What is a ‘smart mix’?
As sustainability legislation moves from design to implementation, how regulatory and voluntary approaches interact remains an important consideration. A ‘smart mix’ describes the different ways these approaches can interact, influence and complement one another to support effective sustainability action.
A changing sustainability landscape
For decades, voluntary sustainability systems have helped businesses address pressing social and environmental challenges, particularly where regulation was weak or absent. They emerged in response to growing expectations from consumers, NGOs and civil society for stronger social and environmental standards and greater business accountability.
As sustainability challenges have become more urgent and interconnected – spanning issues such as human rights, deforestation, climate resilience and living wages, sustainability systems have evolved too. Many have expanded their scope and developed new tools and approaches, while supporting progress through capacity building, collaboration, stakeholder engagement and continuous improvement.
Today, governments are taking a more active role. New legislation in the EU and elsewhere is placing greater responsibility on businesses for environmental and social impacts across their supply chains.
This shift has changed the role of voluntary action and created new questions about how regulatory and voluntary approaches interact.
What do we mean by a ‘smart mix’?
There is no single model for a smart mix. The term can describe many different relationships between regulatory and voluntary measures.
Regulation might recognise or reference voluntary initiatives, or governments may create enabling conditions that support their uptake. These approaches can inform regulation, while voluntary systems may draw on existing policies to provide practical means of implementation or verification.
Voluntary initiatives can also influence market practices and expectations, which in turn can shape how businesses and governments respond.
What makes the mix ‘smart’ is therefore not simply the presence of both regulation and voluntary action, but how different approaches interact and how their respective roles and strengths can contribute to sustainability outcomes.
As sustainability legislation shifts towards implementation, policymakers, competent authorities and businesses are looking for practical ways to put new requirements into practice - from supporting meaningful environmental and social outcomes, to enabling effective enforcement and compliance.
Businesses need to translate new requirements into practice across complex global supply chains, often while navigating multiple regulatory frameworks. Competent authorities need practical approaches and tools to support implementation and enforcement, while policymakers are considering how to make frameworks effective, proportionate and interoperable, whilst ensuring that compliance translates into meaningful action rather than becoming a tick-box exercise.
Across these different needs, there is a growing interest in building on existing implementation tools and expertise, avoiding unnecessary duplication and making use of approaches that are already working.
The interplay between regulatory and voluntary approaches can help bridge the gap between policy and practice, support more effective implementation and strengthen the contribution of both approaches to meaningful sustainability outcomes.
Sustainability systems have decades of experience translating sustainability goals into practical action across complex supply chains.
Sustainability systems can bring expertise and infrastructure including standards and implementation frameworks, traceability and data systems, assurance and verification, stakeholder engagement and grievance mechanisms, capacity building and mechanisms for continuous improvement.
At the same time, voluntary systems can continue to innovate, raise expectations and address issues that may sit beyond minimum legal requirements.
Importantly, sustainability systems do not replace government oversight or businesses’ legal responsibilities. The opportunity is to understand where existing approaches can add value and how they can interact effectively with regulation.
There is no one-size-fits-all approach. The relationship between voluntary and regulatory measures will vary depending on the issue, sector, market and regulatory context.
ISEAL’s Innovations Fund projects offer practical examples of how sustainability systems can complement emerging regulation. GoodWeave has used community-based monitoring to strengthen approaches to preventing and remediating child labour, while Rainforest Alliance and Fairtrade International have explored aligning worker-led approaches to human rights due diligence with regulations and guidance, ranging from the EU CSDDD to OECD Due Diligence Guidance.
The Sustainable Biomass Platform has led collaboration between sustainability systems to share risk data and reduce duplication in risk assessment in response to commodities legislation, and Global Infrastructure Basel Foundation has worked to align with financial disclosure regulations to combat greenwashing in sustainable investment.
These initiatives showcase some of the ways credible sustainability systems can empower business action on sustainability, demonstrating the value of the voluntary side of the smart mix.
Understanding what works also means examining the potential tensions and limitations – including questions around credibility, accountability, interoperability and the appropriate division of responsibilities between governments, businesses and voluntary initiatives.
Explore the conversation
As the regulatory landscape evolves, ISEAL is exploring what effective interaction between regulatory and voluntary approaches looks like in practice.
Through research and engagement with policymakers, businesses, sustainability systems and other stakeholders, we are examining where greater alignment can add value, where tensions need to be addressed and what can be learned from emerging approaches across different sectors and jurisdictions.