Track 5f. Sustainable Supply Chains and international trade
Track chairs:
Walter J.V. Vermeulen. Copernicus Institute of Sustainable Development, Utrecht University, Utrecht, Netherlands.
Valerie Nelson. Natural Resources Institute, University of Greenwich, London, UK.
Ximena Rueda. Universidad de los Andes, Bogota, Colombia.
Contacts: w.j.v.vermeulen@uu.nl, valairn@ntlworld.com; x.rueda@uniandes.edu.co
Goals and objectives of the track
We are witnessing a fast growing implementation of (mostly) private voluntary sustainability standards and of corporate strategies towards substantial or fully sustainable sourcing (examples are Unilever, DSM, Tesco, IKEA, Adidas, Nestlé, Cargill, Mars, Mondelez, Dangote, Nescafe, Nespresso, Kingfisher, IKEA). In both cases these approaches aim at transforming unsustainable practices of production, trade and consumption in international supply chains towards improved environmental and social conditions (workplace and community) and the creation of shared value. A wide range of private voluntary sustainability standards is applied to verify compliance with sustainability best practices (including FSC, MSC, Organic (IFOAM), Fairtrade, UTZ Certified, Rainforest Alliance, GlobalGAP, ETP, RSPO, Bonsucro etc.). In various global markets the penetration of these sustainable sourcing practices has increased reaching 40% in coffee, 25% in cocoa, 15% in palm oil of the full global production in 2012, with global total sales reaching 12% for coffee, 7% for cocoa, and 8% for palm oil (IISD, 2014, p. 91). In some consumer countries we observe the mainstreaming of sustainable labelling for export agricultural and forestry commodities. In the Netherlands around 40% (coffee, palm oil, fish, cocoa) and 65% (timber) of the sales in 2012/2013 were sustainably sourced (van Oorschot et al., 2013, p. 33) and governments are recognizing the strengths of such market-based sustainability transformations.
Interestingly, these practices of self-governance originally rested on the organizing capacities, field experience and collaborative efforts of front-runner companies and globally acting NGOs, while governments have been on the side-line (Vermeulen and Kok, 2012; IISD 2014).
In creating private governance approaches for global supply chains the private standards are framing their understanding of sustainability issues. There is variation in the scope and focus of the private standards, but in agriculture and forestry, the most dominant standards simultaneously address a wide variety of environmental issues in production in combination with social challenges of community development, fair and healthy working conditions, respecting labor-related institutions and adjusting the modes of business-to-business interaction in markets, both globally and locally in supplier countries.
In the field, practitioners and their knowledge support agents have started to jointly develop a general theory of change about global market transitions (see for example Molenaar et al., 2013, Simons 2014). While NGOs and front-running companies initially operated independently, filling the vacuum of government regulation and enforcement and addressing their failure to internalize externalities related to the import of goods from developing country's pollution havens (Mani and Wheeler 1998; Cole 2004), more recently new smart forms of concerted market-NGO-governments strategies have been implemented successfully. Some companies are currently looking beyond standards to other kinds of interventions, not necessarily involving standards anymore.
This new approach has recently been termed ‘global market transitions'. Some scholars suggest an analytical framework for understanding these transitions towards sustainable global markets, based on empirical evidence. Such frameworks illustrate this by using a S-curve, which describes various different stages of a market transformation process progressing towards sustainability. These authors explore the role of voluntary sustainability standards and other instruments at each stage of the S-Curve (see for example Molenaar et al., 2013; van Oorschot et al. 2013). A key role is given to transdisciplinary collaborative approaches in engaging the key economic actors in the center of global supply chains as major leverage points, which may work well with concerted smart pressures from market, civil society and governments.
But one can take the debate also further. Imagine 2025, where will we be 9 years after the 22nd ISDRS conference of Lisbon? Is a rapid and structural transition to a circular and fair global economy possible, using this road of self-governance for products traded in the global economic arena? Are voluntary sustainability standards and other associated corporate responses to sustainability fit for purpose with respect to achieving a circular and fair global economy? While it may be possible to identify thresholds for environmental services, it is not so straightforward for social goals. For voluntary sustainability standards (and smart mixes with government and NGOs) to facilitate this pathway to sustainable trade (as defined by a circular and fair global economy) may require a rapid growth of consumer demand for certified products; government sustainable procurement programmes; ‘all-inclusiveness' of these supply chain governance approaches (addressing the triple-P); successful uplifting production and trade practices of all suppliers; and making them address the major issues of unsustainability. Will such approaches be successfully translated into a new practice of CSR or creating shared value (CSV)?
To understand the effectiveness of voluntary standards and other sustainability innovations in global supply chains, there is a need for more evidence, especially third order evaluation. Despite an increase in the evidence base, there still remain many gaps, because of the diversity of locations in which VSS are being adopted and the rapid expansion into new products, and identification of new sustainability issues requiring attention, such as gender, landscape issues, etc. Further, learning and impact studies need to assess which kinds of smart governance mixes and collaborative approach are effective under what conditions, and where they too have limits. The development of a form of ‘meta'-governance, including new approaches by governments, combining public policy strategies with the demonstrated virtues of self-governance is increasingly seen by the community of practice, researchers and policy-makers associated with sustainable trade and private standards as being the way forwards. Critical research evidence and insights are needed to understand whether such a meta-governance system can evolve and be effective in securing social and environmental sustainability.
We welcome any research or critical review paper addressing one or more of the issues suggested here.
References used:
Alvarez, G. & Hagen, Von, O., 2011. The Impacts of Private Standards on Producers in Developing Countries. Literature Review Series on the Impacts of Private Standards, Part II, Geneva.
Alvarez, G. & Hagen, Von, O., 2012. When Do Private Standards Work? Literature Review Series on the Impacts of Private Standards; Part IV, Geneva.
Hagen, Von, O. & Alvarez, G., 2011. The Impacts of Private Standards on Global Value Chains. Literature Review Series on the Impacts of Private Standards, Part I, Geneva.
Hagen, Von, O. & Alvarez, G., 2012. The Interplay of Public and Private Standards: Literature Review Series on the Impacts of Private Standards, Part III, Geneva.
Nelson, V. and A. Martin (2013) ‘Assessing the impact of voluntary sustainability standards. Policy Brief’. NRI report for DFID. Available at: http://www.nri.org/images/documents/project_websites/AssessingPovertyImpacts/
AssessingThePovertyImpactOfSustainabilityStandards.pdf
Porter, M.E. & Kramer, M.R., 2011. Creating shared value. How to reinvent capitalism - and unleash a wave of innovation and growth. Harvard Business Review, pp. 2-17.
Resolve, Steering Committee of the State-of-Knowledge Assessment of Standards and Certification. (2012) Toward sustainability: The roles and limitations of certification. Washington, DC: RESOLVE, Inc.
Simons, L. (2014). Changing the Food Game: Market Transformation Strategies for Sustainable Agriculture. Greenleaf.
Vermeulen, W.J.V., (2010) Sustainable supply chain governance systems: conditions for effective market based governance in global trade. Progress in Industrial Ecology, An International Journal, 7(2), pp.138-162.
Vermeulen, W.J.V. (2015) Self-Governance for Sustainable Global Supply Chains: Can it deliver the impacts needed? In Business Strategy and the Environment, doi: 10.1002/bse.1804.
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