Breaking News on Food & Beverage Development - EuropeUS edition | Asian edition

Headlines > Business

Sustainability review: Huge growth but developed nations dominate

By Annie-Rose Harrison-Dunn , 03-Feb-2014
Last updated the 03-Feb-2014 at 13:25 GMT

A trend towards the concentration of sustainable production is disconcerting, says report contributor
A trend towards the concentration of sustainable production is disconcerting, says report contributor

Once-niche certified sustainable goods are gaining traction in mainstream markets, but there is a danger that smaller producers are still under-represented, according to a review from the International Institute for Sustainable Development (IISD).

The State of Sustainability Initiatives (SSI) Review 2014 found the majority of the 16 standards initiatives included – such as Forest Stewardship Council, Organic and Rainforest Alliance – across ten commodity sectors had experienced double and triple digit growth.

However the report also concluded that significant challenges remain in tackling the persistent oversupply of standard-compliant products and a market dominance of advanced producing countries.

Dominating the market

The review said while the growing uptake of voluntary sustainability standards could hold potential in helping the poorest rural and small-scale producers, the sustainable markets are still largely dominated by developed countries.

Bill Vorley, principal sustainable markets researcher for the International Institute for Environment and Development, one of the other organisations behind the report, said: "The trend towards an increased concentration of sustainable production in more developed regions is disconcerting especially when considering that poverty represents one of the main sustainability issues of commodity production more generally."

Growth, but at what cost?

The report said certified goods had an estimated trade value of US$36.1bn (€26.78bn) in 2012. Within this the average annual growth rate of certified production across all commodity sectors – excluding biofuels – in 2012 was 41%, outperforming the 2% growth seen in parallel conventional commodity markets. This was strongest within the certified palm oil sector which experienced 90% growth in 2012, followed by sugar (74%) and cocoa (69%). 

Certified coffee was seen to lead in terms of market penetration, amassing a 38% market share of global production in 2012, a figure that sat at just 9% back in 2008. Certified cocoa held 3% of global production in 2008 and 22% by 2012, while palm oil rose from 2% to 15% and tea doubled to 12%. 

Despite this growth, Jason Potts, co-author and IISD associate, said typically somewhere between 33% and 50% of all compliant production is actually sold as compliant. He says this poses a “dichotomy of impacts” on the supply chain. 

“The visible oversupply of standard-compliant goods means that companies benefit from a wide selection of options when sourcing sustainably. This may however also indicate a downward pressure on the prices of sustainable products due to oversupply which could create a detrimental impact on smallholder producers," Potts said.