De Neve, G. (2022). The collective working body: Rethinking apparel workers’ health and well-being during the COVID-19 pandemic in Sri Lanka. Global Labour Journal, 13(3). 
• Wickramasingha, S. (2022). ‘Living for the day’: Informality, gender, and precarious work in the Sri Lankan apparel industry. SSA Polity. 

By Søren Jeppesen, CBDS, MSC, CBS and Andries Bezuidenhout, Department of Development Studies, University of Fort Hare, South Africa

The garment industry is often portrayed as an industry that has the potential to bring about large-scale economic and social changes in countries in the Global South. Bangladesh and China are examples of this, where garment manufacturing led to increased levels of employment and further industrial development. However, smaller economies can also benefit from the industry by establishing a significant number of formal jobs in contexts otherwise dominated by informality and subsistence agriculture. Lesotho and Eswatini (formerly known as Swaziland) in Southern Africa are such examples, where some 45.000 and 22.000 jobs have been created since the late 1990s/early 2000s. The bulk of the garments made in these new factories is exported to the US and to the two countries’ South African neighbours.

However, the garment industry also has a different and somewhat darker side. Significant parts of the industry are characterized by tough working conditions and extremely low wages. This, for obvious reasons, attracts criticism from workers, trade unions, consumer organizations, NGOs, and human rights organizations. Lesotho and Eswatini are no exception to this. In the late 1990s and early 2000s, campaigns about working conditions in these factories undertaken by workers and unions, supported by student movements and unions in the Global North, led to some major retail brands introducing labour codes of conduct to be complied with by their suppliers. These codes, some argue, will ensure proper working conditions and wages not lower than the national minimum level.

Particularly in Lesotho, the implementation of these codes of conduct led to some improvements. To be sure, the country marketed itself as a ‘sweat free’ production destination after these codes had been implemented by major fashion brands. These improvements include better lighting and temperature control in factories. Lesotho, also called the Mountain Kingdom, has extremely cold winters and seething hot summers. However, there is an argument that this focus on ‘outcome rights’ is at the expense of workers themselves voicing their own concerns, also referred to as ‘process rights’ (for more on ‘outcome rights’ and ‘process rights’ see Mick Blowfield’s article published nearly two decades ago in Third World Quarterly *). In addition, while some basic health and safety conditions have improved, wages remain low. The result is that workers and trade unions continue to dispute the sustainability of their working conditions.

The situation in Lesotho and Eswatini points to a number of salient issues regarding options for workers and trade unions in similar contexts, which we outline below. Three issues stand out:

1. Although codes of conduct fulfil some minimum conditions according to national law, these codes do not necessarily ensure ‘good working conditions and proper (living or decent) wages’.
2. Although consumers in the Global North may think that a label in a T-Shirt stating that certain standards have been met and social responsibilities upheld, the groups mainly impacted in the Global South may think differently.
3. While minor improvements in working conditions and (minimum) wages might be celebrated as ‘major achievements’ at one stage, the benefits and experience impact in the Global South can be limited and short-lived. This, in turn, calls for long-term and a more sustained effort internationally and nationally, if the process of outsourced production is to lead to more substantive benefits for workers, and for companies and economies in the Global South.

The entry of the garment industry in Lesotho and Eswatini & the response from workers and unions

Garment manufacturing started in Lesotho and Eswatini in the 1970s and 1980s when South African companies set up production in the two countries. The new employment options were generally welcomed, but as Asian, mainly Taiwanese, companies joined the industry, discontent grew. These manufacturers were under pressure to produce large orders at cut-throat profit margins. Supervisors often did not speak local languages and did not understand local behavioural norms. Workers felt offended by what was considered to be harsh language by foreign supervisors and protests were staged. As the industry rapidly expanded due to additional South African, but in particular Taiwanese investments, additional protests followed. Now issues emerged that also related to long working hours, in warm/humid and poor ventilated factories, and low wages.

Trade unions engaged in collective organizing of workers, though encountering several obstacles in reaching a sufficient level of representation to be granted rights to negotiate with management on behalf of workers. Both Lesotho and Eswatini have labour laws that technically comply with the International Labour Organisation’s core conventions, but the proverbial devil is often in the detail. First of all, in Lesotho, labour laws stipulate that such rights can only be granted when organizing 50% of the workers in a workplace. This threshold for representation is extremely difficult to achieve. In Eswatini, strikes are technically legal, but long ‘cooling-off periods’ stipulated by labour law makes it hard to follow through on industrial action. Secondly, in both countries several unions sprung up, which led to internal competition and union rivalry. In Lesotho, this even further limited the chances of even one union being able to organize 50% of the workers. Thirdly, due to intimidation, extremely low wages (which makes paying union dues difficult), as well as the fear of losing their jobs, workers were reluctant to join unions. So, limited progress materialized.

The picture seemed to change as student organisations and unions in the US became aware of the conditions in Lesotho and to some extent Eswatini. They started to engage the US retailers and brands buying the products from Southern Africa and campaigning in favour of improved conditions in the factories. In Eswatini, where a larger share of the production went to South Africa, the unions started to collaborate with South African counterparts (unions from the Congress of South African Trade Unions, or COSATU). Eventually, the US retailers and brands found the media attention and queries in the US to be too cumbersome. They accepted that some improvements needed to take place and a number of codes of conduct were signed between the US buyers and the mainly Taiwanese garment producers.

These labour codes of conduct led to some improvements in wages, as well as safety and health conditions. An industry initiative in Lesotho attempted to pool resources from different companies to respond to high levels of HIV/AIDS among employees. These initiatives were celebrated in the media in the US, but soon the workers and unions in the two countries realized that the wages continued to be (way) below a living wage. Garment manufacturers expected their orders to increase due to them complying with codes of conduct, but this was not the case. Some union activists felt that the codes made minor improvements in terms of outcomes, but did not significantly address extremely low wages. As a result, protests resumed – and continue to do so as workers fail to see significant improvement.

The challenges encountered

The implementation of codes of conduct indicates some level of attention to the particular economic and social issues in the countries where factories are located. There is certainly some level of social responsibility among both brands and retailers as the industry’s major buyers. But the question remains whether these improvements will spill over into sustained changes and more meaningful improvements. Workers and unions have quite legitimate claims — who in a Danish setting would not acknowledge the right to a living wage? — but industry conditions point in a different direction. These conditions are linked to the competitive nature of the industry, dynamics related to the states where production is located, as well as the limits to consumer activism under such conditions.

From a global perspective, fierce competition between countries to attract garment manufacturers to set up shop means that the typical wage paid is low. Wage increases beyond a certain level can price a country out of the market and producers may move elsewhere (on this, see Pietra Rivoli’s now classic book The Travels of a T-Shirt in the Global Economy **).

In addition, and also importantly, workers and their unions have little backing from the state in the two countries. As mentioned above, on balance the labour laws are in support of the garment manufacturers and working against the interest of the workers and their unions. More importantly, the governments of the two countries have a clear agenda in support of the garment manufacturers as part of their investment policy. The outcome of this has been a foreign-owned industry with little link to local businesses and markets. There certainly is the potential that the presence of the industry could assist in building locally owned businesses, but little effort to bring this about through industrial policy. Rather, state intervention is directed at tax breaks for investors, the provision of factory shells in industrial parks, as well as the promise of labour at competitive wage rates. Accordingly, the labour side has been met with a narrative of ‘we should make sure not to scare away the investors’ (understood as ‘we should not ask for too high wages’) – or as framed in the Eswatini context: ‘The foreign investors are like birds who can easily fly away’. In both countries, strikes are routinely met with police violence.

Finally, the awareness of the ‘critical consumers’ and to some extent the ‘critical/supportive’ media in the Global North tends to be short-lived. While both groups can be mobilized for a cause for some time, both tend to turn attention elsewhere within a short time. Consumers feel assured that the social responsibilities are actually making a difference and tend not to follow up on their earlier concerns. Media tends to move on to the next ‘hot topic’ and similarly not follow up on earlier inquiries. Hence, the initial gains made based on attention, joint collaboration and pressures in the Global North and in the Global South wane, leaving workers and unions to continue their fight alone (see Gay Seidman’s book Beyond the Boycott: Labour Rights, Human Rights, and Transnational Activism for more on this ***). The bottom-line in Lesotho and Eswatini, unfortunately, is one of limited and insufficient change leaving the workers with non-living wages and a lot to be desired regarding working conditions in general.

Ways ahead

An analysis that only points to the structural constraints to improving the working conditions and lives of workers in these garment factories runs the risk of ignoring their own efforts to bring about change. Despite the constraints on the potential outcome of the years of struggle, workers and unions have made progress and continue to push for decent work and living wages. In Lesotho, unions often strategically use contact with fashion brands to put pressure on local manufacturers and they have also put political pressure on the state to increase the minimum wage. Unions also formed a single union called the Independent Democratic Union of Lesotho (IDUL), although smaller rivals still muddy the waters of solidarity. In Eswatini, rival unions have also come together to form the Amalgamated Trade Unions of Swaziland (ATUSWA) and have used international pressure to force the state to recognise them as legitimate unions when the government refused to register the newly formed union. The history shows that options for positive gains do exist, especially when based on international collaboration and an ability to create international attention to the issues at stake.

Here we could highlight that proper consumer awareness in Denmark and in South Africa can potentially have significant influence on the situation, but this influence also depends on a more careful understanding of power dynamics in the industry. These power dynamics relate to both the cut-throat nature of competition in the industry and local repression by governments. Hence, activism in the Global North also has to be focused on strengthening internal workers’ organisation and not be focused on ‘outcome rights’ at the expense of ‘process rights’. In the end, workers should be able to voice their interests, rather than being the beneficiaries of ‘social responsibility’. In both countries, the unions have been able to overcome former differences and set up common unions – an important step towards securing the rights of their members.

The blog draws on a longer-term collaboration between the authors, which presently is supported by funding from the Danish Free Research Funds (in Danish: Danmarks Frie Forskningsfond – DFF) through its Society and Business arm. The funding is allocated for an ‘International Research Stay’ for Søren Jeppesen at University of Fort Hare, South Africa with a focus on: ‘Understanding the Role of Business in Development: The Garment Industry in Southern Africa and Enclave Development.’ For joint publications, see below.

Søren Jeppesen is an Associate Professor in Business & Development Studies (see: www.cbs.dk/en/staff/sjmsc). His main research areas includes CSR, SMEs and Entrepreneurship in developing countries with an emphasis on Southern and Eastern Africa. He works on issues regarding local factors which influence the development and growth potential of developing country firms (or lack of same). One of his major research activities concerns the importance of Codes of Conduct for working conditions in the textiles and clothing industry in Southern Africa (in South Africa, Lesotho and Eswatini).Andries Bezuidenhout is Professor of Development Studies at the University of Fort Hare in South Africa’s Eastern Cape province. His main research areas include an interest in precarious labour, labour markets, labour movements and development policy. He is the co-author of Grounding globalization: labour in the age of insecurity (2008, Blackwells) and co-editor of the forthcoming volume Critical engagement with public sociology: Perspectives from the Global South (2022, Bristol University Press).

Joint Publications:

Bezuidenhout, A. and Jeppesen, S. (2011). ‘Between State, Market and Society: Labour Codes of Conduct in the Southern African Garment Industry.’ Development Southern Africa, Vol. 28, no. 5, pp. 653-668.
Jeppesen, S and Bezuidenhout, A. (2019). ‘Swaziland: The Garment Industry in its Economic, Political and Social Context.’ Frederiksberg: Copenhagen Business School [wp] 2019, 51 p. (CBDS Working Paper Series, No. 4, 2019).
Jeppesen, S. and Bezuidenhout, A. (2019). ‘Lesotho: The Garment Industry in its Economic, Political and Social Context.’ Frederiksberg: Copenhagen Business School [wp] 2019, 50 p. (CBDS Working Paper Series, No. 3, 2019).

References/Further reading:

*Blowfield M (1999) Ethical trade: A review of developments and issues. Third World Quarterly 20(4): 753-770.
**Rivoli P (2005) The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade. Hoboken, NJ: Wiley.
***Seidman G (2009) Beyond the Boycott: Labour Rights, Human Rights, and Transnational Activism. New York: Russell Sage.

By Lotte Thomsen (Centre for Business and Development Studies, Copenhagen Business School) and Martin Hess (School of Environment and Development, University of Manchester)

Did you also wonder why coloured gemstones, like rubies and emeralds, are ‘back in the market’? And why they abruptly compete with diamonds, which were otherwise the most valuable and desirable stones since the early 1900s? Our joint effort to provide some answers to these (and other) questions so far led to a newly published paper in Economic Geography, which explores the connections between the rising popularity of coloured gemstones and a corporate re-focusing away from diamonds.

The image and value of diamonds was challenged and problematized since the 1990s when they became connected with a variety of sustainability challenges, not least with conflict in diamond supplier countries. In contrast, the social and environmental problems of the coloured gemstone industry have not yet been the focal point of similar scrutiny and intensive research. Rather, coloured gemstones are often branded as “sustainable”. We show how the rising popularity and value of coloured gemstones is part of a “corporate escape” from known problems in the diamond sector.

Gemstones are highly connected to their “grounded” nature and geographical origination. “Geography” is therefore an essential aspect of gemstone and jewellery valuation, and “provenance” is often utilised as a marketing tool in the industry. However, using “origination” for branding purposes certainly works best when the places in which consumer products origin are perceived as “exotic and adventurous” rather than “problematic and unsustainable” by consumers. Gemstones frequently originate from “dark places”, where sustainability challenges for mining communities, workers, and the environment are severe and manifold. Gemstones are also often unearthed where sourcing is considered unethical or even embargoed. Thus, the geographical origination of gemstones is potentially problematic for retail sales.

Corporations therefore increasingly turn to strategies and practices of “geographical dissociation” of places and matters that are damaging for retail sales and brand reputation. An inherent intransparency of the industry has become key to such processes of dissociation. Gemstone mining, processing, and trading takes place in overly complex and unregulated supply networks which connect with global value chains for gemstone and jewellery. Thus, coloured gemstones that enter into international markets commonly involve informal—and sometimes illicit—mining and trading practices.

You can read much more about the myriad of trading networks and global value chains for coloured gemstone and jewellery, by accessing our full paper:

Lotte Thomsen & Martin Hess (2021) Dialectics of Association and Dissociation: Spaces of Valuation, Trade, and Retail in the Gemstone and Jewelry Sector, Economic Geography. https://www.tandfonline.com/doi/full/10.1080/00130095.2021.1989302?src

References

Channel News Asia. 2018. Why coloured gemstones are so popular right now.

Ibert, O., Hess, M., Kleibert, J., Müller, F., and Power, D. 2019a. Geographies of dissociation: Value creation, ‘dark’ places, and ‘missing’ links. Dialogues in Human Geography 9 (1): 43–63.

Pike, A. 2015. Origination: The geographies of brands and branding. Oxford: Wiley.

Shortell, P., and Irwin, E. 2017. Governing the gemstone sector: Lessons from global experience. Natural Resource Governance Institute, September 19, 2017

Wright, C. 2004. Tackling conflict diamonds: The Kimberley Process certification scheme. International Peacekeeping 11 (4): 697–708.

By Stefano Ponte, Christine Noe, Dan Brockington, Opportuna Kweka, Rasul Ahmed Minja, Robert Katikiro, Faraja Namkesa, Mette Fog Olwig, Pilly Silvano, Ruth John, Kelvin Kamde, Lasse Folke Henriksen and Caleb Gallemore

The issue

New and more complex partnerships are emerging to address the sustainability of natural resource use in the Global South. These partnerships variously link donors, governments, community organizations, NGOs, firms, consultancies, certification agencies and other intermediaries. High expectations and many resources have been invested in these initiatives. Yet, we still do not know whether more sophisticated organizational structures, more stakeholders involved, denser social networks and more advanced participatory processes have delivered better sustainability outcomes, and if so, in what sectors and under what circumstances.

The research project

To fill this knowledge gap, the collective research project New Partnerships for Sustainability (NEPSUS), funded by FFU [1], assembled a multidisciplinary team to analyse sustainability partnerships that seek to combine conservation and development objectives in three key natural resource sectors in southeast Tanzania: wildlife, forestry and coastal resources. Researchers from Copenhagen Business School, the University of Dar es Salaam, the University of Sheffield and Roskilde University undertook five years of research, which involved carrying out a total of 331 key informant interviews, 81 focus group discussions, a survey with 1019 respondents, participant observation, and the collection of secondary documents, statistics, remote sensing and social network data.

In each of these sectors, we assessed whether co-management with local communities and private and civil society actors, and putatively more participatory processes in the governance of natural resources, result in positive environmental outcomes and improved livelihoods. We compared institutionally ‘more complex’ partnerships to relatively ‘simpler’ (more traditional top-down and centralized) management systems – and to ‘control’ locations where there are no partnerships in place.

We also assessed network complexity – as actors can use social networks to share their experiences, values, interests, knowledge and resources, but also to facilitate resource exchange and handle possible tensions. At the same time, networks may survive only when the most powerful and influential members of a partnership keep them alive, thus possibly reinforcing existing power imbalances. Our interest was to assess whether partnership complexity (in its institutional and network aspects) affects the ability to deliver sustainability outcomes.

Main findings

Legitimacy

Despite deliberate, evolving and persuasive efforts to raise awareness on the relevant rules and regulations, sustainability partnerships have struggled to gain and maintain legitimacy. Local communities are yet to perceive these partnerships as responsive, accountable and trustworthy arrangements that strike the requisite balance between community welfare and conservation goals.

Communities living in forestry sites perceived relatively higher levels of socio-economic and environmental outcomes accruing from new partnerships than their counterparts in wildlife and coastal resource sites. Lack of material incentives in wildlife partnerships and coastal partnerships limited their legitimacy in the eyes of local communities. Fishers and consumers of bush meat were affected by access restrictions, and alternative livelihood activities failed – or their benefits went to a small number of wealthy investors.

Complexity

We expected network complexity to correlate positively with institutional complexity, as the latter often entails participation of, and coordination between, a wide set of stakeholders. We found that there is a statistical association between these two dimensions (although it is highly sector-dependent), and that the building of more complex networks tends to predate the joining of more complex institutional governance forms. We interpret this as an indication that network building needs to be part of the initiation process of these partnerships.

Environmental impacts

The analysis of our remote sensing data suggests that there is a positive relationship between a higher degree of both institutional and network complexity and the maintenance of forest cover (in relation to forestry, wildlife habitats, and mangroves). However, we found no consistent relationships between either form of complexity and the perceptions by survey respondents on local environmental change.

These findings indicate that there is some potential for (institutional and network) ‘more complex’ forms of sustainability partnership to support effective natural resource management. But institutional complexity does not simply emerge on its own. It must often be deliberately constructed and maintained and it involves previous work building complex networks.

Impacts on livelihoods

Most people in the study sites we researched are farmers. Their livelihoods will improve to the extent that their farming revenues increase, and this happens mainly in relation to improved transport arrangements and farm-gate prices. New sustainability partnerships need to support farming activities if they are to bring prosperity. New partnerships on sustainability matter. They can make laws more just and fairer. They can introduce new business opportunities. They can safeguard natural resources more effectively. But they are not likely to be engines of large-scale prosperity of agricultural communities.

Cultivating Partnerships

Instead of decentralization, we are witnessing accountability transfers that move obligations to local authorities without sufficient resources allocated to them to carry out their tasks. In the contexts we examined in southeast Tanzania, we observed a multiplication in the number and variety of actors engaged in sustainability partnerships. These actors often represent different interests, express different world views and bring with them specific hopes, expectations and claims. Smaller and weaker actors – especially those who do not have capacity, organizational skills, and resources to participate as equals in partnerships – have been marginalized in decision-making.

We also see that the functional quality of sustainability partnerships in Tanzania depends on how they are embedded in networks of actors and institutions. To some extent, we have shown that social networks can act as potentially positive mediators of collective action coordination and collective learning processes.

Sustainability partnerships have been more inclined towards the provision of training on conservation issues than the development of alternative livelihood activities. As a result, they have had limited effects on socio-economic and livelihood outcomes, especially at the household level. They have thus failed to strike a balance of conservation and socio-economic outcomes, with the partial exception of community-based forest management. This has culminated into significant levels of community dissatisfaction with their performance.

Policy recommendations

1) Local community governance needs to be strengthened to improve a sense of ownership and increase cooperation and trust.

2) The income accruing from sustainabitlity partnership activities need to be distributed evenly and in a transparent manner, no matter how small.

3) Duplication and unclear division of labour among different actors and jurisdictions need to be addressed.

4) Long-term consistent financial support is essential.

5) The government and collaborating actors should provide clear economic incentives and support community-based enterprises.

6) When access to resources is tightened, it is essential that alternative sources of livelihood that make sense to local communities are facilitated.

7) Efforts should be made to facilitate contacts between local communities and other key actors before the establishment of sustainability partnerships and maintained during their operation.

For more information, see www.nepsus.info

Keep an eye open for the forthcoming open-access book: Stefano Ponte, Christine Noe and Dan Brockington (eds) Contested Sustainability: The Political Ecology of Conservation and Development in Tanzania. James Currey.

[1] The Consultative Research Committee for Development Research (FFU) is a programme committee that advises the Ministry of Foreign Affairs of Denmark regarding Danida’s support to development research.

By Eirik Veggeberg, Izabela Delabre, and Kristjan Jespersen

The private sector is becoming increasingly vocal in its efforts to reduce deforestation. The last decade has seen a number of major firms making zero-deforestation commitments (ZDCs); pledging to eliminate deforestation in their supply chains, including Nestlé, Cargill, Unilever and Mondelez International. The exact contents of ZDCs vary, from strict zero gross deforestation commitments as implemented by Nestlé, to the more flexible zero net deforestation commitments of Unilever. Many corporations further include policies for social sustainability, such as labour standards (Mondelez, Nestlé), land rights (Nestlé, Unilever) and community consultation and inclusion (Cargill, Unilever). Due in part to their recency, our knowledge on the topic of ZDCs is limited, and there is much to learn about their effects on both forests and people.

What do we know about ZDCs?

The private sector deforestation movement started gaining traction following the ‘success story’ of the Brazilian Soy Moratorium, to which significant deforestation reductions were attributed. However, recent developments suggest that the intervention merely displaced the environmental destruction to the Cerrado savanna, with subsequent environmental costs potentially outweighing the conservation value of the initial deforestation reduction. Similar findings elsewhere induce scepticism about the capacity of supply chain initiatives to give rise to positive change. Despite this, ZDCs are perceived favourably by scholars and environmental groups alike – encouraged as being a (small) step in the right direction.

The efficacy of ZDCs in reducing deforestation is widely examined in academic research, however, little is known about the impacts of ZDCs on local income and livelihoods. This is an important gap in our understanding given the prevalence of ZDCs, and the potential challenges and opportunities they foster for more sustainable and equitable environmental governance. Without more scholarship examining the capacity of zero deforestation pledges to drive positive change and mitigate social harm, there is a danger that they may fail to address the complex problem of deforestation, marginalise communities, and delegitimise other forms of governance that could lead to more positive outcomes. This article expresses numerous concerns about the impacts ZDCs may have on local income and livelihoods.

Selection biases

Firstly, there is a risk that the producers participating in ZDCs are the “low-hanging fruit”. This is prevalent in the adoption of certification schemes and sustainability standards, where participation has been found highly biased toward producers who are already compliant, or close to complying due to prior deforestation, as well as those sufficiently wealthy to afford the price of adoption and implementation. Biases in ZDC participation could contribute to worsening existing inequalities, excluding poorer farmers and entrenching the position of wealthier ones.

While ZDC implementation strategies greatly vary, the exclusion of non-compliant actors is not rare – Nestlé openly commits to such practices. This may be perceived as a sign of loyalty to sustainability, however, paired with selection biases found in other sustainability schemes and initiatives, it anchors the fear that the implementation of ZDC could aggravate local income inequalities and harm poorer stakeholders; perversely rewarding farmers who have obtained land through past deforestation, whilst punishing those who have not.

The price of sustainability

Secondly, for the implementation of ZDC to be considered sustainable and equitable, it is imperative that adequate cost-sharing processes are implemented within supply chains. Learning from the oil palm sector, it is likely that farmers will be held disproportionately responsible for ensuring sustainable production. Farmers implementing ZDC risk losing out on income as buyers exhibit little willingness to compensate producers for operating sustainably. This fear was reiterated by interviewees working on ZDC implementation, as the majority felt corporations were unwilling to pay the price of their sustainability initiatives. A consulted economist further suggested that local suppliers may be caught in a poverty trap as a result of ZDCs restricting them from expanding their agricultural frontier. Businesses’ reluctance to pay for the implementation of sustainable practices risks the income and livelihoods of local actors – potentially encouraging the illegal encroachment of forests.

Interviews with sustainability experts shed light on further negative impacts supply chain sustainability initiatives may have on local suppliers. One interviewee spoke of an indigenous community settled in the Peruvian Amazon that had developed good contact with local NGOs as well as international corporations. The interviewee described them as skilled at diversifying their sources of income: cocoa, timber – even starting to venture into tourism. However, when the pandemic hit, the community was one of the first to request emergency food supplies. The indigenous community had been left exposed in times of crisis in part due to specialisation and involvement with the private sector, which eroded their resilience. Such scenarios evince that still very little is known of the wider and longer-term social impacts of private sector sustainability governance through ZDC implementation. Similarly, based on field research from the Peruvian Amazon, one consultant worried that farmers who swap their crop out for the one pushed by initiatives may actually see their income drop, as a lack of experience with the crop leaves them more vulnerable to potential challenges such as pests and growth issues related to poor land suitability.

What to do?

There are numerous ways in which businesses could adapt their initiatives and implementation strategies to minimise the risks discussed above. Firstly, thorough jurisdictional approaches could help avert some of the potential dangers faced by local communities as a result of ZDC implementation. Incorporating regional governments, NGOs as well as local actors and communities could help combat selection biases by providing support and incentives for all local actors and communities to partake and benefit from the initiatives. More cooperation at the local level may also help minimise worries that actors may have about altering their crop to fit the initiatives. Further, it is crucial that initiatives are developed so as to suit local or regional contexts. One interviewee stated that currently this is not the case, and that regional differences and complexities often go overlooked. It is not as simple so as to ‘copy and paste’ approaches between regions with the belief that “if it worked in Costa Rica, surely it will work in Peru”. The implementation of ZDCs must evolve to incorporate and encourage cooperation amongst a broader range of actors, and their contents require a great deal of flexibility to account for local differences and complexities.

Secondly, businesses need to show greater responsibility and willingness to partake in cost sharing decisions. It is currently too easy for firms to push full responsibility onto farmers. As highlighted by a chief sustainability officer, businesses still consider zero-deforestation policies efforts of charity and CSR, with very few integrating sustainability into their business model. Therefore, as long as environmental costs are not integrated into the price of goods, businesses will fail to prioritise sustainability over profits, and will be reluctant to pay for initiatives in an attempt to minimise their costs. Approaches to integrating externalities are heavily researched and must be more closely examined in relation to deforestation and ZDCs.

The aim of this article is not to discredit supply chain sustainability initiatives and ZDCs as legitimate instruments for reducing deforestation, or to expose them as inherently damaging to the incomes and livelihoods of local actors. Rather, it aims to shed light on ignored and potentially damaging unintended consequences ZDCs may have on local actors, with the intention of encouraging scholars and practitioners to explore this matter further. Empirical research on the implementation of ZDCs is needed to establish whether the aforementioned- and/or other effects are observed in practice, and if so, to what extent they can be attributed to existing ZDCs.

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About the Authors

Eirik Ingwardo Veggeberg is a Junior Research Associate and final year Philosophy, Politics and Economics undergraduate at the University of Sussex. His current research project explores the effects supply chain sustainability initiatives have on local income and livelihoods in the Peruvian Amazon. Feel free to connect with Eirik on Linkedin.

Izabela Delabre is a Research Fellow at the University of Sussex, examining sustainable forest governance, sustainable production and consumption of food, and sustainability transformations. Izabela worked for the Business and Biodiversity Conservation Programme at the Zoological Society of London (ZSL) managing ZSL’s global oil palm work. Her PhD (Human Geography) examined the political ecology of participatory impact assessment practices in the context of the Roundtable on Sustainable Palm Oil (RSPO) in Indonesia and Malaysia.

Kristjan Jespersen is an Associate Professor at the Copenhagen Business School. He studies the growing development and management of Ecosystem Services in developing countries. Within the field, Kristjan focuses his attention on the institutional legitimacy of such initiatives and the overall compensation tools used to ensure compliance.