The UN Forum on Sustainability Standards (UNFSS) Intergovernmental Forum of Dialogue on Voluntary Sustainability Standards

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1 The UN Forum on Sustainability Standards (UNFSS) Intergovernmental Forum of Dialogue on Voluntary Sustainability Standards ICCO Workshop, Douala, Cameroon June 24-27, 2013 Working group guide

2 United Nations Forum on Sustainability Standards (UNFSS) 2 Objective: Effective forum for policy-makers to better understand voluntary sustainability standards (VSS) and be able to utilize VSSs as potential tools to support their own sustainable development strategies and goals. 2

3 What are Voluntary Sustainability Standards (VSS)? 3 Mainly developed by private bodies (commercial and non-commercial). Typically cover health, safety, environmental, economic, social and animal welfare issues. Credence characteristics, i.e. attributes not verifiable through examination of the product (Production and Processing Methods- PPMs). Most prominent in the food and agricultural sector (also significant in textiles/ clothing, toys, timber products, cosmetics, bio-fuels, electronic goods). Carbon & water foot-printing and energy and material/resource efficiency standards are emerging as a new frontier.

4 Importance of VSS 4 4 VSS are of key importance for market entry and sustainable development. Real developmental opportunities strong market dynamics (including growing private sector interest and participation) Unless pro-actively addressed, VSS can potentially become a market entry hurdle and a serious challenge in particular for small-scale producers.

5 Importance of VSS (cont d) 5 5 Voluntary (i.e. private) Sustainability Standards (VSS) are often viewed as a technicality, when VSS are tools that can be used to: Internalize environmental and social costs. Advance sustainable production and consumption methods (including opportunities for energy/ material/ resource efficiency and cost savings). Promote competitiveness in the growing and lucrative sustainability markets.

6 Market Share of VSS-certified Bananas & Coffee 6 6 Source: Food and Agriculture: The Future of Sustainability, UN Department of Economic and Social Affairs, D. Giovannucci, S. Scheer et al., NYC, 2012: 17.

7 State of Sustainability Initiatives (SSI): 7 7 Reporting service on VSS: Market trends Program reach/structure Program governance Sectors: Forestry, Coffee, Cocoa, Tea and Banana

8 Growth of VSS 8 8 Recent Average Annual Growth Rate of Key VSS Markets: Global US High-value 5-10 % 10+ % Organic % % Fair Trade 35 % 40 % Utz Certified 30 % -- Rainforest 105 % 120 % Conventional Food Markets 2-4 % 3-5% Source: State of Sustainability Initiatives, 2011

9 Geographical distribu2on of sustainable cocoa cer2fica2on, 2011 (mt)

10 Geographical distribu2on of sustainable coffee cer2fica2on, 2011 (mt)

11 Sustainable cocoa and coffee (% of Global Produc2on in mt- 2011) Cocoa Utz: 5% (212,690mt) Fairtrade: 3% (121,400mt) Rainforest Alliance: 2% (98,416mt) Organic: 1.4% 61,842mt) Adj for multiple-certification: 8% of Global Production Coffee 4Cs: 11% (906,300mt) Utz: 6% (476,903mt) Fairtrade: 5% (393,000mt) Organic: 3% (286,120mt) Rainforest Alliance: 2% (191,384mt) Adj for multiple-certification: 20% of Global Production

12 Sustainable cocoa produc2on vs. sales, global Annual growth rate in production: 55% from Total volume certified in 2011: 349,504mt (8% of global production) Total volume sold as certified in 2011: 143,514 (3% of global production)

13 Sustainable cocoa produc2on by country and ini2a2ve (2011) Fairtrade Global Average Organic Rainforest Alliance Utz

14 Reported 2011 premiums (KPMG) UTZ: US$152/mt in Ghana $140/mt in Côte D Ivoire Rainforest Alliance: US$150/mt Ghana $200/mt Côte D Ivoire Fairtrade: US$200/mt in Ghana and Côte D Ivoire Source: KPMG. (2012). Study on the Costs, Advantages and Disadvantages of Cocoa Cer2fica2on.

15 Reported 2011 audit costs (KPMG) UTZ: $6,500/coop, Ghana $4,331/coop, Côte D Ivoire (annual) Rainforest Alliance: $8,500/coop,Ghana, $7,500/coop, Côte D Ivoire (annual) Fairtrade: $2,561/coop, Ghana, $2,562/coop, Côte D Ivoire (annual) KPMG: 2012

16 Impact Assessment Tools to measure the costs and benefits of implementing sustainable certification programs

17 Economic 1. Farmer Livelihoods 2. Risk & Resilience 3. CompeMMveness 4. Management 5. OrganizaMonal Social 1.Health & Safety 2.Working CondiMons 3.EducaMon & Training 4.Basic Rights & Equity 5.Inclusive Value Chains Environment 1. Resource Use 2. Waste 3. Soil ConservaMon 4. Biodiversity 5. Climate Change

18 Colombia Expanding each year

19 KEY INDICATORS: Certified vs. Uncertified Economic Perception Training 105% Yield Recycling Crop Waste 63% 68% 17% Price 13% Conservation Measures 90% 36% 35% 36% Revenue Protective Gear 53% 58% Net Income Food Security Education Sample: 9 countries, over 4,000 farms, 2 crops (coffee/cocoa) with control groups ( )

20 Source: CRECE-COSA Multiple Certifications and Relation to Net Income

21 6 Certifications: before and after Year 1 Year 4 Source: CRECE-COSA: significant improvements in a basket of environmental indicators and improvements over controls groups

22 % Women s Time Spent on Crop: Certified vs Conventional Percentage of Woman's Work Time Spent on Crop 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FairTrade FairTrade Control Utz Utz control Starbucks Starbucks Control Organic CERT - CONV CERT - CONV CERT - CONV CERT - CONV Organic Control 1053 producer samples Tanzania

23 Benefits and Costs of VSS Benefits of VSS use may arise at different levels: Enterprise level Sector level National level International level Costs and benefits might arise at different points and levels (i.e. those bearing costs might not necessarily earn many of the benefits). Thus, governmental task to even out interests.

24 Level Farm National/ Sector Potential Benefits of Standards/ Certification as tools: Improve management capacities (farm/resource) Improve productivity and product quality Reduce costs Improve market access (and diversification) Longer-term relationships (w/ buyers & other farmers) Premiums- sometimes Increase export revenues Create jobs on farms Improvements in processing and services Economies of scale and innovation achieved Positive spillovers- quality and safety in domestic markets & occupational health/welfare of farm workers Enfranchise marginalized groups Enhanced soil fertility, water quality, biodiversity etc Source: Draft Decision-making guide: Trade Standards Practitioners Network (TSPN), International Institute for Environment and Development (IIED)

25 Potential Concerns: Policy Level (Producer Countries) Market Access: Threat to market access (exclusion-valuable export/new markets) Sustainability used to protect domestic markets Standard-setting: Perception external non-state actors setting standards Threat to national sovereignty (exclusion from standard-setting) Whose sustainability (democratic national governments or distant consumers/ brands)? Standards applicability: Standards/criteria/processes, potentially inappropiate to local situation Too stringent for producers and local institutions capacities Inflexibility to adapt to local realities (lack of appreciation for cultural/geographical/ social diversity)

26 Pro-active Role of Developing Country Governments Surveillance, Supportive and Facilitating Role Governance/ Standardsetting Facilitating Investment Devising flanking/support policies Assuring policy coherence Facilitating stakeholder dialogue

27 Pro-active Role of Developing Country Governments Surveillance, Supportive and Facilitating Role Governance / Standardsetting Facilitating Investment Devising flanking/support policies Assuring policy coherence Facilitating stakeholder dialogue Transparency, Inclusiveness, legitimacy, trade restrictiveness Anti-trust Assuring coherence between mandatory & VSS Facilitating interoperability between VSS

28 Pro-active Role of Developing Country Governments Surveillance, Supportive and Facilitating Role Governance/ Standardsetting Facilitating Investment Devising flanking/support policies Assuring policy coherence Facilitating stakeholder dialogue In physical infrastructure In SMTQ (standards, metrology, testing, quality) systems & institutions Directing donor funding accordingly

29 Pro-active Role of Developing Country Governments Surveillance, Supportive and Facilitating Role Governance/ Standardsetting Facilitating Investment Devising flanking /support policies Assuring policy coherence Facilitating stakeholder dialogue Awareness raising/ training Financial support Information instruments/ independent evaluation of VSS SME support

30 Pro-active Role of Developing Country Governments Surveillance, Supportive and Facilitating Role Governance/ Standardsetting Facilitating Investment Devising flanking / support policies Assuring policy coherence Facilitating stakeholder dialogue Among government agencies dealing with VSS Between public & private requirements (e.g. perverse incentives) Towards donors

31 Pro-active Role of Developing Country Governments Surveillance, Supportive and Facilitating Role Governance/ Standardsetting Facilitating Investment Devising flanking / support policies Assuring policy coherence Facilitating stakeholder dialogue Facilitating and engaging in stakeholder dialogue on development & implementation of VSS

32 Public-Private Cooperation: 32 Public (public goods) Find nexus based on mandates Identify roles Private (business/ supplychain issues) 32

33 Rational for Creating UNFSS VSS as means to Sustainable Development, not as ends in themselves. Contextualize VSS into the macro-economic development perspective (i.e. not only market access and market shares agenda). UNFSS should focus on public interest & public goods related to VSS. VSS need to be recognized as strategic policy issue (mitigating economic, food, climate and water crises). Understood within overall life cycle of products and related services (looking at avoidance, minimization and management of real risks). Also of increasing importance for South-South trade.. VSS represent a new meta-governance system for international supply chains, largely outside WTO rules.

34 Rational for Creating UNFSS (cont d) What is important to address is that VSS are scrutinized as: (i) proportionate to the (real) risk they claim to address; (ii) scientifically-based; (iii) that the burden of compliance is distributed fairly; and (iv) VSS should not undermine or weaken rules of the WTO s TBT (Technical Barriers to Trade) and SPS (Sanitary and Phytosanitary) agreements.

35 United Nations Forum on Sustainability Standards (UNFSS) 35 Objective: Effective forum for policy-makers to better understand voluntary sustainability standards (VSS) and be able to utilize VSSs as potential tools to support their own sustainable development strategies and goals. 35

36 UNFSS Added Value An unbiased and credible policy dialogue that guides and benefits from analytical, empirical and capacity-building activities. Structured to promote ownership by developing countries and assure the demand-driven nature of UNFSS activities. The only inter-governmental (and multi-stakeholder) forum that deals with generic and strategic issues of VSS in a consistent and pro-active way. Capitalizes on the strengths and specialization of each of the five UN organizations that partner on UNFSS. Better coordination of activities among UN partner organizations.

37 UNFSS Structure: 37 Members of the UNFSS 37

38 Cluster of Activities of UNFSS Informed policy dialogue on developmental and marketaccess impact of VSS Analytical & empirical work (including flagship analytical report) Upon specific request from developing countries, assist with specific analysis of VSS and in implementing UNFSS recommendations

39 Activities of UNFSS (set-up) 39 High-level advisory board (multi-stakeholder) Briefing sessions to consult and partner with stakeholders in building UNFSS: Several in Geneva, WTO, UNCTAD XIII China, Thailand, Panama Cameroon (with Inter. Cocoa Org.; June 24-27) Kenya (TBC) Official launch of UNFSS- March nd, 2013 Geneva at Palais des Nations Through consultation Advisory Panel prepared draft work plan which was discussed, adjusted and confirmed at UNFSS launch event: 39

40 Preliminary Activities of UNFSS (from launch) 40 Action areas identified Decision-Making tool for policy makers on VSSs Flagship Report on VSSs Impact Assessment working group Status Further develop draft tool (IIED/TSPN); adapt/ validate at producer country level. Initial publication almost ready for dissemination (draft shared with ICCO). Work with exisiting initiatives (COSA etc.), support interpretation of results for policy Capacity building activities Begin in pilot countries, link with exisitng initiatives (SCAN etc). Harmonization and equivalence Emerging standard initiative National and regional Committees linked to UNFSS Working group being set-up, building on existing program (GOMA-organic standards/global Gap). Provide information and promote their relevance and value to Sustainable Development. Under development, build on briefings (China, Thailand, Panama under development) 40

41 41 For more information: Website: Support for the UNFSS provided by: 41