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From Niche to Norm

  • Date: 11 April 2013
  • Author: Nick Conger
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Oxford, England, the historical town along the River Thames is currently teeming with really smart ideas. Nearly 1,000 “social entrepreneurs” gather each year for the Skoll World Forum, to challenge the status quo and collaborate on solutions to world’s pressing challenges.

Among this intelligentsia is my colleague Jason Clay who’s participating on the Sustainable Sourcing: The Business Imperative panel session on Friday. The panelists will tackle, among other topics, “the role certification can play in creating value for all players in the supply chain.”

A palm oil plantation Riau, Sumatra certified sustainable according to Roundtable on Sustainable Palm Oil criteria.

Certification in a laymen’s term translates to an eco-label. We’ve all seen them. That green stamp of approval can make shopping feel so good. Businesses are latching on as a means to offer responsible products to socially conscious consumers, while supply chain partners become more efficient and profitable as they strive to meet sustainability criteria.

But does this create value “for all players in the supply chain”?

When it comes to Mother Nature, the jury is still out. Last summer a thorough analysis was released weighing the conservation value of eco-labels. The bottom line is a big question mark: We aren’t sure what impact eco-labels are having on the ground. We aren’t sure because these programs aren’t sufficiently measuring performance with data.

Anecdotally, NGOs are seeing conservation gains from certification programs in key regions of the world. The market uptake of labels like FSC and MSC demonstrates that consumers and businesses see value in responsible production. But without performance measures built into certifications, there’s no quantifiable way to prove that value.

What’s needed, Jason will say, is to shift certified products from “niche to norm.” Sounds fancy. What does it mean?

  1. It means setting up certificate trading systems (think: Renewable Energy Certificates), where certified producers sell credits to retailers that offer eco-labeled products.
  2. It means retailers establishing longer term purchase contracts with suppliers, which also hedges against the risk posed by a dwindling resource base.
  3. It means groups of retailers pool their commitments to guarantee more demand, reducing burdensome transaction costs.

The first solution is about increasing market traction. The latter two will incent the supply chain to understand where raw materials come from and how they are produced. This will provide certification programs the foundation they need to integrate performance measures, allowing them to track and quantify impacts. Quantifiable proof of value is essential to achieving scale, as certifications serve as complements to government policies and smart private sector-based initiatives.

It’s no longer a question whether sustainable sourcing is a business imperative. The commitments detailed in my previous post, as well a recent Sustainable Sourcing Workshop convening major brands offer compelling proof.

There are many approaches to source and produce raw materials in a way that sustains them over time. Certification programs must be part of the solution, giving consumers a way to participate in sustainability. But until they measure performance, they will remain niche. Here’s hoping the ideas presented in Oxford will help create a new norm.

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