Setting Standards:
A Strategy for Europe
As emerging economies seek to influence global
standards, Europe’s role as a shaper becomes
a priority. This paper outlines the findings of a joint
study by A.T. Kearney and the European Round Table
of Industrialists.
Setting Standards: A Strategy for Europe
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Europe—a Shaper, not a Follower, of Global Standards
Standards have strategic relevance for the competitiveness of
companies and economies. They enable innovation and are powerful
tools to improve productivity through interchangeability and reduced
variety, thereby contributing to the cost-effective launch of new
products and services that benefit industry and consumers.
Standards underpin a well-functioning single market, with implications
for product and business development, manufacturing, and market
access. The increased political and regulatory focus on standardization
is partially responsible for the development of safer and higher-quality products and the ability
to meet environmental challenges.
Emerging economies are increasingly adopting a strategic and international approach to
standards, in a bid to influence and set global standards as close as possible to their own
technological developments. The EU, therefore, must treat standards as a crucial element in
their industrial policy strategy, to ensure that Europe remains a shaper of global standards and
not a follower—which is necessary to secure global market access.
With this in mind, the European Round Table of Industrialists (ERT) launched a joint study with
A.T. Kearney to provide a strategic perspective on standards for use by companies and industry
sectors that are participating in public policy dialogues and working with standard setters at the
national, EU, and global levels.
This paper outlines our findings and offers six recommendations.
Peter Brabeck-Letmathe
Chairman, ERT Foreign Economic Relations Working Group
Chairman, Nestlé
Setting Standards: A Strategy for Europe
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Standards are the rules, guidelines, and definitions that describe repeatable ways of doing
things. Companies either voluntarily agree on standards or they are imposed upon them by
governments on a national or global level. Standards are a crucial element in the EU’s industrial
strategy as Europe seeks to remain a shaper of global standards rather than a follower.
The European Round Table of Industrialists worked with A.T. Kearney to study the issue
of developing and implementing standards. Our findings and six recommendations for
establishing standards in European industry are outlined in this paper.
Standardization processes must remain
dynamic, unhindered by competition
laws or other barriers.
1. Establish Performance Targets to Foster Innovation
Standards spread collective knowledge, bringing together industry players in a working
environment of sharing and collaboration. The use of standardized parts and business
processes can reduce early investment costs and risks, and provide a platform from which
industries can innovate. Standards can either foster innovation, by defining performance
targets and key performance indicators (KPIs), or limit innovation by defining narrow, specific
solutions as part of product design.
Because standards can foster or limit innovation, industry experts must be involved from
the point when standards are defined through to formulation. From their knowledge of
the industry, these experts are most qualified to establish realistic performance targets and
the right conditions for innovation, and to better gauge the impact of standards on third
parties. For example, industry experts can ascertain how the traceability requirement will
impact European utilities in terms of additional costs, or how it will impede Canadian fuel
producers’ EU market access.
Case Study: Fuel Quality Directive
The objectives of the Fuel Quality Directive and its supporting standards have changed
over time, in line with progress on vehicle pollutants and the evolution of the EU’s CO2
emission reduction strategy. The EU’s Fuel Quality Directive was originally designed to
ensure compatibility of motor vehicle fuels in Europe during the 1970s. In 1988, the
Directive was amended to reduce sulfur and eliminate lead from fuels as an environmental
imperative. The Directive’s reach was expanded again in 2009 with new sustainability
criteria, including minimum CO2 emission reduction targets along the entire fuel value
chain and the incorporation of biofuel.
Setting Standards: A Strategy for Europe
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2. Consult with Experts
Regulatory standards are most effective when focused on essential requirements such as
consumer safety and environmental protection. Involving technical and industrial experts,
even when standards are initiated by governments, can help build these standards on solid
foundations, ensuring a reasonable timeline for application and limiting compliance costs
by taking advantage of existing capabilities and technology.
Case Study: Certification Scheme of Waste Containing Metals
The European metal industry is calling for a certification scheme of pre-processors,
refiners, and recyclers of waste and secondary raw materials. Metals are priority raw
materials for secondary use, and Europe has a certification scheme for waste containing
metals currently in process.
The overall objective is to ensure a worldwide level playing field for secondary raw materials
processing, specifically non-ferrous metals. Certification will also help reduce the EU’s
dependence on raw materials imports, curb energy consumption, and minimize the
environmental impact.
Stakeholders representing both the whole supply chain and non-governmental
organizations (NGOs) have initiated a standardization process, and are planning
to implement a first standard within three years. Because the standard addresses
environmental concerns, they prefer a regulatory approach to avoid any competition
bias during the creation of the standard.
Technical experts should drive the formulation of standards—even when the target standard
is a public regulation. Regulatory standards should be based on the best scientific knowledge
available, the proportional level of risk, and long-term cost effectiveness. Experts understand
the complexity of fragmented value chains within their industries and the issues across the
many players and geographic regions.
Because standards can foster or limit
innovation, industry experts must be
involved from the point when standards
are defined.
Setting Standards: A Strategy for Europe
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3. Coordinate Industry Players
It is widely acknowledged that market-driven, consensus-based standards are the most efficient.
Yet aligning stakes and expectations among industry players is often difficult, as players’
organizations are often at different levels of maturity. Here, European standardization bodies can
play a larger role in facilitating standard-setting along the value chain and across industries.
Case Study: Near Field Communication Standard
The near field communication (NFC) standard aims to improve mobile payment services
in Europe by defining the tools to develop a subscriber identity module (SIM)-based NFC
ecosystem. Initiated in 2011, the standard is being developed in a cross-industry
approach, involving more than 40 industry players, primarily mobile network operators
and handset manufacturers. This approach allows for broader competition within
a single standard, unlike the quasi-monopolistic market structures often generated by
proprietary platforms. Broader stakeholder involvement is also important to achieving
critical mass when launching a new network service, such as NFC mobile wallets.
Because telecom is a fast-paced, competitive industry, NFC standardization will have
to be timely to avoid delays in getting the product to market. The European Commission
has a responsibility to move the process along quickly, facilitating and promoting
strategic coordination across industries.
Standardization processes must remain dynamic, unhindered by competition laws or other
barriers. Authorities should understand the need for cooperation among competitors, particularly
in industries requiring interoperability. Applying flexible antitrust rules will ensure a desirable
time-to-market.
4. Balance Speed and Consensus
Setting standards requires a balance between speed and consensus. Standards must be put in
place quickly in the face of accelerating technological change and market competition, and they
must be built on a foundation of consensus to broadly address the requirements of all players.
The length of the standard-setting process is a concern in technology-driven sectors, where
a fast-track standardization process is necessary for companies to stay globally competitive. In
other industries, consensus ensures the successful adoption and application of quality standards.
Case Study: Common Code for the Coffee Community
The coffee value chain is one of the most complex in the food and beverage industry.
Industry leaders joined forces to develop the Common Code for the Coffee Community
(4C) to improve the socioeconomic conditions of small coffee farmers around the world
and strengthen the entire coffee value chain.
The 4C Association—about 250 members including coffee farmers, traders, roasters,
retailers, non-governmental organizations, trade unions, and consumer associations—
developed a global certification system. The 4C standard, adopted in 2006, covers about
4 percent of global coffee production.
Setting Standards: A Strategy for Europe
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The association attributes its success in developing and applying the 4C standard to the
involvement and consensus of all stakeholders along the value chain. This allowed them,
for example, to map the requirements and training needs for small-scale coffee producers.
Consensus also enabled the food and beverage industry to reduce the cost of growing coffee,
as well as improve product quality and operational flow along the value chain.
Standards must be built on a foundation
of consensus to broadly address the
requirements of all players.
5. Encourage a Global Approach
Geographic scope is increasingly becoming a strategic component in the standard-setting
process. European levels are rarely the most relevant for standard-setting, but are often perceived
as stepping stones toward a global standard. It is no secret that European companies that adopt
and participate in setting global standards increase their market access to other countries. With
this in mind, member states, participating within international standardization bodies, should
better coordinate and align their work.
Case Study: E-Mobility
Smart electricity grids, new forms of multimodal transport, and new concepts for living
and working can help cities achieve their energy-efficiency goals. But these new services
all depend on integrating information and communications technology into the energy
and transportation infrastructure.
An e-mobility standard is necessary to deploy electric vehicles worldwide.
The standard-setting process for e-mobility involves stakeholders across value chains and
industries. For example, standardizing vehicle chargers requires coordination along the value
chain, bringing in hardware providers for connectors, software providers for communication,
and electricity networks. Developing safety, quality, and performance standards requires
coordination among industries, working with car manufacturers, suppliers, utilities, and
energy storage companies.
Europe can protect its global competitiveness by strengthening its international alliances.
The ERT suggests that the Commission conduct a study on the positioning of Europe’s main
competitors on the global standard-setting scene—China, India, Russia, and the United
States—in order to define Europe’s position and identify potential alliances.
Another important factor in securing Europe’s global competitiveness is synchronizing
European and American standards, doing so early in the process. This will require political
leadership to coordinate industries, public authorities, and regional standard-setting bodies.
Setting Standards: A Strategy for Europe
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6. Encourage SME Participation
Despite their importance to the European economy, few small and medium-sized enterprises
(SMEs) are actively involved in setting standards. This is primarily because they often lack the
necessary resources and expertise to be involved, and because many SMEs do not believe they
will reap significant benefits from standardization.
It is important for SMEs to be part of the standard-setting and implementation process.
Standards should be applied consistently to all companies regardless of size.
Fostering Growth and Prosperity
The advantages to standardization are clear and profound, as are the opportunities for
innovation and increased productivity. But for standards to be effective, they must be
conceived, formulated, and implemented correctly, with a scientific and technical basis,
while remaining cost-effective and wide-reaching. These six steps offer a look at how Europe
can take a strategic and international approach to standardization, and in the process, foster
an environment of growth and prosperity.
Authors
The ERT Foreign Economic Relations Working Group
Coauthor of the joint study and the recommendations in this paper, the ERT Foreign Economic
Relations Working Group is committed to strengthening and promoting open international flows
of trade and investment as a means of supporting European companies’ competitiveness in a global
economy and achieving balanced global growth.
Xavier Mesnard, partner, A.T. Kearney
[email protected]
David Weill, partner, A.T. Kearney
[email protected]
Charles Perrard, principal, A.T. Kearney
[email protected]
Setting Standards: A Strategy for Europe
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