The first commodity sustainability scheme, FSC (Forest Stewardship Council), was born thirty years ago in 1994 to protect the world’s forests from destruction. It was the model for many other commodity schemes that came later, covering palm oil, soy and sugar, to name but a few. Since then, as climate change and environmental damage have risen up the news agenda, the public has demanded that more food, personal care products and other consumer goods should be produced responsibly, which has prompted the growth of sustainability schemes in a range of sectors. But just as their use has increased, so they have been blamed for allowing fraud, greenwashing and even impeding world trade rules. But are there any alternatives to the now well-established model of an independent certification scheme with strict traceability rules and third party auditing of raw materials entering the supply chain?
These schemes are largely voluntary. They are disliked by some international brands that don’t want to pay farmers to produce more sustainably, traders who are worried that they will lose suppliers, and countries who want the freedom to expand their economy without restrictions. But they are popular with concerned members of the public.
The European Commission, an early supporter of sustainability schemes, brought them into the Renewable Energy Directive in 2011, to provide a way of ensuring that bioenergy was produced responsibly, and that greenhouse gas savings were properly calculated. But officials become disillusioned with the refusal of the approved Schemes to recognise each other’s certificates in the early days. Then a fraud, caused primarily by the EU’s over incentivisation of waste based biofuels, was blamed on scheme auditors. The reluctance of many big companies to embrace certification has also contributed to their fall from grace.
Now, the European Commission, in its latest environmental regulation, is looking at other methods to control supply chains, with the aim of ensuring that high risk commodities imported into Europe have not come from deforested land. Supplier due diligence, together with risk assessments, will form the backbone of the Deforestation Regulation (the EUDR), covering cattle, cocoa, coffee, oil palm, rubber, soy, wood and products derived from them. There will be limited oversight, centred on risk based sampling carried out by national authorities themselves. Sustainability schemes play a role, but they continue to be only voluntary. To reduce the risk of fraudulent behaviour, the Commission is insisting on complete segregation of EUDR compliant products from all others, which is difficult to implement and has led to calls for a delay.
There really is no easy way of guaranteeing sustainable production in a world where trading occurs across continents and materials change hands many times. If society is serious about using all means to protect biodiversity and the climate, then there should be a debate about the best way of overseeing supply chains.
Sustainability schemes offer high levels of assurance and external scrutiny, combined with confidentiality. As certified material is traded across the world, what matters is the proof or certificate of sustainability that accompanies each shipment. Companies at one end of the supply chain don’t need to know the identity of farmers or producers of the raw materials at the top of the chain. If quantities are accurately accounted for, then sustainable material does not have to be kept segregated. The disadvantages include the cost of auditing and the difficulty in reconciling quantities passed between companies. The alternatives include some kind of treaty between individual countries to enforce environmental protections or the type of supply chain due diligence proposed in the EUDR. These competing concepts are succinctly presented in a recent video by ISCC, the largest sustainability scheme for food, feed, bioenergy and renewable materials.
The differentiation of commodities based on their environmental credentials is only going to increase. Greenhouse gas emissions associated with the production of all materials is becoming even more important, with emissions trading schemes and now a tax on imports into Europe of high greenhouse gas intensity products (CBAM). The independent auditing of these calculations and the traceability of the raw materials back to the first producer will be crucial. Sustainability schemes could provide the necessary infrastructure and independent oversight.
But even more importantly, in an age when people are losing trust in politics, sustainability schemes, offer an alternative approach to implementing the environment and climate actions the world urgently needs. With members drawn from raw materials producers (including farmers), processing and recycling industries, international brand owners and civil society, politicians should rely on Sustainability Schemes more, rather than less.
Published: 10 June 24
