Sustainable Sourcing: Recent Developments and Outlook

One of the most difficult issues associated with sustainable sourcing is whether companies should adopt third party standards or develop in-house schemes. Recent developments suggest the pendulum is swinging towards in-house sustainable sourcing schemes.

Green & Black’s, the iconic ethical chocolate brand, has launched a new Velvet Edition bar this month in the UK. It is its first product that is not certified organic and / or fairtrade. The brand decided to source cocoa beans from the Dominican Republic according to its parent company’s Cocoa Life sustainability programme. Mondelēz Foods has already dropped fairtrade certification for its Cadbury’s Dairy Milk chocolate. By 2019, all Cadbury’s chocolates in the UK and Ireland will carry the Cocoa Life logo.

Also in the UK, Sainsbury’s recently decided to drop fairtrade certification for its private label teas. The second leading supermarket chain decided to work directly with African tea groups and co-operatives to develop its own ‘Fairly Traded’ scheme. Sainsbury’s is one of the largest retailers of fairtrade products in Europe, generating about EUR 200 million sales. There are concerns that its ‘fairly traded’ scheme will also be extended to its private label coffee, bananas, and other products.

There are many benefits for large food companies and retailers to develop their in-house sustainable sourcing schemes. Apart from providing greater control and less bureaucracy, such schemes can easily be integrated into their wider sustainability programmes. Similar developments are taking root in the cosmetic & personal care industry. L’Oreal received the Sustainable Beauty Award last year for its ethically sourced quinoa husk extract; the ingredient is a by-product of quinoa that is sustainably farmed by Bolivian farmers. The cosmetics brand Lush sources raw materials according to its own ethical charter. Although many of its ingredients are fairtrade and / or organic, it prefers not to adopt third party standards.

As will be shown in upcoming sustainability summits (Sustainable Foods Summit and Sustainable Cosmetics Summit), the number of third party standards or charters continues to grow, especially for single ingredients. The Roundtable for Sustainable Palm Oil (RSPO) is now highly established for palm oil. New sustainability roundtables have now been developed for soya beans, beef, cocoa and cotton. New schemes are also emerging for non-agricultural commodities. For instance, the Responsible Mica Initiative was set up in February to ensure mica mineral is ethically sourced from mines in northern India.

With growing proliferation in sustainability standards, charters and similar schemes, it is perhaps not surprising that companies are opting for in-house schemes. The concern is that companies like Mondelēz Foods and Sainsbury’s are adopting third party standards as a ‘rite of passage’ into sustainable sourcing. The knowledge and expertise gained is then used to develop their in-house sourcing programmes which are not subject to the same scrutiny as independent schemes.

Although critics question the commitment of large companies, Ecovia Intelligence believes a positive is that more raw materials are now sustainably sourced. Sustainable coffee now has a market share of over 30 percent of total coffee. Starbucks is the leader with its Coffee And Farmer Equity (CAFE) programme. The market share of sustainable tea and cocoa is also above 20 percent because of similar commitments by large companies. Whether the future is with third party standards or in-house schemes, the market share of sustainable ingredients is only going in one direction.

Sustainable sourcing is regularly featured in the Sustainable Foods Summit and Sustainable Cosmetics Summit. The executive summits are now hosted in Europe, North & Latin America, and the Asia-Pacific.

Posted: August 25th 2017

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