7 innovations driving certified-sustainable markets of the future
Certified sustainable segments of industries with the biggest environmental and social footprints -- agriculture, forestry and tourism -- have been growing for a decade. Rainforest Alliance Certified farms produce 4.6 percent of the world’s coffee, 10.2 percent of cocoa, 11.2 percent of tea, and 15 percent of bananas. Forest Stewardship Council forests worldwide cover an area about the size of Chile. Sustainability certification is expanding into new markets, like the first certified cattle ranches and the first FSC certified TV set. The list of businesses committed to 100 percent sustainable sourcing is impressive and growing.
This sort of growth is a new normal, and in a way, old news, although no less welcome for being an established trend. But beyond that, something else is emerging in the certification and sustainability sectors these days: The sense that as they grow, they’re supplying the knowledge and innovations their entire industries will need to function well as sustainability challenges ramp up.
According to KPMG, “sustainability megaforces” -- from population growth and food security to deforestation and climate change -- will affect every business’s performance and profitability within 20 years. A new study finds the food and beverage sectors are at the highest risk. Pioneers of sustainable production and sourcing are confronting problems and evolving solutions today that the rest of their industries may depend on tomorrow. Their work was showcased at a Sustainability and Certification Innovation Workshop the Rainforest Alliance organized last week in New York, featuring business leaders and experts sharing what they’re learning and inventing as they climb the sustainability curve.
Throughout the workshop, common themes emerged:
Cut waste -- IndoTeak Design purchases reclaimed teak at auction and re-uses it to craft flooring, paneling and decking. It’s finding major savings by reducing packaging and changing package shape to optimize it for shipping containers, which cuts transport costs 40 percent. Kingfisher, Europe’s leading home improvement retailer, reduced landfill waste 70 percent and cut packaging costs by Dumpster diving to investigate what its stores were throwing away and why.
Raise yields -- Meeting rising food demand sustainably requires raising farmers’ yields and farmer incomes on existing cropland, including for coffee and cocoa, which are threatened by climate change. In West Africa, low yields keep many rural smallholder cocoa farmers in poverty, pressuring them to encroach on nearby forests. To prevent that, Barry Callebaut, the largest cocoa manufacturer, trains farmers to raise yields and income on the land they have, while global supply chain manager Olam is co-financing an experimental REDD project to give farmers additional income. In Latin America, Nestlé works to raise coffee farmers’ yields and incomes, providing training and higher-yield (non-GMO) plantlets.
Track impacts -- Without metrics, there’s no way to manage progress toward sustainability goals. Independent studies measuring the Rainforest Alliance’s impacts are summarized here. At the New York workshop, Nespresso unveiled the results of a four-year study by the Colombian research firm CRECE of its AAA Sustainable Quality Program. It developed indicators to compare AAA vs. non-AAA farms, enabling it to track how much better social, environmental and economic conditions are on AAA farms, and providing data to guide further progress as Nespresso approaches its goal of sourcing all its coffee from AAA farms (it’s now at 80 percent).
Innovate finance -- Sustainability makes business more efficient, resilient, productive and profitable, but accessing the required financing to invest in it can be difficult for small- and medium-sized farms, forests, and tourism businesses, especially in rural areas. The non-profit social investment fund Root Capital works with Sustainable Harvest and the International Development Bank to pioneer finance for rural businesses in Latin America and Africa, making loans and providing business support and advice for smallholders. Nespresso funded Root to work with farmers in the remote western highlands of Guatemala. Commercial banks are learning about such innovations in the development banking sector, and exploring ways they can incentivize sustainability through the value chain.
Communicate and engage -- Doing the work of sustainability may be more important than talking about it, but communicating with employees, partners and consumers is still mission-critical and needs more attention. “Some companies don’t have a greenwash problem,” says Kingfisher Group Chief Executive Ian Chesire, “They have a greenhush problem. You can’t communicate about sustainability too much.” Engaging organizations with many thousands of employees on sustainability goals requires constantly integrating them into planning, training and internal communications. Engaging millions of consumers on sustainability and connectivity across the value chain requires innovative marketing and outreach efforts. Tata Global Beverages’ Farmers First Hand Facebook page directly connects tea farmers to consumers worldwide. The Rainforest Alliance’s award-winning “Follow the Frog” viral video promoting certification gleaned over a million online views and celebrity tweets.
Better isn’t good enough -- Companies that have achieved part of their sustainability goals have to figure out how to go the rest of the way. It’s an iterative process. “If you’re not prepared to make mistakes, you won’t get there,” said Katy Tubb, director of tea buying and blending at Tata, which is halfway to its goal of sourcing all its tea from Rainforest Alliance Certified farms by 2016. “We’re challenging ourselves to get to net positive impact,” says Kingfisher’s Chesire. “Just being a bit more sustainable isn’t going to cut it for our customers or for us. Companies that figure this out are going to benefit.”
Share what works -- Serious pursuit of sustainability can’t afford to waste resources on duplicating efforts or reinventing the wheel, so companies have to share what they’re learning. In 1995 Tetley, part of Tata Global Beverages since 2000, approached Unilever about cooperating on monitoring and assuring their supply chains. “We took the view it was a ‘pre-competitive’ approach,” said Tubb, and Unilever agreed. They went on to co-found The Ethical Tea Partnership. Barry Callebaut, Olam and others share trainers and materials to teach Ghanian cocoa farmers best practices. Kingfisher is developing key performance indicators and recommendations for achieving net positive impact, which it will share. These are open source processes in dialog with other companies, previews of a possible “post-competitive” future where collaborating on sustainability could become the norm.
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