The world is on the brink of a ‘perfect storm‘ with a quadruple shock of COVID-19, climate change, conflicts, and increasing cost-of-living. The effects of this will be felt most by developing and under-developed countries.
To tackle these sustainability challenges, the world needs resources and tools. One such tool is sustainable trade.
Further, to ensure sustainable trade, there is a need for sustainable business practices to be adopted throughout entire global value chains (GVCs). Companies are increasingly placing voluntary sustainability standards (VSS) at the center of the sustainability approaches governing their GVCs.
BUT Can VSS help? What are the impacts of VSS and what is their role in improving sustainability for developing countries?
Find out in our 5th Flagship Report!
“We have to be specially mindful of increasing costs that may exclude smallholders and producers in developing countries from global trade specially when there is a multitude of different VSS requiring separate certification.
The United Nations Forum on Sustainability Standard is set to advance the understanding of voluntary sustainability standards in global value chains and contribute to real opportunities in developing countries.”
UNCTAD SECRETARY-GENERAL,REBECA GRYNSPAN
Although there has been growth in the certified areas for major agricultural products there have been challenges in VSS adoption, including:
1. Costs involved in obtaining certification
2. Lack of incentives to adopt VSS
3. Sociopolitical resistance to VSS
4. Lack of inclusion of actors from developing countries in VSS governance structures
5. Prevalence of governance gaps between developed and developing countries
Overall, studies revealed a positive impact of VSS on the different sustainability dimensions. However, the effects remain mixed.
In some cases, and on some sustainability parameters, studies found a positive impact of VSS, while in other cases they found no impact, and in some cases even a negative impact.
In addition, the current state of research on VSS impacts highlights trade-offs in sustainability improvements, as some studies found a positive impact on environmental outcomes but not on social or economic outcomes or the other way around.
It was also found that better compliance generates more significant positive impacts.
This suggests the need for more research on VSS’s impacts and actions to reduce VSS-induced sustainability trade-offs.
The recent emergence of human rights due diligence (HRDD) regulations constitutes an important development in public policy that can potentially impact VSS significantly. In that respect
1. HRDD regulations require firms to govern their value chains in conformity with human rights criteria and can drive the adoption of VSS as management tools for value chain governance.
2. More generally, governments are expected to play a key role in addressing sustainability concerns, and VSS are increasingly used to support government action.
The interaction between VSS and governments could lead to the latter supporting VSS or controlling VSS, or to VSS supporting governments.
Each of these interactions would result in different forms of public-private policy mixes.
