Mindfulness and Ethical Consumption

Abstract

Voluntary sustainability standards have grown rapidly in number and importance in global commodity markets over the past decade. The growth of voluntary sustainability standards has occurred in parallel with growing recognition of the importance of economic drivers in implementing sustainable development, as evidenced by the global call for a green economy. The State of Sustainability Initiatives Review 2014 reports on systems and market trends across 16 of the most important standards initiatives operating across 10 key commodity sectors. Initiatives covered in this report account for an estimated $31.6 billion in trade value, pointing toward their growing importance in defining terms of trade and opportunities for development across the commodity-producing world. Key findings of the SSI Review 2014 include: Sustainability standards continue to experience exceptional growth: The average annual growth rate of standard-compliant production across all commodity sectors in 2012 was a stunning 41 per cent, significantly outpacing the annual average growth of 2 per cent in the corresponding conventional commodity markets. Growth in compliant production was strongest in the palm oil sector, which experienced 90 per cent growth in 2012. Other leading commodity sectors for production growth in 2012 were sugar (74 per cent growth), cocoa (69 per cent growth) and cotton (55 per cent growth). Sustainability standards have forcefully penetrated mainstream markets: The Review documents a persistent trend in sustainable sourcing commitments by manufacturers, which is resulting in significant market penetration in several commodity markets. For example, standard-compliant coffee, which led in terms of market penetration, reached a 40 per cent market share of global production in 2012 (up from 15 per cent in 2008). Other commodities with significant market shares (in terms of global production) in 2012 include cocoa (22 per cent; up from 3 per cent in 2008), palm oil (15 per cent; up from 2 per cent in 2008) and tea (12 per cent; up from 6 per cent in 2008). Sustainable markets continue to be defined by persistent oversupply of standard-compliant production: While standardcompliant production has reached significant levels across select commodities, actual sales of products as “standard compliant” have not grown as rapidly, resulting in significant oversupply (typically between one-third and one-half of total compliant production is actually sold as compliant). This situation means that companies have ample choice for sustainable sourcing (positive outcome), but also suggests that the market may be placing downward pressure on the prices of sustainable products due to oversupply (negative outcome). Production for sustainable markets is concentrated in more advanced, export-oriented economies: Supply of sustainable products is concentrated in select regions with more developed production capacity. Across developing countries, sustainable production is concentrated in Latin America. When developed countries can supply sustainable markets (as in the forestry sector), they tend to dominate supply. In light of this, special investment will be necessary if voluntary standards are to effectively operate as tools for poverty reduction among those most in need. Sustainability standards are creating new opportunities for stakeholder participation in supply chain decision making: Whereas conventional commercial relationships rely principally on agreement between buyer and seller, sustainability standards have done a good job at integrating non-traditional perspectives into supply chain decision making by the standard-setting and implementation process, as represented by board member representation. Although developed country representation is still dominant across most boards, developing country representation is significant and remarkable. Sustainability standards are strengthening the reliability of market claims through increasingly independent monitoring and enforcement processes: All of the initiatives surveyed applied some form of third-party conformity assessment procedure. A full three-quarters apply third-party certification—which adds to the independence of claims. Some of the newer initiatives have focused on using only verification for conformity assessment in order to cut costs and allow for more rapid growth.