On 17 June 2021, the UNFSS and Evidensia co-organized the 3rd and last Academic Advisory Roundtable Series on Sustainability Standards and Economic concerns to highlight the role of trade in economic growth and development.
According to Mr. Santiago Fernandez de Cordoba, UNFSS coordinator and UNCTAD senior economist, in order to respond to the environmental and socio-economic challenges brought by globalization, there is a need for powerful tools and instruments to ensure that the benefits brought by trade must become more inclusive and sustainable.
“The analysis on the effectiveness of VSS, governance of VSS, and how they fit into trade agreements, and within the context of WTO are some key research areas.” Dr. Bernard Hoekman, Director, Global Economics at the Robert Schuman Centre for Advanced Studies, European University Institute (EUI) and Co-Chair of the Academic Advisory Council.
Dr. Bernard Hoekman also pointed out some other research areas that need more attention, especially from the effects of COVID-19. These includes multi-stakeholder partnerships as policymakers seem not to adequately understand how the supply chain works, and the new European trade strategy where mandatory requirements are becoming a commonplace on firms to understand the operations of their supply chains with regards to sustainability dimensions.
Where supply chains are concerned, the three academic expert-speakers of the UNFSS Academic Advisory Council (AAC) focused their presentations on smallholder/ small-scale producers and farmers from different angles.
The first impulse speaker, Dr. Stefano Ponte, Professor of International Political Economy at Copenhagen Business School, Director of the Centre for Business and Development Studies, provided an overview of the broad trends in sustainability and business and, based on that, highlighted the reflections on VSS. Based on the main findings of his latest book “Business Power and Sustainability in a World of Global Value Chains (GVCs)”, he raised three key questions: 1. Is sustainability becoming important for business in a world of GVCs? 2. Is business helping solve sustainability crises? And 3. What is the role of VSS in helping to orchestrate sustainability in this context?
Dr. Ponte highlighted three main key findings from his empirical work and research: First, sustainability is key in understanding the contemporary global economy and is becoming mainstream. Second, lead firms in GVCs are leveraging sustainability to maximize green capital accumulation. Third, and the most problematic point, these lead firms actually capture value from suppliers, especially those in the global south.
Dr. Ponte concluded that sustainability standards work well for lead firms in GVCs and not so good for smallholder suppliers in the global south. He illustrated that VSS are weeding out the smaller suppliers. Although suppliers might capture long term benefits, there still exist short term pressures and costs that need to be financed.
The second speaker, Dr. Thomas Dietz, Professor, University of Muenster, Professor Dietz is currently heading a research group (TRANS SUSTAIN) that works on assessing the effectiveness of VSS. His presentation included the findings of his research in the coffee sector and focused on the on-ground effect of the certification. His research included collecting household-level data from three countries that are Honduras, Colombia, and Costa Rica, to assess various economic impacts of certification, including Gross profits, Household income, poverty and wealth, productivity, record keeping, higher prices, soil analysis, GAP training, lower costs and access to finance. The result revealed that 29% of the indicators studied across countries were positive, more than 50% were insignificant, and between 14% are negative. Professor Dietz also presented and compared the results of the big coffee certificates individually.
He pointed out two main takeaways from the analysis, first, although VSS seem quite successful in providing higher prices to producers, however it has a considerably less positive impact on the gross profit and household’s income.
Second, when using panel data from Costa Rica, i.e. when pooling all certifications a positive development over time can be detected (50% are positive, and 50% are insignificant). This led him to conclude that maybe for certain certifications the economic effects improve over time.
The third speaker, Dr. Mercedes Aráoz Fernández, Former Second Vice President of Peru and Professor of Economics, Universidad del Pacifico, focused on the practitioners and policy-makers point of view and discussed the various ways to assist smallholders and farmers in entering VSS compliant markets, she as well highlighted the conditions needed for this.
She highlighted two main points, the need to include sustainability in the policymaking framework and the necessity of providing supporting policies to assist small and producers. Taking Peru as an example, she signified the need for transforming the institutional policymaking framework to include sustainability through designing and implement supply chain driven environmental and social policies.
She also brought up the VSS-related limitations that need to be addressed by standards organizations as well as governments. The multiplicity, high cost and complexity of the certification process are all limiting factors for small producers. From her point of view, harmonization seems to be one of the potential solutions to this problem.
She highlighted several factors through which governments could assist smallholders, including investing in technology and innovation, adaptation, process upgrading, value chain upgrading, inclusion of small holder farmers and fishermen, capacity building, providing information, access to finance, trade facilitation and logistics, and policies that support inclusive labour markets, among others.
Dr. Aráoz Fernández concluded by signifying the importance of informed policies through research. She highlighted the need for evidence-based studies on the common components of VSS for supportive harmonization and standardization, and the need for evaluating the marginal economic and sustainability impact of VSS requirements, taking into account particularities of countries and regions.
The commentator, Dr. Vera Thorstensen, Professor, Head of the Centre for Global Trade and Investment Studies, Getulio Vargas Foundation (FGV) Brazil, raised two main issues: the proliferation of VSS in new sectors and the potential competition between the different sectors, and the need to investigate the efficiency of the accreditation process of the certifiers. Dr. Thorstensen also highlighted the need to expand the research on VSS beyond agricultural and environmental standards and look at emerging areas, including standards in banking and finance sectors. She added that the complementarities and competition between the sectorial standards in an issue to look at and research. She as well highlighted the necessity of conducting more research that questions the efficiency of VSS and their impact on trade. The concentration of VSS in the hands of a few producers and the discriminatory impact of VSS is another area that requires more work and research.
Missed the webinar? We have the entire session recorded for you here.
No time to watch the entire video? Glance through the summary of proceedings here.
Need reference to the presentations? Here are the powerpoint slides readily available for you to make reference.
Need summaries of the last two webinars?
Here is the link to the 1st AAC Webinar on Sustainability Standards and Environmental Concerns.
Here is the link to the 2nd AAC Webinar on Sustainability Standards and Social Concerns.
The AAC Roundtable Series is an initiative of UNFSS and Evidensia. The UNFSS Secretariat would like to express our gratitude to our partners in Evidensia, Vidya Rangan and Rita Mendez for providing their excellent VSS evidence-based platform and technical support. The UNFSS team is led by Santiago Fernandez de Cordoba, working together with Siti Rubiah Lambert and Niematallah Elfatih Ahmed Elamin. Furthermore, the AAC counts the guidance of the UNFSS Steering Committee United Nations members: ITC, FAO, UNCTAD, UNEP and UNIDO.
Together with Dr. Axel Marx, Co-Chair of the AAC, and Charline Depoorter of the Leuven Centre for Global Governance Studies (Leuven GGS), the UNFSS Secretariat is grateful of all the academic expert contributions from the Academic Advisory Council members namely, Benjamin Cashore, Eric Lambin, Graeme Auld, Elizabeth A. Bennett, Verena Bitzer, Miet Maertens, Stefano Ponte, Thomas Dietz, Mercedes Aráoz Fernández, Vera Thorstensen and Jorge Antonio Pérez-Pineda.
All three webinars received over 1000 registrants, covering almost the entire globe and across sectors. This means that the topic surrounding VSS is becoming a commonplace and we do hope to continue raising the needed awareness and more importantly, connecting the policy makers with adequate evidence-based information.