Does Voluntary Governance Work? : Insights from Specialty Coffee

Abstract: Agricultural businesses contribute to sustainability problems, but they are also increasingly central to the effort to develop solutions. One way of moving toward sustainability is through regulatory governance. In this thesis, I analyze a tool of regulatory governance called voluntary market-based regulatory initiatives. Specifically, I investigate two types of initiatives, certification and disclosure, involving businesses and consumers in regulatory governance. I researched these types of initiatives by selecting the case of specialty coffee, which has high levels of acceptance, experience, and support of voluntary governance for sustainability initiatives. To study developing certification initiatives, I analyzed direct trade schemes in the US, Denmark, and Sweden over a period of several years. To study voluntary disclosure initiatives, I analyzed the widely-used sustainability reporting system from the Global Reporting Initiative, the reporting recommendations from a new multi-stakeholder initiative called the Sustainable Coffee Challenge, and the practice of sustainability reporting among specialty coffee roasters in North America.My research indicates that voluntary market-based regulatory initiatives could contribute to governance for sustainability through involving businesses and consumers in governance, but that there are limitations. The limitations of this approach were showcased by the inability of US direct trade founders to enforce common definitions of direct trade due to the voluntary nature of the initiative and the inability or unwillingness of private actors to enforce definitions, in part due to perceived self-interest. This shows how such initiatives can have difficulty penalizing or using disincentives to inspire change. Direct trade scheme developments demonstrated the active inclusion of consumers within regulatory governance, but this active role was pushed on consumers rather than requested by consumers. In addition, there were indications of limitations of consumer skill in differentiating between regulatory schemes. Sustainability reporting among US specialty coffee roasters reveals poor conditions for empowerment through disclosure as disclosed information is not comprehensive, comparable, or useful because too few companies report and those that do report disclose information inconsistently. Collaboratively defined material topics, such as the goals and measurements defined within the Sustainable Coffee Challenge, do have the potential to improve the quality and usefulness of voluntary disclosures for governance, although it is too soon to say whether this has worked in practice. Finally, both voluntary certification and disclosure involving businesses focus on problem solving and avoid broader sustainability strategies such as substituting coffee with a more sustainable alternative or trying to decrease coffee consumption.