Sustainably produced commodities are growing on consumers

Access to natural resources is already – and will continue to be – a major challenge for sustainable development challenge far into the future. Fortunately, many opportunities exist along international supply chains to meet resource shortfalls.

Voluntary sustainability standards (VSS) are no longer a novelty serving niche markets. Over the past decade and more, they have increasingly found their way into mainstream markets. They are enabling sustainable consumption and production as well as partnerships for sustainable development, effectively contributing to the fulfilment of several of the United Nations’ Sustainable Development Goals.

The expansion of sustainable consumption choices enabled by VSS – usually developed by businesses or non-governmental organizations – makes consumers more aware of sustainability. This is true whether they are individuals shopping for their day-to-day needs or corporate procurement decision makers purchasing tons of materials for their businesses, creating a virtuous cycle of demand for more sustainable products.

The continuous increase in certification over the past decade reflects a demand among consumers, buyers and producers to address common environmental and social concerns. Those issues span several important sectors.

For example, the banana industry, the world’s second-largest consumer of agrochemicals after cotton, faces such challenges as low wages; worker health and safety; child labour; and lack of biodiversity. The cocoa market is confronted by an unorganized production base systemic poverty and child labour. The cotton market’s reputation is affected by high water use, volatile prices and worker exploitation. The increasing consumption of sugarcane is having a major impact on biodiversity amid concerns over abusive labour practices. For the tea market, challenges include forest removal; soil erosion; chemical inputs; and worker protection.

By providing assurances for purchases that support sustainability, VSS connect consumers and producers via transactions that involve more sustainable products. As VSS continue tackling more complex sustainability challenges, the partnerships they nurture between entities and consumers committed to sustainable consumption and production will become increasingly important.

There are many reasons for the growing adoption of these standards. For some producers and suppliers, adherence to a set of recognized principles for sustainable practice represents a stepping-stone to implementing best practices within supply chains. For others, compliance with a given standard may offer a strategy for managing reputational or supply risks, or may be a requirement imposed by their buyers.

Regardless of the reasons, the trend is clear: the market for sustainable commodities, as defined by products that are demonstrably (for example, third-party verified) compliant with internationally recognized standards, is growing at a pace that outstrips markets for conventional commodities.

For the third consecutive year, the Research Institute of Organic Agriculture (FiBL), the International Institute for Sustainable Development (IISD) and the International Trade Centre (ITC) have produced a report evaluating market size for sustainably produced and certified commodities. These include bananas; cocoa; coffee; cotton; palm oil; soybeans; cane sugar; tea; and forestry. The report, ‘The State of Sustainable Markets 2018’, provides data on compliant areas, production volumes and actors who are certified or are engaged across 14 major standard-setting organizations.

The current report, which presents information for the year 2016 where available as well as previous years, draws three main conclusions.

STANDARDS GAIN GROUND

The amount of agricultural land on which certified commodities is grown continues to rise and in some cases surpasses the 20% mark in some commodities.

At least a quarter of the world’s land dedicated to coffee, for example, is now certified. But the real share may be closer to half of the world’s coffee areas. This minimum and maximum range for each product is given in the chart above, because many producers have multiple certifications. The coffee sector boasts the highest compliance rate, with the organic coffee area up 24% since 2011. The Cotton made in Africa (CmiA) certified area currently represents 26% of the entire cotton area in Africa. Palm oil, a major driver of deforestation, is now among the fastest-growing VSS-compliant sectors.

Three standards now certify production of sugarcane, the world’s largest source of sugar, while 13% of the world’s tea area is now VSS certified. The forestry sector, which accounts for 1% of global GDP, is paving the way for voluntary standards worldwide, posting a 37% increase in the certified timber area since 2011.

CONTINUED GROWTH

In terms of expansion, the growth rates experienced in previous years have slowed, with some sectors undergoing either stagnation or significant drops. Between 2015 and 2016, substantial declines were noted for oil palm (11.5% less than in 2015) and sugarcane (7.9% less). The year 2016 saw a double-digit growth in the certified areas of coffee (24% of the global coffee area), cocoa (23%), tea (13%) and oil palm (12%). The certified area for cotton experienced the highest growth rate, increasing at least threefold between 2011 and 2016. Cocoa also almost tripled in area; and oil palm and tea-certified areas more than doubled during the same five-year span.

SINGLE-SECTOR STANDARDS

All standards covered by the report showed growth in their compliant areas between 2011 and 2016. The Rountable on Responsible Soy (RTRS) underwent the greatest jump, with the certified area expanding almost sevenfold. The Better Cotton Initiative (BCI) area increased nearly five times, while that of CmiA trebled. Similarly significant growth of their certified area was also reported by 4C and Rainforest Alliance (RA/SAN).

The certified forest area expanded by 57% between 2008 and 2016. The Forest Stewardship Council (FSC) area almost doubled to 196 million hectares while that of the Programme for the Endorsement of Forest Certification (PEFC) rose 39% to over 301 million hectares in the same period.

WHAT NEXT?

Voluntary sustainability standards offer explicit strategies to link trade with better practices. Better data will improve understanding of the state of sustainable markets, while better reporting will help round out the picture of sustainable supply chains.

In a context where access to sustainable markets tends to be concentrated in more developed economies, policymakers, producers and businesses need improved information to facilitate strategic planning.

It remains difficult to report a global total for individual sectors as many producers are certified by more than one standard. There are not enough reliable data on the share of these multiple certifications. For the purposes of this report FiBL, IISD and ITC agreed that the best approach was to provide the minimum, maximum and average of the area or production volume.

Better quality and more transparent data are needed for prices and markets, trade, consumption, expansion of reporting and transparency requirements for certified producers, expansion of the Harmonized System coding system, expanded corporate reporting and sustainable consumption at the national level.