feasibility study for a generic supply chain initiative ...from the review findings and analysis, it...
TRANSCRIPT
Feasibility Study for a Generic Supply
Chain Initiative for Sustainable
Commodity Crops:
Findings and Recommendations
Final Report
ProForest 58 St Aldates Oxford OX1 1ST United Kingdom
Telephone
+44 (0)1865 243439
Authors: ProForest and IIED
International Institute for Environment and Development 3 Endsleigh Street London WC1H 0DD United Kingdom
Telephone
+44 (0)20 7388 2117
2
1. Executive Summary ........................................................................................ 3
2. Introduction ................................................................................................... 8
3. Methodology ................................................................................................ 10
4. Findings of the Review ................................................................................. 12
4.1. Review of existing initiatives .................................................................. 12
4.1.1. Segregated supply chain initiatives .................................................. 13
4.1.2. Non-segregated supply chain initiatives .......................................... 15
4.1.3. Approaches led by other actors........................................................ 17
4.2. Review of stakeholder needs .................................................................. 19
4.2.1. Perceived priority commodities for future action .............................. 19
4.2.2. Perceived barriers to be overcome ................................................... 21
4.2.3. Who should be involved?.................................................................. 21
4.2.4. Perceived functions of a future generic initiative .............................. 22
4.2.5. Perceived roles for DEFRA ................................................................ 25
4.3. Implications of the Review...................................................................... 26
5. Development of Proposals ............................................................................ 31
5.1. Potential Activities under a Generic Initiative .......................................... 31
5.2. Case Studies .......................................................................................... 32
6. Recommendations........................................................................................ 35
Recommendation 1: Policy framework for leadership and guidance..................... 37
Recommendation 2: Information and best practice documentation...................... 38
Recommendation 3: Stakeholder fora – communication and policy/practice
development ...................................................................................................... 40
Recommendation 4: Developing links with existing international generic initiatives,
and mapping gaps.............................................................................................. 41
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Annex A Summary Listing of Schemes and Initiatives ............................................. 43
Annex B Questionnaires......................................................................................... 50
Annex C List of consultees..................................................................................... 64
Annex D Workshop summary................................................................................. 68
Annex E Case studies............................................................................................. 72
1. Executive Summary
This project aims to assess the feasibility of establishing a generic supply chain
initiative for sustainable commodity crops, by identifying and assessing mechanisms
to encourage more sustainable production. The project has been commissioned by
the Advisory Committee on Consumer Products and the Environment (ACCPE), which
advises the UK Department for Environment, Food and Rural Affairs (DEFRA).
The underlying rationale of the project is that in many cases it is not clear how UK
manufacturers and retailers (referred to as ‘users’ throughout the report) should
tackle sustainability issues in relation to the commodities that they source, as the
key characteristics of many commodities appear to raise particular barriers to action.
ACCPE commissioned the study to explore this rationale, by reviewing existing
initiatives and user needs, in order to identify the scope and detail of potential
activities that a generic sustainable commodities initiative could provide.
Throughout, there is an assumption that this would seek to build on, rather than
duplicate, existing initiatives. The focus is on market-based activities that might be
adopted voluntarily by companies through their sourcing policies.
The review of existing schemes and initiatives identified a wide variety of different
approaches and mechanisms, and developed a framework for categorising them. A
parallel review of user needs collected data through over 40 completed
questionnaires from and interviews with potential users (retailers and manufacturers)
as well as other experts and interested parties. It also drew on responses from
organisations running existing schemes.
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An analysis of stakeholder comments was undertaken in terms of:
• perceived priority commodities for future action;
• perceived barriers to be overcome;
• who should be involved;
• perceived functions of a generic initiative; and
• perceived roles for DEFRA.
Beyond the specific possible functions of a generic initiative that were suggested for
comment in the consultation, the data collected for this review of initiatives and user
needs has a number of broader implications for any future initiative, as follows:
• there is a need for flexibility and to build on existing work;
• traceability is not necessarily the answer;
• there is a need to ensure costs are minimised and shared evenly;
• niche or mainstream markets can each provide solutions;
• consider the international context;
• make the links to the macroeconomic picture;
• avoid creating ‘talking shops’; and
• the need for parallel activities by various stakeholders.
From the review findings and analysis, it became clear that there is no single best
way forward for an initiative to suit all commodities or supply chain actors. Instead,
the recommendations for a generic supply chain initiative should consist of a
coherent set of different activities, rather than a single process or approach. A
number of potential activities for inclusion in a generic scheme were identified as
options. These included a number related to the provision of information services
and practical guidance to users, and others intended to actively promote or enable
the sourcing of sustainably produced commodities. These potential activities were
presented as the basis for discussion at a consultative workshop, in order to
significantly increase the level of comment and scrutiny for the different proposals,
and potentially enhance the level of ‘buy-in’ from stakeholders to the eventual
outcomes of the study and any future initiative.
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The comments from workshop participants supported the flexibility of the proposed
approach to a generic initiative. Specific points that emerged included:
• the danger of duplicating current work and the need for coordination;
• before establishing any new initiative, the need for a performance review of
existing voluntary initiatives given the limited evidence that they can achieve
significant improvements in social and/or environmental outcomes;
• the need to connect supply chain initiatives to the context of economic pressures
on producers;
• the importance of not pursuing niche sectors to the exclusion of mainstream
markets, where there are few incentives for the ‘laggards’ to improve practices;
• the need for a coherent policy vision from DEFRA, in order to provide leadership
and guidance to supply chain actors.
As a separate strand of work in developing proposals, a number of case studies were
undertaken to look at the extent to which different categories of supply chain
scheme or initiative are applicable for specific commodities and for the needs of
different users. The case studies aimed to explore the degree to which supply chain
solutions depend not only on the commodity, but also on context-specific business
drivers for those commodities for different actors in the supply chain. The case
studies also aimed to assess the extent to which general guiding principles can be
formulated, clarifying which supply chain options are most suitable for which type of
commodity under which context.
Based on the analysis of review findings, the proposed options that were developed,
and subsequent feedback from the consultative workshop, four recommendations
for action are made. These recommendations are complementary, and each could be
developed and implemented independently or in conjunction with others. The
underlying objectives common to each of the recommendations are, firstly, to
improve the availability of information and practical guidance for supply chain
actors, and secondly, to promote and encourage the sourcing of sustainable
commodities by such organisations.
In order to assist decisions concerning which recommendations to pursue and/or
prioritise, each recommendation is examined in terms of its objectives, feasibility,
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likely impact on sustainability, funding implications, and possible implementation
pathways. The four recommendations are:
Recommendation 1: Policy framework for leadership and guidance
A clear message from the consultation process was that supply chain actors such as
retailers would benefit from the development of a clear and coherent government
policy position in relation to sustainable commodities. This would provide the policy
context for involvement and support by supply chain actors and civil society. It would
create a sense of leadership and provide a catalyst for further actions. The policy
position should set out the potential roles of UK companies, civil society
organisations and government departments within the international context.
A second step could be taking a lead in developing a high-level voluntary Code of
Practice, either at generic or commodity-specific level, including aspects such as a
review of impacts, continuous improvement and transparency of reporting. This
should be situated clearly within the policy framework to clarify the objectives to
stakeholders. Thirdly, development of the policy position could lead to specific
actions by government, for example related to procurement policy and practice.
Recommendation 2: Information and best practice documentation
Feedback from potential users and other stakeholders clearly indicated that there is
considerable demand for tools relating to the provision of information and practical
guidance, to assist supply chain actors such as retailers and manufacturers to source
sustainable commodities. These activities should include:
• Database, website and/or handbook, with listings of schemes, issues, and
sources of help. This could be supplemented by a helpline or update service.
• Categorisation and/or evaluation of existing schemes, against clear technical
criteria, to enable users to identify appropriate tools/supply chain solutions for
their own use, and facilitate comparisons for that purpose.
• Toolkit for sourcing of sustainable commodities. This would provide analytical
tools for organisations involved in the supply chain – e.g. practical guidance on
supply chain solutions for specific scenarios, and decision support mechanisms.
Information collected and analysis undertaken for this project can provide the basis
for development of these resources.
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Recommendation 3: Stakeholder fora – communication and policy/practice
development
There is demonstrable demand for activities relating to collective action by users and
other stakeholders, which would complement the information resources proposed in
recommendation 2.
Facilitation of stakeholder events and other communication fora, such as e-bulletins
and promotional campaigns, would also aim to address underlying issues such as
linking action to fundamental problems of producer prices and oversupply, and
consumer awareness. This could include commodity specific actions to share and
develop best practice, where not adequately covered by other organisations, or
mechanisms to share expertise for different commodities.
Recommendation 4: Developing links with existing international generic initiatives,
and mapping gaps
DEFRA could develop informal or formal links with and between existing or emerging
international initiatives that are already working at a generic level on sustainable
commodity crops. A first step could be to host an informal meeting with the leaders
of these initiatives, to discuss common ground, gaps and plans for the future. This
meeting could provide an appropriate forum to discuss the viability and desirability
of a more comprehensive, global, stakeholder-led institution that has as its primary
roles to:
a. foster awareness and demand for more sustainable commodities; and
b. provide solutions to market players to meet that demand (including bringing an
international perspective to many of the tasks identified in Recommendations 2
and 3 above).
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2. Introduction
This project aims to assess the feasibility of establishing a generic supply chain
initiative for sustainable commodity crops, by identifying and assessing mechanisms
to encourage more sustainable production. The project has been commissioned by
the Advisory Committee on Consumer Products and the Environment (ACCPE), which
advises the UK Department for Environment, Food and Rural Affairs (DEFRA).
The underlying rationale of the project is that in many cases it is not clear how UK
manufacturers and retailers (referred to as ‘users’ throughout the report) should
tackle sustainability issues in relation to the commodities that they source. The key
characteristics of many commodities appear to raise particular barriers to action,
such as:
• lack of visibility to consumers, as many commodities are ingredients within
complex products;
• bulk markets that blend commodities from different locations, to create
economies of scale and broad markets, which reduces scope for traceability; and
• users’ limited share of and lack of influence within commodity markets.
ACCPE commissioned the study to explore this rationale, by reviewing existing
initiatives and user needs, in order to identify the scope and detail of potential
activities that a generic sustainable commodities initiative could provide.
Throughout, there is an assumption that this would seek to build on, rather than
duplicate, existing initiatives. The focus is on market-based activities that might be
adopted voluntarily by companies through their sourcing policies, although there is a
recognition that these may need to be supported by a range of public sector actions
where there is currently no clear business incentive to do so. The terms of reference
focused specifically on cultivated food crops, although it is recognised that some or
all of the findings could equally relate to non-food commodity crops such as cotton,
wild-harvested crops such as timber, and marine products such as fish and seafood.
This report presents the results of the project. Although it is aimed at ACCPE, the
findings will be of interest to many other actors, and the proposals for future action
do not presume that ACCPE or DEFRA would necessarily be the lead agency in taking
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these forward. For some proposed actions, it may be more appropriate for other
actors – such as NGOs, retailers or producers – to take the lead, possibly in a
partnership approach with Government support.
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3. Methodology
The study consisted of three main phases, comprising the following methodology:
• Preliminary analysis and consultation to define the scope of the study. This
involved the development of an analytical framework, based on three parameters:
key sustainability implications of specific commodities; supply chain
characteristics that affect the incorporation of sustainability measures; and
drivers for change, namely those factors that create a business case for action.
• Review of the current situation, consisting of two linked elements:
o Desk-based review of existing schemes and initiatives, in order to identify
a wide variety of different approaches and mechanisms. Annex A presents
a list of these initiatives, together with their key characteristics. An in-
depth review of a sample of these initiatives was undertaken, using a
structured review questionnaire (reproduced in Annex B) and interviews
with people managing key initiatives.
o Consultation with UK multiple food retailers, major manufacturers,
government representatives, NGOs and other experts and interested
parties, using structured questionnaires and interviews. The list of
consultees is presented in Annex C. Two slightly different questionnaires
(reproduced in Annex B) were developed, the first specifically for potential
core users of a generic initiative, such as retailers and manufacturers, and
the second aimed at other key interested parties.
• . Development of proposals and recommendations for action, including:
o An analysis of key findings and implications from the review stage, to
develop a range of proposed options for inclusion in a generic initiative.
o Consultative workshop, with representatives of industry bodies, major
retailers, manufacturers, government agencies, NGOs and other experts,
to review proposals. A summary of the workshop can be found in Annex
D.
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o Case studies, to examine the extent to which different types of scheme or
initiative are applicable for specific commodities and for the needs of
different users.
o Development of recommendations for action.
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4. Findings of the Review
4.1. Review of existing initiatives
The review of existing schemes and initiatives identified a wide variety of different
approaches and mechanisms. This section uses the following framework for
categorising the existing schemes and initiatives, as a basis for identifying
implications for a generic initiative:
3rd party certification/audit
2nd or 1st party certification/audit Segregated
supply chains: Identity-preserved
Supply-led Area-wide
approach: Demand-led
Company-specific
Supply chain
initiatives
implemented by
retailers and
manufacturers as
part of sourcing
strategies:
Non-segregated1
supply chains: Code of conduct:
Sector-wide
Good practice guidelines Government-led:
Cross-compliance
Investor-led
Civil-society led
Initiatives led by
other actors:
Dialogue-based
1 It should be noted that within the wide range of supply chain initiatives, there are examples of area-wide approaches and codes of conduct that do involve segregation within supply chains. The division in this framework and in the following description is therefore not without exception, and is used here primarily to underline the key point in 4.1.2, that many supply chain initiatives seek to work with conventional markets rather than establishing alternative supply chain structures.
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4.1.1. Segregated supply chain initiatives
Many supply chain initiatives designed to enhance the social and/or environmental
outcomes of production and trade do not use conventional bulk commodity markets.
Where traceability is an integral part of the initiative and cannot be provided by
existing market structures, alternative supply chains are often established. These
tend to cut out many intermediaries, resulting in significantly shorter chains. The
reality is therefore that a proportion of many products typically considered as
commodities are in fact not traded as commodities, but as differentiated products in
segregated supply chains.
Commodities are traded in this way when they have particular attributes
distinguishing them from conventionally traded commodities. Although some of
these attributes have physical elements, most relate to the geographical source, or
production or process methods (PPMs), which are not inherently recognisable from
the product itself. For example, tea grown on plantations with high labour standards
or to organic specifications may not itself taste or look any different to tea grown
under conventional systems with poor labour standards. In order for these attributes
to be recognised in the marketplace, they need to be verified and guaranteed in
some way. Existing initiatives that attempt to do this fall under three categories, as
follows:
Third party certification/audit
Initiatives that seek to create products with a strong sustainability message often
require the highest level of guarantee. Third party certification is seen by many as
the favoured option in terms of credibility, although it does not necessarily imply any
higher standards than other types of audit. A recognised and accredited independent
body inspects the production, and in some cases the trading arrangements, and
certifies that the product has been produced according to a given standard.
Examples that are commodity specific include the Forest Stewardship Council (FSC)
and the Marine Stewardship Council (MSC). Issues-based schemes that cut across a
number of commodities include the organic and Fairtrade schemes. Other examples
include ISO 14001 for environmental management systems and the EUREPGAP
Protocol for fresh fruit and vegetables. In most cases, a dedicated institution exists
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to develop standards and to promote and regulate the scheme.2 Certification may
also be linked to other support or capacity building services or lobbying roles. In
most cases, certified products are labelled as such at the point of sale, although
certification is sometimes aimed at trade customers rather than the end consumer.
First or second party certification/audit
Where companies do not need to demonstrate the highest level of guarantee to
external audiences such as consumers, or where there is limited availability of
independently certified products, first- or second-party certification may be used.
This also involves a given standard against which production or trading processes
are compared, but this is not independently certified by a third party. First-party
auditing involves the producer carrying out a self-audit and keeping records to
demonstrate that the proper processes have been followed. The Linking Environment
And Farming (LEAF) audits in the UK work on this basis.3 Second-party auditing
involves the buyer of the product inspecting the production or trading processes,
often on a sampling basis. This may be carried out by the retailer or by integrating
suppliers further up the supply chain. An example of this is the Migros Criteria for
Oil Palm Plantations, which are now being implemented on plantations supplying
Migros in three countries. This approach is common among major retailers using
their own private standards, which are often linked to quality. It may also be used to
audit against external standards such as the Ethical Trading Initiative base code.
Identity-preserved schemes
Unlike conventional bulk commodity production, ‘Identity Preserved’ (IP) commodity
production allows a commodity to be differentiated in the market. This is achieved
through a combination of contract farming, information and tracking technology4,
production, processing, and distribution technologies, and process standards. IP
technology has so far largely been applied to managing risk, for example in
2 In addition, the leading voluntary international standard-setting, certification and accreditation schemes that are focused on social and environmental issues are have joined together as a formal association called the ISEAL Alliance. See www.isealalliance.org. 3 As well as self-certification, LEAF also offers farmers the opportunity to have an external audit. 4 Such as that developed by IdentityPreserved (see http://www.identitypreserved.com) or efarm (see http://www.efarm.com/)
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excluding GMOs from supply chains, or ensuring quality, such as enhanced starch
quality in maize. Use of this technology is growing. General Mills, for example,
expect that within three to five years, half their total grain usage will be identity
preserved.5 There are possibilities of widening the set of attributes to include
sustainability of production, processing and handling. It can be concluded that if the
retail or processing end of the chain starts to demand products from environmentally
friendly production systems, the technology exists for commodity systems to
respond to meet those demands, albeit with cost implications.
4.1.2. Non-segregated supply chain initiatives
Although many in the demand-side of the agrifood industry are driving for
certification and segregated chains for sustainable commodities, others are
reminding the world that sustainability rather than certification is the goal. They
suggest that certification is the last thing that we should discuss when aiming for
sustainable production, in order to avoid losing the benefits associated with
commodity markets and incurring the costs of establishing and monitoring a
dedicated chain of custody within traditional long supply chains. There are various
initiatives that attempt to work with existing markets rather than investing in
alternative supply chain structures or ensuring full traceability.
Area-wide initiatives
One approach is to organise a supply base – a community of growers – rather than
segregation within a region with all the associated problems and costs of traceability
and mixing. With such area-wide partnerships, the existing commodity markets can
be used rather than expensively by-passed. This remains a demand-led approach,
but it does provide the opportunity to develop true partnerships with producers of
raw materials, avoiding the imposition of standards. For example, Unilever is
working on an area-wide approach to reach 3-4 million small tea producers. Two
other examples of demand side-led area-based regional support initiatives are the
Sustainable Tree Crops Program and the World Cocoa Foundation Sustainable Cocoa
Program.
5 Ron Olson, General Mills Grain Divisions, September 2001, cited in Shipman (2002)
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Such an approach lends itself to the application of Better Management Practices
(BMPs). These can encompass a broad range of environmental, social and labour
practices (from siting, zoning, and construction during the establishment of
operations to ownership and outgrower arrangements) that allow companies to
optimise resource use efficiency, create marketable by-products, reduce waste,
encourage employee fidelity, assure market access and reduce the risk of adverse
relations with local stakeholders.6.
Area-wide initiatives and BMPs can also be supply-led, for example at a national
sectoral level such as for cotton and sugarcane in Australia.7 Growers see this form
of self-regulation as offsetting possible regulatory restrictions, for example as
competition for water supplies becomes more intense, and in supporting Australia’s
claim of “Clean and Green” credentials abroad. Cotton Australia, the main industry
body for the country’s 1500 cotton growers, lists among medium-term benefits of
BMPs lower insurance premiums, better access to finance and tax concessions, while
long-term benefits include a premium price for BMP cotton, a licence to continue to
grow cotton, access to new markets and greater demand for Australian cotton on a
world scale.8 Another example of a supply-led sectoral area-wide initiative is the
Peace Coffee initiative.
Industry-led codes of conduct
In some cases, an individual company or a group of companies, often on a sectoral
basis, adopts a code of conduct intended to encourage good practice or to reassure
other stakeholders. It is likely to be integrated into the requirements passed on to
suppliers and producers. Although this may be backed up by first-, second- or
third-party audits, it may not be monitored or verified at all. Two prominent
examples are the Tea Sourcing Partnership and the UK Banana Group Code. Both are
funded by corporate membership and relate to a very high proportion of UK imports.
6 Definition as used by IFC and WWF-US in their initiative on BMPs. See Annex A for further
details of this initiative. 7 Source: Source: EMS Australian Agronomy Conference Paper Jan 2001. www.cse.csiro.au/research/Program2/SAND/sand_project_EMS.htm 8 http://www.cottonaustralia.com.au
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The Tea Sourcing Partnership standards are monitored by an independent third-
party, PriceWaterhouseCoopers.
4.1.3. Approaches led by other actors
The primary actors involved in the segregated and non-segregated supply chain
initiatives described above are companies at retail, processing or production level.
Companies decide what they want a supply chain initiative to achieve for a particular
commodity, and choose between these options as appropriate. Given this study’s
focus on establishing how a generic initiative could meet the needs of ‘users’, i.e.
retailers and processors seeking to tackle sustainability issues within their
commodity sourcing, it is reasonable to focus particularly on these types of
initiatives. However, other actors can also play a role in encouraging sustainable
commodity sourcing.
The following approaches are based on interventions by one or more government,
civil society or other private sector actors. Some are intended to create a business
case for action on sustainable commodities, while others seek to provide solutions
and ways to allow companies to act. They can be valuable in that they can find and
create points of leverage and solutions that take account of the ‘big picture’ that
conventional supply chain approaches introduced at a company level may ignore. For
example, they have the potential to change consumption, production or trading
patterns as a whole, rather than simply ensuring that existing patterns are
sustainable at a management or plant level. They should therefore be considered as
possible complementary methods alongside the more conventional segregated or
non-segregated supply chain initiatives described above.
Government-led initiatives
The public sector can play a driving role in various ways. Firstly, it can endorse or
create commodity-specific good practice guidelines or checklists for industry. A
recent example is the UK Sustainable Development Commission (SDC) sugar
checklist.
Secondly, government can link sustainability to direct financial support for
producers. The concept of cross-compliance (also known as ‘eco-conditionality’) is
that farmers should comply with a basic standard of environmental responsibility in
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return for the public support they receive. In the Agenda 2000 reforms to the EU’s
Common Agricultural policy, national authorities were given the jurisdiction to attach
environmental conditions to all CAP subsidies. The most comprehensive national
adoption of cross-compliance has been in Switzerland, where following a
referendum in March 1995, Integrated Crop Management became the baseline
standard for all farmers that wish to receive the generous direct income payments
since 1998.9 Cross-compliance is a natural ally of area-wide sourcing, presenting a
whole country’s production as in compliance with BMPs; all Swiss production, for
example is now either ‘integrated’ or organic. But the link between public policies of
cross-compliance and sustainable supply chains has apparently not yet been made.
Investor-led initiatives
Investors can exert significant leverage on companies, and are under increasing
pressure themselves to demonstrate responsibility in financing commodity
production. IFC, the private sector arm of the World Bank, is carrying out a project
with WWF-US to explore whether Better Management Practices (BMPs) could be
developed for a range of agricultural commodities. This is based on the assumption
that for investors, companies that use BMPs represent fewer risks and potentially
higher returns on investment. For many buyers, such companies represent good
potential longer-term partners because there is greater assurance that
environmental and social issues have been successfully addressed and there is
generally higher and more consistent product quality about which purchasers can
defend their purchases or even make claims if that is their goal.10 A prominent
example of this approach is the group of Dutch banks that have adopted a set of
basic social and environmental principles as a screen for investment in oil palm
plantations.
Civil society-led initiatives
There is a wide variety of civil society campaigns and other projects directly or
indirectly related to commodity production. Some are generic, such as the Oxfam
9 Markus Günter, Felix Schläpfer, Thomas Walter, Felix Herzog (2002). Direct payments for biodiversity provided by Swiss farmers: an economic interpretation of direct democratic decision. OECD, Paris. 10 Mark Eckstein, pers. comm. May 2003.
19
campaign on trade and the Sustain work on Food Miles, while others are commodity
specific, for example the Songbird Foundation (coffee) or Sawit Watch (palm oil).
Campaigns may target an issue, a sector or a single company, for example the
Banana Action Network in relation to Chiquita.
Dialogue-based initiatives
Recognising the crucial importance of involving a wide range of stakeholders for
initiatives to be credible, and the fact that solutions often require wide participation,
many initiatives are based on dialogue and cooperation between companies and
other actors. Again, these may be commodity-specific, such as the Palm Oil
Roundtable, or have a limited sectoral or thematic focus, such as the FAO Working
Group on horticulture. Others are generic or seek to draw common lessons from
dialogue related to particular commodities, for example the IISD/UNCTAD
Sustainable Commodity Initiative.
4.2. Review of stakeholder needs
The following analysis draws on data collected through questionnaires to and
interviews with potential users (retailers and manufacturers) as well as other experts
and interested parties. It also draws on responses to question 8 of the questionnaire
completed by people running existing schemes, which sought their opinions on the
appropriate functions that a generic initiative could perform. Comments made by
stakeholders at the consultative workshop and in subsequent correspondence
related to proposed options for inclusion in an initiative are not included – though
many make similar points to those raised here – but are taken into account in the
recommendations that follow in section 6.
4.2.1. Perceived priority commodities for future action
Existing work on sustainable commodities appears to be relatively patchy. Retailers
reported that much of their existing work has been driven by concerns around GMOs
and supply chain labour standards as well as the more traditional quality and
innovation drivers. In some cases it has been opportunistic, for example making use
of supply chain traceability for Fairtrade product lines to address other issues such
as pesticide usage. However, all respondents agreed that further action on
20
sustainable commodities was necessary. One expert suggested that “without reform
of supply chains, prices paid to producers will continue to fall in real terms, and
quality will also decline”. One retailer noted that “they are a significant element of
our social and environmental impact but it is often difficult to effect change on our
own”. It appears that pressure for action comes mainly from NGOs and within the
industry rather than from consumers.
Most respondents said that all the commodities listed in the questionnaire11 had
sustainability impacts that needed to be addressed in some way. Some respondents
pointed to particular priorities from their perspectives; the most commonly cited
ones were bananas, cocoa, coffee, palm oil, soy and sugar, followed by cotton, fish,
rice, shrimp/prawns and timber. Maize and wheat were mentioned as particular
priorities by only one respondent, and tea was not singled out by any respondents.
The relatively high number of respondents who said that all of the listed
commodities needed attention, and the relatively small sample of respondents, some
of whose work focuses particularly on one or a few commodities, means that these
results should be interpreted with some caution. However, it is fair to draw the
conclusions that there are no commodities that stand out as requiring particularly
more attention than others on this broad list, and that a generic initiative could
usefully relate to any on the list.
In contrast, respondents clearly identified producer prices and oversupply as an
overriding priority in terms of issues. Without tackling this it was felt that other
elements of sustainability could not be addressed. The other issues listed were all
identified as priorities, i.e. destruction of habitats, pollution, worker welfare, GMOs
and human rights. Some respondents also specifically mentioned pesticides and
fertilisers, community relations, irrigation and dealing with insecure supply. Many
respondents stressed that priority issues are often commodity- or location-specific.
One retailer emphasised the need for an holistic approach, dealing with the
livelihood impacts of any environmental measures rather than tackling any one issue
in isolation.
11 These were bananas, cocoa, coffee, cotton, fish, maize, palm oil, rice, shrimp/prawns, soy, sugar, tea, timber and wheat.
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4.2.2. Perceived barriers to be overcome
Respondents identified various barriers that would need to be overcome to do more
on these priority commodities or issues. The factor mentioned most was the lack of
customer awareness and interest, followed by cost. Other barriers identified by some
respondents were a limited share of the market, lack of traceability and current
subsidy regimes. Additional barriers each mentioned by one respondent were a lack
of agreement on principles for action; a lack of commitment at the industry or retail
level; a lack of transparent price information for producers; excessive power at the
retail level that forces prices below the cost of production; and a lack of research into
ideas and solutions. One expert suggested that an underlying problem that creates
many of these barriers is that “there is no clear link between irresponsible practices
and business risk”. There were some contradictory statements in the responses in
this section – for example, one importer refuted the suggestion that traceability is a
key barrier, stating that “as a company we are now very good at traceability;
everything within the company is now traceable back to source”.
4.2.3. Who should be involved?
Most respondents suggested that retailers and processors should take the lead in
tackling sustainable commodity issues, as part of their purchasing strategies. Other
actors identified as possible leaders were producers themselves and other supply
chain actors, governments (including DEFRA) and international commodity bodies. It
was notable that people running existing schemes argued that initiatives should be
mission- or stakeholder-driven rather than retail-driven, and that if an initiative is
retail-led, retailers should address the costs of implementation rather than simply
passing them onto producers.
Actors identified as having a potential role to play but not necessarily leading were
diverse. Suggestions included all supply chain actors; civil society groups including
NGOs and unions; donors; shareholders; banks and others in the financial sector;
governments in producing and consuming countries; trade associations; and
consumers. Some respondents stressed the need for a multi-stakeholder approach,
with one retailer noting that “the Ethical Trading Initiative model is a good one, with
government facilitating and pressure groups working with all elements of the value
22
chain”. It was noted that in many cases the necessary actors depends on the
commodity – for example, one expert said that “the financial sector has a real role to
play for certain commodities e.g. oil palm, soy, sugar, but this is not the case for
some other commodities such as cocoa”.
4.2.4. Perceived functions of a future generic initiative
There was not universal support among respondents for a generic initiative. One
expert said that “there is no need for a new initiative; all the functions that a generic
initiative could provide are already covered by various initiatives”. One person
involved in an existing scheme stated that “we believe that we already have a generic
sustainable commodities initiative that can be adapted to any crop in any country”.
This caution at least partly reflects uncertainty about the scope and objectives of a
potential generic initiative.
However, other responses demonstrated a clear demand for services, actions or
outcomes that either do not exist, or are not meeting current needs. One expert
stressed that there is a need for “practical, viable solutions for companies”. Question
3.2 in the questionnaire, which asked how important various aspects of an initiative
would be, produced the range of responses shown in figure 1.
Figure 1 Importance of various aspects of a potential generic initiative
0%
20%
40%
60%
80%
100%
visibi
lity
trace
abilit
y
indep
ende
nt au
dit
colle
ctive
actio
n
guide
lines
prior
ity
strate
gic ad
vice
spec
ific gu
idelin
es
info i
nitiat
ives
forum
s
non-t
race
don't knownot importantmay be importantimportantvery important
Note: Full descriptions of the categories listed on the x axis:
23
Visibility to consumers e.g. labelling or membership of an initiative Mechanisms to allow supply chain traceability Independent audit/certification Scope for collective action with other companies General guidelines on how to identify priority commodities Practical advice on how to develop a strategy to deal with priority commodities Specific guidelines on what is ‘sustainable’ for different commodities Information on existing initiatives or further information Forums for discussion with key stakeholders Interventions that do not require traceability but tackle sustainability at the production level
while retaining existing commodity market supply chain structures
As with earlier parts of the questionnaire, the variety of responses indicates that
different functions are seen as desirable by different stakeholders. The opinions
expressed in relation to the possible functions of a generic initiative are analysed
below.
Function 1: Forums for discussion with key stakeholders and collective action
Over two-thirds of respondents identified opportunities for stakeholder engagement
as either very important or important. However, there is a danger of duplication in
this area. In the words of one potential user, “there are already too many forums for
discussions with key stakeholders (for us) to deal with”. Over 60% of respondents
said that it would be useful if an initiative allowed scope for collective action with
other companies or stakeholders – though others stressed that this could be
counterproductive or harm prospects for progress.
Function 2: Information provision/clearing house
A similarly high proportion of respondents felt that there was scope for providing
information on existing initiatives, practical advice on how to develop a strategy to
deal with priority commodities, and specific guidelines on what is ‘sustainable’ for
different commodities. A smaller proportion would find guidelines on how to identify
priority commodities useful. One additional comment described a need for detailed
information on how commodity markets work, particularly given a lack of
understanding among some ethical managers and NGOs. Overall, it was stressed that
there is a need for any solution to reduce information costs by keeping messages
clear and simple.
24
Function 3: Establishing principles for ‘acceptable’ or ‘credible’ schemes
Many of the comments made by respondents suggested a need for “a way for people
to tell the difference between good schemes and duff ones”, noting that this should
probably be targeted at industry buyers rather than consumers. Various respondents
suggested that an initiative could develop criteria for deciding which existing
schemes are credible, noting that work in this direction is already under way within
the ISEAL alliance. It was suggested that such guiding principles should relate to
stakeholder involvement, reference to objective scientific evidence, and transparent
independent verification.
Function 4: Providing advice on acceptable schemes
Some respondents took function 3 a step further, suggesting that an initiative could
use such principles or criteria to “provide objective and impartial advice on which
schemes are acceptable or recommended”. However, it was stressed that any such
peer review or recommendation of labels/schemes runs the risk that standards are
set too high or too low.
Function 5: Providing assurance to consumers
Over half of respondents felt that visibility of an initiative to consumers would be
important or very important. One retailer stressed the need for “proof that we are
operating in a sustainable manner”. This relates also to the perceived need for
mechanisms to allow traceability, and for independent auditing, both of which were
identified as important or very important by over 70% of respondents. The key
question of the merits and costs of ensuring traceability is discussed further below in
section 4.
Function 6: Validation of product sources and increasing sustainable supply
Some respondents put forward a case for supply-side measures to allow the
validation of product sources and to develop supply chain networks and sustainable
sources. Just under half of respondents felt that interventions tackling sustainability
at the production level while retaining existing commodity market supply chain
structures would be useful.
25
Function 7: Linking supply chain initiatives to the macroeconomic context
Throughout most responses was the message that there is little point in addressing
the social and environmental issues within supply chains without taking account of
the overriding context of low producer prices. In the words of one expert, “incentives
for environmental management plus producer revenues go hand-in-hand”, and a
number of respondents argued that poverty alleviation has to be integral to any
commodities initiative. There is therefore a need to link existing initiatives that
operate at the micro, supply chain level, with measures that tackle the larger
macroeconomic issues or oversupply and fluctuating prices. Proposals to allow this
included measures to promote diversification options for producers; policy research;
intergovernmental relations; and financial structures such as a global sustainable
agriculture credit facility that would support producers working towards any number
of recognised or approved voluntary initiatives.
Function 8: Tackling supply chain power relations
Linked to this broader macroeconomic and prices issue, it was also suggested that
measures to deal with supply chain power relations would be useful. One expert
commented that harsh retail price competition combined with a concentration of
power at the retail level mean that price cuts are pushed back down the supply chain,
resulting in producers being paid below cost price. It was therefore suggested that
measures could be taken to influence supermarket sourcing policies to tackle this.
4.2.5. Perceived roles for DEFRA
Respondents proposed a variety of roles that DEFRA could play in relation to
sustainable commodities. These are summarised in the table below. National and EU policy
• Addressing EU tariff escalation to make it easier to import processed sustainable commodities
• Promoting greater transparency in private sector sourcing and trade to allow policy makers to know which companies are sourcing from where
• EU-wide cooperation and policy work • Collaborating with DTI and DFID • Providing funding and taking it more seriously as a political issue • Building commodities into the Food Industry Sustainability
Strategy • Providing subsidy or other payment mechanisms where positive
social or environmental outcomes (i.e. public goods) are generated, that are otherwise not recognized in the market and hence not generated.
26
Information generation, provision and guidelines
• Provide an overview of existing work • Helping to pool resources on what is sustainable for each
commodity • Make recommendations for what is necessary and what is
possible • Supporting research on the impacts of commodity schemes:
poverty, environmental, supply chain (access to markets, costs, distribution of rents)
Production level support
• Supporting technical issues of conversion to sustainable systems in developing countries
Catalysing action • Leading and supporting national and international initiatives • Funding (akin to DFID support for ETI) • Convening all relevant parties • Threatening legislation • Supporting civil society action and campaigns to raise the issues
re commodity production • Expanding funding along the lines of existing/previous DEFRA
grants to overcome barriers to certification Adding legitimacy • Ensuring objectivity and credibility in any new initiative
• Formal government recognition of existing schemes Partnering • Working with NGOs and supply chain actors to identify and
formulate possible initiatives, but not running them
4.3. Implications of the Review
Beyond the specific possible functions of a generic initiative that were suggested for
comment in the consultation, the data collected for this review of initiatives and user
needs has a number of broader implications for any future initiative. These
implications provide useful context for the final recommendations for action that are
made (section 6), and are summarised below.
Implication 1: There is a need for flexibility and to build on existing work
It is clear that many problems and solutions are commodity-, location-, company- or
market-specific. Many respondents stressed the need for any generic scheme to be
appropriate and flexible. Any scheme needs to allow for improvement over time and
allow producers to develop their own systems to meet the standards. One
respondent stressed that the danger of generic programmes is that as they become
more general they necessarily lose their meaning and effectiveness, and another
cautioned against “seeking unattainable or standardised goals, which may cut across
the significant work already being done.” Another said that “the big retailers will
want a simple one-size-fits-all initiative, but that’s not good for producers because
it doesn’t take account of production issues (e.g. scale, seasonality) or different
niche markets (e.g. organic, fairtrade)”. It was suggested that harmonisation at a
27
high level while retaining enough flexibility to be applicable in various countries is a
useful principle. Homogenising existing schemes would ignore the fact that they
have each been developed to address the particular issues in that sector or market.
There is also a need to be sensitive and nuanced – one respondent noted the need to
take care that any attempt to increase consumer or investor awareness and to
support best practice does not over-simplify issues and lead to damaging boycotts.
Implication 2: Traceability is not necessarily the answer
There is mixed evidence regarding the usefulness of aiming for traceability and
segregation of supply chains. Some respondents suggested that interventions that
do not require traceability are “a waste of time” as they will not be credible, and there
are concerns about a free-rider problem with area-wide initiatives if these do not
involve some sort of audit. Others suggest that it is not worth investing in dedicated
supply chains as this is expensive and the benefits of bulk markets are lost. As
technology develops the cost of traceability is likely to fall – but clearly certification
is not always the answer. Any generic initiative therefore needs to be flexible enough
to allow for a range of solutions, some based on traceability and some working on an
area-wide basis.
Furthermore, some respondents suggest that the perceived lack of traceability of
commodity markets is sometimes used by large companies as an excuse not to
provide more information on where their products come from. As one respondent
stated, “if you know the geographical region you can check the production structure
in that region. Companies are hiding behind a smoke screen to shirk their
responsibilities”. Further investigation examining to what extent traceability issues
are really a barrier to action may therefore be warranted.
Implication 3: Ensuring costs are minimised and shared evenly
As discussed above, some supply chain schemes have an additional cost attached to
them. Many respondents stressed the need for mechanisms to share these fairly
along the supply chain - if retailers and manufacturers reap the benefits of
labelling/assurance schemes through improved sales or public image, they should
pay the costs of attaining that assurance, not just push requirements onto others.
This is particularly the case for smaller producers – there are economies of scale that
work against them. There may be a trade-off between the environmental benefits of
28
full traceability and audit and the social benefits of facilitating access by
smallholders. One expert suggested that “a shift towards an integrated certification
programme like EUREPGAP with quality, environmental and social elements would be
very problematic for small suppliers on the basis of cost and intolerance of process
requirements for long term improvement. There needs to be collaboration to allow
producers to improve conditions”. Others suggested that standards need to differ for
smallholders compared with plantation production. Suggested ways of reducing
costs included training and using local auditors; the application of group certification
or landscape level schemes where appropriate; and exempting small producers.
Implication 4: Niche or mainstream markets can each provide solutions
The actors behind any future generic initiative will have to address the question of
whether to prioritise efforts in aiming to grow niche markets, or to directly tackle
mainstream markets. There may be excessive cost implications for some
commodities, that can only be paid through niche market premiums. Some certified
commodities are likely to remain in short supply for the foreseeable future, as has
been the case with MSC-certified fish, so this may not be a sufficient solution for
retailers and processors. Meanwhile, some processors and retailers are wary of
offering ethically traded lines, as this may make them a target for further ethical
pressure, and it potentially makes customers suspicious of mainstream product
lines. Furthermore, product-level labelling of niche products can unnecessarily place
the onus on consumers to make a conscious choice to buy sustainable products, and
the proliferation of labels and standards can confuse producers and consumers.
There may therefore be a need to develop an initiative which leaves room for both
niche, differentiated standards (eg organic) plus baseline standards for mainstream
markets (eg IPM). This would also help to address concerns that sub-organic
initiatives and standards may be confused with ‘dark-green’ sustainability initiatives.
Implication 5: Consider the international context
There was little support for a national-level initiative. In the words of one
respondent, “internationally traded commodities need international approaches; a
national initiative won’t be able to cope”. This was echoed elsewhere; “to make a real
difference, this sort of initiative needs to be taken forward internationally and on a
large scale”. It may therefore be worth considering how an initiative could be
29
developed in partnership with other actors with complementary expertise and
capacity. Opportunities for working with existing multilateral or international
initiatives with similar aims could therefore be explored.
Implication 6: Make the links to the macroeconomic picture
As discussed above under the possible function 7, there is an urgent need to deal
with the macroeconomic context of commodity production and trade as well as
supply chain issues. Producer prices is a key priority. Furthermore, any initiative also
needs to deal with the wider environmental and social contexts of commodity
production – there is a danger that supply chain initiatives are blind to wider
implications of trade flows in relation to nutrient flows, transport-related climate
impacts, patterns of natural resource usage, employment and migration flows, and
so on. A generic initiative allows the opportunity to situate micro-level actions within
their broader context.
Implication 7: Avoid creating ‘talking shops’
Many respondents were enthusiastic about the potential for action on sustainable
commodities, but stressed the need to instigate real action rather than creating yet
another talking-shop. One potential user stressed that it is “critical that we get
something up and running involving leaders rather than waiting for all stakeholders
in the debate to reach the same level of understanding of the need for action”.
However, some respondents suggested that working with leaders through voluntary
initiatives has limited potential for change, and that there should be greater
emphasis on improving the performance of the laggards – using a mix of
interventions by government and civil society.
Implication 8: Need for parallel activities by various stakeholders
Given this study’s focus on establishing how a generic initiative could meet the
needs of ‘users’, i.e. retailers and processors seeking to tackle sustainability issues
within their commodity sourcing, it is reasonable to focus particularly on initiatives
led or implemented by these companies. However, other actors can also play a role
in encouraging sustainable commodity sourcing.
Interventions by one or more government, civil society or other private sector actors
that are intended to create a business case for action on sustainable commodities, or
30
to provide solutions and ways to allow companies to act, can be valuable in that they
can find and create points of leverage and solutions that take account of the ‘big
picture’ that conventional supply chain approaches introduced at a company level
may ignore. They should therefore be considered as possible complementary
methods alongside more conventional supply chain initiatives.
31
5. Development of Proposals
5.1. Potential Activities under a Generic Initiative
The review analysis of existing initiatives (section 4.1) and user needs (4.2) identified
a number of implications for a generic initiative (4.3). From this analysis, it became
clear that there is no single best way forward for an initiative to suit all commodities
or supply chain actors. Instead, the recommendations for a generic supply chain
initiative should consist of a coherent set of different activities, rather than a single
process or approach.
Following the analysis of the review findings, a number of potential activities for
inclusion in a generic scheme were identified for consideration as options. The
potential activities included a number related to the provision of information services
and practical guidance to users, and others intended to actively promote or enable
the sourcing of sustainably produced commodities, as follows:
Information and practical guidance Active promotion of sustainable sourcing
• Database or resource book, with listings
of schemes, issues, commodities, and
sources of help
• Stakeholder forum
• Links to international fora
• Information service, e.g. helpline or
website
• Toolkit to assist companies’ decision-
making in relation to sourcing
• Code of practice, possibly with external
monitoring
• Multi-stakeholder entity for promoting
sustainable commodities
• Call for public commitment by companies
• Evaluation of credible schemes
• Campaigns to create the business case
for sustainable commodities
• Facilitation of market links
• Support for producers to meet production
requirements
• Linking supply chain initiatives to the
macroeconomic context, e.g. through a
‘commodity sustainability fund’
32
These potential activities were presented as the basis for discussion at a consultative
workshop (see Annex D for workshop summary), attended by a range of supply chain
actors and stakeholders, most of whom had already contributed to the review stage
of the project. The purpose of the workshop was to discuss the proposals with key
individuals, in order to significantly increase the level of comment and scrutiny for
the different proposals, and potentially enhance the level of ‘buy-in’ from
stakeholders to the eventual outcomes of the study and any future initiative.
The comments from workshop participants supported the flexibility of the proposed
approach to a generic initiative. Specific points that emerged included:
• the danger of duplicating current work and the need for coordination;
• before establishing any new initiative, the need for a performance review of
existing voluntary initiatives given the limited evidence that they can achieve
significant improvements in social and/or environmental outcomes12;
• the need to connect supply chain initiatives to the context of economic pressures
on producers;
• the importance of not pursuing niche sectors to the exclusion of mainstream
markets, where there are few incentives for the ‘laggards’ to improve practices;
• the need for a coherent policy vision from DEFRA, in order to provide leadership
and guidance to supply chain actors.
5.2. Case Studies
As a separate strand of work in developing proposals, a number of case studies were
undertaken to look at the extent to which different categories of supply chain
scheme or initiative are applicable for specific commodities and for the needs of
different users. The case studies aimed to explore the degree to which supply chain
solutions depend not only on the commodity, but also on context-specific business
drivers for those commodities for different actors in the supply chain. The case
12 For example, OECD (2003) Voluntary Approaches for Environmental Policy: Effectiveness, Efficiency and Usage in Policy Mixes concludes that the environmental effectiveness of voluntary approaches is often questionable, and their economic efficiency is generally low.
33
studies also aimed to assess the extent to which general guiding principles can be
formulated, clarifying which supply chain options are most suitable for which type of
commodity under which context.
The results of the case studies (see Annex E), and their use in developing practical
guidance based on decision trees or screening processes using the above principles,
offer considerable potential as part of a 'toolkit' for supply chain actors to identify
and implement appropriate supply chain options for specific situations. The
development of this toolkit has been identified as a key potential activity of a generic
initiative, and is included under Recommendation 2 (section 6, below).
Although the case studies demonstrated the need for context-specific solutions,
they also established that it is possible to frame some principles that are common in
most circumstances for particular characteristics of commodities, as listed in the
table below. Clearly there will be exceptions to these general principles, and they
should be applied with some caution. It should be noted that these principles
provide some guidance to the appropriate response of a company in a particular
scenario, given that company’s objectives of minimising business risk and
maximising business benefits. They do not necessarily indicate the optimal outcome
in terms of sustainability. Therefore there does need to be parallel activities carried
out by government, civil society or a future multi-stakeholder body with the
objective of enhancing business incentives for increased action on sustainable
commodities. Such activities could include awareness building, pressure from
multiple sources, technical and financial support to enable buyers to switch to
sustainable supply, monitoring of progress, and so on. These potential activities are
included in the Recommendations (section 6, below).
Characteristics of Commodities
(any or all may apply)
Principles for Supply Chain Measures
• Relatively visible to the consumer, e.g. as
discrete product or significant ingredient
• High profile sustainability issues, often
targeted by campaigning groups
• Traceable supply chains
• Strategically important for company
Likely to be suitable for segregated supply
chain mechanisms with high credibility
(such as 3rd party schemes). Other
interventions such as area-based support,
codes of conduct and long-term
34
• Company seeks leadership status in relation
to sustainability
partnerships could also be applicable.
• Less visible to the consumer, e.g. as minor
ingredient in processed product
• Lower profile sustainability issues
• Less traceable supply chains
• Low strategic importance for company
• Company does not seek leadership status in
relation to sustainability
Likely to be suitable for codes of conduct
with gradual monitoring to establish
credibility; possibly with the introduction
of Identity Preserved systems over time.
Industry-wide codes of conduct or baseline
standards may be sufficient.
35
6. Recommendations
As noted in section 5, our analysis suggested that there is no single best way
forward for an initiative to suit all commodities or supply chain actors. Instead, the
recommendations for a generic supply chain initiative should consist of a coherent
set of different activities, rather than a single process or approach. Based on the
analysis of review findings, the proposed options that were developed, and
subsequent feedback from the consultative workshop, four recommendations for
action are made. These recommendations are complementary, and each could be
developed and implemented independently or in conjunction with others. Although
the recommendations are aimed at ACCPE and DEFRA, they include some actions that
may be taken forward by or involve other actors, with Government playing a
supporting or catalytic role.
The underlying objectives common to each of the recommendations are, firstly, to
improve the availability of information and practical guidance for supply chain
actors, and secondly, to promote and encourage the sourcing of sustainable
commodities by such organisations.
It should be noted that the applicability of each of these recommendations depends
on the desired outcomes – it is clear from the stakeholder consultation that there is a
wide range of possible objectives that a generic initiative could seek to fulfil, none of
which are common to all stakeholders. In order to assist decisions concerning which
recommendations to pursue and/or prioritise, each recommendation is examined in
terms of its objectives, feasibility, likely impact on sustainability, funding
implications, and possible implementation pathways.
Finally, a note of caution. Rather than focusing only on these specific
recommendations, we would urge ACCPE and DEFRA also to consider the wider
implications of the findings of this study, in particular those identified in section 4.3
above, repeated in the box below.
Implications identified by the review
• there is a need for flexibility and to build on existing work;
• traceability is not necessarily the answer;
• there is a need to ensure costs are minimised and shared evenly;
36
• niche or mainstream markets can each provide solutions;
• consider the international context;
• make the links to the macroeconomic picture;
• avoid creating ‘talking shops’; and
• the need for parallel activities by various stakeholders.
37
Recommendation 1: Policy framework for leadership and
guidance
A clear message from the consultation process was that supply chain actors such as
retailers would benefit from the development of a clear and coherent government
policy position in relation to sustainable commodities. Within this, consideration
should be given to the respective roles of DEFRA (given its food and sustainable
development remit), DTI (given its overall policy responsibility for international
commodity issues) and DFID (given its international development remit). A clear
government position would provide the policy context for involvement and support
by supply chain actors and civil society. It would create a sense of leadership and
provide a catalyst for further actions. The policy position should set out the potential
roles of UK companies, civil society organisations, international commodity bodies
and government departments within the international context.
A second step could be taking a lead in developing a high-level voluntary Code of
Practice, either at generic or commodity-specific level, including aspects such as a
review of impacts, continuous improvement and transparency of reporting. This
should be situated clearly within the policy framework to clarify the objectives to
stakeholders. Thirdly, development of the policy position could lead to specific
actions by government, for example related to procurement policy and practice.
Objectives • Provide the context for involvement and support by other government
departments, supply chain actors and civil society.
• Enable leading supply chain actors, such as retailers, to publicly
demonstrate best practice.
Possible
implementation
pathways
• ACCPE to recommend to DEFRA a policy position to take, possibly within
or linked to the Food Industry Sustainability Strategy and the Sustainable
Consumption and Production Strategy. This should note DEFRA’s role in
relation to other government departments.
• DEFRA to lead the establishment of a high-level cross-departmental
working group involving DEFRA, DTI and DFID, with the remit of
developing common policy objectives and clear statements, and
identifying further common activities. This should build on the work of
38
the DTI Working Group on Commodities, dealing with the broad range of
sustainability issues and a wide cross-section of commodity crops.
• This working group to lead the development of a high-level voluntary
code of practice to allow supply chain actors to express their
commitment to the stated policy objectives.
Funding
implications
• Low direct input, mainly requirements for time input by DEFRA and other
departments to manage the process of policy development, including
some consultation.
Likely impact on
sustainability
• Directly, no impacts.
• Indirectly, significant potential for change, as it will encourage supply
chain actors to take these issues seriously, and establish synergies
between ongoing departmental activities.
• Working group could develop greater understanding of the benefits and
limits of voluntary action, and consider the range of Government
interventions (mandating, facilitating, partnering, endorsing13) necessary
to support these. This could have significant impacts if taken seriously.
Feasibility • Highly feasible.
Recommendation 2: Information and best practice
documentation
Feedback from potential users and other stakeholders clearly indicated that there is
considerable demand for activities relating to the provision of information and
practical guidance. These should take the form of tools that would assist supply
chain actors such as retailers and manufacturers to source sustainable commodities.
These activities should include:
• Database, website and/or handbook, with listings of schemes, issues, and
sources of help. Information collected for this project can provide the basis for
this resource. This could be supplemented by a helpline or update service. A
13 See Fox, T., H. Ward and B. Howard (2002) Public Sector Roles in Strengthening Corporate Social Responsibility, World Bank, Washington, DC, for a discussion of this framework.
39
website could form a specific ‘sustainable commodities’ section of the proposed
‘Green Guide’ website if this goes ahead.
• Categorisation and/or evaluation of existing schemes, against clear technical
criteria, to enable users to identify appropriate tools/supply chain solutions for
their own use, and facilitate comparisons for that purpose. Analysis undertaken
for this project can provide an initial basis for this work.
• Toolkit for sourcing of sustainable commodities. This would provide analytical
tools for organisations involved in the supply chain – e.g. practical guidance on
supply chain solutions for specific scenarios, and decision support mechanisms.
The case studies carried out for this project may provide an initial basis for
development of the toolkit.
Objectives • Provide information resources and tools for supply chain actors and
civil society, in order to facilitate greater uptake of mechanisms to
encourage sourcing of sustainable commodities.
Possible
implementation
pathways
• DEFRA to clarify priority activities, with input from ACCPE.
• DEFRA to commission the development of specific tools, based on
the outputs of this project, with information on each commodity
crop, relevant schemes and information on good/best practice.
These tools should be developed with further advice and feedback
from potential users such as retailers and manufacturers.
Funding
implications
• Moderate direct input; some funding required to commission
specific resources. Initial inputs could be fairly low, as this project
has undertaken some of the necessary baseline work. However, a
fully comprehensive database or website would require longer term
resource commitments to develop and maintain it.
Likely impact on
sustainability
• Directly, no impacts.
• Indirectly, significant potential for change, as the improvement in
availability of clear, concise, up-to-date information will facilitate
greater uptake of supply chain schemes and initiatives, and improve
the level of general debate around these options for change.
Feasibility • Highly feasible.
40
Recommendation 3: Stakeholder fora – communication and
policy/practice development
There is demonstrable demand for activities relating to collective action by users and
other stakeholders, which would complement the information resources proposed in
recommendation 2.
Facilitation of stakeholder events and other communication fora, such as e-bulletins
and promotional campaigns, would also aim to address underlying issues such as
linking action to fundamental problems of producer prices and oversupply, and
consumer awareness. This could include commodity specific actions to share and
develop best practice, where not adequately covered by other organisations, or
mechanisms to share expertise for different commodities.
Objectives • Improve supply chain awareness and capability to take action, by:
o providing updates on latest international policy and practice
developments; linkage to international discussions.
o improving the business case for sourcing sustainable
commodities, by increasing dialogue, raising awareness and
promotion.
o developing links to, and working with, producer
organisations (improve communication, understanding of
mutual requirements, facilitation of compliance with
sustainability issues, market links, and potential channel for
donor community) and campaigning organisations.
• Improve consultation by government on specific commodity issues,
to ensure appropriate policy development and to encourage greater
participation.
Possible
implementation
pathways
• Recommendations for focus and priorities from ACCPE, in
consultation with key experts.
• DEFRA would organise events either on its own or in partnership
with others (such as NGOs, retailers, other Government
41
departments, etc). Detailed organisation of programme and activities
would need to be commissioned.
Funding
implications
• Moderate, depending on level of activity.
• Some management time input, but mainly direct costs of organising
events and associated activities.
Likely impact on
sustainability
• Directly, some potential for impacts due to promotion of the case for
sustainable commodity production and sourcing.
• Also significant potential for indirect change, as the context for
supply chain actions is affected by greater dialogue and promotion.
Feasibility • Moderately feasible. Would require considerably greater degree of
commitment, to ensure on-going and active involvement in
activities.
Recommendation 4: Developing links with existing
international generic initiatives, and mapping gaps
DEFRA could develop informal or formal links with and between the following
existing or emerging international initiatives that are already working at a generic
level on sustainable commodity crops:
• IISD/UNCTAD Sustainable Commodity Initiative
• IFC/WWF-US Better Management Practices and Agribusiness Commodities
A first step could be to host an informal meeting with the leaders of these initiatives,
perhaps with a limited selection of other initiatives, to discuss common ground, gaps
and plans for the future. The coordinator of the IISD/UNCTAD Initiative has already
expressed interest in this. Scoping work for the IFC/WWF-US project will be carried
out during Autumn 2003, after which it may be appropriate to seek such a meeting.
There should also be some consultation beforehand to identify any other
governmental activity, for example in other EU member countries. This meeting
could provide an appropriate forum to discuss the viability and desirability of a more
comprehensive, global, stakeholder-led institution that has as its primary roles to:
a foster awareness and demand for more sustainable commodities; and
42
b provide solutions to market players to meet that demand (including bringing an
international perspective to many of the tasks identified in Recommendations 2 and
3 above).
Objectives • Increase understanding between international initiatives, to facilitate
synergies.
• Develop an international forum for sustainable commodities issues.
Possible
implementation
pathways
• DEFRA to host an informal meeting with leaders of IISD/UNCTAD,
IFC/WWF-US and other key initiatives in late 2003, possibly in
collaboration with DTI and DFID.
• With partners, organise workshop and support research at an
international level to explore levers to foster awareness and demand
for sustainable commodities through a. financial sector; b. NGO
action/campaigns; c. others.
• Initiate discussions in relation to a future global, multi-stakeholder
and multi-functional sustainable commodities body.
Funding
implications
• Low initial direct input, mainly requirements for time input by
DEFRA, with some expert involvement to facilitate exploratory
workshop.
Likely impact on
sustainability
• Directly, no impacts.
• Indirectly, significant potential for change, as this will facilitate
international actions to establish synergies between ongoing
activities.
Feasibility • Highly feasible.
43
Annex A Summary Listing of Schemes and Initiatives
The following table presents a compilation of information concerning as many
schemes and initiatives as possible, together with key characteristics such as
commodities included, geographical range, and which elements of sustainability they
seek to address.
In the following table, scheme/initiative type is defined by selecting one of the
following categories:
• Segregated supply chain initiatives (SEG)
• Non-segregated supply chain initiatives (NON)
• Initiatives led by other actors (OA)
Sustainability scope is defined by selecting from the four main elements of sustainability
relating to commodities initiatives that have been identified:
• Social (e.g. labour rights):
• Environmental (e.g. habitat protection):
• Economic (e.g. minimum prices):
• Equity (e.g. trading relationships):
44
Scheme/Initiative Type Which Commodities? Sustainability Scope Geographic coverage Any Other Comments
Fairtrade Labelling
Organisations (FLO)
SEG Mainly coffee, cocoa,
bananas
Social, economic,
equity
Africa, Latin America
International Federation of
Organic Agriculture Movements
(IFOAM)
SEG All agricultural/wild-
crafted products,
developing codes for
forestry, aquaculture
and textiles too
Mainly environmental Global
Marine Stewardship Council
(MSC)
SEG Wild-caught seafood;
longer term plans to
include aquaculture
Mainly environmental Potentially global -
initial stocks in
temperate waters,
several tropical
stocks now being
assessed.
Social Accountability
International (SAI)
SEG Manufactured goods,
agricultural sector,
service industries
Mainly social [some
economic]
Global
45
Scheme/Initiative Type Which Commodities? Sustainability Scope Geographic coverage Any Other Comments
Sustainable Agriculture Network
(SAN)
SEG Range of agricultural
products
All Global
Forest Stewardship Council
(FSC)
SEG Timber products and
NTFP’s
Mainly social and
environmental
Global Note many competing
timber labelling
schemes
Social Accountability in
Sustainable Agriculture (SASA)
OA Global Not a scheme -this is
a research project
between 4 ISEAL
schemes to compare
their current methods
ISO 14001Standard for
Environmental Management
Systems
SEG Potentially all Environmental Global Not specific to
commodities, can be
applied in any sector
EUREP GAP Protocols
SEG Horticultural crops Mainly environmental,
some social
Global
FAO Working Group on
Environmentally & Socially
OA Horticultural and
other crops
Communication and
research forum
46
Scheme/Initiative Type Which Commodities? Sustainability Scope Geographic coverage Any Other Comments
Responsible Horticulture and
Trade
IISD/UNCTAD Sustainable
Commodities Initiative
OA Commencing with
coffee
All Global
Sustainable Agriculture
Initiative (SAI)
NON Eventually all, but
now 3 pilot schemes
All Global
UK Sustainable Development
Commission (SDC) Sugar Supply
Chains Checklist
OA Sugar All Global
WWF Forest Conversion
Initiative
OA Focusing on oil palm
and soy
Environmental Potentially global
International Finance
Corporation (IFC)/WWF Better
Management Practices
NON A range of
commodity crops
Environmental and
social
Potentially global
World Bank/International Coffee
Organisation forum
OA Coffee Potentially all Global
Common Codes for Coffee NON Coffee All Global
47
Scheme/Initiative Type Which Commodities? Sustainability Scope Geographic coverage Any Other Comments
DTI initiative concerning
sustainable livelihoods for
producers
NON Initially coffee and
cocoa
Social, economic and
equity
Potentially global
DEFRA Food Industry
Sustainability Strategy
OA Mainly environmental Initiative with the
manufacturing sector
in UK
Migros Criteria for Oil Palm
Plantations
SEG Oil Palm Environmental and
social
Global
Supply-side farm standards NON Various Typically
environmental
Localised
Sustain Food Miles OA Potentially all, but
currently only cheese,
bread, chicken
Environmental UK
UK Banana Group Code OA Bananas All International focus on
UK importing
Banana Action Network OA Bananas All Focus on Central
48
Scheme/Initiative Type Which Commodities? Sustainability Scope Geographic coverage Any Other Comments
campaigns America
Labour-related banana
campaigns
OA Bananas Social and equity Central America
Company Codes of Conduct for
purchasing specific
commodities, e.g. bananas,
cocoa
SEG Various - commodity
specific
Typically
environmental and
social
Global
Ethical Trading Initiative SEG Various commodities Social, economic and
equity
Global
Sustainable Tree Crops Project NON Coffee, cocoa,
cashew
All Currently West Africa
International Cocoa
Organisation (ICCO) Sustainable
Cocoa Programme
NON Cocoa All Ghana, Cote d’Ivoire,
Brazil, Costa Rica,
Panama, Trinidad,
Malaysia, Vietnam &
Indonesia
Songbird Foundation SEG Coffee All Latin America
49
Scheme/Initiative Type Which Commodities? Sustainability Scope Geographic coverage Any Other Comments
importing to USA
Peace Coffee SEG Coffee All Guatemala, Mexico,
Sumatra & Ethiopia
importing to USA
Company production codes of
practice e.g. oil palm
OA Various Environmental and
social
Global
Oil Palm Roundtable OA Oil Palm Mainly environmental
and social
Global
Oil palm investment criteria
(from campaigns)
OA Oil Palm Environmental and
social
Focus on Indonesia
Tea Sourcing Partnership SEG Tea All 1200 estates in seven
countries
50
Annex B Questionnaires
Copies of the three questionnaires are attached below:
• Review of existing initiatives
• Review of user needs
• Experts and interested parties
51
Feasibility Study for a Generic Supply Chain Initiative for Sustainable Commodity Crops
Consultation Part A: Review of existing initiatives
Defra has commissioned Proforest and IIED to undertake a study into the scope for a sustainable commodities initiative. We are currently consulting with retailers, manufacturers and other interested parties. This survey seeks to gather information about your priorities, current activities, and needs for the future in relation to sustainable commodities. This consultation will be initially by email and at a later date we will arrange a telephone interview were by we can discuss the answers to the questions. It would helpful to the process if this questionnaire could be completed and sent to us prior to the telephone interview. We will contact you shortly to arrange a day to discuss the answers to this form. Please email your completed survey form to [email protected]
Name: Position:
Company/organisation:
Contact details:
1. Scope of your initiative
1.1 Which commodities are covered?
1.2 What proportion of the market [for each] does the initiative cover?
52
1.3 What is the current geographical scope, in terms of:
• Production?
• Marketing?
1.4 Are there any limits to the potential geographical scope?
1.5 What kind of production systems does the initiative cover (e.g. smallholders vs plantations, cooperatives, etc)?
1.6 What stages of the supply chain are covered (eg production, processing, trading, transport, retail)?
1.7 Which elements of sustainability are covered by the initiative (please list elements):
• Social (e.g. labour rights):
• Environmental (e.g. habitat protection):
• Economic (e.g. minimum prices):
• Equity (e.g. trading relationships):
1.8 Does the initiative involve an element of capacity building or training?
2. History and key objectives
2.1 How was the initiative set up?
2.2 Who were the key drivers?
53
2.3 What were the key objectives at the start, and how have they changed, if at all?
3. Future plans
3.1 How do you see the scope of the initiative changing in the future, in terms of:
• Mode of operation?
• Geographical coverage?
• Numbers of producers?
• Volume of production or market share?
4. Governance structure
4.1 Who (which organisations) is/are involved in the initiative, and how?
4.2 How is the initiative funded?
4.3 What proportion of funding is generated by fees e.g. for certification?
4.4 What are the costs of implementation and verification? How are these covered?
4.5 How are decisions taken, either at strategic or operational level?
54
4.6 How are stakeholders’ views taken into account in standard-setting, implementation, etc?
4.7 Are there any measures to ensure that the initiative does not exclude particular sets of producers, e.g. by ensuring that costs are not prohibitive?
5. Implementation process
5.1 Please outline the main building blocks of the initiative, and how they relate to each other (e.g. standards, code of practice, principles & criteria, certification, accreditation, marketing, lobbying)
5.2 Does the initiative operate through existing/mainstream supply chains, or have you set up alternative trading mechanisms?
5.3 Does the initiative require/enable full traceability along the supply chain?
6. Market profile and premiums
6.1 What level of market penetration has the initiative achieved?
6.2 Are end [or semi-processed/intermediate] products marked so consumers [or trade buyers] are aware of the initiative?
6.3 Does the initiative involve a market premium?
6.4 How is the premium allocated among actors along the supply chain?
7. Success of the initiative
7.1 Has the project met its objectives?
55
7.2 What have been the greatest successes?
7.3 What have been the most important factors in ensuring these successes?
7.4 What have been the greatest failures?
7.5 What lessons could be drawn for other future initiatives?
8. Links with other future initiatives
8.1 If a generic ‘sustainable commodities initiative’ was developed, how could this most usefully support your initiative?
8.2 Should this take the form of a certification initiative or another form?
8.3 What would need to be avoided to ensure that this would not be counter-productive?
Thank you very much for your time and co-operation.
56
Feasibility Study for a Generic Supply Chain Initiative for Sustainable Commodity Crops
Consultation Part B: Review of user needs
Defra has commissioned Proforest and IIED to undertake a study into the scope for a sustainable commodities initiative. We are currently consulting with retailers, manufacturers and other interested parties. This survey seeks to gather information about your priorities, current activities, and needs for the future in relation to sustainable commodities. This consultation will be initially by email and at a later date we will arrange a telephone interview were by we can discuss the answers to the questions. It would helpful to the process if this questionnaire could be completed and sent to us prior to the telephone interview. We will contact you shortly to arrange a day to discuss the answers to this form. Please email your completed survey form to [email protected].
Name: Position:
Company/organisation:
Contact details:
1. Existing work on sustainable commodities 1.1 What initiatives have you already undertaken to ensure that commodities that you
source come from sustainable sources, either:
• Independent initiatives within the company?
• Collaborative approaches with other actors?
• Keeping in touch with external initiatives?
57
2. Priorities for future action on sustainable commodities
2.1 Do you foresee the need to do more on sustainable commodities in the future?
2.2 Which commodities do you see as particular priorities for future action?
! bananas
! cocoa
! coffee
! cotton
! fish
! maize
! oil palm
! rice
! shrimp/prawns
! soy
! sugar
! tea
! timber
! wheat
! other (please specify)
2.3 Which issues do you see as particular priorities for future action?
! destruction of pristine habitats
! pollution
! worker welfare
! prices paid to producers
! GMOs
! human rights
! other (please specify)
2.4 What do you think are the key barriers that would need to be overcome to do more on these priority commodities/issues?
58
! limited share of the market
! lack of traceability
! lack of customer awareness/interest
! cost
! other (please specify)
2.5 Which actors would need to take a lead?
2.6 Which actors would also need to be involved?
3. Recommendations for a potential generic commodities initiative 3.1 If a generic sustainable commodities initiative was developed, what functions
could it most usefully provide for your company? 3.2 How important would each of the following aspects be?
! Visibility to consumers e.g. labelling or membership of an initiative
! Mechanisms to allow supply chain traceability
! Independent audit/certification
! Scope for collective action with other companies
! General guidelines on how to identify priority commodities
! Practical advice on how to develop a strategy to deal with priority commodities
! Specific guidelines on what is ‘sustainable’ for different commodities
! Information on existing initiatives or further information
! Forums for discussion with key stakeholders
! Interventions that do not require traceability but tackle sustainability at the production level while retaining existing commodity market supply chain structures
! Other (please specify)
3.3 What role do you think DEFRA could most usefully play in this area?
59
3.4 Any further comments?
Thank you very much for your time and co-operation, Rebecca Latchford.
60
Feasibility Study for a Generic Supply Chain Initiative for Sustainable Commodity Crops
Consultation Part C: Experts and interested parties
Defra has commissioned Proforest and IIED to undertake a study into the scope for a sustainable commodities initiative. We are currently consulting with retailers, manufacturers and other interested parties. This survey seeks to gather information about your priorities, current activities, and needs for the future in relation to sustainable commodities. This consultation will be initially by email and at a later date we will arrange a telephone interview were by we can discuss the answers to the questions. It would helpful to the process if this questionnaire could be completed and sent to us prior to the telephone interview. We will contact you shortly to arrange a day to discuss the answers to this form. Please email your completed survey form to [email protected].
Name: Position:
Company/organisation:
Contact details:
1. Existing work on sustainable commodities 1.1 What initiatives are you involved with in relation to promoting sustainable commodity production and trading:
• Initiatives that you are running?
• Collaborative approaches with other actors?
• Keeping in touch with other initiatives?
61
2. Priorities for future action on sustainable commodities
2.1 Do you foresee the need for further action on sustainable commodities in the future?
2.2 Which commodities do you see as particular priorities for future action?
! bananas
! cocoa
! coffee
! cotton
! fish
! maize
! oil palm
! rice
! shrimp/prawns
! soy
! sugar
! tea
! timber
! wheat
! other (please specify)
2.3 Which issues do you see as particular priorities for future action?
! destruction of pristine habitats
! pollution
! worker welfare
! prices paid to producers
! GMOs
! human rights
! other (please specify)
62
2.4 What do you think are the key barriers that would need to be overcome to do more on these priority commodities/issues?
! limited share of the market
! lack of traceability
! lack of customer awareness/interest
! cost
! other (please specify)
2.5 Which actors would need to take a lead?
2.6 Which actors would also need to be involved?
3. Recommendations for a potential generic commodities initiative 3.1 If a generic sustainable commodities initiative was developed, what functions or outcomes (e.g. environmental protection, better social conditions) could it most usefully provide? 3.2 How important would each of the following aspects be?
! Visibility to consumers e.g. labelling or membership of an initiative
! Mechanisms to allow supply chain traceability
! Independent audit/certification
! Scope for collective action with other companies
! General guidelines on how to identify priority commodities
! Practical advice on how to develop a strategy to deal with priority commodities
! Specific guidelines on what is ‘sustainable’ for different commodities
! Information on existing initiatives or further information
! Forums for discussion with key stakeholders
63
! Interventions that do not require traceability but tackle sustainability at the production level while retaining existing commodity market supply chain structures
! Other (please specify)
3.3 What role do you think DEFRA could most usefully play in this area?
3.4 Any further comments?
Thank you very much for your time and co-operation, Rebecca Latchford.
64
Annex C List of Consultees
1. Potential Core Users
Food Industry Company Contact Interview and/or
questionnaire completed
Supermarket/
retail
Co-op Group
David Croft, Head of Quality &
Consumer Care
Yes
The Body Shop
Elaine Jones
Marks and Spencer
Mike Barry, Environmental
Manager
Yes
Sainsburys
Alison Austin, Head of
Environmental Management
Safeway Stores plc Nicola Ellen, CSR Strategy
Manager
Asda Stores ltd Ian Bowles, Environmental
Manager
Tesco plc Leonie Smith, CSR Manager
Manufacturers
/processors
Sustainable
Agriculture Initiative
(SAI)
Maryline Guiramand Yes
Unilever
Jan Kees Vis Yes
Nestle Hans Joehr, Head of Sustainable
Agriculture
Patrick Leheup, Coffee/Cocoa
Specialist
Neumann Kaffee
Gruppe
Michael Opitz, Managing Director
of Consulting
Cadbury’s
Dole F2. Jean Marie Guaux
(Sylvain Cuperlier)
Yes
65
Kraft Annemieke Wijn Yes
Importers
Alan Legg
Pratts Importers Robert Wells
Trade bodies
Food and Drink
Federation
F2. Jonathan Peel (Helen
McDermott)
Seed Crushers & Oil
producers
Association (at FDF)
Juliet Howarth
Angela Bowden
Yes
Producers
Sector specific
Malaysian Oil Palm
Producers
Joseph Tek Choon Yee (Mr Tek)
El Gaubo
(Ecuador)
Jorge Ramirez Yes
Windward Islands
Farmers Association
(WINFA)
Wilberforce Emmanuel
(Fairtrade)
Caribbean Farmers
Association
Renwick Rose
(certified organic)
Yes
Producer Ecuador
President National
Banana Producers
Simon Canarte
2. Other interested parties/stakeholders.
Type of
Organisation
Company
Name
Contact
Name
Interview and/or questionnaire
completed
Investment
bodies
Isis Asset
Management
Kirsty Sargent (Analyst
Governance & Socially
Responsible Investment)
Yes
Banks ABN AMRO Christopher Wells Yes
Rabobank Bruce Tozer/Andy Duff Yes
UK
Government
DEFRA
(Job Titles)
Daryl Brown (trade & globalisation
issues, OECD)
Yes
66
Head of
Environmental
Protection
International (EPINT)
Head of Trade
Policy Unit
Ian Newton (International trade/
WTO negotiations)
Head of Arable
Crops Division
Andrew Kuyz (Wheat, maize, rice,
soy, sugar, oil palm)
Head of Horticulture
and Potatoes
Division
David Jones (Oranges, bananas)
Head of Food Retail
and Catering Branch
Jim Howell (Coffee, Cocoa, Tea (&
sponsorship of the food retail
sector))
Yes
Head of Fisheries I
(structures) Division
Ed Dyson ((Peter Boyling (Fish,
Prawns, shrimp))
Yes
Head of Food
Manufacturing
Industry Branch
Christine Jarvis (Food industry
sustainability strategy (and
sponsorship of the food
manufacturing sector)
DTI Ramil Burden Yes
DFID Derrick Akintade
(Natural resources advisor)
Yes
Multilateral
agencies
IFC Mark Eckstein / Glen Armstrong Yes
FAO Cora Dankers Yes
Sustainable
Commodities
Initiative (IISD)
Jason Potts Yes
Other
institutions
CDC Capital
Partners
Alice Chapple Yes
Natural Resources
and Ethical Trade
Programme, NRI)
Anne Tallontire
LMC consultancy Rob Simmons (James Fry) Yes
67
Imperial College Jonathan Kydd Yes
NGOs Bananalink Alaistair Smith / Liz Parker Yes
The International
union of food,
agriculture, hotel,
restaurant, catering,
tobacco & allied
workers
associations (IUF)
Peter Rossman
WWF UK Richard Perkins Yes
WWF US Jason Clay Yes
WWF International Patrick Cooper Yes
AIDEnvironment Erik Wakker Yes
Oxfam Tom Lines Yes
ETI Fiona Mabbutt
ITDG Jon Hellin Yes
Greenpeace Ben Ayliffe Yes
Friends of the Earth Ed Matthews Yes
68
Annex D Workshop summary
Eland House, Bressenden Place, London
16 June 2003
Participants
Bill Vorley (IIED)
Didier Leiton Valverde (Costa Rica Banana
Workers Union) + Gustavo Cruz
(translator)
Duncan Macqueen (IIED)
Ian McIntosh (Seed Crushers and Oil
Producers Association)
Jan Kees Vis (Unilever)
Jim Howell (DEFRA)
Joanna Scott (Kraft Foods UK)
John Orchard (Natural Resources
Institute)
Julia Hailes (ACCPE)
Katie Stafford (Marks and Spencer)
Kirsty Sargent (ISIS)
Leonie Smith (Tesco)
Lindsay Coombs (DEFRA)
Liz Parker (BananaLink)
Maryline Guiramand (SAI Geneva)
Matt Philips (FoE)
Neil Judd (ProForest)
Patrick Cooper (WWF)
Patrick Leheup (Nestlé and SAI, and
4’Cs’ initiative)
Penny Hawley (for Tony Lass, Cadbury)
(Biscuit, Cake, Chocolate & Confectionery
Alliance)
Philip Sigley (Sustainable Tree Crops
Programme)
Rebecca Latchford (ProForest)
Robert Barrington (ISIS)
Simon Cox (DEFRA)
Sophie Higman (ProForest)
Steve Jennings (Proforest)
Tom Fox (IIED)
Victoria Read (Sustainable Development
Commission)
Wolfgang Richert (AIDEnvironment,
Amsterdam)
Yunusa Abubakar (ICCO)
69
Background
A consultative workshop was held with supply chain actors, in order to review
proposals for a generic supply chain initiative for sustainable commodity crops, as
part of a feasibility study commissioned by DEFRA’s Advisory Committee on
Consumer Products and the Environment (ACCPE).
Why ACCPE commissioned the study
ACCPE has the remit of looking at environmental impacts of consumer products. A
sub-committee on food was established last year. It concluded that there are many
commodity products present in processed consumer products, and that consumers
are not aware of the environmental impacts of these constituent ingredients. Even
large supermarkets individually buy miniscule proportions of global commodity
products, but the collective action of small players might potentially apply market
pressure for sustainable commodities. There are some powerful tools available
within supply chains to improve environment impact. Starting with palm oil, ACCPE
decided to look more broadly to develop general principles that might be applied to
many products. The committee contracted ProForest and IIED to conduct a feasibility
study for a generic supply chain initiative for sustainable commodity crops.
What the study did
• Developed a typology of supply chain initiatives based on a review of 35 different
schemes
• Proposed 13 different potential roles of a generic supply chain initiative based on
expressed opinions of supply chain actors and other stakeholders, from ‘passive’
database/guideline-style resources, to more active processes to review existing
schemes or facilitate the formation of effective new schemes
• Concluded that any generic initiative would need to encompass and support
disparate approaches and schemes for each commodity serving the overall goal
of "raising the floor" of sustainability for each commodity. Such an initiative
would need to be flexible, aware of the variation between commodities
(plantation/smallholder production systems, degree of processing, visibility to
70
consumers, etc.), the multiple actors in the chain (processor/retailer/industry
federation/government/NGO/producer group) and the varied interpretations of
‘sustainability’ which different schemes operate under (environment/labour
standards/terms of trade)
Comments from workshop participants
Any initiative should take note of the following:
• A large number of sustainable commodity programmes are already in place
within the UK (DTI) and internationally (IISD-UNCTAD, UNEP, IFC-WWF work on
commodities and BMPs, USAID, SAI Platform, FAO-SARD, Society for
Organisational Learning, IPC Sustainability Working group, Sustainable Tree
Crops, initiative on rice etc.). There is a danger of duplicating work that is
happening already—some effort is required to bring existing initiatives together.
Furthermore, there has not yet been a performance review of the myriad existing
voluntary initiatives and codes of conduct, and many claims of greater
‘sustainability’ are unsubstantiated
• Any generic initiative should be aware that there may not be much middle ground
between very general activities which suffer from weak applicability, and those
very commodity specific projects already in place
• There are risks of marginalizing weak countries and small farmers through
imposing high costs of compliance unless those costs are offset by functional
support programmes
• There is a need to connect supply chain initiatives to a greater understanding of
the economics, structure and power relations within commodity markets,
particularly given downward pressure on commodity prices and its implications
on producer livelihoods
• There is a risk of continuing to focus on niches (the ‘best of the best’) while
overlooking mainstream markets (e.g. better management practices to ‘raise the
floor’ of performance)
• There is little real governance of many commodity chains (unlike the familiar
retail-driven horticulture chains), and the workings of global commodity markets
are poorly understood
71
• Certification is not usually rewarded through mainstream bulk commodity
markets
• The donor community is unclear as to where to channel its investments in
sustainable commodity chains and there is little coordination between different
donors even within the same government
• The debate would be clarified if the government—led by DEFRA—put forward a
policy statement based upon their sustainable development objectives and
international agreements, aimed at providing a framework and coherent basis for
supply chain actors to take actions
• Even voluntary private sector initiatives intersect with international trade policy
Next steps
IIED and ProForest will incorporate the workshop outcomes and further comments
into the final report to ACCPE, which will include recommendations for actions at
various levels.
Contacts
ProForest: Neil Judd ([email protected])
IIED: Tom Fox ([email protected])
72
Annex E Case studies
The nine case studies grouped around three commodities were designed to explore
the practical sustainability options which might confront different actors in different
supply chains, with the following objectives:
1. Explore the degree to which sustainability solutions depend not only on the
commodity, but also on context-specific business drivers for those commodities
for different actors in the supply chain.
2. Assess the extent to which general guiding principles can be formulated, despite
(1), which clarify which sustainability options are most suitable for which type of
commodity under which context.
3. Refine the structure of a 'decision tree' or 'hierarchical screening process' by
which these guiding principles might facilitate the identification and
implementation of sustainability options that are appropriate to the commodity
and context in question.
4. Assess what additional elements might be necessary as part of a 'toolkit' for
supply chain actors to implement the sustainability options suggested by (3).
In order to maximise the scope for drawing comparisons, the nine scenarios related
to three commodities with distinct characteristics – banana, soy and barley:
• Banana has very high consumer visibility as it is sold as a discrete product
in the form in which it is grown, and a high sustainability profile (i.e.
there is high awareness of the sustainability issues related to its
production).
• Soy has very low consumer visibility, as it is primarily used as an
ingredient in processed products, and a medium sustainability profile.
• Barley has low consumer visibility, being a prominent ingredient in
processed products, and a low sustainability profile.
Three scenarios were developed for each of these commodities. The scenarios, key
characteristics and likely outcomes are summarised in the table below.
73
The findings clearly show that it is necessary to take a context-specific approach.
Even for the same commodity, the likely solution depends on the strategic
importance of the commodity to the company, the actual and potential level of
traceability, and the corporate sustainability objectives. For example, the companies
in the first two scenarios both produce bananas, but because one aims to be a
market leader on sustainability, it is likely to opt for the enhanced credibility of third
party certification, while the other is more likely to opt for a technical area-wide
solution, as it is more interested in reducing production costs.
However, it is possible to frame some principles that are common in most
circumstances for particular characteristics of commodities. These are listed in the
main report in section 5.2.
The supply chain characteristics that were used to explore the case study scenarios
could form the basis of analytical tools, such as a decision tree or screening process,
for inclusion in a toolkit.
74
Characteristics
Commodity Scenario Consumer visibility of commodity
Sustainability profile of
commodity
Supply chain
traceability
Strategic importance to company
Corporate sustainability
objectives
Likely Outcome Rationale
1. UK retailer seeking market differentiation through sustainable sourcing
Very high: unprocessed
High (campaigns on social &
environmental issues)
High Fairly high Aims to be seen as a leader on sustainability
Third-party certification and
labelling (e.g. Fairtrade, ECO-OK
or organic)
Need for high credibility
2. Major producer seeking to control pests, and reduce
cost of agro-chemical inputs
Very high: unprocessed
High (campaigns on social &
environmental issues)
Potentially high
Very high Limited.
Cost-driven.
Research and technical support
through area-wide initiative
Technical fixes more important than credibility
Banana
3. Smallholder cooperative seeking market
differentiation in response to falling prices
Very high: unprocessed
High (campaigns on social &
environmental issues)
Potentially high
Very high Seeking market
differentiation to secure incomes
Third-party certification and
labelling (e.g. Fairtrade, ECO-OK
or organic
Need for high credibility
4. UK retailer seeking to eliminate GM soy from
branded and own-brand products
Very low (processed ingredient)
Medium (some campaigns
related to GMOs)
Low; difficult for branded
products Medium
Reducing reputational risk
Build into requirements for
suppliers
Passes onus and costs to suppliers
5. Brazilian animal feed producer seeking to
guarantee that all planting is in previously degraded areas
Very low (processed,
indirect ingredient)
Medium (some campaigns
related to land use conversion)
Very low Very high Maintaining
markets
Code of conduct with limited
investment in traceability
Insufficient risk to justify necessary
expenditure on traceability
Soy
6. Food manufacturer responding to concerns of
institutional investors
Very low (processed ingredient)
Medium (some campaigns; awareness
among investors)
Very low High Maintaining
credibility among investors
Take part in roundtables to
explore solutions and best practice
Minimises costs yet
demonstrates commitment
Barley 7. Beer producers seeking
sector-wide collaboration on sustainable barley
Low (prominent ingredient)
Low
Contract production high; open market low
High Developing
sectoral baseline standards
Stakeholder forum to define best
practice and code of conduct
Sufficient to engage industry
leaders and followers
75
8. Beer producer seeking market differentiation and to
secure future supply
Low (prominent ingredient)
Low Very high
(for quality reasons)
Very high Market
differentiation and future supply
Partnership with suppliers; technical
support and monitoring; future
labelling?
Overriding priority is to ensure future
supply
9. Regional malting barley association seeking entry
into speciality market
Low (prominent ingredient)
Low Very high
(for quality reasons)
Very high Market premiums
for sustainable barley
Area-wide code of conduct with 3rd
party certification
Requires credibility