United Nations Forum On Sustainability Standards To Be Launched Soon

Delegates to the UNCTAD XIII quadrennial conference were briefed Wednesday on a soon-to-be-launched United Nations Forum on Sustainability Standards (UNFSS).

Voluntary sustainability standards (VSS) – also called “private standards” related to health, occupational safety, environmental, social or animal welfare issues — have become a critical issue in international trade and in the promotion of sustainable development strategies.

Five UN bodies (UNCTAD, the Food and Agriculture Organization, the United Nations Environment Programme, the United Nations Industrial Development Organization, and the International Trade Centre) have come together and plan an imminent launch of the UNFSS.

The Forum will be a platform for providing information, analysis, and capacity-building assistance on these standards, with a particular focus on their potential value as tools for developing countries to achieve their sustainable development goals and boost production and exports of sustainably produced products. The Forum also will address the potential trade or development obstacles these standards may create with particular emphasis on their impact on small-scale producers and in less-developed countries.

The UNFSS is designed to encourage dialogue, exchange knowledge, and provide a forum for developing country decision-makers to engage with key target groups in the business, research and non-governmental organization (NGO) communities.  Among the Forum’s purposes is to address information and analytical needs so that VSS can serve as a way of implementing the specific sustainability goals of developing countries, while minimizing the costs of such standards, in particular for small-scale producers and less-developed countries.

Activities will focus on four thematic areas: “meta-governance” of private standards; overcoming weaknesses in developing countries in technical, human, institutional, and infra-structural areas related to VSS; devising supportive policies and achieving coherence between those policies; and fostering public-private dialogues and partnerships.

Private sustainability standards increasingly govern rapidly evolving global markets

(Private)  voluntary sustainability standards comprise requirements that are often referred to as “credence characteristics” of a product, such as attributes that neither the trader nor the consumer can verify through direct examination of the product.  Several VSS are combined with labels that are recognizable by end consumers (for example, organic or fair-trade products); some of which may lead to price premiums.  Many, however, are business-to-business standards that are not visible to end consumers.  An example is the GlobalGAP standard for food sold by large supermarkets.

VSS are not exclusively a developed-country phenomenon, but in light of increasingly globalized supply chains, consumers in countries of the Organization for Economic Cooperation and Development increasingly want the goods and services they purchase to meet specific health and safety requirements (as regards product characteristics), on the one hand, and environmental and social sustainability criteria on the production methods of the goods and services purchased, on the other. Governments have traditionally reacted to such forces by developing policies, regulations, and technical requirements, which, however, are mostly confined to product characteristics and difficult to enforce because of a lack of institutional or technical capacity.  A voluntary, private approach is an alternative.  Against this background, NGOs and private companies are taking on a new role in the development of VSS and codes of conduct on modes of production and processing, placing emphasis on their environmental, social and economic impacts.  VSS are thus a driver of change.

In a number of sectors, VSS have already become market realities.  VSS are most prominent — in terms of quantity, level of sophistication, and multi-dimensionality — in the food and agricultural sectors, notably for fresh produce and beverages, which can be regarded as trendsetters for other economic areas.  VSS also are of importance in the sectors of textiles and clothing, footwear, toys, timber and timber products, natural cosmetics, liquid biofuels, and electrical and electronic goods. Carbon-footprint standards are emerging as a new case in point, in particular for areas and sectors where “first” and “second-best” carbon-pricing tools are impractical or politically difficult to adopt.

Although still an exception rather than the rule, VSS play an increasingly important role in South-South trade and even in matters of gaining access to national markets.  Prominent cases in point are intra-Asian trade in fresh food and vegetables and the domestic fresh-food markets of Thailand and Malaysia .

Private sustainability standards are a challenge for developing countries

Generally, VSS evolve more rapidly than regulatory requirements.  They are a constantly moving goalpost. Over time, they have become more stringent, prescriptive, complex, and multi-dimensional (that is, dealing with several issues). In addition, increasingly, several VSS have to be met for the effective market entry of a single product. This significantly complicates compliance and drives up testing and certification costs.  As a result, VSS tend to reinforce already existing capacity weaknesses at the producer level in developing countries, such as poor physical and institutional capacity and insufficient skills, policy coherence, and public-private sector dialogue. Therefore, VSS could enhance the risk of marginalization of small-scale producers and poor countries or regions, in particular least developed countries (LDCs). What is more, developing country officials fear that VSS might undermine hard-won gains in transparency and progress achieved under the WTO Technical Barriers to Trade and Sanitary and Phytosanitary Agreements.

VSS are still often seen by many key policy makers in developing countries as a technicality, instead of a strategic policy issue.  But VSS are best considered to be a matter of “internalization” of environmental and social costs; of the promotion of sustainable production and consumption methods (including opportunities for energy/material/resource efficiency and related cost savings); and of building sustainable competitiveness in growing and lucrative markets.  Most sustainability markets have seen double-digit growth rates in recent years.

Assistance from the UNFSS

To address the existing market reality of VSS and to promote the positive developmental aspects of VSSs, while avoiding potential negative impacts on global supply chains and smallholders, it is important that VSS are scrutinized to assess that they are proportionate to the (real, not perceived) risks they claim to address; that they are scientifically based; that their burden of compliance is distributed fairly; and that a policy framework is developed to maximize the benefits of VSS while limiting their potential negative impacts. In this context, developing countries need support in setting up effective policies on VSS aimed at making VSS a means for achieving or contributing to specific sustainability goals (this is the very rational for public and donor funds being used for VSS compliance); and developing coherent national strategies that deal with VSS as a function of developmental priorities and poverty-eradication strategies. The UNFSS will provide assistance on these issues.