About the Report

The State of Sustainability Initiatives Review: Standards and the Green Economy offers a bird’s-eye view of market and performance trends across 16 of the most prevalent standards initiatives operating across ten different commodity sectors. The Review represents an important effort towards strengthening our understanding of how voluntary sustainability standards are developing over time, both in terms of the systems they deploy and the market impacts that they have.
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At-A-Glance

Standards Coverage

Findings

Market Performance

Exceptional Growth

The average annual growth rate of standard-compliant production across all sectors reviewed was a stunning 41%, significantly outpacing the annual average growth of 2% in the corresponding conventional commodity markets.

Niche to Mainstream

In 2008 standard-compliant production accounted for no more than 9% of global production in any given commodity market. By 2012, at least 4 commodities had surpassed the 10 percent mark, with coffee and cocoa leading the way with 40 and 22% of global supply respectively.

Persistent Oversupply

A definite lag between supply and demand exists across all of the sectors reviewed. In fact more than half of most standard-compliant product is NOT actually sold as standard compliant. The gap between demand and supply may lead to reduced incentives to make the transition to sustainable production over time.

Concentration in More Developed Economies

Production for sustainable markets is concentrated in more advanced, export-oriented economies raising concerns about the effect of sustainability requirements on market access for less developed producers.

Credibility

Conformity Assessment

Sustainability standards are strengthening the reliability of market claims through increasingly independent monitoring and enforcement processes: All of the initiatives surveyed in the SSI Review 2014 applied some form of third-party conformity assessment procedure. A full three-quarters apply third-party certification—which adds to the independence of claims. Some of the newer initiatives have focused on using only verification for conformity assessment in order to cut costs and allow for more rapid growth.

Conformity Assessment Findings

Governance

Sustainability standards are creating new opportunities for stakeholder participation in supply chain decision making: Whereas conventional commercial relationships rely principally on agreement between buyer and seller, sustainability standards have done a good job at integrating non-traditional perspectives into supply chain decision making via the standard-setting and implementation process, as represented by open consultations on standards development and diverse board member representation. Although developed country representation is still dominant across most boards, developing country representation is significant and remarkable.

Governance Systems Findings

Scope

Average criteria coverage of voluntary sustainability standards is declining as standards target mainstream markets

An analysis of voluntary sustainability standard criteria suggests that newer, mainstream-oriented standards apply criteria of reduced depth and breadth as a means for allowing for more rapid uptake. Across the initiatives surveyed, negative rights related to ILO core labour standards, as well as environmental practices with direct quality and yield outcomes, show the greatest degree of coverage. Most initiatives contain few criteria related to economic sustainability, reflecting a general belief that economic benefits should follow automatically upon reaching compliance.

Criteria Analysis Findings

High Level Challenges

Standards and the Green Economy

Market Efficiency

Market efficiency, which is a prerequisite for sustainable development and represents the foundation of a green economy, can be supported by standards.
Sustainability Standards and the Green Economy

Public Policy and Enforcement

Standards establish new enforcement regimes for supply chain actors, but are rarely the subject of public policy instruments themselves.
Conformity Assessment Processes
The Need for Public Policy Frameworks

Governance and Rule Making

When standards use multi-stakeholder processes they can improve participatory governance along global supply chains.
Defining the Rules Part 1
Making Rules Relevant to Local Context
Defining the Rules Part 2
Adjudication and Resolving Disputes

Market Constraints

Although voluntary standards can improve market efficiency, they are themselves subject to many of the same forces that give rise to market imperfections.
Standards will Adapt to Market Context
Economic Criteria or Not
Women’s Rights
Continual Improvement Systems

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A bird’s-eye view of market and performance trends across 16 of the most prevalent standards initiatives operating across ten different commodity sectors. The Review represents one small effort toward strengthening our understanding of how voluntary sustainability standards are developing over time, both in terms of the systems they deploy and the market impacts that they have.

DOWNLOAD FULL REPORT