A Sustainable Herbs Program Toolkit Webinar

To register for the second of this two part webinar series: Certifications as a Tool for Sustainable Sourcing: Perspectives from Producers, go here.

Private voluntary certifications were developed to address the social and environmental challenges of doing business. On Feb. 23, 2023, SHP Director Ann Armbrecht spoke with Rik Kutsch Lojenga, Executive Director, UEBT (Union for Ethical BioTrade); Krista Pineau, Certification Manager, Ecocert; Deborah Vorhies, CEO, FairWild Foundation; and Joshua Wickerham, ISEAL about how these certifications and standard setting organizations are innovating and evolving to more effectively meet these challenges. It was a fascinating conversation that covered a range of topics. You can watch the complete recording here. Highlights from the webinar are outlined below.

Value of Certifications

Joshua Wickerman began by outlining the traditional sustainability standards and certification model and some innovations happening within these sustainability systems.

“A systemic review found that certified entities are more likely to adopt and retain better sustainability practices. Audits help drive practice adoption and prevent slippage into bad practices. That’s not to say that’s the best approach. But this is one of the benefits of third party certification,” Joshua said.

Krista Pineau explained that certifications offer benefits on two levels. First, the intrinsic, ethical argument is that they help assure good practices on the ground. The second argument for certifications is that they are a tool to gain market access and a way to differentiate a product for customers.

Certifications offer assurance and trust as a company scales and loses the ability to have close relationships with its suppliers. They also offer a roadmap for improvement for a company to become more socially and environmentally responsible. Finally they can help with internal goal setting and implementation.

Certification and sustainability standards are one tool but not the only solution. Regulation such as the EU Due Diligence regulations are also needed to require the private sector to take action.

Fair Certifications and What They Mean

Krista outlined how Fair for Life (FFL) sets the price.

Because FFL is a supply chain certification, the producer operation does a cost of production analysis to determine what they need to make to be profitable. This is then used to determine the sale price of the ingredient. She added that this decision involves a lot more detail that includes the minimum wage in the area, the cost of labor etc. but that was more detailed than time allowed her to go into.

This determination then goes into setting the floor price. In any fair-trade certification, no matter what happens in the market, the price will not go below the floor price.

When the market is good, the price will be higher than this floor price. That is called the sales price. For FFL and products that are not certified organic, the sales price is at least 5% higher than conventional market prices. For products that are both FFL and organic, the price is 10% higher.

The FT premium is then the added percentage paid by the FT partner to the producer operation to be used for community projects.

Cost Calculation

Rik Kutsch Lojenga explained that calculating these costs is very difficult. The cost calculation values people’s time against the minimum wage which often devalues that time. The UEBT standard aspires to instead value people’s time against the living wage. When they do that, the prices often become much higher than what the prices currently are. This in turn creates pushback and significant discussion about prices and costs.

On top of that, the key challenge with botanicals is the question of how to translate the life of a harvester, especially when it is seasonal work, into a living wage so that income from harvesting can contribute to decent and dignified work.

Rik added that we talk about living wage but in reality, the living wage should just be the starting point. “Living wage is simply the more correct definition of a minimum wage,” he said.

Joshua added that the global living wage coalition does living wage benchmarks around the world in a standardized way, but that assumes fulltime work. For seasonal work, living income questions come to the fore. What are the other ways that supply chain actors can support the producers so they earn a living income? For more information on this, see the Living Income Community of Practice.

Rik added that living wage benchmarks are typically done for well-established commodities. And so UEBT is finding that they need to create the benchmarks for the herbs and spices they are working with. Not only that, botanical supply networks are so fragmented that there are not enough actors in any one landscape to work together to take action. Rik added that this could be an area where FFL, FairWild, and UEBT might be able to work together.

Feedback from Producers

Deborah Vorhies then outlined FairWild’s goals in revising their standard. She goes into more detail in the webinar, but essentially, they are focusing on three areas:

1. Engage with international policy on these issues;
2. Improve traceability along the total chain; and
3. Help the harvesters and harvesting communities.

As part of that, they have created the Operators Support Fund to provide support for collector organizations so that they can better prepare and implement good management plans, and prepare for audit and certification.

“We’ve understood. We’ve heard our clients, and especially our collector organization clients loud and clear. They tell us FairWild is too expensive. It’s too hard. It’s too complicated. We have to address that. So, without losing the rigor of our standard, which is one of our bedrocks and which we must uphold, we are exploring how we can make this more doable.” Deborah Vorhies

Costs are Too High

Rik added that producers are right. “The costs related to certification are often very high. There are three types of costs:

1. Implementation costs/implementing good practices which must be documented; this requires a lot of work and creates a lot of frustration.
2. Certification by the auditors, which is an annual recurring cost.
3. The cost of the system.

UEBT is trying to find ways to reduce costs. Rik mentioned two:

1. Auditing: Can you move more toward risk-based auditing and place more value on implementing a management plan? Management plans are valuable because they embed better practices with the producer groups that go beyond just meeting the requirements of the audit.
2. Implementation costs: Can you focus more on impact and less on all of the practices that need to be implemented in one particular way? UEBT has developed Biodiversity Action Plans to help local companies identify good practices that lead to better biodiversity impacts without needing to go through certifications.

Certifications offer Assurance and Build Trust

Deborah agreed that the costs are too high. But she emphasized that certifications bring unique aspects to the table as a tool to implement social and environmental practices.

“They offer the assurance that a company is doing the right thing and is on the right path. Assurance to the company, to the people you sell to, and to everyone along the chain. They build trust and the help with communication.”

“All over the world,” Deborah continued, “consumers are aware in a way they never were before about the need to deal with landscapes, to deal with communities to protect traditional knowledge, and to protect biodiversity. So we need to empower those consumers to make the right decisions that will enable them to be part of the system. And I think certification is essential to that.”

Rik agreed with the importance of trust, adding that from UEBT’s Biodiversity Barometers, they have found that 30% of consumers trust companies.

They discussed the pros and cons of company based certification systems which is included in the webinar recording.

Harmonization/Standards Recognition

Standard recognition means that a standard/certifier recognizes someone else’s certificate in the supply chain. There is a recognition procedure for recognizing Fair for Life, Fair Trade International, FairWild, and Fair Trade USA, Krista explained. The buyer pays for this. A detailed process control what is called the point of relabeling. This means that the product is no longer verified by the original certification and is now relabeled as a Fair for Life product.

Equivalency means if a supplier is already certified in certain other accepted programs, then it doesn’t need to repeat that part of the certification. For example, if a supplier is already certified organic, the auditor does not need to check on whether agrochemicals and synthetic pesticides are used. The idea is to create an approach where the audit addresses what another certification has not already verified.

Deborah added that at FairWild they are very keen to move forward on equivalency arrangements. They see this as a way to reduce confusion in the marketplace, to help FairWild grow to scale, and to build recognition. The challenges are that equivalency depends on trust and trust depends on regular communication. Everyone needs to be very clear about what is equivalent between the standards and what factors are not included (say fair-trade features in organic certifications) and need to be audited.

Rik said that in theory it works very well. But in practice it can be challenging. It requires a lot of trust because each multi-stakeholder defined standard has their own theory of change, and issues they were historically set up to tackle. It requires time and trust to develop these partnerships.  He said UEBT has a collaboration with Rainforest Alliance on herbs and spices that is working well.

Paying for Doing things Wrong

In discussing the costs and the importance of balancing them across the supply network, Krista added, “Imagine if those ones that are doing things well and properly didn’t have to pay. And those using slave labor and child labor and doing deforestation had to pay to have a disclaimer on their product. That would be even better.”

In wrapping up the discussion, Rik mentioned the targets set at COP15 in Montreal for the Global Biodiversity Framework: Sustainable use of agricultural areas through biodiversity friendly practices; Reducing risk of pesticides by half; and using wild species in a sustainable way. To achieve these regulations, company procurement practices, and standards will all need to be aligned. There was a lot of talk about goals and targets at COP15. Yet what matters, each of the speakers agreed, is how to implement change and improved practices on the ground. To do that effectively, all of the speakers also agreed that we need to learn to be much more collaborative moving forward.