Global supply chains have been an engine of growth and a significant driver of job creation, especially in developing countries. However, questions have been raised as to whether participation in global supply chains will continue to be a viable development strategy for inclusive growth and poverty reduction.
Despite a wide range of interventions set at international level to ensure economic development and decent work in global supply chains go hand-in-hand, decent work deficits and governance gaps continue to exist, undermining labour rights particularly freedom of association and collective bargaining. The presence of child labour and forced labour in some lower segments of some global supply chains, discrimination and absence of legal protection on migrant workers, persistent low-wages in lower-tiers and other forms of workplace violence are some of the critical issues that stems the importance of international strategies as a stepping-stone for regulatory innovation.
Instruments like Voluntary Sustainability Standards (VSS) have an aim to specify requirements that cover a wide range of environmental and socio-economic issues. On the social dimension, VSS cover issues related to improved working conditions, labor rights and safety, fair prices and benefit sharing, fair wages, community development, gender equality, and the promotion of responsible consumption and production, among others.
However, the inconclusive evidences from various studies about the impact of VSS on income growth and improved wages especially on small commodities producers in developing countries are proves that such topic deserves more attention. The uptake of VSS often involves resources such as finances and expertise as changing operational procedures take time and inputs for these changes require some form of capitals. Therefore, if compliance to VSS cannot guarantee them of income stability and profit sharing benefits along the supply chains, the uptake of VSS thus, are not meeting its desired outcome.
In the last decades, products certified according to their environmental and social sustainability have become an important feature of production, trade, and consumption. Hypothetically, the compliance with these requirements will eventually lead to improved social sustainability in terms of empowerment and inclusion of smallholders in the value chains, food security, improved livelihood, job creation and poverty alleviation, among others.
Even if VSS could be considered as tools to achieve socio-economic and environmental sustainability, the evidence on their impact and effectiveness do not necessarily resemble this theory. Some of the most relevant social components of VSS which can be found in several literatures include:
- Price premiums and distribution across value chains
- Income inequality and poverty
- Labour rights including child labour, forced labour, freedom of association and collective bargaining, health, and safety, working hours and discrimination
- Empowerment of marginalized actors
- Social upgrading in general in value chains
VSS Academic Advisory Council Social Dialogue
Complemented by the expertise of the Academic Advisory Council (AAC), in particular professors Verena Bitzer (Maastricht University), Elizabeth A. Bennett (Lewis & Clark College/ Harvard Kennedy School) and Miet Maertens (KU Leuven), this dialogue has unraveled some of the complexities of VSS to address social issues.
The first impulse giver, Dr. Miet Maertens, University of Leuven, observed that VSS engage with social concerns both through their vision and mission and by including social aspects in their criteria. Prof. Dr. Ir. Maertens introduced some of her research assessing the social impacts of VSS on different vulnerable groups of people, making the distinction between smallholder farmers, plantation and agro-industry workers, and cooperative and farm workers. Her main point raised was that while more significant impacts are found for socially-oriented VSS, there is overall a large variability in the social impacts of VSS. Dr. Maertens hence insisted on the need to understand such heterogeneity of results. It was pointed that the potential impacts of VSS also depend on factors such as the regulatory environment in which they operate, the presence of trade unions, or market demand, although most quantitative studies on VSS impacts try to control for such confounding factors. Dr. Maertens concluded by highlighting the need to keep questioning and studying the impacts of VSS, especially on cooperative and farm workers as well as on smallholder farmers. She insisted on the necessity to understand not only when standards work, but more importantly, why they do or do not work.
The second impulse giver, Prof. Verena Bitzer, focused on how VSS empower farmers. She made the distinction between VSS that follow a logics of control and those following a logics of empowerment. She put forward four dimensions to assess the concept of empowerment as both a process and an outcome: power over, power with, power to, and power within. Dr. Bitzer presented her research studying the comparative effects of Fair Trade and of the Small Producers Symbol on farmers’ empowerment in South America. She showed that VSS not only differ in how they empower farmers in practice but also in how they aim to empower farmers within their governance, thereby highlighting the diversity of VSS governance as one determinant for the heterogeneity of their impacts. Additionally, Dr. Bitzer argued that empowerment of farmers through VSS is also dependent on supply chain commitments. Dr. Bitzer concluded by highlighting that VSS play a role in farmers’ empowerment but not necessarily through price premium, as empowerment also involves other dimensions such as farmers’ feeling of empowerment, their satisfaction, their ability to decide on the use of agricultural production, or their say in decision-making.
The third impulse giver, Dr. Elizabeth Bennett, raised the questions of what VSS can really contribute to sustainability and how to improve VSS. In particular, she argued that while increasing the uptake of VSS can contribute to improving environmental concerns, it might not be the way forward to tackle social issues. This is shown by heterogeneity of results across contexts regarding the social impacts of VSS, as presented by the previous impulse givers. Hence, departing from VSS uptake, she identifies 8 dimensions to be improved for VSS to contribute to social sustainability: (1) governance, representation and standard-setting process – as her research shows limited opportunity for farmers and targeted groups to participate in the governance of VSS; (2) standards’ content, scope and implementation – as there is a gap between claims that VSS make and their practices on the ground; (3) auditing; (4) suppliers’ experiences; (5) behaviour of buyers and brands; (6) consumer discretion and demand; (7) supplier country conditions; and (8) relationships among relevant actors. Dr. Bennett made the point that VSS should focus on what is possible and what issues they can better solve. She concluded by highlighting the need to look into the decoupling issue, i.e. the gap between the claims VSS make and their practices, and therefore to investigate the implementation aspects of VSS on the ground.
Against this background, we can also take references of new legislations being introduced in several countries. As AAC Co-Chair Dr. Axel Marx (Leuven Centre for Global Governance Studies) pointed out, the European Commission, for example has committed to tabling an EU-wide human rights due diligence law by this June 2021. There are strong indications that the proposed law will have a wide scope (with potential to apply to non-EU domiciled companies) and contain sanctions for non-compliance. Such legislation would have important advantages, such as creating a level playing field among all companies operating on the EU market, bringing legal clarity, and establishing effective enforcement and sanction mechanisms, while possibly improving access to remedy for those affected, by establishing civil and legal liability for companies. Its 2021 work programme includes a proposal for a directive on sustainable corporate governance that would also cover human rights and environmental due diligence. Learn more about the mandatory EU systems of due diligence for supply chains here.
Mr. Santiago Fernandez de Cordoba, UNFSS Coordinator and Co-Chair of the AAC concluded the dialogue by raising the point that we need a better understanding of what VSS can achieve in addition to helping fulfil legal requirements. He insisted on the necessity to refocus on the primary targets of certification, i.e. farmers and producers, and how VSS can improve their livelihoods, rather than certification per se. In this perspective, Mr. Fernandez de Cordoba highlighted the important role of public policy and policy tools, among which are VSS, a plausible trade instrument to harness social due diligence.
Recording & Other Downloads
If you missed the webinar, watch the recording here.
Opening remarks given by Mr. Santiago Fernandez de Cordoba is available here.
The UNFSS would like to thank Charline Depoorter, KU Leuven for the dialogue´s summary of proceedings.