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Supply Chain
2018 Promises to Further Raise the Sustainability Bar

As we approach the 2020 deadline for many corporate sustainability pledges, plus the commitments made in the New York Declaration on Forests, sustainable business practices are front and center in the minds of decision-makers. The next twelve months will be pivotal in achieving these goals.

As we approach the 2020 deadline for many corporate sustainability pledges, plus the commitments made in the New York Declaration on Forests, sustainable business practices are front and center in the minds of decision-makers. The next twelve months will be pivotal in achieving these goals. At Rainforest Alliance, we see certification as a key component on the path to sustainability, but that is just one part of the current trends that will push business to meet their commitments. Here’s our take on how the next twelve months will bring in sustainability trends.

#1: Sustainability is here to stay — and grow. Consumers demand it.

The global buzz around sustainability has grown rapidly over the last few years, and research shows it is only likely to increase. Already in 2015, market research firm Nielsen polled over 30,000 consumers across 60 countries, revealing that two-thirds were willing to pay more for sustainable products. And a study that year by Cone Communications found that 91 percent of consumers in the world’s biggest economies expect companies to act responsibly in addressing social and environmental issues. That’s an overwhelming majority of purchasing power, and the impact when these consumers vote with their purchasing choices cannot be overstated.

At the same time, governments and companies are increasingly using the 2015 Paris Climate Agreement and UN Sustainable Development Goals (SDGs) to guide their sustainability work: 9,500+ companies have joined the UN Global Compact in support of the SDGs. There is also a Business Commission for Sustainable Development, consisting of key industry leaders aiming to make the business case for achieving the SDGs. And the number of countries signed up to conduct a voluntary review on progress towards the SDGs at the UN’s High Level Political Forum almost doubled in the last year, reaching 43 countries. A 2017 joint report by WWF and the ISEAL Alliance illustrates how sustainability standards can help accelerate progress on many SDGs, while delivering direct benefits for companies and small-scale producers.

Social responsibility in business is also increasingly a matter of legal obligation. In the UK, companies are now legally required to report on their efforts to eradicate slavery throughout the supply chain. In the US, a legal loophole was closed in 2016, in effect introducing a ban on the import of goods produced using child labor or slavery. France has adopted a law requiring multinationals to publish due diligence plans on human rights from 2018 onwards. And there are more just around the corner.

#2: Words are not enough. Consumers want action.

Today’s consumers are savvy, if they choose to be. Savvy consumers don’t want to hear empty promises; they want to see action and results. And they have technology and social media to show them what is really happening at the origin of their products.

As a result, many companies are turning to certified sourcing programs as one of the key tools to achieve their sustainability goals — and to help them demonstrate independently verified results. Several large companies are sourcing 100 percent certified commodities already.

However, as a recent report from the Economist Intelligence Unit uncovered, there is a risk of complacency in some quarters. The report found that, while four in five companies said they had responsible supply chains, less than a quarter were actually addressing key issues such as climate change or child labor. In fact, 30 percent had decreased their focus on supply chain responsibility over the last five years. I would like to see more commitment from business, not less.

Customers are also increasingly likely to exercise their choice and look for a brand that better aligns with their values. A recent global study by BBMG and GlobeScan revealed that for the first time since 2009, more consumers say they have punished companies for their behavior (28 percent) than have rewarded them (26 percent).

While accountability is core to helping businesses ‘walk the talk,’ it’s often unclear for companies which tools to use to get the sustainability results they want, or how to use them effectively. The Accountability Framework, an initiative being developed by a coalition of leading environmental and social organizations (including Rainforest Alliance), will provide a clear pathway for companies on the sustainability journey — including key milestones and benchmarks to evaluate their progress.

#3: Certification remains under scrutiny (and that’s good)

Supply chain partners and consumers continue to ask about the unique value proposition of certification. Certification can offer deep supply chain insights that are hard to otherwise achieve. The connection that certification creates along the supply chain — bringing farmers and workers together with markets and civil society — is unique, and results in positive impact for farmers and the environment, as numerous independent studies confirm. It offers a level of transparency that few other systems do. And it all forms the basis of a fully scalable system that engages both farmers and companies.

This value is increasingly recognized. The International Trade Centre, a joint venture between the World Trade Organization and the UN, reports in its 2017 State of Sustainable Markets research that: “sustainable agricultural products, demonstrably compliant with internationally recognized standards, are growing at a pace that outstrips markets for conventional products.”

Certification requires continuous improvement, and it’s true that different elements have different impacts and challenges. And of course, no label can offer a 100 percent sustainability guarantee, because it’s impossible for any viable global system to monitor every producer 24 hours a day, 365 days a year.

Furthermore, certification alone cannot solve the many systemic sustainability challenges faced by producers. For example, if a farm is certified, it does not necessarily mean that it has achieved a stable, living income for the farmer and its workers; international commodity prices and market fluctuations will continue to be the biggest factor affecting their incomes. But certification supports farmers with knowledge, training and opportunities to increase their income through better and more sustainable agricultural practices, and by becoming more efficient and better connected.

While certification can serve as a powerful tool on the sustainability journey, it is most effective at catalyzing sustainable transformation when implemented within a larger context of collaboration between companies, NGOs, governments and others.

#4: Producers and producing countries demand more collaboration

Partnerships and collaborations are key to address the major sustainability challenges and producers rightfully demand to look at sustainability from a more holistic angle, to take into account the cost of production and access to finance to make the necessary investments. A number of important collaboration platforms have emerged. Among the most recent ones: The Cocoa and Forests Initiative, and the Kenya and Uganda Coffee Platforms (supported by the Global Coffee Platform).

The latest collaboration example is the January 2018 merger of UTZ and Rainforest Alliance. In 2019, we will publish our new, unified certification program, building on the best of the current UTZ and Rainforest Alliance systems. Streamlining the certification process will help the 1.9 million farmers we work with — especially the 182,000 cocoa, coffee and tea farmers currently certified under both standards — and new farmers alike. They will be able to invest more efficiently in sustainability, avoiding a double administrative load of working with two standards and certification systems.

I hope this will be the beginning of a new consolidation trend in the sustainability standards sector. I also hope to see a trend of collaboration not only within sectors, but also across them. There is a huge opportunity to link different commodities at field level (many countries grow both cocoa and coffee, for example), and this is something that the merged Rainforest Alliance will explore in the future.

#5: More transparent supply chains call for greater use of data and tech

Digitized data is providing big opportunities for innovation. For example, mobile apps and drones are already making it easier to map and better understand sustainability challenges, and address them in a more targeted way. This is changing the way some audits are carried out.

Sustainability certification programs in the medium term will have to master data management. Data is the key tool to drive interventions for positive change. At Rainforest Alliance, we are starting to use drones to collect additional information on farming landscapes, and to compare data from third parties with the data gathered by these drones.

Furthermore, technology can be effectively used for training and raising awareness among producers. Early last year, Rainforest Alliance launched its Farmer Training App, allowing farmers across Africa, Asia and Latin America access to training modules and videos, and to connect with other farmers to share best practice.

Meanwhile blockchain — essentially a recent, open, distributed database technology that can record transactions in a verifiable and permanent way — is already making its mark on food supply chains. For instance, Provenance, a UK startup, uses blockchain to trace the origins and journey of products such as tuna and coconuts.

But all new technologies also present challenges. Accessing data from supply chains in some sectors remains difficult, as many products are grown in countries with data-poor systems. And without significant buy-in from the governments concerned, it will be hard to implement some of these modern technologies. Privacy remains a challenge: All data management has to respect the personal details of individuals, confidentiality of commercial data, and data security laws and best practices. These are big challenges, but by working together and utilizing the expertise of different industries, they are surmountable.

Looking ahead

2018 looks to be a year of growth for sustainability. On the one hand, I see increasing consumer demand, coupled with a growing need to address pressing issues such as climate change, deforestation and child labor. On the other, new technologies offer producers new pathways to sustainability. This dynamic won’t be reversed. Transparency will be the key that brings it all together and helps all stakeholders to understand the challenges in often complex supply chains.

I also believe that certification — a journey within the wider sustainability journey — represents a strong building block in these exciting times and will continue to see consistent growth in 2018 and beyond.