Cosmetics companies must prepare to meet and go beyond legal requirements on ABS, says María Julia Oliva
In 2010 countries adopted new international rules under the Nagoya Protocol that address the use of biodiversity in research and development. Although it will be a number of years before this set of international rules is put into practice by national governments, companies would be wise to start preparing in advance. Moreover a company’s efforts should not focus only on meeting legal requirements – it should aim to go beyond them.
There is significant and growing scrutiny from both governments and consumers on how industry accesses, uses and shares the benefits of biodiversity, beyond any existing or prospective legal obligations. Consistently applying ethical principles when using biodiversity will help distinguish companies from their competition and minimise reputational risks from biopiracy accusations.
Permissions & benefits
The Nagoya Protocol is an international agreement under the United Nation’s Convention on Biological Diversity (CBD). Its aim is to help implement the CBD Access and Benefit Sharing (ABS) principles. These principles were developed to ensure that R&D on biodiversity-based products is conducted in a fair and equitable way. The CBD recognises the rights of countries and communities over their resources and knowledge, and ABS principles require that R&D on these resources and knowledge take place with their approval. In addition, ABS principles require the sharing of benefits, both monetary and non-monetary, that result from R&D in a way that provides incentives for local conservation and sustainable use.
Under the CBD, ABS focuses on access and benefits linked to the genetic resources found in biodiversity. However, the meaning of the term ‘genetic resources’ – and consequently when ABS is legally applicable – has never been clear. Though there is some clarification in the Nagoya Protocol, experts already differ in their interpretations. Ultimately the precise scope of ABS will differ from case to case, depending on how each country decides to implement the Protocol. In ABS legislation, a diverse range of R&D related activities is covered. As countries put laws in place to implement the Nagoya Protocol, the R&D activities covered by ABS will continue to vary.
With this uncertainty in mind, companies are well advised to understand the rationale of ABS in the context of the CBD and apply ABS principles, as may be relevant, in all sourcing of natural ingredients. Indeed it is widely recognised by experts and policy makers that the spirit of the CBD, with its focus on prior informed consent and benefit sharing, should apply more broadly to biodiversity-based activities. After all, ABS principles are based on the idea of asking permission to access a resource and agreeing to share any benefits that may arise from it; a fair and equitable way of trading regardless of the nature of the resource. Moreover, given the reliance of companies on biodiversity, there is growing interest in ensuring that there are incentives for sustainable use flowing to the countries and communities charged with guarding these resources.
Ethics & legalities
Applying principles of ethical trade more widely will also distinguish a company from its competitors in the eyes of consumers. Respecting regulation is expected from all industry players large and small, so legal compliance can never be used to set a company apart from its competitors. In addition, it is only by consistently applying ABS principles, even when there are no legal requirements yet in place, that reputational risks stemming from allegations of biopiracy, which will continue alongside scrutiny on implementation of the Nagoya Protocol, will be minimised or avoided.
Africa is rich in biodiversity yet the poorest continent
Companies applying ABS principles will also be uniquely placed to quickly address emerging legal requirements. Pioneering companies are already working to apply principles of prior informed consent and equitable benefit sharing throughout their natural ingredient supply chains. These companies will also be in a position to actively engage in ongoing processes for the development of policies and rules on ABS at a national level, contributing to more practical and effective results.
While pioneering companies have an important role to play in changing the way industry uses biodiversity as a resource, governments must also do their bit. As it stands, navigating existing national laws on ABS is often difficult. A number of countries, though leaders in their early adoption of ABS concepts, are having trouble putting into practice rules that are unclear and too complex.
Brazil, for example, was one of the first countries to establish ABS legislation. Created in response to public outcry over a possible biopiracy case, Brazil took a defensive approach that resulted in an impractical system. Critics say Brazil’s system is very difficult to respect for reasons including lack of clarity on traditional knowledge and long delays between requesting a permit and receiving authorisation. In the last year a number of companies, including those that have made attempts to respect legal requirements, have received fines for operating outside Brazilian regulation.
Similar criticisms have been levelled at countries such as South Africa and Peru, where detailed laws have not resulted in practicable or legally certain systems. Numerous other countries have general references to ABS in their legislation or draft rules on ABS that have not entered into force or been applied. Others lack a contact person or organisation on ABS.
The consequences of an unworkable regulatory system are wider than fines or allegations of biopiracy for a handful of companies. There is a danger that companies, in particular those concerned by the ethical trade in biodiversity, may turn towards countries with less stringent regulation due to fears over reputational risks. No access equals no research, which means no benefits to share and no incentives for conservation and sustainable use.
The objective of ABS is to give developing countries a means to profit from their resources, in turn providing incentives for conservation and sustainable use. Although finding a system that both incentivises private sector research and ensures equitable benefit sharing is challenging, a number of countries have had some success with developing legislation. Namibia has developed a national pipeline approach to proactively creating sustainable economic opportunities based on the harvest and trade of natural products. The approach has brought a number of new ingredients to the international cosmetics markets including ximenia and marula oil.
Such an approach is critical because countries rich in biodiversity are often still struggling with economic development. Much of Africa is very rich in biodiversity, yet it is the poorest continent on the planet, suffering from diverse economic and social problems. The rich biodiversity found in Africa presents significant innovation opportunities for companies looking to work with natural ingredients. If ethical sourcing practices are applied throughout the supply chain, this investment in biodiversity can present significant opportunities to the local population as well.
The important role that the ethical sourcing of biodiversity can play in poverty alleviation and conservation is becoming increasingly clear. But in order for this to be successful both companies and governments need to pioneer a new way of trading in natural products. All sourcing should aim to promote the conservation of biodiversity, respect traditional knowledge and assure the equitable sharing of benefits right along the supply chain. The ABS principles are increasingly relevant for companies working with biodiversity in the context of but also well beyond evolving legal obligations.
Basic principles of ABS
ABS principles are based on two notions:
• Any access or use of genetic resources must take place with the approval, or prior informed consent, of the country providing the resources
• The use of traditional knowledge is equally subject to ABS principles and must take place with the approval of indigenous and local communities, as well as the equitable sharing of benefits.