Sustainable label programs enjoy 40 percent boost

By Will  Nichols, Published February 03, 2014,
Sustainable label programs enjoy 40 percent boost
Production of certified sustainable goods, such as those carrying Fairtrade or organic labels, jumped more than 40 percent in 2012, increasing their market share across a raft of product categories.

A new study of the 16 most prevalent green standards initiatives across 10 commodities sectors records the rapid expansion in the development and use of voluntary standards over the past decade, transforming them from instruments for supporting niche markets into globally recognized names, such as the Better Cotton Initiative, the Forest Stewardship Council and the Rainforest Alliance. In 2012, certified or verified production across the 16 standards reached an estimated trade value of $31.6 billion, while the market grew at a rate that was 20 times that of the corresponding conventional commodity markets.

The report, published last week by an alliance of international organizations, reveals the majority of labeling schemes analyzed experienced double or triple digit growth rates last year and also highlights a raft of sustainable sourcing commitments made by some of the world’s largest consumer brands, including Unilever, Coca-Cola, Nestlé, Ikea, Mars and Adidas.

Growth in certified production was highest in the palm oil sector, which experienced a 90 percent increase during 2012. It was followed by production of Bon Sucro-certified sugar, which grew 74 percent, the market for certified cocoa, which increased 69 percent, and the Better Cotton Initiative, which saw 55 percent growth.

The report also recorded “significant market penetration” for certified products in major commodity markets. Certified coffee leads the way with a 38 percent share of global production in 2012 — up from just 9 percent in 2008 — closely followed by cocoa with a 22 percent share. Certified palm oil made up 15 percent of global production, according to the report — more than 8 million metric tons — while certified tea accounts for 12 percent of the amount produced worldwide.

Much of this growth is attributed to the growing number of companies that have made commitments to source sustainably, illustrating the huge role the private sector can play in stoking demand for products that meet environmental standards.

Reassuringly for consumers, the State of Sustainability Initiatives (SSI) Review finds that all 16 initiatives surveyed applied some form of third-party conformity assessment procedure. Three-quarters undertake third-party certification to help ensure suppliers meet agreed standards, while some newer initiatives have focused on using only verification to help cut costs and allow for more rapid growth of the market.

However, while the report highlights strong growth in both production and sales of green labelled products, it also identifies a “persistent oversupply of standard-compliant products,” despite a growing number of companies making commitments to source sustainably. As a result, many products that could be sold as certified are not marketed as such. According to the report, between a third and half of total compliant production is actually sold as compliant. The oversupply allows companies to benefit from a wide selection of options when sourcing sustainably, but could also push down prices, which could create a detrimental impact on smallholder producers.

Bill Vorley of the International Institute for Environment and Development (IIED), told BusinessGreen said the composition of supply chains requires some level of surplus to guard against supply interruptions. “But this doesn’t seem to explain some levels of oversupply when you get to two times the level purchased,” he admitted. “This needs to be looked at carefully — this is a call on the sector to check out what’s going on.”

In addition, the report warned smaller producers that cannot afford to go down the certification route may be missing out on the benefits of standards designed to help them improve yields while reducing environmental impacts and operating costs. The report finds that a number of voluntary standards are making concerted efforts to ensure access to certified markets for smaller-scale producers, but the bulk of production for green consumer markets is provided by more advanced producing countries.

The overarching message of the report is that while sustainability standards make an important contribution to the green economy by driving investment in sustainable technologies and practices, they cannot be assumed to deliver sustainable development outcomes on their own. Vorley said supportive, complementary policies are required — on top of business-led initiatives and sustainable sourcing policies — to ensure labeling schemes are raising standards across entire sectors.

“Government doesn’t have to run [certification] organizations, but it should give them a mandate to be able to spend a levy on production or exports to invest in the sector as whole, not just in those big enough to pay certification rates,” he said.

This article originally appeared at BusinessGreen. Eco-label image by Alberto Masnovo via Shutterstock