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Report: Sustainable Sourcing Driving Major Market Growth

Image credit: IISD

Private sector sourcing commitments from companies such as Unilever, Coca Cola, Starbucks and Home Depot are driving major market growth for sustainable commodities, according to the State of Sustainability Initiatives (SSI) Review 2014.

Once thought of as instruments primarily tailored for niche markets, voluntary sustainability standards such as Fairtrade, Rainforest Alliance and Organic are gaining traction in mainstream markets. The trend towards mainstreaming of sustainability standards is strongest among newer sector-specific initiatives that explicitly target mainstream markets.

Besides the companies named above, the review documents a persistent trend in sustainable sourcing commitments by manufacturers including Dole, Chiquita, Tetley, Twinings, Hershey, Lowes, Nestlé, Ferrero Group, Mars, Ikea, adidas and others. The growing number of companies that have made commitments to source sustainably illustrates the critical role that the private sector plays in overall market growth of products certified under these initiatives, SSI says.

The average annual growth rate of certified production across all commodity sectors (excluding biofuels) in 2012 was 41 percent, outpacing growth of 2 percent in the corresponding conventional commodity markets. Growth in certified production was strongest in the palm oil sector which experienced 90 percent growth in 2012. Hershey’s, for example, last year achieved its commitment to source 100 percent mass-balanced RSPO (Roundtable on Sustainable Palm Oil)-certified palm oil more than a year ahead of its original 2015 commitment, and announced it will achieve 100 percent traceable and sustainably sourced palm oil by the end of 2014. Other leading sectors were sugar (74 percent), cocoa (69 percent) and cotton (55 percent).

The research found that compliant production attained significant market penetration in several major commodity markets. Certified coffee, which led in terms of market penetration, reached a 38 percent market share of global production in 2012 (up from 9 percent in 2008). To help consumers make sustainable choices with their coffee consumption, last year a new Green Coffee Carbon Footprint Product Category Rule (CFP-PCR) was published, providing the first CPR for the calculation of greenhouse gas (GHG) emissions from coffee production.

Other certified commodities with significant market share for sustainable production in 2012 include: cocoa (22 percent); palm oil (15 percent) and tea (12 percent).

The SSI Review 2014 also reveals a long-term trend of declining depth of sustainability criteria coverage among voluntary standards over the past decade. This trend might be enabling more producers to enter sustainable supply chains, but also highlights the growing importance of answering questions related to the field-level impacts created by voluntary sustainability standards.

Overall, the SSI Review concludes that the opportunities for voluntary standards to enable positive transformational change across major mainstream markets are now well-established and continue to grow, but that taking full advantage of them will require a better understanding of field-level impacts as well as a host of strategic policy measures to support technical assistance and cost-internalization at the market level.

Mike Hower is Marketing Communications Manager at Carbon Lighthouse. With a background on both sides of the communications podium — as a journalist and strategic communicator — he is committed to helping organizations address climate change through sustainability innovation. Previously,… [Read more about Mike Hower]

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