The United Nations’ Sustainable Development Goal 12 is to “Ensure sustainable consumption and production patterns” [1
]. Consumption drives resource use and the world is using resources at an unsustainable rate. Reducing the rate of resource use would require decreasing consumption and improving production. In the context of food systems, consumption is expected to rise due to increasing populations, affluence and dietary change [2
], yet simultaneously food system production must reduce its environmental impact from land use change as well as water, energy and fertilizer usage [3
]; food systems are responsible for 19%–29% of global anthropogenic greenhouse-gas emissions [4
]. Concurrently, there is a need to improve the livelihoods of people working in food system value chains. Regulation is one way of improving such production patterns.
There are competing models for how to regulate on a transnational scale to support sustainable consumption and production. Particularly popular now are roundtables and certification, as seen in palm oil [5
] and the Forest Stewardship Council [6
] respectively. These follow a trend in regulation in which voluntary standards and non-state involvement in regulatory processes are increasing [7
]. There is not agreement on the best model for regulating towards more sustainable production [9
] and this seems to differ based on condition and context [12
], something that we explore in this paper.
The coffee industry has arguably the most advanced experience from a regulatory perspective with sustainable labeling [16
], another increasingly popular form of regulation. Coffee has a long history with sustainable consumption movements [17
], in which consumers choose labeled coffee that claims to support better production practices, for example Fair Trade, Organic, UTZ Certified, Rainforest Alliance or Bird Friendly. This effort is recognized for example in the UN’s summary of “Responsible Consumption and Production: Why it matters” [18
] where there is a single image: a handful of coffee cherries.
Yet coffee consumption and production remain problematic. Although demand for coffee is increasing, livelihoods of coffee producers remain uncertain [19
]. Coffee also embodies production problems facing agricultural products generally; climate change is negatively impacting coffee production [20
] and coffee trading has been shown to threaten biodiversity [22
This paper analyzes the development of voluntary regulatory schemes claiming to support sustainable production and consumption by looking within the mature labeling landscape of the specialty coffee industry at voluntary schemes called “direct trade” in the United States of America (US) and Scandinavia (specifically Sweden and Denmark). The use of direct trade as a standalone term, rather than as a Fair Trade principle, was popularized by the Chicago-based firm Intelligentsia [23
] beginning around 2005 and Counter Culture Direct Trade Certification was established in 2008; the use of the term direct trade has since spread rapidly [24
]. Generally the stated purpose of direct trade is to facilitate regularly procuring high quality coffee in a sustainable way.
Discussions about direct trade can become muddled as the term is used in three different ways in the coffee industry: first, as a general concept for coffee sourcing; second, as a marketing strategy; and third, as a voluntary scheme. In this article, we will focus specifically on direct trade as a voluntary scheme. Direct trade as a concept for coffee sourcing refers to having direct and regular contact between roasting firms and coffee producers, which is typically represented by practices such as coffee buyers from roasting firms visiting coffee producers, with quality-based prices paid directly to producers. Direct trade as a marketing strategy refers to the use of the term direct trade to sell coffee to consumers. A voluntary scheme is a claim that a particular set of standards is followed. In the case of direct trade voluntary schemes, firms claim, usually via a logo targeted at consumers (marketing strategy), to follow a particular set of standards (coffee sourcing practices). Thus, direct trade voluntary schemes refer to making coffee sourcing practices marketable in the form of a voluntary regulatory program by guaranteeing a particular set of standards are followed. Direct trade is a voluntary scheme because firms choose whether to be involved; it is not a mandatory regulation requiring participation.
Direct trade voluntary schemes can be classified as sustainability schemes because they contain claimed sustainability standards. Specifically, direct trade voluntary schemes claim to contribute to sustainability through coffee sourcing practice standards that ensure traceability in an identity preserved model [25
] and through financial incentives for high quality coffee.
The aim of this paper is to examine the development of direct trade coffee voluntary schemes in the US and Scandinavia as examples of regulatory standard-setting processes. We do this in order to see whether such schemes offer a way forward for more radical transformation of agricultural value chains to support sustainable production and consumption by exploring the opportunities and constraints arising for voluntary schemes whose development involved firms. Our overarching research question is: What are the implications for sustainable production and consumption of regulatory approaches involving firms? We address this question through two sub-questions: (1) How have direct trade schemes developed at each stage (agenda-setting, negotiation of standards, implementation, monitoring, enforcement) of the regulatory-standard setting process over the past few years in the US and Scandinavia? (2) What approaches within regulatory space do these processes represent within the US and Scandinavian contexts? In the discussion section we consider differences in regulatory processes and outcomes in order to examine the opportunities and limitations of firms as actors within regulatory governance.
Regulatory standard-setting is the process of developing either voluntary or mandatory standards, which ultimately seek to improve production and consumption patterns. The regulatory standard-setting process consists of five stages: agenda-setting, negotiation, implementation, monitoring and enforcement (Figure 1
]. Agenda-setting concerns what issues are placed on the regulatory agenda and how those issues are framed. Negotiation of standards is the process of defining exactly what standards entail. Implementation involves putting the standards into practice. Monitoring refers to tracking how well the standards are followed both internally and externally, for instance via in-house evaluation or verification by a third party. Enforcement concerns the use of rewards and penalties related to adherence to the standards.
The regulatory triangle (Figure 2
) visualizes direct involvement of three key actors within transnational regulatory space: state, non-governmental and firm actors [26
]. Actor involvement is mapped within the regulatory triangle based on the level and importance of direct involvement, including decision-making power, through the regulatory standard-setting stages. For example, national laws would be considered state schemes (zone 1) because decision-making power lies in the hands of state actors through legislative enactment. Firms may be involved in the process, for instance through lobbying, but this is considered indirect influence because the final action of enacting legislation is entirely in the hands of state actors [26
This mapping gives an overall impression of the structure of the scheme and is intended to make schemes comparable, even if they appear different on the surface [27
]. Mapping schemes within the triangle prioritizes positioning schemes relative to other schemes over precise positioning of these complex schemes within the triangle [26
]. This structural comparison helps in analyzing the strengths and weaknesses of various approaches, as different actors tend to have different levels of capacity in necessary competencies for regulation, such as expertise, operational capacity, independence and representativeness [26
We use the regulatory standard-setting framework to compare the development of direct trade voluntary schemes in the US and Scandinavia. We analyze coalitions of actors involved in developing the schemes in order to explore differing outcomes in direct trade usage between the US and Scandinavia related to actor competencies.
This section begins with a systematic overview, based on data drawn from website analysis and interviews, of each firm’s direct trade scheme content (Table 3
), development (Table 4
), and usage and prominence (Table 5
) between 2015 and 2016. The sub-sections then describe in greater depth the development of direct trade in the contexts of the US and Scandinavia through the regulatory standard-setting stages.
The content of standards within direct trade voluntary schemes differs somewhat by firm (Table 3
). The most widely shared topics of direct trade standards relate to coffee quality, price premiums and regular visits of the roasting firm to the producer, and in 2015 all schemes had at least one quantifiable standard. Coffee quality in this context relates to cupping scores, meaning the taste of the coffee, and price is based on incentivizing coffee quality, sometimes with a guaranteed minimum price. All firms using direct trade logos also have a standard related to financial transparency. We defined financial transparency as, at minimum, the roaster knowing whom the producer is and paying them directly, but more stringent standards require additional disclosures to producers or consumers. Sustainable social practices, environmental requirements and long-term commitment have standards only for some schemes. External auditing is rare; it was only used by Counter Culture as part of their certification program.
The actors involved in the stages of regulatory standard-setting for these direct trade voluntary schemes heavily—but not exclusively—involved firms (Table 4
). Regulatory agendas of direct trade schemes were set by and schemes were implemented by individual firms internally across the board. Monitoring was primarily done by firms internally, meaning that individual firms verify and self-report compliance. Counter Culture Direct Trade Certification was the exception in that the NGO Quality Certification Services monitored and verified the firm Counter Culture’s compliance. In the US, interviewees (CCC, ST) emphasized the pressure coming from other firms in the industry in the continued development of direct trade schemes, as seen in the negotiation of standards column (Table 4
). Similarly, all interviewees acknowledged the lack of formal enforcement capable of preventing or penalizing misuse of direct trade schemes in the US; additionally US interviewees (CCC, ST) stated reluctance to call out scheme misuse by other firms. Without formal penalties or shaming tactics, US firms attempted enforcement through soft power of influence and convincing others. By contrast, two Scandinavian firms involved state actors in negotiation and enforcement stages through trademarking direct trade schemes within their own countries.
The period from 2015 to 2016 represented rapid change in general usage of and prominence of direct trade schemes. All firms must have made active decisions about how to present direct trade voluntary schemes online because five of the six firms restructured and redesigned their websites during this time period and the sixth firm, The Coffee Collective, revised and restructured the specific webpage on which their scheme is defined. Two firms no longer use direct trade voluntary schemes; Counter Culture terminated its Counter Culture Direct Trade Certification scheme and Koppi rebranded their scheme (Table 5
). Through restructuring their websites, both Stumptown and Intelligentsia decreased the visibility of their direct trade schemes (Table 5
). In updating direct trade specific webpages Intelligentsia revised the wording of their direct trade scheme while maintaining the content of the standards (Table 3
) and their commitment to the scheme [47
]. The Stumptown interviewee indicated there were not changes to Stumptown’s direct trade scheme. However, the restructured Stumptown website in 2016 no longer has a dedicated direct trade webpage and the new text describing direct trade is shorter, less detailed and states fewer standards (Table 3
), so communication of the scheme has changed. The two Scandinavian firms with trademarked voluntary schemes maintained the use, content and prominence of their schemes during this time.
4.1. Development of Direct Trade in the US
Here we examine the development of direct trade as a regulatory standard-setting process in the context of the US by focusing on three founding firms introduced below. We do this by examining agenda-setting, negotiation of standards, implementation, monitoring and enforcement stages individually and then mapping their regulatory approach within the governance triangle.
Intelligentsia is a quality-driven, rapidly growing firm that claims to have “pioneer[ed] the concept of direct trade” [47
]. One notable element of their direct trade scheme is their annual Extraordinary Coffee Workshop [48
], which brings together actors from across the supply chain to a producer region for five days.
Counter Culture Coffee is known for their sustainable business mission. They were already identified by the New York Times as a direct trade roaster in 2007 [23
], but it officially launched the first third-party authenticated direct trade certification scheme in May 2008 [49
]. They presented their direct trade scheme as a “quality-driving approach to sustainability” supporting “sustainability-focused business practices” and “informed purchasing decisions” [49
]. The widespread use of the term direct trade, without similar standards, led Counter Culture to abandon its direct trade certification scheme in 2015, replacing it with “Purchasing Principles” [50
Stumptown Coffee Roasters is a rapidly expanding firm characterized by its pursuit of highest quality coffee. The Stumptown interviewee explained the use of their direct trade scheme based on business, saying direct trade is what allows Stumptown to regularly obtain large quantities of high-quality coffee, but they also claim sustainability benefits result from it. Stumptown’s direct trade scheme emphasizes context, arguing for contextually applied practices and against universal standards regardless of context (ST).
4.1.1. Agenda-Setting in the US
Agenda-setting in the US context reflects the concerns of roasting firms, namely desires for quality and claims backed by data. The regulatory agenda for the development of direct trade is grounded in business practices of roasting companies working with high-quality coffee. The Stumptown interviewee described direct trade as not “simply a marketing tool… not because we want to feel good; it’s … the best way to get the best coffee” (ST). As this regulatory agenda represents the perspective of roasting firms, there is an emphasis on making good sourcing practices marketable or “how do we best use everything we’re doing to be able to sell the coffee as well” (ST). As Counter Culture put it “We originally created DT [direct trade] certification as a way to capture how we buy coffee” [50
This desire for high-quality coffee justifies the need for direct trade in the eyes of founding companies and they criticize the limitations of commodity and certified coffees. Coffee sold as a commodity is criticized for its lack of quality and lack of “transparency along the supply chain” with the direct trade scheme being presented as an “alternative method of exchange to source, procure and develop relationships in coffee” (ST). Certified coffees, Fair Trade in particular, were criticized for their lack of quality incentives: “[With Fair Trade] we realized the prices that we’re paying are not tied to quality at all, so it’s really hard to improve quality because there aren’t any incentives to do so. And that’s why we kind of moved to… make our own Direct Trade Certification.” (CCC).
This suggests that the founders of direct trade schemes prefer high-quality coffee over ethically produced certified coffee of lesser quality, which demonstrates that sustainability is not the primary driver of direct trade. “You know we can only accept a very high quality of coffee so even if something is certified as being ethically sourced or ethically produced it doesn’t always work. So that quality component becomes crucial…” (ST). However, firms do make sustainability claims as they consider sustainability to be an outcome of the direct trade scheme. The same Stumptown interviewee quoted above connects these issues of quality and sustainability directly, arguing that direct trade “contributes incredibly to sustainable practices in the long term” because in order to obtain “year after year consistent quality” the producer must have a “well managed forest” that “very carefully” maintains “shade canopy… biodiversity… clean water source.” Similarly, individual direct trade standards are presented as sustainable, as in “sustainable prices” [42
] and “sustainable social practices” [43
While direct trade is a rejection of existing certification schemes, it is still focused on the idea of credible claims. Many high-quality coffee firms tell stories of farmers and claim to pay good prices, but founding firms critiqued their inability to back up those claims with data: “We could write a lot about how we buy coffee, but it doesn’t mean much without the data to back it up” [50
]. Direct trade schemes strongly value “transparency along the supply chain” (ST).
4.1.2. Negotiation of Standards in the US
Each firm internally defines its own direct trade scheme’s standards. Initially the negotiation of standards across the market was dominated by the founding firms who had quite similar standards. However, weaker direct trade schemes are increasingly common, as more firms have developed their own direct trade schemes with weaker standards. In all cases, the initial development of and amending of each scheme’s standards were presented as a process involving only roaster firms without involvement from state or non-governmental actors. When specifically asked about the roles of these actors in the development of standards, interviewees’ responses could be summarized as “Not so much…” (ST).
Direct trade schemes’ standards are negotiated within individual firms, with the three founding firms using similar standards. For founding firms, developing direct trade standards was about “captur[ing] our coffee-buying philosophy” [50
] and was a formalization of existing good coffee sourcing practices. The standards themselves were developed among small groups of individuals that have worked together for years within a single firm, such as the coffee team or founders. These small groups still control implementation and changes to direct trade standards within each firm.
“So we have a coffee team here—it’s coffee sourcing, our head roaster, our director of coffee, our head of quality control—and we’re all working on these things day in and day out... We simply get together and adapt. We have our basic parameters of what direct trade is… we’ve had a few sincere re-evaluations and come to the conclusion that we’re going to keep doing it the way we’ve been doing it…”
Founding firms initially disagreed on whether direct trade should aim to become a more formal certification program, but now the three founders use a firm self-regulatory approach and they describe each other’s standards as “the most similar” (ST).
As many firms began using their own direct trade schemes, the discourse of what direct trade standards entail shifted to weaker definitions in the US, according to interviewees (ST, CCC, TCC). Interviewees noted a general increase in the use of the term direct trade by other firms and presented this in a negative light. The Stumptown interviewee described the “popping up” of “hundreds” of roasters in Portland that “claim to be direct trade roasters” but was dismissive of their version of direct trade in which “they might have gone on an origin visit, they might have taken a picture and met the farmer” but do it simply as a “marketing tool.” Counter Culture described the same phenomenon in which “lots of other coffee companies are using the term ‘direct trade’… [leading] to the term becoming somewhat diluted and nebulous and hence confusing [as] consumers are getting a lot of different messages” [50
4.1.3. Implementation in the US
Despite the growing popularity of the term direct trade within the US, founding firms have been quietly backing away from direct trade voluntary schemes over time. This is most noticeable with Counter Culture Coffee, who ended their Direct Trade Certification program in 2015. This trend can also be seen through web presence of direct trade schemes across firms (Table 5
) and small actions that de-emphasize the term direct trade.
Counter Culture Coffee replaced their Direct Trade Certification program with Purchasing Principles. By comparing the main tenents of their direct trade certification scheme, using their old certification scheme standards, to the current Purchasing Principles, we identified differences between them (Table 6
). Counter Culture claims the move from direct trade certification to Purchasing Principles “is not a change in our coffee-buying practices, rather it’s an evolution in the way we communicate those practices” [50
]. We found the changes constitute a regulatory shift away from an NGO and firm collaborative governance through third-party certification (Table 6
). Counter Culture claims to maintain the good sourcing practices of direct trade and to have expanded the scope of such practices to all coffee products, though the Purchasing Principles are guidelines rather than guaranteed standards with quantified minimum requirements. Rather than third-party verification, the firm releases data directly to consumers, in the form of annual transparency and sustainability reports [51
]. Counter Culture argues this represents increased transparency as more data, covering additional aspects of production and more products, are being released to consumers.
Counter Culture explained their reasoning for discontinuing their direct trade certification scheme and developing Purchasing Principles as due to general problems with certification, confusion around the term direct trade due to competing firms’ standards and a move to broaden the scope of sourcing practices and reporting [50
]. Their first argument is that certification “creates a false separation in our coffees” [50
] meaning that it divides products between certified presumed good products and non-certified presumed bad products, which limits visibility of “continuous improvement” (CCC). Confusion around the term direct trade is a problem that comes from negotiation and enforcement stages, yet led to changes in implementation. “[Direct trade] can be greenwashing for sure and that’s why we’re trying to—I don’t want to say step away from the term direct trade because that still describes what we’re trying to do, but not to try to codify it, and own it anymore…” (CCC).
Counter Culture no longer puts a direct trade logo on their packaging (Table 3
), but the interviewee stated when prompted that all their coffees could be considered direct trade because they follow purchasing principles. Purchasing Principles is the term Counter Culture now uses to market their sourcing practices.
Stumptown has quietly backed away from describing itself as direct trade. According to the interviewee, Stumptown maintained direct trade practices, but changes to their website de-emphasize the term. Stumptown no longer has a webpage dedicated to explaining direct trade as they had in 2015 [41
]; instead there is only a short description of direct trade buried within the sourcing sub-section of their webpage about the company [45
]. In 2015, direct trade was presented as representing specific pillars related to sourcing practices, whereas now it is presented more broadly as “We shoot for sustainability, and not just in the environmental sense” [45
]. When purchasing coffee online, consumers are no longer able to filter results for direct trade coffees [53
] as they were previously [54
]. Individual products are still described as direct trade, but Stumptown’s direct trade logo is no longer on product webpages [55
4.1.4. Monitoring in the US
Monitoring practices in the US context have changed since 2015, most notably within Counter Culture, who ended their third-party certification, and now all founding firms self-report and release data to consumers. In 2015 Counter Culture Coffee was the only founding firm who collaborated with a non-governmental organization in monitoring their compliance with standards. This collaboration meant that Counter Culture represented a different regulatory approach than the other two US firms (Figure 3
). By ending their third-party certification program, they shifted their regulatory approach to more strongly firm-led. All founding firms now monitor standard compliance internally and self-report compliance. Counter Culture Coffee argued in ending their direct trade certification scheme that monitoring should be more about data than verification (Table 6
). In response to perceived co-optation, founding firms have emphasized backing up claims with data. Counter Culture claims that their move away from third-party verification is actually a move towards greater transparency. Data that in 2015 were released only about direct trade coffees is now provided for every coffee product and they now report on environmental conditions [52
4.1.5. Enforcement in the US
The US context demonstrates a lack of control over who can use the term direct trade and enforce common standards as there is no penalty for firms who misuse the term. Founding firms lack the power to enforce their own direct trade standards on other firms or prevent other firms from misusing the term. “You can call anything direct trade and you’re not going to get in trouble by anyone, in the legal sense” (CCC). Founding companies have also been reluctant to shame firms that they feel are misusing the term. “As a company [we] are not going to call out other companies and be like… ‘you’re saying direct trade and it doesn’t mean anything, it’s an empty statement’, which I personally would love to say” (CCC).
This use of the term direct trade by firms with weaker standards is a form of co-optation. “We [Stumptown] also call ourselves direct trade and I think the label has been co-opted by many people who are simply trying to greenwash” resulting in “very fair negative attention” which frustrated founding firms because “at the same time some really substantial and really positive work that’s been done behind that name [direct trade]” (ST). Co-optation in this situation means firms are calling themselves direct trade, yet using weaker standards than are the founding firms. While Counter Culture uses milder language their argument remains the same. Founding firms are concerned that the firms that developed weak direct trade schemes are allowed to continue to call themselves direct trade; there is nothing in the US context to stop other firms from misusing the term or to force adoption of stronger schemes.
Interviewees saw co-optation as enabled by the nature of direct trade and the “lack” of a “universal standard” (ST). The Stumptown interviewee believed factions within direct trade result from the conflicted nature of direct trade as “a sourcing model or… a model for merchandizing your coffee” noting that “merging those two” is “complicated” (ST). Counter Culture further adds that the misuse of direct trade is possible because “the definition of direct trade has never been codified in an international standard…” [50
4.1.6. Mapping US Regulatory Structures
Based on the actors involved through these stages (Table 4
), we mapped the regulatory standard-setting processes of these three firms’ voluntary schemes within the governance triangle (Figure 3
). We argue that the US regulatory process now represents a strongly industry and firm self-regulatory structure. Counter Culture Direct Trade Certification used to collaborate with a non-governmental organization through third-party certification, but they now have an internally monitored scheme.
4.2. Development of Direct Trade in Scandinavia
We find that within the Scandinavian context, the use and content of direct trade voluntary schemes has remained stable for trademark-owning firms. Here, we briefly introduce the Scandinavian firms’ history with direct trade, examine the development of their direct trade schemes through regulatory standard-setting’s five stages, and then categorize the scheme’s regulatory approaches.
The Coffee Collective owners recognized both the promise and problems of US-based direct trade. They asked for permission to use direct trade from Intelligentsia, which was granted on the condition of protecting the “integrity” of the term (TCC). The interviewee presented obtaining the direct trade trademark in Denmark as protecting direct trade’s integrity from the problem of many direct trade definitions by different US roasters already developing in 2007. Any firm using the term direct trade in Denmark must be approved by The Coffee Collective; the Coffee Collective authenticates the compliance of other firms with their own trademarked direct trade scheme (TCC). Firms not verified or not in compliance with the Coffee Collective’s scheme are sent cease and desist letters (TCC).
Johan & Nyström was prevented from selling coffee marketed as direct trade in Denmark by the Coffee Collective; Johan & Nyström responded by applying for the trademark within Sweden (JN). This was problematic for them because they had seen direct trade schemes as open source (JN). According to the interviewee, Johan & Nyström are open to other firms using direct trade within Sweden, but they are not aware of any firms doing so and there is no authentication system for other firms in place as there is in Denmark (JN).
Koppi is a small, single-café independent roaster. In 2015 they called all of their coffee direct trade and described the sourcing policy entailed by that, but did not use a logo on packaging. Their scheme was informal, briefly describing their sourcing policy. They maintained the exact policy, but changed the name to “sustainable coffee trading” by the end of 2015 [36
4.2.1. Agenda-Setting in Scandinavia
Agenda-setting for Scandinavian direct trade reflects the problems and opportunities of roasting firms. The desire for quality coffee is the primary motivation behind direct trade: “we wanted to form a transparent trade model that would guarantee us the best quality of produce, and guarantee the producers payment that meets that better quality” [46
]. The problem as they saw it was “that coffee is normally being traded as a commodity,” (JN) and within commodity markets “nobody really cares first and foremost about quality” (JN). They pointed out “limitations” of Fair Trade in obtaining high-quality specialty coffee (TCC). Simultaneously, the specialty coffee market was critiqued for its “hollow communication” (TCC) that offered stories of farmers and claimed to pay good prices but offered no guarantees or data to back up those claims.
Scandinavian firms assert that direct trade schemes contribute to sustainability, although quality is the top priority. In describing why Johan & Nyström decided to work with direct trade, the interviewee talked “first and foremost about quality” and “secondly the sustainable aspects” related to producers. The interviewee also argued that the only way to consistently produce high-quality (good-tasting) coffee is in an “environmentally friendly” way, thus arguing high-quality direct trade coffee implies good environmental practices.
4.2.2. Negotiation of Standards in Scandinavia
Standards for Scandinavian direct trade were defined and continue to be negotiated internally within individual firms. The Coffee Collective’s standards were developed by the co-founders of the firm after requesting and receiving permission to use the term direct trade from Intelligentsia (TCC). The Johan & Nyström interviewee described the standard development process as “We’ve always been doing what we believe and just learning by heart.”
4.2.3. Implementation in Scandinavia
For trademark-owning firms, the usage of the direct trade schemes has remained stable between 2015 and 2016. The Coffee Collective interviewee discussed how clear and simple standards, which have not changed, allow consumers to recognize “what it [direct trade] signifies” (TCC). Direct trade communicates sourcing practices in a marketable form as it enables communication “on different levels of complexity” for consumers (TCC). This consistent usage of direct trade terminology and practice demonstrates how Scandinavian firms have maintained trademarked voluntary direct trade schemes that make sourcing practices marketable.
Koppi ceased to use the term direct trade, but maintains the same sourcing practices. In early 2015 Koppi used the term direct trade to describe their sourcing practices and coffee, but by late 2015 they had stopped using the term direct trade. This change is shown on their homepage where the header “Direct Trade Coffee” became “Sustainable Coffee Trading” [36
] followed by the exact same text describing their sourcing practices. This demonstrates firms’ abilities to change their marketing strategy and thus their regulatory strategy by changing terminology, meanwhile maintaining the practices underlying it.
4.2.4. Monitoring in Scandinavia
Monitoring compliance is done internally within firms, although firms are increasingly reporting on their monitoring to consumers and other verification models are being considered. The Coffee Collective direct trade products have a high degree of transparency throughout the value chain. Each Coffee Collective direct trade product is traceable to the producer level, origin visits are reported within the firm’s blog and during the time of our study they decided to begin listing the price paid to producer on the packaging of each product as well as the product webpage (TCC), which provides data backing up their price standard.
Johan & Nyström’s reporting on fulfillment of standards is less systematic. Johan & Nyström direct trade products are traceable to a producer level, but precise numbers for price paid to producers, quality (cupping) score, date of latest origin visit and farm level sustainability policies are not available for all direct trade products. The interviewee recognized a need to systematize reporting and stated that there are active discussions about beginning an NGO-verified direct trade certification, with both processes modeled after Counter Culture Coffee (JN). The interviewee was not aware at the time that Counter Culture Coffee had abandoned their certification.
4.2.5. Enforcement in Scandinavia
The Coffee Collective and Johan & Nyström trademarked the term “direct trade” within their respective countries, giving them the power to enforce their own direct trade scheme definitions. Trademark ownership allows firms to enforce their own direct trade schemes via legal control over how the term may be used by other firms. The Coffee Collective interviewee stated they did this in order to protect the term direct trade so that consumers would know “what’s meant by it [direct trade]” (TCC). The Coffee Collective interviewee contrasted their level of control over direct trade usage with the situation in the US where direct trade has “a longstanding problem” of having “different meanings for every company” (TCC). Similarly, the Johan & Nyström interviewee stated the “big downside” of direct trade is that it “does not have any controlling agencies” and is therefore based on “how you choose to believe in the company that you buy from” (JN).
Firms within Sweden and Denmark that do not own the trademark have either had to conform to the trademark owner’s standards or cease to use the term direct trade. Within Denmark, firms can ask The Coffee Collective for permission to use the term direct trade. Firms will only receive permission if they agree to regularly submit documentation to The Coffee Collective to verify that they fulfill The Coffee Collective’s direct trade standards.
4.2.6. Mapping Scandinavian Regulatory Structures
Based on the actors involved through these stages, we mapped these Scandinavian schemes within the governance triangle (Figure 4
). We argue that, for the trademark-owning firms, the regulatory standard-setting process of their direct trade schemes is on the boundary between firm self-regulation and firm-state collaborative governance. While the regulatory process was led by firms, firms strategically brought in state actors who control decision-making power at particular stages of the regulatory standard-setting process. Firms did this in order to pursue a strategy of trademarking.
Trademarking in this Scandinavian context was done in a particularly powerful way. Scandinavian firms trademarked the broad concept of direct trade, rather than a narrow firm- or initiative-specific trademark. In other words, The Coffee Collective broadly trademarked “direct trade” and not the narrower “The Coffee Collective direct trade.” This broad trademarking differs from narrow trademarking seen in the US context, such as Counter Culture Direct Trade Certification, which is trademarked but narrowly refers to the scheme and not to all instances of direct trade. The Scandinavian broad trademarking strategy also differs from the use of trademarks seen in firm self-regulatory schemes like the Sustainable Forestry Initiative [26
] (Figure 2
). The difference between narrow and broad trademarks is the difference between narrowly trademarking the “Sustainable Forestry Initiative” and broadly trademarking the term “sustainable forestry” itself.
Trademarking and, specifically, broad trademarks played a major role in the development of direct trade as a voluntary scheme in Scandinavia, particularly within the stages of standards negotiation and enforcement.
Broad trademarks enable greater control by trademark-owning firms through enforcement in a wider array of cases. Through a broad direct trade trademark, trademark-owning firms may control the usage of the term direct trade within their country regardless of whether use is related to their own trademarked scheme, the development of a different direct trade scheme or even use of the term direct trade as a concept. By contrast, narrow trademarks would only enable control over the usage of their individual voluntary scheme. This is a powerful position for trademark-owning firms as direct trade was already a popular term in the coffee industry internationally. Trademarks are a powerful regulatory tool of the state and were strategically used by Scandinavian firms in the development of their direct trade schemes.
We consider this regulatory approach to be more than firm self-regulation because of the important decision-making power held by state actors. Trademarking is not a regulatory strategy a firm could pursue without some level of direct involvement of state actors and broad trademarking greatly enhances the importance of state actor involvement. State actors directly participated through approving trademark applications. These decisions of state actors to grant broad direct trade trademarks enable trademark-owning firms to enforce their definitions, again mediated through state actors who ultimately decide whether infringement occurred and determine penalties for infringement.
The Scandinavian direct trade schemes were positioned relative to other schemes in the regulatory triangle in a border area between firm and state collaborative governance and firm self-regulation. State actor direct participation and decision-making power was important in the development of the Scandinavian schemes, but was not seen in the US schemes, which now clearly represent firm self-regulatory schemes. On the other hand, firm and state collaborative governance schemes such as the UN Global Compact Caring for Climate [26
] (Figure 2
) demonstrate a more active role for state actors than the Scandinavian schemes. This border area between firm self-regulation and firm and state collaborative governance where we position the Scandinavian trademarked schemes is an area that tends to be empty of schemes in classifications [26
]. Due to the direct and important participation of both firm and state actors in broad trademark schemes and the comparison to other schemes positioned within the triangle, we determined that the Scandinavian schemes should be positioned in this border area between firm self-regulation and state and firm collaborative governance.