Voluntary Sustainability Standards for the SDGs

1. Voluntary Sustainability Standards for the SDGs P166 Short Courses on Key Issues on the International Economic Agenda 12 April 2019 Better Trade 4 the SDGs Miho Shirotori UNCTAD/DITC/TAB UNCTAD/P166/BetterTrade4theSDGs/12April2019

2. Global brands are turning GREEN… What do all these global brands have in common? They all say they are committed to make their businesses socially and environmentally sustainable

3. …because global consumers are more conscious about sustainability To many consumers, if products are “sustainably made” matters in purchasing decisions. According to 2015 Cone Communications/Ebiquity Global CSR Study: 91%of global consumers expect companies to be responsible to social and environmental issues; 84% like responsible (or sustainable) products when available; 90% would boycott a company if they learned of irresponsible or deceptive business practices. • Many firms rely on Voluntary Sustainability Standards (VSS) to prove their sustainable sourcing • What are VSS? What are VSS challenges? What are key issues for policymakers?

4. A. What are VSS What are Voluntary Sustainability Standards (VSS)? VSS are… • Often called “private” standards • Social or environmental sustainability metrics • To ensure a product is harvested, produced or processed sustainably • Addressing issues e.g. human rights, labor standards, gender equality, protection of environment and ecosystems: “workers are kept safe and healthy, human rights are upheld, communities and land are protected, or environmental impacts were moderated” (UN Forum on Sustainability Standards) • Made visible on a final product as a proof of sustainability

5. A. What are VSS How do VSS function? • Transform production methods • Certify for VSS • Maintain VSS certification • Higher price • Place in a value chain

6. A. What are VSS How popular are VSS? Certifying for VSS is becoming popular in agricultural commodity sectors, e.g. • 25% or more of the world’s coffee production area • 23% or more of the cocoa production area • 13% or more of the world’s tea area • 10% or more of cotton area VSS plays a big part in the fashion industry, too. • 60% of UK consumers prefer “ethical fashion”, check for a sustainability label when purchasing • Similar trends in developing countries e.g. Mexico, China and India (source: Sustainable Fashion Blueprint Report 2018) Source: The State of Sustainable Markets 2018 Source:

7. B. VSS Challenges VSS Challenges to developing countries • To producers - Inequality in benefit-cost sharing • To processors and exporters - Market access barrier • To the government - Dissociation from government policy Also … questions over true sustainability (credibility)

8. B. VSS Challenges 1. Benefits and costs not always shared equitably

9. B. VSS Challenges Challenges to Producers: Case of Vanuatu Getting certified is “perceived” to be very difficult Not enough information Source: UNCTAD (forthcoming), Fostering green exports through VSS – Organic coconut oil in Vanuatu

10. B. VSS Challenges Challenges to Producers: Case of Vanuatu Photo: Interviewing small coconut oil producers in Malekula, Vanuatu "To get certified must be difficult, and I don’t know where to start" Source: UNCTAD (forthcoming), Fostering green exports through VSS – Organic coconut oil in Vanuatu

11. B. VSS Challenges 3. VSS can be dissociated from public policy 2. VSS can be market access barriers When buyers demand, VSS are no longer “voluntary” • VSS act as non-tariff measures (NTMs) e.g. SPS and TBT measures • VSS compliance cost higher than SPS/TBT (need to get certifiers to check production and processing methods on the ground) • No clear rules under WTO on trade-distorting impact of “private” standards • Unlike SPS and TBT, little technical assistance expected from Aid for Trade VSS adoption is a decision made within a value chain • Not always agree with the national development strategies • Too many VSS activities across wide areas and sectors with different actors involved – challenge to policy coherence • No framework for information exchange and cooperation with producers and businesses

12. C. Key Issues Key issues for policymakers

13. C. Key issues Some Resources on VSS: • UNCTAD Project “Fostering Green Exports through VSS” https://unctad.org/en/Pages/DITC/Trade-Analysis/TAB-Project-1617AI.aspx • United Nations Forum on Sustainability Standards (UNFSS) www.unfss.org • The State of Sustainability Market Report (ITC/FiBL/IISD) http://www.intracen.org/publication/The-State-of-Sustainable-Markets-2018-Statistics-and-Emerging-Trends/ • ISEAL Alliance https://www.isealalliance.org/

14. THANK YOU