Intergovernmental Forum of Dialogue on Voluntary Sustainability Standards The UN Forum on Sustainability Standards (UNFSS) ICCO Workshop, Douala, Cameroon June 24-27, 2013 Christopher Wunderlich: UNFSS coordinator

Objective: Effective forum for policy-makers to better understand voluntary sustainability standards (VSS) and be able to utilize VSSs as potential tools to support their own sustainable development strategies and goals. United Nations Forum on Sustainability Standards (UNFSS)

3 What are Voluntary Sustainability Standards (VSS)? Mainly developed by private bodies (commercial and non-commercial). Typically cover health, safety, environmental, economic, social and animal welfare issues. “Credence characteristics”, i.e. attributes not verifiable through examination of the product ( Production and Processing Methods- PPMs ). Most prominent in the food and agricultural sector (also significant in textiles/clothing, toys, timber products, cosmetics, bio-fuels, electronic goods). Carbon & water foot-printing and energy and material/resource efficiency standards are emerging as a new frontier. 3

444 Importance of VSS 4 VSS are of key importance for market entry and sustainable development. Real developmental opportunities – strong market dynamics (including growing private sector interest and participation) Unless pro-actively addressed, VSS can potentially become a market entry hurdle and a serious challenge in particular for small-scale producers. 4

5555 Voluntary (i.e. private) Sustainability Standards (VSS) are often viewed as a technicality, when VSS are tools that can be used to: Internalize environmental and social costs. Advance sustainable production and consumption methods (including opportunities for energy/ material/ resource efficiency and cost savings). Promote competitiveness in the growing and lucrative “sustainability” markets. Importance of VSS (cont’d) 5

6666 Market Share of VSS-certified Bananas & Coffee Source: Food and Agriculture: The Future of Sustainability, UN Department of Economic and Social Affairs, D. Giovannucci, S. Scheer et al., NYC, 2012: 17. 6

7777 State of Sustainability Initiatives (SSI): 7 Reporting service on VSS:  Market trends  Program reach/structure  Program governance Sectors : Forestry, Coffee, Cocoa, Tea and Banana

888 Growth of VSS 8 Recent Average Annual Growth Rate of Key VSS Markets: GlobalUS High-value5-10 %10+ % Organic10-15 %15-20 % Fair Trade35 %40 % Utz Certified30 %-- Rainforest105 %120 % Conventional Food Markets2-4 %3-5% 8 Source: State of Sustainability Initiatives, 2011

Geographical distribution of sustainable cocoa certification, 2011 (mt)

Geographical distribution of sustainable coffee certification, 2011 (mt)

Sustainable cocoa and coffee (% of Global Production in mt- 2011) CocoaCoffee Utz: 5% (212,690mt) Fairtrade: 3% (121,400mt) Rainforest Alliance: 2% (98,416mt) Organic: 1.4% 61,842mt) Adj for multiple-certification: 8% of Global Production 4Cs: 11% (906,300mt) Utz: 6% (476,903mt) Fairtrade: 5% (393,000mt) Organic: 3% (286,120mt) Rainforest Alliance: 2% (191,384mt) Adj for multiple-certification: 20% of Global Production

Sustainable cocoa production vs. sales, global Annual growth rate in production: 55% from Total volume certified in 2011: 349,504mt (8% of global production) Total volume sold as certified in 2011: 143,514 (3% of global production)

Sustainable cocoa production by country and initiative (2011) Fairtrade Global Average Organic Rainforest Alliance Utz

Reported 2011 premiums (KPMG) UTZ: US$152/mt in Ghana $140/mt in Côte D’Ivoire Rainforest Alliance: US$150/mt Ghana $200/mt Côte D’Ivoire Fairtrade: US$200/mt in Ghana and Côte D’Ivoire Source: KPMG. (2012). Study on the Costs, Advantages and Disadvantages of Cocoa Certification.

Reported 2011 audit costs (KPMG) UTZ: $6,500/coop, Ghana $4,331/coop, Côte D’Ivoire (annual) Rainforest Alliance: $8,500/coop,Ghana, $7,500/coop, Côte D’Ivoire (annual) Fairtrade: $2,561/coop, Ghana, $2,562/coop, Côte D’Ivoire (annual) KPMG: 2012

C ommittee O n S ustainability A ssessment Impact Assessment Tools to measure the costs and benefits of implementing sustainable certification programs

Economic 1.Farmer Livelihoods 2.Risk & Resilience 3.Competitiveness 4.Management 5.Organizational 1.Farmer Livelihoods 2.Risk & Resilience 3.Competitiveness 4.Management 5.Organizational 1.Health & Safety 2.Working Conditions 3.Education & Training 4.Basic Rights & Equity 5.Inclusive Value Chains 1.Health & Safety 2.Working Conditions 3.Education & Training 4.Basic Rights & Equity 5.Inclusive Value Chains 1.Resource Use 2.Waste 3.Soil Conservation 4.Biodiversity 5.Climate Change 1.Resource Use 2.Waste 3.Soil Conservation 4.Biodiversity 5.Climate Change Social Environment

Colombia Expanding each year

Yields in Colombia cps/ha 20 *** 99% confidence except 2 & 6 Sample: 2,474 producers (75% sm/25% lg) 7 certified agri-standards show consistently higher yields and = increased farmer revenue by $331 million! Conventional Control

Sample: 9 countries, over 4,000 farms, 2 crops (coffee/cocoa) with control groups ( )

Source: CRECE-COSA Multiple Certifications and Relation to Net Income

Source: CRECE-COSA: significant improvements in a basket of environmental indicators and improvements over controls groups Year 1 Year 4 6 Certifications: before and after

CERT - CONV CERT - CONV CERT - CONV CERT - CONV % Women’s Time Spent on Crop: Certified vs Conventional 1053 producer samplesTanzania

25 Benefits of VSS use may arise at different levels: Enterprise level Sector level National level International level Costs and benefits might arise at different points and levels (i.e. those bearing costs might not necessarily earn many of the benefits). Thus, governmental task to even out interests. Benefits and Costs of VSS 25

Source: Draft Decision-making guide: Trade Standards Practitioners Network (TSPN), International Institute for Environment and Development (IIED)

28 Pro-active Role of Developing Country Governments 28 Surveillance, Supportive and Facilitating Role Governance/ Standard- setting Facilitating Investment Devising flanking/support policies Assuring policy coherence Facilitating stakeholder dialogue 28

29 Pro-active Role of Developing Country Governments 29 Surveillance, Supportive and Facilitating Role Governance / Standard- setting Facilitating Investment Devising flanking/support policies Assuring policy coherence Facilitating stakeholder dialogue Transparency, Inclusiveness, legitimacy, trade restrictiveness Anti-trust Assuring coherence between mandatory & VSS Facilitating interoperability between VSS 29

30 Pro-active Role of Developing Country Governments 30 Surveillance, Supportive and Facilitating Role Governance/ Standard- setting Facilitating Investment Devising flanking/support policies Assuring policy coherence Facilitating stakeholder dialogue In physical infrastructure In SMTQ (standards, metrology, testing, quality) systems & institutions Directing donor funding accordingly 30

31 Pro-active Role of Developing Country Governments 31 Surveillance, Supportive and Facilitating Role Governance/ Standard- setting Facilitating Investment Devising flanking /support policies Assuring policy coherence Facilitating stakeholder dialogue Awareness raising/ training Financial support Information instruments/ independent evaluation of VSS SME support 31

32 Pro-active Role of Developing Country Governments 32 Surveillance, Supportive and Facilitating Role Governance/ Standard- setting Facilitating Investment Devising flanking /support policies Assuring policy coherence Facilitating stakeholder dialogue Among government agencies dealing with VSS Between public & private requirements (e.g. perverse incentives) Towards donors 32

33 Pro-active Role of Developing Country Governments 33 Surveillance, Supportive and Facilitating Role Governance/ Standard- setting Facilitating Investment Devising flanking /support policies Assuring policy coherence Facilitating stakeholder dialogue Facilitating and engaging in stakeholder dialogue on development & implementation of VSS 33

34 Public-Private Cooperation: Public (public goods) Private (business/supp lychain issues) Find nexus based on “mandates” Identify roles Find nexus based on “mandates” Identify roles

Rational for Creating UNFSS 35 VSS as means to Sustainable Development, not as ends in themselves. Contextualize VSS into the macro-economic development perspective (i.e. not only market access and market shares agenda). UNFSS should focus on public interest & public goods related to VSS. VSS need to be recognized as strategic policy issue (mitigating economic, food, climate and water crises). Understood within overall life cycle of products and related services (looking at avoidance, minimization and management of ‘real’ risks). Also of increasing importance for South-South trade.. VSS represent a new meta-governance system for international supply chains, largely outside WTO rules. 35

36 What is important to address is that VSS are scrutinized as: (i) proportionate to the (real) risk they claim to address; (ii) scientifically-based; (iii) that the burden of compliance is distributed fairly; and (iv) VSS should not undermine or weaken rules of the WTO’s TBT (Technical Barriers to Trade) and SPS (Sanitary and Phytosanitary) agreements. Rational for Creating UNFSS (cont’d) 36

37 Objective: Effective forum for policy-makers to better understand voluntary sustainability standards (VSS) and be able to utilize VSSs as potential tools to support their own sustainable development strategies and goals. United Nations Forum on Sustainability Standards (UNFSS)

UNFSS Added Value 38 An unbiased and credible policy dialogue that guides and benefits from analytical, empirical and capacity-building activities. Structured to promote “ownership” by developing countries and assure the “demand-driven nature” of UNFSS activities. The only inter-governmental (and multi-stakeholder) forum that deals with generic and strategic issues of VSS in a consistent and pro-active way. Capitalizes on the strengths and specialization of each of the five UN organizations that partner on UNFSS. Better coordination of activities among UN partner organizations. 38

UNFSS Structure: 39 Members of the UNFSS

Cluster of Activities of UNFSS 40 Informed policy dialogue on developmental and market- access impact of VSS Analytical & empirical work (including flagship analytical report) Upon specific request from developing countries, assist with specific analysis of VSS and in implementing UNFSS recommendations

41 Activities of UNFSS (set-up) 41 High-level advisory board (multi-stakeholder) Briefing sessions to consult and partner with stakeholders in building UNFSS: Several in Geneva, WTO, UNCTAD XIII China, Thailand, Panama Cameroon (with Inter. Cocoa Org.; June 24-27) Kenya (TBC) Official launch of UNFSS- March nd, 2013 Geneva at Palais des Nations Through consultation Advisory Panel prepared draft work plan which was discussed, adjusted and confirmed at UNFSS launch event:

42 Preliminary Activities of UNFSS (from launch) 42 Action areas identifiedStatus Decision-making tool for policy makers on VSSs Draft tool (IIED/TSPN), being further developed to adapt/validate at producer country level. Flagship report on VSSs Initial publication almost ready for dissemination (draft shared with ICCO). Impact Assessment working group Work with exisiting initiatives (COSA etc.), support interpretation of results for policy Capacity building activities Begin in pilot countries, link with exisitng initiatives- (SCAN etc). Harmonization and equivalence working group Working group being set-up, building on existing work (GOMA-organic standards/Global Gap). Emerging standard initiative working group Provide information and promote their relevance and value to Sustainable Development. National and regional Committees linked to UNFSS Under development and implementationBuild on briefings, link to UNFSS.

43 For more information: Support for the UNFSS provided by: Website:

44 In a Nutshell While there are arguments for and against voluntary sustainability standards (VSS), in many international markets VSS have become a reality and have long since graduated from niches. Therefore there is a need to discuss and analyze VSS more systematically to maximize their benefits and minimize their costs, in particular for small-scale producers and less developed countries. VSS can effectively address some acute problems, overcome policy inertia, policy and market failures. VSS are the new 'power tools' in international trade that form a meta-governance system largely outside the WTO, but may have a critical bearing on market access, market exclusion and the achievement of national sustainability goals. The five UN agencies partnering in the Forum are all actively working on VSS. They will aim at pooling resources, synchronizing efforts, and assuring policy coherence, coordination and collaboration among United Nations agencies. The effort is thus a concrete and very practical example of the "The UN Acting as One" to maximize impact and efficiency. 44