Standard Setting

By Debra Tan 12 June, 2012

Veronique Tjon walks us through the 101 on standard setting, common pitfalls and certification processes, Veronique Tjon walks us through the 101 on standard setting, common pitfalls and certification processes, Veronique Tjon walks us through the 101 on standard setting, common pitfalls and certification processes

Standards with multi-stakeholder participation will garner more credibility
Certifications are beneficial - 3 main types: system, process and product certifications
Standards that solely address water are still in their infancy

Veronique Tjon of Control Union Certifications gives us the 101 on standard setting and tips on choosing a standard. Control Union Certifications (CUC) is one of the leading certification bodies when it comes to Sustainable Quality Programs and offers a wide range of over 130 programs worldwide. A privately owned company, established in 1940s, CUC’s head-office is located in the Netherlands with branch offices in over 60 countries to better cater to the needs of their international clients.


Why are standards needed?

To answer this question we have to understand what we mean by ‘standards’.  According to the dictionary, a standard maybe defined as follows:

stand·ard

1. something considered by an authority or by general consent as a basis of comparison; an approved model

2. a rule or principle that is used as a basis for judgment

3.standards, those morals, ethics , habits, etc., established by authority, custom, or an individual as acceptable

 

To summarize, a standard is an objective set of requirements set by authorities, individuals or companies that help regulate, evaluate, compare and establish whether a particular level of conformance to the set of requirements is reached. Standards are present in many aspects of our daily lives. For example:

  • The food and drinks we consume are guided by health and safety and good manufacturing standards
  • Cosmetics we use are guided by an ISO and good manufacturing standards
  • The cars we drive are guided by safety standards
  • The restaurants we dine in, should comply with food hygiene and quality assurance standards
  • Organic and recycled textiles are guided by standards
  • Transportation modes such as trams, buses, MTRs, airplanes have gone through rigorous safety standards
  • Buildings, the construction materials and elevators all have safety standards

On a corporate level, compliance to a standard offers a vote of confidence that can lead to better regulatory compliance in the market. It can increase market exposure and access, benefit communication with stakeholders and in general encourage improvement and innovation within the organization ultimately improving management.

How are standards set?

Standard-setters are organizations that develop and write standards to a point when an individual or a third party (such as an inspection and certification body) can audit the company seeking compliance with the standard.

They can for example, be authorities, non-profit organizations, industry associations, individuals, or companies. In standard setting these bodies  gain consensus and formulate a set of requirements for a specific country, industry or product, where regulation is needed to guide companies in meeting the demands of external parties such as customers (orders) shareholders and consumers (corporate social responsibility) or government (subsidies).

An example of a well-known standard setter is the International Organization for Standardisation (ISO). A standard-setter in most cases is also the standard owner. This means that the setter has the authority  to make changes and interpretations to the standard and can qualify third parties to audit the standard.

Who are the stakeholders?

  • Governments : via their role as regulators , governments can establish incentives such as subsidies to grow certain industries and assist companies, which in turn can influence standard setting

 

  • Industry Organizations : can seek standardization of requirements for their industry and members via lobbying. The resulting transparency which should pave the way for fair judgment, appraisals and rewards. Industry organizations are also interested in raising the overall level of quality in their respective industries.

Example: Automotive industries organization

 

  • Non-profit organizations : representing and voicing out concerns for the society

Example: Greenpeace

  • Certification Body (CB): an impartial and unbiased third party qualified by a standard-owner to audit companies against the standard’s requirements. Upon compliance, a certificate will be issued by the certification body to prove compliance. In turn, a CB will be required to be audited, certified (ISO 65) and accredited by an acknowledged accreditation body and standard owners in order to be deemed qualified to conduct third party audit assessment and certification.

Example: Control Union Certifications

  • Experts: possess extensive knowledge and experience in the subject and / or industry which enables them to offer advice for the betterment of the standard content.

Example: University professors

 

  • A certified company: A company which is found to be compliant with a certain standard and is third party audited and certified.
  • Buyer/Investor: Request their business partners and suppliers to adhere to a certain standard which fits into the their   company policy.

For obvious reasons, a standard with multi-stakeholder participation will garner more credibility. Before a standard can be released it will go through a number of drafts and public consultation process before entering a phase of so called “pilot testing” where audits are carried out at companies to the test the practicality of the standard.

Standard forms the foundation for Certification

A standard forms the foundation for a certification scheme which is essentially a rigorous quality assurance system with clear deliverables for a company. When compliance is established a certificate, proof of compliance will be issued. Obtaining certification is a vote of confidence to stakeholders such as government, business partners, shareholders, consumers, that a company is meeting with industry requirements.

 

The benefits of Certification

There are three main types of certification: a system, process and product certification.

Whether a company is B2B or B2C, assurance is required – assuring the buyer that a product has gone through a rigorous amount of time and investment to assure quality and compliance with international and nationally set rules and requirements. As a result of these efforts, the goods and services are widely accepted, commonly trusted and highly valued compared to competitors.

A certificate can have different periods of validity (which is industry or product specific) such as 1, 3, 5 and even 10 years. What all certification programs have in common is the certification procedure which is typically in phases:- Application – Preparation – On site audit  and identification  of non-conformities – Implementation of  Corrective Action Plan – Assessment and Issuance of certificate. The cycle repeats itself , usually annually.

Certification is different to verification

The main difference is “Certification” requires the company that is being audited, to go through a complex process of quality assurance requirements set by nationally and internationally governments and standard setting bodies to certify (i.e. prove) that their behavior and product complies with the standard. The proof is given via an acknowledged document called certificate.

Verification is there to establish a conformity of performance of a company behavior or product. Thus Verification is an additional check to Certification but not in lieu of it.

Uniformity in standards

Different regions and different conditions require different standards. As long as buyers and investors maintain different requirements there will be a wide array of standards. It is a simple principle of supply and demand. Though there are exceptions to the rule for instance in the Organic Textile Industry it was the certification bodies whom pushed for industry uniformity by doing so they dropped their own respective standard and aligned with one textile industry standard. This simplified matters for buyers/investors and the supply chain.

Water and Certification

Two of the top five most polluting industries in China, according to China Water Risk, are the Agricultural and Textile industry. It will come as no surprise that these industries are heavily regulated and a wide variety of standards and certification schemes exist for the two industries.

Although standards that solely address water are still in their infancy. A number of standards do address the water stewardship such as standards for Organic, Sustainable, Environmental production and processing standards.

Some tips when choosing a standard:

  1. Have a clearly defined CSR policy
  2. Clarity on which target group to be reached
  3. Engagement with industry players / share best practices
  4. Reach out to the standard setter/owner, certification body for practical advice and consultation
  5. Understand the standard – do not leave room for interpretation or doubts
  6. Top to bottom approach – commitment of the entire organization, not only the CSR or Quality department
  7. The road to compliance is  a long term commitment and is not fulfilled by obtaining a one-year certificate

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Debra Tan
Author: Debra Tan
Debra heads the China Water Risk team. She was tasked with taking The Asia Water Project pilot to the next level and was responsible for the direction and build out of China Water Risk portal for ADM Capital Foundation. Debra started her career in finance, spending over a decade as a chartered accountant and investment banker. She has lived and worked in Beijing, HK, KL, London, New York and Singapore. Debra left banking to explore her creative side. She has since pursued her interest in photography and within a year had her first solo exhibition sponsored by a global bank. She also ran and organized hands-on philanthropic and luxury holidays for a small but global private members travel network and applied her auditing, financing and photography skills in the field for various charitable organizations and foundations. Debra believes that we can all make a difference, if only we see the ‘big picture’.
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