LONDON (Thomson Reuters Foundation) - Production of commodities certified with leading sustainability initiatives - including cotton, palm oil, cocoa, bananas and wood - is galloping ahead, but the poorest communities may not be benefiting, a new report from international researchers said on Friday.
The average annual growth rate of certified production across all commodity sectors examined, excluding biofuels, was 41 percent in 2012, far outpacing growth of 2 percent in the corresponding conventional markets, said the State of Sustainability Initiatives Review 2014, the second of its kind.
The strongest performer was certified palm oil, which enjoyed 90 percent growth in 2012. Other top sectors were sugar, which grew 74 percent, cocoa 69 percent and cotton 55 percent.
The private sector is playing a critical role in boosting the market for products certified by major sustainability initiatives such as Fairtrade International, the Forest Stewardship Council, the International Federation of Organic Agriculture Movements and the Roundtable on Sustainable Palm Oil, the report said.
"Much of the switch to standard-compliant and certified production is not about immediate consumer marketing; it is about risk management and brand protection," said Bill Vorley, a researcher with the London-based International Institute for Environment and Development (IIED) and one of the leaders of the project.
The report identified a persistent trend in sustainable sourcing commitments by large manufacturers including Dole, Chiquita, Coca Cola Company, Tetley, Twinings, Unilever, Hershey’s, Home Depot, Lowes, Starbucks, Nestlé, Ferrero Group, Mars, Ikea, Adidas and others.
This month, for example, cosmetics and beauty giant L'Oréal committed to sourcing 100 percent of the renewable raw materials it uses from sustainable sources by 2020, including palm oil, soya oil and wood fiber-based products. It has also adopted a goal of "zero deforestation" by 2020, meaning none of its products should be linked to deforestation.
But one less positive aspect of the wider market is a significant oversupply of standard-compliant products, with only around one third to one half of certified production actually being sold as such, the 2014 review revealed.
“The visible oversupply of standard-compliant goods means that companies benefit from a wide selection of options when sourcing sustainably," said Jason Potts, co-author of the report and associate with the International Institute for Sustainable Development (IISD). "This may however also indicate a downward pressure on the prices of sustainable products due to oversupply which could create a detrimental impact on smallholder producers.”
Vorley said price premiums are a declining feature of certified markets, and future gains for producers are more likely to come from higher productivity, higher-quality products, a secure trading relationship and technical support. "We need to look at a post-premium world," he added.