Jason Potts, IISD

Geneva,

January 31, 2014

The State of Sustainability Initiatives Review 2014:

Standards and the Green Economy

Data Collection Partners

SSI Implementation Partners SSI Funding Partners

Purpose: To facilitate efficient decision making

for sustainability by providing timely,

accurate and pertinent information

on the performance of voluntary

sustainability initiatives on

international markets.

Relevance: Clarity is

increasingly required to

make sense of the complexity

of the voluntary sustainability standards and

initiatives landscape and their existing and

emerging sustainability claims.

The State of Sustainability Initiatives

SSI Review 2014: Standards and the Green Economy

Bananas

Biofuels

Cocoa

Coffee

Cotton

Forestry

Palm Oil

Soybeans

Sugarcane

Tea

In the beginning...

• Prior to Agenda 21 in 1992 only two of the 16 sustainability standards

included in the SSI Review 2014 had been established

• Since then, we have seen a shift from an initial focus on product

differentiation towards large scale transition of mainstream compliance

Market Overview

www.bonsucro.com

Sustainable Markets: Compound Annual Growth Rates, Sales 2008-2012:

Growth in compliant vs. conventional sales

Commodity Growth in

compliant sales

Growth in

global sales

Cocoa 58% 1%

Coffee 20% 2%

Cotton 47% -1%

Forestry (change in

forested area) 6% 0%

Signifantly higher growth rates among standard compliant products

than in growth of sales in conventional markets

Sustainable

Agriculture Markets VSS Compliant Production (Ha 2008-2012)

• Approximately 3.5 million

hectares in 2008 has grown

to nearly 10 million hectares

in 2012

• Most hectare growth* linked

to five specific sectors:

cocoa, coffee, cotton, palm

oil and soybeans

* Excluding forestry sector not shown here.

Sustainable Markets: Production Growth Rates 2008-2012

Coffee Cotton Cocoa

• Recent growth in most commodities driven by one or two initiatives

• Points to a trend towards mainstream oriented initiatives, which

are focused on rapid and significant market uptake

Compliant production as percent of global production, 2008 & 2012

Sustainable Markets:

Production Market Share

Substantial market penetration of compliant production over past four years

Compliant production vs. compliant sales, 2012

Sustainable Markets: Sales vs. Production

• Consistent oversupply of compliant production

• Can raise issues associated with pricing

• However, there needs to be certain degree of supply

in order to build supply base and segue into

larger market uptake

Distribution

Global vs. Sustainable

Distribution

of Supply (Select Commodities,

ha and mt, 2011/2012)

• Trend toward more

economically

endowed economies

excelling in supply

of standard

compliant products

• Lower economies

must be able to

more effectively

participate

Governance

Board Representation by

Stakeholder Role in Supply Chain

Initiatives are integrating diverse voices

into decision-making and standard-setting process

Board representation by geographical location (developing/developed countries)

• General predominance of Northern stakeholders on boards

of initiatives

• However, significant representation from Southern stakeholders

pointing toward the potential for more equitable governance

within boards

Conformity

Assessment

Conformity Assessment Procedures & Frequency

• Recognition

of the need

to ensure

credibility and

independence

of claims

• High level of

discretionary

authority in

application

across

initiatives --

ensuring

process is

risk-based,

targeting

areas that

most need to

be addressed

SSI Content

and Criteria

• Coverage of each index matches the degree of compliance

(short term, long term, recommended, etc.) that each initiative

requires across each SSI indicator

• Analysis DOES NOT speak to specific impacts of a given initiative

• Impacts may be related to criteria contained within initiative,

but impacts rely on number of other factors such as

implementation of systems and geographic specificities that

define applicability and relevance

• However, degree of coverage can point to level of aspiration and

accountability of an initiative

• Therefore, SSI content and criteria can speak to intent and

effort of sustainability standards operating in market

SSI Content and Criteria

SSI Social Criteria

See next slide for key findings...

SSI Social Criteria - Key Findings

• Strong convergence with SSI indicators among core ILO

standards: labour rights, health and safety and employment

conditions

• Somewhat less coverage across community involvement and

human rights

• Likely explained by reliance of supply chain actors on local

communities to deliver on these rights

• Least coverage on positive rights like gender and employment

benefits

SSI Environmental Criteria

See next slide for key findings...

SSI Environmental Criteria - Key Findings

• General convergence toward the SSI soil, waste and synthetic

inputs indices--likely explained by direct relationship with

productivity and reinforcing interests

• Less coverage on water and biodiversity, which involve

a broader landscape management

• GHG and energy show the lowest coverage across SSI indices

• One would expect some GHG reducing effects through

coverage of soil and synthetic inputs criteria; however,

explicit GHG criteria is not (or very minimally) covered

by half of the initiatives reviewed

• GMO prohibition reveals an even split among initiatives

reflecting the debate in society about the sustainability of GMOs.

• Initiatives at the bottom of the table tend to be newer initiatives

targeting mainstream markets, which points to a generalized

trend toward lower breadth and depth of coverage among

environmental criteria included in these systems

SSI Economic Criteria

See next slide for key findings...

SSI Economic Criteria - Key Findings

• Little in way of economic criteria covered among initiatives

reviewed

• Largely explained by underlying theory of change that many

initiatives adopt:

• As market-based instruments they should be responsive

to and operate within the market rather than dictate

terms of the market

• Generalized understanding that economic benefits

associated with standard compliance will be delivered

through compliance (access to markets, increased

productivity, improved product quality) rather than being

dictated by standards themselves

• However, there remains a generalized agreement on criteria to

enforce compliance with minimum wage laws across initiatives

Conclusions

• Standards compliance is increasingly becoming a condition of

market entry

• Single-sector, mainstream-oriented initiatives are increasingly

dominating the market

• Mainstream uptake appears to be fueling a lower average

criteria coverage across sectors

• Standards are improving participation of developing country

stakeholders in supply chain decision-making

• Access to sustainable markets is inconsistent with some

evidence that less developed regions are being further

marginalized as sustainable markets grow

Moving forward...

Future required work:

• Need for more detailed and regular reporting of market

information

• Consumer markets

• Industry specific uptake and commitments

• Multiple certification

• Need for more detailed and regular impact reporting

• Need for more concerted technical assistance to ensure

that less developed producers can gain access to

sustainable markets

• Need for strategic policy intervention to ensure

standards fulfill their promise of contributing to

sustainable development

The SSI Review 2014 can be accessed at:

http://www.iisd.org/publications/pub.aspx?pno=2899