How market-based sustainability standards can help protect the planet

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Joshua Wickerham, Engagement Manager, ISEAL Alliance, Pengyu Li, China Specialist, 1t.org China Action/Tropical Forest Alliance, World Economic Forum Beijing

• International trade is often overlooked as a driver of global biodiversity loss and climate change.
• More than 80 industrial sectors in over 180 countries actively employ voluntary sustainability standards to protect biodiversity and food security.
• Global dialogue is needed to advance green commodity value chains, increase coordinated ecological practices, scale-up good practices and build consensus.

Ninety percent of tropical deforestation is linked to agriculture, driven largely by palm oil, timber, beef and soy trade. Thus, commodity-driven trade is a significant driver of biodiversity loss for developing countries, as well as the global climate crisis.

Because climate agreements and ongoing negotiations in the Convention on Biological Diversity (CBD) focus on nationally determined contributions, strategies and actions plans, the effects of international trade are often overlooked and unaccounted for. Therefore, market-based tools like sustainability standards and similar systems that impact trade are underutilized drivers for meeting global biodiversity and climate goals. Policymakers should seize the opportunity to use sustainability standards to make international trade and investments key drivers of biodiversity conservation and low-carbon development.

Driving sustainable trade and investment

Market-based voluntary sustainability standards and related systems (such as producer improvement programmes, or landscape-level approaches) are powerful tools to conserve biodiversity and address climate change resulting from trade.

These systems can protect food security while accelerating the post-2020 Global Biodiversity Framework expected to be determined, along with many other climate actions, at the Convention on Biological Diversity Conference of the Parties (CBD COP15) in Montréal this year.

Sustainability systems incentivize and recognize sustainability performance improvements along global value chains, from the smallest producers to the largest multinationals. Additionally, they provide mechanisms for accountability and reporting of sustainability impacts. The most effective systems also partner with researchers, governments and finance actors to scale up, monitor, evaluate and learn how to deepen impacts over time.

Scope, scale and effectiveness in conservation

A record number of farms and forests are producing and trading certified sustainable commodities, in which voluntary sustainability standards are essential facilitators. Voluntary sustainability standards are now active in more than 80 industrial sectors and over 180 countries. Moreover, in the agricultural commodity sector alone, certified areas grew by more than one-third from 2015 to 2019.

Sustainability systems have mechanisms to address the key drivers of forest and biodiversity loss in the agriculture and forestry sectors, fueling biodiversity conservation and climate adaptation and mitigation. This is achieved through production requirements that certified producers or forest management units or farms must comply with. Sustainability systems also support conservation efforts through training, knowledge transfer and payment for ecosystem services.

A 2018 systematic review on the effectiveness of sustainability standards in boosting practice adoption, found that certified entities are more likely to adopt and retain better practices. The same study found that audits, a key aspect of certification, encourage practice adoption and prevent slippage into bad practices. According to Evidensia, the vast majority of evidence of the impacts of voluntary sustainability standards on forests and plant conservation is positive.

Smart policy is critical in phasing out deforestation value chains

Smart policies and leading developing countries like China are vital to advancing the sustainability of internationally traded commodities. A new WEF report shows that, if China is to deliver the Glasgow Leaders’ Declaration on Forests and Land Use with 140 other countries, using trusted multistakeholder sustainability systems will be key. While in many developed and developing economies, policy makers have begun to utilise sustainability systems, too many national policies are still driven by regulatory approaches alone.

Voluntary sustainability systems and public policies work best together. Legality requirements like those in the EU Proposal for a regulation on deforestation-free products and China’s forest law, when implemented, can raise the legal requirements for sustainability, eliminating some of the worst deforestation practices. Sustainability systems will allow companies with sustainability performance even higher than the legal minimum to gain additional market recognition through the claims they are allowed to make. In turn, public policies that build such a “smart mix” of regulatory approaches and incentives for the uptake of voluntary systems can move entire sectors toward higher sustainability performance.

Global dialogue and collective action are needed

Yet, given the scale and complexity of sustainability challenges, global action is needed to equip regulators and value chain stakeholders to partner with sustainability systems effectively. Efforts must also address ways to increase credibility and reduce the complexity of these tools for every value chain actor.

For example:

1) Regional and international dialogues are fundamental to phasing out value chains that drive deforestation. Dialogue among developing countries and advanced economies like the US, the UK and the EU on implementing sustainability systems in trade and investment are critical areas of latent cooperation. Additionally, as China hosts the presidency of the UN CBD COP15 in December, sustainability systems can be essential assets that support the implementation of global biodiversity commitments.

2) Technologies and innovation in sustainability systems are critical, particularly in tools that help reduce costs to producers, traders and consumers. In addition to certification, many sustainability systems are collaborating with governments and other civil society actors at the jurisdictional level so that an entire region can reach a certain sustainability threshold, such as the LTKL in Indonesia. Assurance at a landscape or jurisdictional level can also reduce costs and increase impacts by working to ensure that entire regions meet minimum sustainability thresholds and allow companies to communicate progress toward deforestation or climate goals. Risk-based assurance can also reduce costs by directing certification resources to only the highest-risk areas.

3) Learning from existing sustainability systems, emerging systems and their end users is essential, and the uptake of sustainability systems in emerging economies is key. Governments, civil society and businesses can play key roles in scaling up capacity to meet sustainability goals using sustainability systems.

4) Cross-ministerial cooperation mechanisms within governments can be developed and supported to reach sustainability targets using sustainability systems. Joining up policy makers from trade, environment, development aid and business can support adoption of market-based sustainability systems, leveraging legal and political tools to show leadership.

Leaders in government, business and civil society should seize these opportunities to scale up the use of credible sustainability systems, building on stronger regulatory requirements for deforestation-free value chains. These systems provide the capacity, assurance and impacts to supercharge the delivery of global sustainability commitments through international trade and investment.