The State of Sustainability Initiatives (SSI) project is facilitated by the United Nations Conference on Trade and Development (UNCTAD) and the International Institute for Sustainable Development (IISD) under the auspices of the Sustainable Commodity Initiative. The project aims to improve supply chain decision makers’ understanding of voluntary standards initiatives and to aid their strategy and program development.
The report presents findings in three parts: 1) evaluation of vital statistics,2) review of market shares and trends, and 3) an analysis of relationships between voluntary standards initiatives and key development themes (e.g. biodiversity, poverty reduction).
The study analyzed ten initiatives, each of which has existed for more than three years, using approximately 100 indicators related to costs, market trends, governance, conformity assessment, content and criteria. All voluntary standards initiatives share the same basic goal of promoting sustainable supply chains. Voluntary standards initiatives are increasingly taking a more integrated approach by incorporating multiple issues and even across multiple sectors. I will focus on the first section: evaluation of vital statistics.
Accounting for all costs associated with certification schemes is challenging due to the complexity and variability from region to region and initiative to initiative. Indirect costs include training, infrastructural investment and potential yield reductions, which are historically difficult to measure. The administrative budgets for the voluntary standards initiatives studied range from 1.5 to 19 million euros and most are dependent on grants for more than 50 percent of their funding. There are also costs associated with certification, registration and related activities that are typically born by the industry.
The VSI assessment, development and implementation process can have a big impact on the cost- effectiveness and integrity of the system. The process should be participatory and should allow for local conditions, resources and capabilities. Nearly all of the initiatives have local indicators and 70 percent are, or in the process of becoming, compliant with the applicable International Standards Organziation standard (ISO 65).
Almost all of the initiatives require annual auditing, but they differ by the degree of flexibility in how the audit is conducted. Most initiatives have a chain of custody standard, with many including the segregation of compliant product to allow for traceability. The forestry sector is more reliant on mass-balance systems.
Strong governance and participation by all interested stakeholders is a pillar of credible and transparent voluntary standards initiatives. Only half of the initiatives have a process for independent dispute settlement, despite its importance, with 40 percent providing a process in English only. Only 60 percent of initiatives allow external stakeholders to vote on criteria, which is cause for additional concern. With this said, voluntary standards initiatives are allowing a wider range of “non-industry” stakeholders to participate in the decision-making process. Standards board members are dominated by stakeholders from developed countries, with NGOs holding the majority of seats and industry members holding fewer board level positions.
Content and criteria
Increasingly, many initiatives’ criteria address multiple issues, with environmental criteria the most prevalent and robust across the initiatives studied. You will find consistency across initiatives on synthetic inputs, integrated pest management and restricted chemical lists.
Social criteria center largely on International Labour Organization (ILO) conventions, with virtually all initiatives requiring compliance with core ILO conventions. Most initiatives have robust criteria for health, safety and employment conditions.
Economic criteria are the weakest category across all initiatives. When they do exist, they center on product quality and minimum wage requirements.
I would like to add a comment on transparency. Transparency is essential to ensure that stakeholders can make – and be accountable for – impactful and sustainable decisions. Transparency must include information on the impact of voluntary standards initiatives themselves. They hope it will open a dialogue and spur the development of improvements in the information collection and dissemination processes. Voluntary standards initiatives present an opportunity for consumers, companies and governments to receive better information on which to make decisions about strategies, investments and operational enhancements.
For the most part, the voluntary standards initiatives have been developed under governance processes and are transparent on requirement. The real test will be if the voluntary standards initiatives can be brought into action to have a measurable and positive impact.
Questions for consideration
Can we apply learnings from the voluntary standards development process – as brought to light in this report – to cotton industry efforts?