Voluntary standards, trade and sustainable development

Abstract

Voluntary sustainability standards (VSS) seek to improve social and economic outcomes in developing nations through voluntary commitments by firms located in these countries, who can advertise their adherence to the standard through certification and associated labels. VSS are a potential instrument to help achieve some of the objectives of the Sustainable Development Goals (SDGs), but the current empirical evidence on their effectiveness is mixed. Distinguishing between Fair Trade VSS developed by non-governmental organizations and corporate-backed private VSS, this chapter disentangles the possible channels through which these two types of VSS regimes may impact on trade and, in turn, on SDGs. We review the evidence in the light of these channels, finding important differences between the two categories of VSS.