Trade for Sustainable Development Principles

While the proliferation of sustainability standards related to consumer objectives from labour rights to rainforest conservation has created lucrative niche markets, it has also raised challenges for producers in developing countries.

As the number and complexity of sustainability standards increase, so do the costs of compliance with them. This can potentially exacerbate the economic marginalization of the poorest communities, and undermine the stated objectives of the standards themselves.

Accessible, transparent, and credible standards, coupled with technical and financial assistance, benefit consumers and producers alike. Inclusive business needs inclusive standards.

ITC has launched a set of ‘Trade for Sustainable Development’ (T4SD) principles to help stakeholders from across the supply chain -- standards organizations, multinationals, NGOs, and others -- find common ground and maximize the promise of standards in making trade contribute to sustainable and inclusive growth.

Sustainability is the first of the four principles. Signatories to the principles are expected to incorporate the full spectrum of social, environmental, economic, quality and ethical issues in production, processing, and trade.

The second principle is transparency. Signatories are encouraged to share good practices and foster trust and inclusiveness at all levels of global supply chains. ITC and the German Ministry for Development Cooperation (BMZ), together with the European Union and Switzerland, have worked together to produce “Standards Map”, a neutral, online database of information on almost 200 voluntary sustainability standards and eco-labels.

Transparency favours accessibility: ITC and partners use Standards Map and its self-assessment tool to sensitize smallholder to the basic good agricultural practices required to sell on to buyers who prize certain sustainability criteria. Harmonization is the third principle. Neither producers nor consumers are well served by a multiplicity of standards, audits, and assessment methodologies for roughly the same goals. Signatories pledge to build collaboratively on existing resources and methodologies to avoid duplication.

Finally, signatories commit to align their work to the United Nations Post-2015 Development Agenda and the Sustainable Development Goals.

Since the principles were launched in October 2014, the number of signatories has grown steadily, reaching 39 by mid-2015. They include large multinationals such as Nestlé, supply chain traceability enablers such as GlobalStandard 1 (GS1), regional producers’ associations, standard-setting organizations, and business platforms gathering multiple industry players.

Collaboration with one of the signatories, the Global Social Compliance Programme (GSCP), has yielded a unique ‘Quick Scan’ tool that allows major supply chain actors to easily compare their social and environmental codes of conduct against best corporate practice and third party standards. This lays the groundwork for advancing harmonization of approaches.

The next frontier for sustainability in supply chains is about traceability from primary producers all the way through to retailers.

The current absence of digital links between supply chain actors means that neither producers nor consumers adequately understand companies’ sustainability and quality management attributes. Yet buyers increasingly demand such information. Consumer demand for full traceability is a powerful tool for advancing sustainable trade practices, but risks leaving out smallholder farmers and small and medium-sized enterprises (SMEs) unless complemented by action to integrate them into supply chains.

ITC’s Trade for Sustainable Development programme is working with the UN Global Compact and GS1 to develop a free online system for SMEs to register and obtain a code containing information that would enable actors at every level of the supply chain to identify sustainability issues at different stages in the production process. Buyers or retailers would be able to confidently communicate their sustainable supply chain commitments to the customers. Primary producers and processors in the developing world would be able to better communicate their sustainability processes to existing or potential buyers. The data embedded in the codes would identify where technical assistance would help small producers and processors meet food safety standards, so that such aid can be more efficiently targeted. Finally, the data would enable companies around the world to benchmark themselves against peers elsewhere.

ITC will cooperate with private sector signatories to the Trade for Sustainable Development principles on the code initiative, which promises to empower small farms and businesses and contribute to more sustainable and traceable trade.