State of Sustainability Initiatives:

Sustainability of supply chains and fair schemes

Promoting Responsible Value Chains and Sustainable Sourcing Through Fair Trade

22 June, 2016Brussels

• The SSI is a partnership that was launched out of the joint IISD-UNCTAD Sustainable Commodity Initiative (2003) which sought to mainstream sustainable commodity production and trade by leveraging the different and growing number of voluntary sustainability standards on the market and by promoting core fair trade principles.

• Launched in 2008 the SSI is a collaborative effort funded by the State Secretariat for Economic Affairs (SECO) and led by the International Institute for Sustainable Development (IISD), the International Institute for Environment and Development (IIED) and the Finance Alliance for Sustainable Trade (FAST).

To facilitate efficient decision making for sustainability by providing timely, accurate and pertinent information on the performance of voluntary sustainability initiatives on

international markets.

• A voluntary sustainability initiative, or VSI, is any non-obligatory initiative explicitly designed to promote the objectives of sustainable development, including ecolabels, certification initiatives, standards, CSR programs, business to business initiatives, roundtables and other collaborative or multi-stakeholder initiatives.

Who we are

SSI Review

The SSI Review is an independent evidence-based report on the characteristics, performance and market trends related to

sustainability initiatives.

Content

2. Sustainable market statistics and data3. Social, Environmental & Economic criteria of VSS4. Opportunities through Fairtrade certification5. Overall challenges6. Conclusion

Sustainable market statistics and data

Fair Trade{Commodities coverage

Bananas Coffee

Cotton Cocoa

Tea Sugar

Soy Palm oil

Forestry Biofuel

10 key commodity sectors in

agriculture and forestry

{

Standards coverage

16 standards operating in agriculture and forestry sectors

Growth in sustainability market

Compliant production as percent of global production, 2008 & 2013/14Source: SSI Review 2014

Development of VSS compliant area worldwide, 2008-2013 (Minimum)Source: SSI Review 2014

Production vs. Sales

Sustainable markets: Standard-compliant production vs. standard-compliant sales for 2012Source: SSI Review 2014

Single sector initiatives lead in production volume

Source: SSI Review 2014

Single vs. multisector standards

Sustainable MarketsProduction Growth Rates 2008-2014

Cocoa Coffee Cotton

20082010

20122014

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

UTZRainforest AllianceFairtradeOrganic VSS

PRO

DUCT

ION

(MT)

20082009

20102011

20122013

20140

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

BCICmiAOrganic VSSFairtrade

PRO

DUCT

ION

(MT)

20082010

20122014

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4CUTZFairtradeRainforest AllianceOrganic VSS

PRO

DUCT

ION

(MT)

Geographic distribution

Board representation

Source: SSI Review 2014

Social, Environmental & Economic criteria of the VSS

Environmental criteria: Indicator and indices coverage

Average coverage of SSI environmental indices by VSSSource: SSI Review 2014

Social criteria: Indicator and indices coverage

Average coverage of SSI social Indices by VSSSource: SSI Review 2014

Economic criteria: Indicator and indices coverage

Average coverage of SSI economic Indices by VSSSource: SSI Review 2014

Opportunities and challenges

Smallholders

Additional exceptions for smallholder producers which further accommodates for smallholders by extending the certificate period from three years to six years for “small licensees”.

Opportunities

Concentration on developing countries

Fairtrade certification is only available for products sourced from developing countries.

Contractual transparency

Fairtrade is the only initiative with criteria covering all aspects related to contractual transparency between buyers and sellers.

Price premiums

Price premiums illustrate the second-lowest average coverage across all 16 voluntary sustainability initiatives, with only Fairtrade and UTZ covering this index.

GovernanceFairtrade is a leader in enabling equitable governance among developing country smallholders.

Challenges

Mainstream Markets

Voluntary initiatives, whether Fairtrade or not, cannot be expected to overcome market imperfections—they can help the market in being more attentive to such imperfections but ultimately it will take government intervention and support to do so in a way which is in accordance with the objectives of sustainable development.

Building the market

Continuing need to build the market—and, especially allow for the existence of premiums/compensation for the adoption of more stringent practice (preferential tariffs/taxes and public procurement policies).

Facilitating access

Need to facilitate market access and inclusiveness (technical assistance to unorganized smallholder organizations (SCAN) and facilitation of access to finance for smallholders (FAST)).

Information transparency

Need to improve information transparency—info on markets (SSI) and impacts (COSA).

Conclusion

The general trend towards market growth BUT market concentration in more developed economies.

Fair Trade's focus on marginalized communities is entirely pertinent and appropriate.

The problem is that Fairtrade doesn't meet the needs of the entire market and therefore there is a need to help other initiatives also reach more marginalized markets.

Fair trade has the right priorities, but offers a limited vehicle for their implementation, policy makers need to be open to exploring other opportunities for promoting the "principles of fair trade" by leveraging other instruments as well.

Contact us

Thank you!Any questions?www.iisd.org/ssiinfo@ssianalytics.org

Lead Researcher, Jason Potts:jpotts@iisd.ca