Fragmented environmental certification schemes need to consolidate so that whole supply chains can be covered across international markets

 

Fragmented environmental certification schemes need to consolidate so that whole supply chains can be covered across international marketsEnvironmental and social certifications and labelling schemes have survived, and served well, for more than a quarter of a century. But now they risk becoming irrelevant if they don’t adapt to the changing landscape of sustainability.

A number of eco-certification and labelling schemes that were once hailed as gold standards have come under attack from activists for being inadequate or lenient. Companies may begin to lose confidence in these labels if NGOs continue to question the effectiveness of the schemes.

Proliferation of eco-certification and labelling schemes has only added to the confusion for companies that now need to figure out which ones to work with. Multiple schemes also mean an increased burden on farmers and suppliers who have to spend time and money satisfying different certifications for different customers.

Certification schemes have failed to keep pace with the evolution of sustainability that now encompasses a much broader scope than a few years ago.

“The challenge is that more and more companies now look at the holistic sustainability of the entire supply chain and the product footprint from cradle to grave and not only the individual part of the supply chain,” points out Brendan May, former head of the Marine Stewardship Council, and founder of the Robertsbridge Group, a UK sustainability consulting firm. He says that whether certifications can adapt with this emerging trend is a key question.

Current certifications only measure the impact of one aspect of a product’s value chain. In other words, companies are forced to shop around for several systems if they want to measure the total impact throughout a product’s life-cycle.

“If certification ceases to be seen as useful by multinationals, they will develop their own systems, many of which inevitably will be weaker than the standards currently on offer,” May warns.

Richard Donovan, senior vice-president for Rainforest Alliance, says: “Consumers are becoming increasingly confused by different labels and are not sure which to trust.” He argues that ensuring there is clear understanding by the consumer about what the certification means and what its mark, logo or label stand for is one of the key challenges certification schemes face.

Scaling up supplies from farmers to meet big volume demands from large companies has been another key challenge for many schemes.

“A key part of this is to very clearly understand the product delivery needs of the buyer, as well as the production constraints and challenges at the field level,” Donovan says. “Big customers must be clear on the constraints, and be willing to be patiently impatient in ramping up sourcing of products that can come from a wide variety of producer types including small landowners, SMEs and large producers and hugely varying environmental and social risk profiles.”

Where certification succeeds

He says the Rainforest Alliance is having success supplying large companies such as Kraft, Unilever, Marks & Spencer and Staples.

Alison Kriscenski, communications director at the Forest Stewardship Council, says the FSC is addressing the challenge of scaling up small farmers through the FSC group certification scheme. The scheme allows a group of forest owners to join together under a single FSC certificate and share certification costs among members.

“This can dramatically reduce the cost for each forest owner,” Kriscenski says.

FSC has launched an initiative called CeFCO, which aims to certify forestry contractors. Certifying contractors can cut the costs and workload involved in becoming FSC-certified for smallholders, says Kriscenski.

In spite of all the challenges and controversies, observers agree that certifications are useful. “Of all the sustainability tools available to businesses and NGOs, certification has stood the test of time, particularly the most credible systems. No system will ever be perfect and if no one is unhappy with the standards set then the bar is probably either too high or too low,” says May (who is also an Ethical Corporation contributing editor).

Success of some of the eco-labels is reflected in the way companies have ramped up their sourcing of certified products. For example, Kraft Foods is now the world’s biggest buyer of coffee and cocoa from Rainforest Alliance-certified farms, buying 50,000 tonnes of coffee and 11,000 tonnes of cocoa in 2010. This is a 12-fold jump from 2003.

“Commodity certification helps us communicate and create consumer demand for sustainable sourcing,” says Kraft spokesman Richard Buino. “When comparing between two products and all other things being equal, a sustainability advantage becomes a competitive advantage and can be the tipping point to choose our product over another,” he explains.

Kraft has strengthened its partnership with Fairtrade after acquiring Cadbury. Last year, the company bought 19,000 tonnes of Fairtrade-certified cocoa, four times more than in 2009. Fairtrade-certified Cadbury Dairy Milk is the brand’s biggest seller in the UK, and it is now expanding to Ireland, Australia, New Zealand and Canada.

“Our UK coffee – Kenco – has seen double-digit growth and penetration due to a focus on Rainforest Alliance sourcing and overall sustainability communication,” Buino says.

Kraft’s Côte d’Or and Marabou chocolate lines are the first pan-European brands to bear the Rainforest Alliance seal. Buino says that, together, they will use more than 66m pounds of cocoa beans from Rainforest Alliance certified farms annually by 2012.

Sustainability has become more strategic for multinational companies. “Because we’re one of world’s largest buyers of cocoa, coffee and cashews, we have a vested interest in the long-term future of these crops and communities,” Buino says.

He says continued engagement at the beginning of the supply chain ensures a reliable supply, improved efficiency and supply chain integrity.

Timberland’s Green Index

But there are companies that are trying out self-certification schemes.

Timberland is an example of how companies can successfully develop their own eco-labelling schemes rather than relying on third-party certifications. In 2007, Timberland introduced a Green Index rating to measure the environmental impact of products for a small sample of footwear products and has since expanded the programme to more product lines.

“While we do manage the Green Index internally, we use third-party standards (eg ISO life cycle assessment standard), a transparent methodology and commercially and publicly available datasets so our stakeholders can evaluate what we measure,” says Betsy Blaisdall, senior manager of environmental stewardship for Timberland.

Blaisdall adds: “The rating helps us to design environmental impacts out of our products and at the same time provides consumers with visibility into the footprint our business creates.”

The Green Index has helped the company to make more informed choices about the materials and processes used for products, Blaisdall says. “For example, using materials that are lighter in weight but maintain the same performance of traditional materials is allowing us to save more than 500 tonnes of carbon for just one style of Timberland boots.”

But the company’s frustrations are reflected in its Green Index Report in 2009. “Currently, widely accepted environmental standards do not exist. This means that brands are running in a race with different finish lines,” the report says.

Timberland therefore worked with the Outdoor Industry Association to develop an industry-wide index for measuring the impact of outdoor products. The result is the OIA Eco Index, launched recently, which is being tested by several companies on pilot basis.

Starbucks’ certified brew

Starbucks is another company which decided to develop its own certification programme called Coffee and Farmer Equity (C.A.F.E.) to ethically source coffee from farmers.

“We developed C.A.F.E. Practices with Conservation International because we felt it was the most appropriate way to address environmental and social issues, and the price transparency and quality issues of concern to us,” says Ben Packard, Starbucks vice-president for global responsibility.

Though Starbucks developed C.A.F.E. Practices, the scheme is evaluated by third-party verifiers and is overseen by Scientific Certification Systems, a sustainability certification services firm.

Starbucks’ purchases of C.A.F.E. Practices-verified coffee in 2008 accounted for 77% of coffee purchases, and in 2009 the amount increased to 81%, or 299 million pounds of coffee. (For more on Starbucks’ scheme, see agriculture briefing.)

However, Starbucks has continued to buy Fairtrade-certified coffee and Certified Organic coffees as well. “We acknowledge the significance and efforts of other organisations and share common goals with many of them, including Fairtrade – which helps small-scale farmers receive a fair price for their goods,” says Packard.

These schemes together will help Starbucks to buy 100% responsibly grown and ethically traded coffee by 2015, a goal that the company set in 2008.

“The main challenge to increasing the supply is to do it in such a way that it creates value for our farmers and transparency to our consumers,” Packard says.

If the certification industry does not address the issues of proliferation, concerns of NGOs and changing needs of companies, there may be a rise in the number of company or industry-driven certification schemes.

But Donovan of Rainforest Alliance sees disadvantages in self-certification. “Consumers in general just don’t trust self-certification systems. Consumers want to see NGO support; they want independent verification of practices and transparency.”

Donovan says there are three key disadvantages of self-certification. One, the companies are seen as biased or having a “conflict of interest”. Two, doing self-certification can be quite expensive – the full burden falls on the company. And three, the company misses out on the strength and participation of other stakeholders such as NGOs.

A distant dream

A key question then is whether various competing schemes would come together to collaborate to create one set of standards and methodologies to avoid duplication of work in the market.

Legal developments in the European Union and the US can actually trigger some collaboration between schemes. For example, Rainforest Alliance is now working with both FSC and the Programme for the Endorsement of Forest Certification on the dynamics of illegal forest products, seeking to address the issue across the globe, responding to the new Timber Regulation at the EU and the amended Lacey Act in the US.

“This means having common standards for what constitutes ‘legal’ in forest products, and ensuring that auditing/verification procedures are consistent and rigorous,” Donovan says.

FSC and Fairtrade have joined forces to develop a dual certification system for forest products. FSC has also started a project with the Lembaga Ekolabel Indonesia, a non-profit forest certification organisation, to explore potential areas for cooperation on responsible forest management and forest certification in Indonesia.

But a global collaboration between major forest certification schemes does not seem to be on the horizon yet.

“Multistakeholder governance, independent assessment and measurable impacts are fundamental components of credible certification, and are all essential criteria for any mutual recognition between FSC and other forest certification schemes,” says FSC’s Kriscenski.

She adds: “At present, in the forestry sector, there is not yet another international certification scheme that addresses these aspects in a scope that is conducive to collaboration.”

Observers say certification schemes need to have a sense of urgency and find ways to address the concerns of stakeholders if they hope to remain relevant.

“Certification is the best tool we have to measure impact and progress,” Brendan May says. “But existing labels should not remain static and have to strive to become ever more stringent and holistic.”

Main eco-certification schemes

• Forest Stewardship Council, for forest products 
• Sustainable Forestry Initiative, for forest products
• The Programme for the Endorsement of Forest Certification, for forest products
• Marine Stewardship Council, for seafood certification
• Fairtrade, a scheme for promoting farmers and workers in developing world
• Organic certifications, for a number of farm products
• UTZ Certified, for coffee, tea and cocoa certifications, manages traceability of RSPO-certified palm oil
• Rainforest Alliance, for farms, forestry and tourism certifications
• Global Ecolabel Monitor, a report by the World Resource Institute, in 2010 listed 340 eco labels in 42 countriesBattle for certification market share
  The launch of numerous labels has resulted in competition among various schemes, adding to the confusion.

  For example, Washington-based labelling scheme Sustainable Forestry Initiative (SFI) has posted a detailed comparison with the rival Forest Stewardship Council (FSC) on its website.

  The comparison “fact sheet” opens by telling readers that only 10% of the world’s forests are certified, and 40% of the certified lands are in North America. It goes on to claim that 155m hectares in North America have been certified by SFI and SFI-recognised schemes as against only 44m hectares certified by FSC. But FSC on its website says that it has more than 131m hectares of forests certified.

  The US Green Building Council which runs the LEED (the Leadership in Energy and Environmental Design) scheme currently recognises only FSC certification in its rating system for wood and paper products. SFI is publicly lobbying to press USGBC to accept SFI-certified products as eligible for credits in the rating system.

  The Programme for the Endorsement of Forest Certification (PEFC), an industry-driven forestry certification initiative, states on its website that it’s the world’s largest certification system, with 232m hectares of forests certified. It says more than half of all wood imported in the UK, and several other countries, is PEFC-certified.

  PEFC’s certification system works through endorsed national certification schemes and has more than 30 national certification schemes under its umbrella, including the SFI.

  Both FSC and PEFC are recognised by the UK government as certification schemes to meet legal compliance with the government’s timber policy.