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Is certification fit-for-purpose?

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An excerpt from our new Supply Chain Risk & Innovation publication: http://innovation-forum.co.uk/supply-chain-risk-innovation.php

A key mechanism of the sustainability movement, commodity certification has proved fairly effective in the fight against environmental destruction. But do global systems designed to drive best practice have their limitations?

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Is certification fit-for-purpose?

  1. 1. PAGE 21 than simply spraying weedkiller everywhere – costs more, as it demands more pairs of hands. But it is a method which is maintaining yield levels across the San Alberto group. “In other farms where they don’t do this, they have to keep renovating plants all the time to keep boosting productivity. But we have done very little renovation over the last 30 years and our yields stay the same,” says Guerrero. Today, more than 3,000 boxes of bananas per hectare are produced every year by the group, the large majority of which are bought by Chiquita and shipped to the US. Afour-hour drive north east of Costa Rica’s capital of San José is the town of Siquirres, home to La Estrella, part of the San Alberto group of farms producing bananas on a 700-hectare plot. Strolling among his expansive plantation of three-metre high plants, the farm’s sustainability coordinator Jorge Guerrero explains the nine-month fruit-bearing cycle of his plants and proudly states that “unlike other plantations, we rarely need to replant our plants. By keeping them in good condition, they will just keep on producing.” Central to this “good” conditioning is effective soil management. The ground throughout the farm is a blanket of weeds and grasses which, rather than compete with the plants for nutrients – something Guerrero says is a “myth” – stops the soil being eroded and keeps the applied fertiliser where it should be, at the base of the plants rather than being washed away into the local rivers. Yes, farming in this more manual way – handpicking which weeds to remove rather CERTIFICATION: THE PROS AND CONS Iscertificationfit-for-purpose? A key mechanism of the sustainability movement, commodity certification has proved fairly effective in the fight against environmental destruction. But do global systems designed to drive best practice have their limitations? Essential insight • Certification has had plenty of success in recent years and there is every reason why companies should adopt targets for certified sustainable sourcing. • Certification is beneficial to farms; farmers get a simple, straightforward mechanism to help implement best practice and boost productivity. • But it’s important to remember that certification has its limits. Just because your ingredients have been certified, that doesn’t mean the risk attached to them has been eradicated. • Keep encouraging certification bodies to boost or revise their standards, rather than just settling for “lowest common denominator” options. • With more and more companies going down the certification route, going “beyond certification” can offer a key differentiator to your business or products. • Certification is starting to broaden out to include not just environmental protection, but also tackling social issues too. SUPPLY CHAINS IN FOCUSSUPPLY CHAIN RISK & INNOVATION By 2000, all Chiquita-owned banana farms in Latin America HADEARNEDRA CERTIFICATION The FSC has certified more than 187m hectares of forests in 81 countries
  2. 2. PAGE 22 The company’s approach to agriculture is not commonplace across Costa Rica, or any place else for that matter. It behaves in this way largely as a result of being certified by the Rainforest Alliance (RA) since 1996, ensuring it sticks to a series of environmental and social standards as stipulated by the NGO’s certification system. Its ability to maintain yields and productivity – while those of neighbouring farms steadily decline – is testament to the positive impact certification has had on San Alberto. Successes The widespread use of certification and standards systems has helped to protect against environmental issues such as deforestation and overfishing, and increasingly human rights abuses and community land rights – and created a market for more sustainable commodities in the process. Organisations such as the RA, the Forest Stewardship Council (FSC) and the Roundtable on Sustainable Palm Oil (RSPO) have worked tirelessly to create standards that farmers have to meet to be able to sell “sustainable” commodities, including palm oil, coffee, cocoa, bananas, beef and timber. Today, companies such as Mars and Unilever have committed to buying 100% of their commodity supply from certified sources, and they can be fairly comfortable in the knowledge that trusted standards are helping to protect the planet’s forests. By 2000, all Chiquita-owned banana farms in Latin America had earned RA certification, for example. Now, they want all of the farms from which they source – like San Alberto – to have the same label. These mechanisms have been replicated many times and used for decades, with relative success. The FSC has 850 members and has so far certified more than 187m hectares of forests in 81 countries, working with 150,000 smallholder farmers. The RA claims to have 46m hectares of land under sustainable management and has helped to train 1.3m farmers in better agricultural techniques. According to Nigel Sizer, the newly- appointed president of the RA, certification has been fundamental to turning the tide on Costa Rica’s environmental woes. During the 1980s and 1990s, the country was suffering the worst rate of tropical deforestation of all countries, in terms of the percentage of its land being logged. “It’s extraordinary what Costa Rica and its leaders have done to bring those rates down,” he says, describing the country as something of a “laboratory for sustainable agriculture and forestry” with certification mechanisms being widely used and supported by companies and governments alike. Limitations But with 50 football fields of tropical forests cleared somewhere in the world every minute of every day, according to the latest World Resources Institute analysis, is certification having the desired effect? Take, for example, the RSPO. It has been in existence for the past 12 years. It has worked really hard to encourage the global supply chain of palm oil producers, refiners, retailers and buyers to sign up to meet its set criteria of what it defines as “best practice”. Its 2,000 members represent 40% of the global palm oil sector. And yet just 21% – 13.7m tonnes – of the world’s palm oil is currently certified under the RSPO system. Similarly, the 20m hectares SUPPLY CHAIN RISK & INNOVATION SUPPLY CHAINS IN FOCUS Costa Rica is a laboratory for sustainable agriculture and forestry, with certification mechanisms widely used 50FOOTBALL FIELDS of tropical forests are lost every minute of every day RSPO members represent 40%OFTHE GLOBALPALM OILSECTOR JUST21%OF WORLD’S palm oil is currently certified under the RSPO
  3. 3. PAGE 23 of land that has been FSC-certified in tropical countries so far is barely scratching the surface in terms of effective forest protection. With more than 450 different eco-labels being used across 25 sectors, many commentators are starting to question the value and performance of certification. The concept has been around for decades now. So, why hasn’t it been able to scale up sufficiently, to cover more ground and ensure entire sectors are fit for the long term? Critics such as Scott Poynton, the founder of the NGO TFT, believes that most current standards that certification bodies audit against are too weak and have fallen behind the pace of best practice being shown by some of the leading companies. By adopting lowest common denominator thinking, he believes companies are given the option to use certificates as a way of outsourcing their responsibilities. It is something that is stifling innovation, he says; rather than thinking creatively about how their business is going to develop and maintain a sustainable source of their key ingredients, business leaders are too heavily relying on organisations like the RSPO and FSC to do the work for them. In his book, Beyond Certification, he instead advocates what he calls a “VT TV” system (values, transparency, transformation and verification), which would see companies creating their own set of goals based on their values, with the public-sharing of results ultimately driving performance. He cites the likes of Nestlé for adopting such an approach – one that is starting to pay off. Rather than get rid of certification altogether, many more people – recognising that it is a not a perfect solution – believe it is a suitable starting point for addressing many environmental and social problems. The likes of Sime Darby, the world’s largest producer of RSPO-certified sustainable palm oil, is part of a growing band of companies that, while committed to certification, would like the option to prove they want, and are able, to move beyond the standards being set. Upping the ante As such, the certification bodies have been listening and are starting to react by evolving the criteria by which they operate to ensure they are more effectively doing what they set out to do in the first place. Responding to the number of companies that, while adhering to its standards, had developed policies that go beyond them, the RSPO has introduced new voluntary criteria to expand upon its existing principles and criteria (P&C). To be eligible for the add-on certification – known as RSPO NEXT – members have to have at least 60% of their plantations in compliance with the core RSPO P&C requirements, have company-wide policies that exceed current RSPO P&C requirements, and must commit to implementing the stricter RSPO NEXT policies across all of their plantations. Meanwhile, its decision to suspend the IOI Group from its membership after seemingly breaking deforestation rules was warmly welcomed by critics that had previously lambasted the organisation for showing weakness in the face of paying members. The RA, which audits against standards created by the Sustainable Agriculture Network (SAN), has also upped the ante. A revised SAN standard, which will be published in September 2016, offers up a more robust set of critical criteria, as well as a series of continuous improvement requirements distributed at varying levels over time, making it more accessible to more farmers that want to make use of RA certification. SUPPLY CHAIN RISK & INNOVATION SUPPLY CHAINS IN FOCUS There are more than 450 different eco-labels being used across 25 sectors Can the RSPO keep up?
  4. 4. PAGE 24 Local, social issues There is also more acknowledgement of the fact that environmental and social challenges are interconnected – and the debate and standards-setting to tackle environmental destruction has often been to the detriment of social issues, such as human rights and women’s empowerment. Commonly, labour conditions on plantations where timber is sourced are poor. In countries like Malaysia, a huge population of migrant workers from Indonesia make up a large proportion of the workforce, but there are widespread reports that they are treated poorly, with unfair working conditions and low pay. Again, the certification movement has responded. The retailer Marks & Spencer (M&S) has just become the first retailer to sign up to the Seafish Responsible Fishing Scheme (RFS), which sets out guidelines for vessels and skippers to adhere to if they want to demonstrate they are taking health and safety, and the welfare of those on board, seriously. Activists highlighting poor working conditions of fishermen is something that has dogged the Thai shipping sector since 2014. Again, certification might be the answer. The M&S commitment means that all worldwide fishing boats supplying the retailer will have to gain an RFS certificate by 2021, or at least be actively working towards a time-bound plan. The fact the deadline for compliance is set five years from now highlights just what the sector is up against and just how far vessels, operating in places such as Thailand, need to come before serious issues are addressed. Back in Siquirres, Guerrero is reminiscing about a time before certification and environmental awareness; a time when the SUPPLY CHAIN RISK & INNOVATION SUPPLY CHAINS IN FOCUS blue plastic bags – used widely across the banana industry, stuffed full of chemicals and designed to protect near-ripe bananas from the sun and insects – were burned, sending a host of chemicals up into the atmosphere. It was also a time when the widespread use of fertilisers, and absence of protective clothing, was causing mass infertility among the farming community throughout Latin America. Difficult questions Certification – and the assessment and auditing that goes with it – has made San Alberto’s farm owners question all sorts of practices that go on in the field. The workers chopping away at banana trees now have handles on their machetes to stop sweaty hands being sliced unnecessarily. This is not something required by RA certification, but was implemented by a management team with a new mindset. Certification clearly has its limitations and is not the perfect solution to dealing with big issues such as illegal logging. There is a need for certification bodies to keep evolving and pushing the boundaries – not easy when balancing the needs of the many. Developing standards that are both achievable and stretching will be an ongoing challenge, but one that must be met. It is also up to the corporate community to encourage the development of stronger, more robust and wider-in-scope standards, rather than seeing certification as merely providing a box that must be ticked. For now, it is important to see certification as a good solution for supporting the creation of more sustainable commodity supply chains – but one that has its limits. ★ M&S wants all fishing boats supplying it to have an RFS certificate by 2021 Certification clearly has its limitations and is not the perfect solution for big issuesPoor labour conditions endemic in Thai fishing fleet

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