Leading commodity sustainability schemes have come under attack recently from NGOs. They risk playing into the hands of those who want goods to be traded solely on the basis of price, with no value given to sustainable methods of production.
Since the launch of the first sustainability schemes for crops and timber in the nineties, they have gained market share for agricultural commodities produced whilst still protecting the environment, biodiversity and people’s rights. FSC (Forest Stewardship Council) certified forests, including natural forests and plantations, produced some 16 per cent of global timber by volume in 2016. RSPO (Roundtable on Sustainable Palm Oil) claims that 21 per cent of the global supply of palm oil is now certified as responsible and sustainable.
A new report from Changing Markets Foundation ‘The false promise of certification’ attacks sustainability schemes in the palm oil, fishing and clothing industries, calling for ‘the abolition of weaker schemes’ and encouraging companies, governments and NGOs to ‘look beyond certification’. This follows on from recent criticism of FSC by one of its founder members. None of these critics has yet proposed a concrete alternative to an independent, multi-stakeholder, externally audited certification scheme for assuring the transfer of sustainably produced material along a supply chain. Now is a good time to review what value a sustainability scheme can bring.
First of all, let's look at the main alternative, which is technology to track commodities from sustainable production through processing to the end user. There have undoubtedly been advances in tracking software and hardware, including satellite sensing of land use change, mobile phone apps and private block chains. But implementation requires relatively fixed supply chains whose members are willing to cooperate. Consumers also have to trust the participants to develop and guarantee their own standard of sustainability.
While all sustainability schemes should improve in response to constructive criticism, attacks like these will reduce confidence in sustainability schemes generally, and may actually push them to the margins. But what would be the consequences if this were to happen? To answer this question we need to look at the evolution of markets and schemes themselves.
Implementing a sustainability scheme is expensive. There are direct costs for auditing and a payment to the organisers. Internal administration adds staff costs. To offset the charges, producers ask for a small price premium for certified material. So different types of commodities exist in the market distinguished by their sustainability credentials. The premium, which can be as much as 5-10%, depends not only on the degree of segregation of the sustainable material from the conventional material, but also on the actual sustainability standard to which it is certified.
The widespread availability of certified commodities has led consumers and NGOs to pressurise big brands to buy more sustainably certified produce. However, in practice there is often an oversupply. RSPO certified palm oil, for example, is sometimes sold as uncertified as there are not enough buyers willing to pay the premium.
Criticism of the schemes isn’t new and it has prompted positive change. There is a balance to strike between including enough producers to make the scheme relevant and making sure that the scheme’s requirements are both ambitious and strict enough to exclude bad actors.
Schemes have been forced to suspend companies who are found not to conform to their Standards. So, while the schemes themselves are working to improve, who benefits from abolishing or marginalising them? Well reputable producers and smallholder farmers who abide by the rules won’t benefit, as they risk losing access to those international customers demanding high standards. The environment is unlikely to benefit from the loss of biodiversity and forest protection measures. That leaves the consumers who wish to buy more sustainable products and the companies and brand owners that sell to them.
If the Schemes are marginalised then there will be much less certified material on the market and logistically it will be difficult to procure in sufficient quantities in many parts of the world. The choice of buying sustainably certified material for large-scale operations then effectively disappears. Many companies have recognised the value sustainable sourcing brings to their products. Others, however, don’t see the added value, just the higher price. So the companies who want to act in an environmentally responsible manner would lose a key way of sourcing sustainable commodities. Consumers will have fewer independent sustainability labels to guide them.
So NGOs and others who criticise sustainability schemes are doing a disservice to consumers and responsible companies who may, or may not know the price of everything, but do know the valuable of protecting the environment.
Published: 4 June 18
