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Voluntary Sustainability Standards

Illusions of Progress and a Way Forward

by Ulrich Hoffmann (Author) Arpit Bhutani (Author)
©2021 Monographs XVIII, 146 Pages

Summary

Sustainability standards, and in particular voluntary sustainability standards (VSS) have become an integral part of facilitating green consumerism and promoting green economy and green growth. While such standards have undoubtedly led to some desirable change in production structures and methods, as well as in improved material, resource and energy efficiency, overall results have remained modest, mostly incremental and far from leading to transformational, sector- or economy-wide changes. It is therefore high time that after some 30 years of increasing use of sustainability standards one takes stock of their achievements and pros and cons. This analysis should however not be confined to a technical review of the progress in improving or perfectioning the standard system and best practice in standard application and use, but primarily focus on a review of the political economy of VSS and their record in reshaping the current largely unsustainable agro-food economy and the situation of farmers. Many, in particular voluntary sustainability standards are now at a crossroads, but instead of realizing the systemic, deep-rooted nature of the crisis and conceiving of much-required reforms most standard advocates continue to focus their activities on improving the functioning of the standard system and emulating or disseminating best standard-compliance practice. Against this background, the book wonders what the illusions and what the reality of VSS have been in recent decades and whether these standards can be made fit for a future, in which sustainability issues are bound to play an even more important and pressing role. As appendix we looked into the relationship between the Corona crisis as one of the many other epidemics which have hit us hard and the future of globalized supply chains, of which VSS are part of.

Table Of Contents

  • Cover
  • Advance Praise
  • Title
  • Copyright
  • About the authors
  • About the book
  • This eBook can be cited
  • Contents
  • List of Figures, Tables and Boxes
  • Preface
  • Acknowledgements
  • Introduction
  • I. Sustainability Standards, Their Systems, Role and Impact
  • A. The Taxonomy of Sustainability Standards
  • B. The Ambivalent Antecedents of Voluntary Sustainability Standards (VSS)
  • C. Opportunities and Benefits that Could Arise from VSS
  • D. The Impact of VSS and the Insufficient Leverage for Transformational Change
  • E. The Limitations and Cons of VSS
  • 1. Transparency, Openness and Conflict of Interests
  • 2. VSS as International Standards and the Problem of Sufficient Local Flexibility
  • 3. Inclusion or Exclusion: Can VSS Really Work for Smallholder Farmers?
  • F. Can VSS-Governed Sustainability Markets Really be Mainstreamed and Graduate from Current Market Niches?
  • G. ‘Organic’ – A Standard with a Different Touch
  • 1. Evolution of ‘Organic’
  • 2. What Makes ‘Organic’ Special?
  • 3. Basic Differences between ‘Organic’ and ‘Other VSS’
  • 4. The Commercial Success Leads to Capitalistic Competition
  • 5. Inherent Contradictions
  • 6. Certification
  • 7. Conclusion
  • II. VSS at a Crossroads
  • A. What Are the Key Market Challenges, What Can VSS Realistically Deliver and Where Must They Fail?
  • 1. The Asymmetrical Market Power along the Supply Chain
  • 2. The Race to the Bottom
  • 3. Limited Control over a Range of Essential Flanking and Supportive Elements for VSS
  • 4. The Myth of Yield Increases
  • 5. Economic and Social Sustainability Remain Illusionary without Reforming the International Commodity Price-Fixing System
  • 6. Summing up
  • III Is There Any Future Perspective for VSS and What Might It Look Like?
  • A. Rebalancing Power in Global Agri-food Supply Chains
  • 1. Restoration of National Supply Management: State or Producer Organization Driven
  • 2. Strengthening and Changing the Focus of Competition Policy
  • 3. Reducing the Abuse of Power: Limiting the Use of Restrictive Business and Trading Practices
  • 4. Legislation on due Diligence for Avoiding Precarious Employment Conditions, Infringement of Human Rights, and Environmental Damage
  • B. International Coordination and Supply Management
  • 1. The Concept of International Commodity-Related Environment Agreements
  • C. Lifting the Bar of Sustainability Performance: How Can VSS Play a Constructive Role in the Future?
  • 1. Is the Constructive Use of VSS in the European Union’s Generalised Scheme of Preference (GSP) an Option?
  • 2. The Complementary Role of VSS to Regulation on Key Sustainability Issues
  • D. Epidemics and VSS: A Relationship that Is None
  • E. To Sum up
  • List of Acronyms
  • Explanations of Some Technical Terms
  • References
  • Index

←viii | ix→

Figures, Tables and Boxes

Figure 1:Interplay between regulation and standards

Figure 2:Evolution of estimated minimum production area for selected exported VSS-certified food commodities for the period 2008–2018

Figure 3:VSS impact assessment results for cocoa and coffee producers in 12 developing countries (comparing certified with conventional farmers, and reflecting the variation), 2009–2013

Figure 4:Market concentration in global food supply chains

Figure 5:Changes in the share of end consumer prices between the principal supply chain actors in the period 1995–2011 in percent

Figure 6:Long-term trend of international cocoa prices in real terms for the period 1952 to 2020 (in thousands 2018 US$ per tonne)

 

Table 1:Production area of some VSS-certified commodities in 2018 and related growth rates

Table 2:Estimated minimum production volume of several VSS-certified agricultural commodities in 2018

←ix | x→

 

Box 1:The definition of standards by the WTO and ISO

Box 2:Largely inconclusive discussions in the WTO on private standards and their trade-restrictive effects

Box 3:Green consumerism: Can we really shop our way to a better world?

Box 4:Impact assessment of VSS: Incremental versus transformational change

Box 5:Understanding the ‘Cost Treadmill Trap’ and its implications for VSS-compliant producers

Box 6:Much more sustainable cocoa production is possible – The example of FAIRAFRIC

Box 7:The key features of the EU’s GSP scheme and the applicable tariff preferences

Box 8:The EU’s Forest Law Enforcement Governance and Trade Program (FLEGT)

←x | xi→

Preface

As neoliberal paradigms reached their climax in the 1990s and early 2000s, new narratives emerged in trade debates arguing that international supply chains would play a pivotal role in promoting global trade and economic growth. These narratives suggested that opening up the economies was not only desirable but the only way to have a meaningful participation in the world economy. Moreover, they also predicted that the intensified interdependency in international production relationships inevitably implied greater mutual policy dependency, a de-territorialization of production that called for a diminishing role of national macro-economic policy and the need of a common policy framework. Under this paradigm, less policy space will be left for countries to establish policy frameworks adapted to their needs and conditions. Instead, businesses themselves would set the rules, such as through voluntary sustainability standards that would eventually make supply chains more environmentally, socially and economically sustainable.

As discussed in this book, the reliance on businesses self-designed sustainability standards has been far from delivering the promised results. In many cases, such standards brought about market distortions or were overambitious or naïve and, ultimately, ineffective. Thus, in many agro-food sectors, the increasing use of sustainability standards de facto became a ‘license to operate’ that excluded ←xi | xii→certain producers from the market. In addition, despite the soaring market share of standard-compliant products, the key sustainability problems in related production and markets have neither been overcome nor significantly reduced. This ranges from deforestation and biodiversity loss, over child labour or modern slavery in social terms, to insufficient living income and wages.

There is every evidence that voluntary sustainability standards are at a crossroads. If business as usual continuous and there is a growing perception that these standards mostly boil down to greenwashing, consumers may get disillusioned on the claim that by buying certified products they can shop their way to a better world.

It is also of central importance to consider the extent to which producers, particularly in developing countries, actually benefit from those standards. Are certified products not only more environmentally suitable, but also socially and economically remunerative for producers? The analysis in this book casts considerable doubt on this. Even for sustainability standards, such as organic agriculture and fair trade, additional income gains have been modest or outright disappointing; a decent living income for farmers and farm workers continues to remain out of reach.

Moreover, while some voluntary standard programs strengthen capacity building on management and agronomic skills, the compliance with most sustainability standards requires significant investment for adjusting production and conducting conformity assessment. There is stiff competition among producers to be standard-compliant in the most cost-effective way, implying that small-scale producers get marginalized. There is, in fact, an increasing perception among producers and exporters in developing countries that sustainability standards are imposed on them with a logic and justification based on Northern preferences and conditions, fuelling the impression that a good number of these standards border on technical barriers to trade.

The claims made that voluntary sustainability standards might not only achieve the targeted sustainability goals but also self-cure some of the key systemic market flaws have turned out to be wishful thinking. The internalization of economic, social and environmental costs has not happened and in most agro-food sectors producers are faced with an even higher power asymmetry in global supply chains.

After more than three decades of increasing use of sustainability standards, a fact-based stocktaking and sober-minded analysis of their real sustainability impact was long overdue. The question is not only what was their impact but whether private sustainability standards can be made fit for a very challenging ←xii | xiii→future with far-going transformations in production and consumption patterns and, particularly whether they can be more, truly sustainable. And this is unlikely to occur, as the authors conclude, without far better development and income prospects for farmers.

This book addresses these and other issues based on a thorough analysis and well-defined conceptual framework. Importantly, it not only examines the past but constructively explores whether there is a future for voluntary sustainability standards. After almost 30 years in which they have brought about more illusion than reality, it is time to rethink the role of such standards and how sustainability objectives can actually be reached.

Dr Carlos María Correa
Executive Director, South Center, Geneva

Details

Pages
XVIII, 146
Publication Year
2021
ISBN (PDF)
9781433187728
ISBN (ePUB)
9781433187735
ISBN (MOBI)
9781433187742
ISBN (Hardcover)
9781433187711
DOI
10.3726/b18306
Language
English
Publication date
2021 (October)
Published
New York, Bern, Berlin, Bruxelles, Oxford, Wien, 2021. XVIII, 146 pp., 8 b/w ill., 2 tables.

Biographical notes

Ulrich Hoffmann (Author) Arpit Bhutani (Author)

Ulrich Hoffmann, a German economist, was a senior lecturer and had a chair on trade and international financial relations at the Institute on Economics for Developing Countries in Berlin before joining the UN secretariat in the mid-1980s. Most of the time, he worked for the secretariat of the United Nations Conference on Trade and Development (UNCTAD) in Geneva, focusing on production and trade of commodities, issues of sustainable resource management and the transformation of agriculture as well as on the economics of climate change. For many years, he was principal editor of UNCTAD’s regular Trade and Environment Review, one of UNTAD’s flagship publications. After retiring from UNCTAD in 2015 he was a senior associate at the Research Institute on Organic Agriculture and the International Institute for Sustainable Development. Arpit Bhutani has a Master of International Law and Economics from the World Trade Institute of the University of Bern, Switzerland. He worked at United Nations, Geneva as part of the team that prepared and launched the UN Forum on Sustainability Standards. He is also an expert on the circular economy, having worked with the Ellen MacArthur Foundation. He is a TEDx speaker and a Huffington Post contributor. Arpit is a serial entrepreneur, handles his 70-year old food processing family business in India, Hind Agro Sales, and now is also co-founder of two circular economy startups in Copenhagen, Circular Innovation Lab and ShopC.

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Title: Voluntary Sustainability Standards