What is the current offer in social certifications and how will it develop?

2. What is the origin of social certification standards?

The development and growth of the fair trade movement has mostly been associated with development aid and solidarity trade, as a response to poverty and disasters in the global South. The origin of social certification standards can be traced back to the 1940s and 1950s when the first fair trade shops and companies were set up in Europe and North America. In the 1960s and 1970s, various international NGOs started advocating for fair marketing organisations that would support disadvantaged producers in Latin America, Africa and Asia.

The goal was to create greater equity in international trade. Developing countries were also addressing international political fora at this time to spread the message “Trade not Aid”, emphasising equitable trade relations with the global South. These developments led to the establishment of the first labels and standards in the 1980s.

As globalisation took hold in the 1990s, social issues became more prominent. While leading to new jobs and growth, expanding international value chains stretched across continents which also increased social inequality. Public awareness of these developments increased through publicised NGO movements, such as the campaign against Nike for worker abuse and exploitation and documentaries on child labour on cocoa plantations.

The 2000s marked a rapid growth of sustainability standards as public concern about climate change and social inequalities increased. Global frameworks such as the Millennium Development Goals and UN Global Compact Principles were launched. Existing standards were more widely adopted by companies and new ones established, such as UTZ (2002) and Fair for Life (2006).

Also, environmental and social standards have converged more over the years. An example of this is the FiBL certification programme WeCare. This standard encompasses both environmental and corporate social responsibility criteria. Another example is Naturland Fair, which unites organic agriculture with social responsibility and fair trade principles.

Initially, the movement focused on marketing craft products, and it expanded to food products in the 1970s, starting with coffee and tea. Over recent decades, standards evolved greatly in terms of sectoral and topical coverage, going from an original focus on agriculture, forestry and fair trade in the early nineties to a broad range of issues and sectors nowadays.

Table 1: Important milestones in development of social certification standards

3. What are the developments and trends in social certification standards?

Social compliance audits and product certification are crucial for European buyers, as well as for exporters to meet buyer demand. Their importance is likely going to increase due to new due diligence laws, as well as increased consumer demand for transparency and traceability. As sustainability concerns change, standards look for ways to adopt, while buyers might look for ways to go beyond certification to ensure ethical and fair trading practices.

National and sector-wide sustainability initiatives drive up certification

Due to growing sustainability concerns across Europe, a growing number of initiatives aim to increase farming profitability, improve livelihoods and well-being, and conserve nature. There are initiatives on national levels as well as global sector-wide initiatives.

What all initiatives have in common is that they provide a platform for supply chain actors to share experiences and to create a common understanding of the sustainability issues affecting them. The focus on and importance of sustainability for companies active in any sector will only increase and intensify, broadening the sustainability focus to include issues such as living income.

Sector-wide sustainability initiatives

Examples of multi-stakeholder, sector-wide initiatives are:

• Coffee: The Global Coffee Platform (GCP) is a multi-stakeholder membership association of coffee producers, traders, roasters, retailers, sustainability standards and civil society, governments and donors, united under a common vision to work collectively towards a thriving, sustainable coffee sector for generations to come.
• Spices: The Sustainable Spice Initiative (SSI) aims to sustainably transform the mainstream spices sector, securing future sourcing and stimulating economic growth in producing countries. The consortium consists of an international group of companies active within the spices and herbs sector, and NGOs.
• Nuts: The Sustainable Nut Initiative (SNI) aims to improve the circumstances in nut producing countries, while working towards sustainable supply chains. Members of SNI include largescale retailers, traders and processors.
• Cotton: The Better Cotton Initiative (BCI) aims to help cotton communities survive and thrive, while protecting and restoring the environment. BCI defines what a better, more sustainable way of growing cotton looks like, and trains and supports farmers to adapt to the corresponding techniques. BCI unites a whole range of industry stakeholders, from ginners and spinners to brand owners, civil society organisations and governments.

These initiatives partly drive demand for certification. For instance, members of SSI have committed to strive for a fully sustainable spice production and trade in the sector. One way for buyers to reach this goal is to increase their sourced volumes of certified products. SSI members consider the standards in the SSI basket as adequate to certify or verify the sustainable production of spices. SSI member organisation Euroma (from the Netherlands), for instance, developed a strategy to source and market Rainforest Alliance-certified black pepper for European consumers.

The coffee sector is a similar case. In a move to advance sector transparency and the purchase of sustainable coffee, the GCP recognised nine sustainability schemes that prove coffee is being sourced sustainably. Interesting is that, besides third-party standards like Fairtrade and 4C, a number of second-party verified corporate sustainability standards are also part of this list, such as Ecom's SMS Verified and Olam's AtSource Entry Verified. In 2020, the largest coffee importing retailers and roasters reported that 48% of coffee was purchased through sustainability schemes recognised by GCP, up from 36% in 2018.

Although certification is used to prove sustainability, it is not yet a perfect solution. SNI, for instance, aims to go beyond certification and create a risk-based approach to tackle sustainability issues at a sector level.

National sustainability initiatives

Examples of national multi-stakeholder initiatives are:

• Cocoa: The German Initiative on Sustainable Cocoa, the Swiss Platform for Sustainable Cocoa, the Dutch Initiative for Sustainable Cocoa (DISCO), Belgium’s partnership Beyond Chocolate and the French Sustainable Cocoa Initiative. In 2021, these national sustainability platforms signed a Memorandum of Understanding to collaborate more closely and to enhance transparency. This was in context of various problems in the cocoa sector of West Africa, such as child labour and largescale deforestation.
• Apparel: The UK’s Textiles 2030, the German Partnership for Sustainable Textile and the Dutch Agreement on Sustainable Garments and Textile. These initiatives respond to various problems and scandals in the apparel sector, such as pollution, fast fashion and the 2013 collapse of a garment factory in Dhaka, Bangladesh.

Member companies of these initiatives have adopted their practices to contribute to the targets set by the initiative and will increasingly continue to do so. For example, through the endorsement of specific certification schemes or codes of conduct.

Retailers’ own-label brands boost certification demand across Europe

Certification is increasingly used as a market entry requirement on the mainstream market of some sectors (example: coffee, cocoa and bananas). This is partly driven by increased commitments from retailers. Due to stricter sustainability protocols as a response to consumer demand for more product transparency, it is becoming more difficult for non-certified suppliers to access the European market. Note, however, that the overall market share of certified products in international trade is still rather small. These developments in the retail sector, however, provide an indication for continued importance and growth of the use of third-party certification.

Retailer commitments for third-party certification are strongest in their private-label products. These are gaining popularity and market share in Europe and are expected to continue to grow further. One of the drivers is that, in part because of the COVID-19 pandemic, consumers have smaller budgets to spend. Consumers will likely be more attracted to retailers’ private-label brands, as these offer similar characteristics and quality as branded products, at more affordable prices.

European markets with the highest private label shares in 2020 were Spain and Switzerland with nearly 50% of all products sold being retailers’ brands. The United Kingdom follows with a private label market share of 48%, followed by Portugal (45%), Belgium and Germany (both with 43% each).

Figure 4: Example of Fairtrade-certified own-label tea from Waitrose

Source: Waitrose

For instance, retailer Waitrose (UK) sells all their private label tea, coffee, sugar and cocoa in confectionery as 100% Fairtrade-certified since 2020. Coffee, cocoa, and rice sold under the private label brands of retailer Coop (Switzerland) is also fully Fairtrade-certified. Retailer Lidl (Germany), with shops all over Europe, also commits to fully certified products: 100% of products is certified to the RSPO Palm Oil standard. Moreover, all cocoa, tea and coffee used in their private label products are certified to Fairtrade, Rainforest Alliance/UTZ and/or organic standards, and all chilled and frozen fish products under their private label is certified as MSC or ASC.

Social compliance audits crucial to comply with European legislation

Companies have long been encouraged to take responsibility of their supply chains on a voluntary basis. As results were not sufficient, some countries decided to introduce national mandatory due diligence laws for companies. Examples of this include the 2015 Modern Slavery Act of the United Kingdom, the French Duty of Care Act implemented in 2017 and the Dutch Child Labour Due Diligence Law of 2020. Germany passed the Supply Chain Due Diligence Act in 2021, which will come into force in 2023.

There has also been a broader push for mandatory due diligence legislation on a European level. These include new laws on human rights and environmental due diligence. These laws are currently being developed and are expected to come into force in 2023.

Companies subjected to these laws are obliged to report on their due diligence efforts. They will in turn require their suppliers to comply with stricter transparency requirements. European companies typically deal with this either through specific second-party supplier questionnaires or through third-party social compliance audits. Both are regarded a risk mitigation strategy, and especially audit reports are used as proof of good supplier performance.

However, it is argued that performing social compliance audits is not enough to prove this. Another worry is that suppliers now have extra costs and time investments to prove good practices, while they are also pressured to supply constant volumes of high-quality products on time and at low prices. Given the wide range of social compliance standards available (both from suppliers’ own codes of conduct and independent social compliance standards like BSCI and WRAP), suppliers often have to pay for and deal with various standards, depending on what buyers require.

Although social audits and certifications will likely continue to play an important role in dealing with current and new legislative requirements, specific companies are also looking for ways to go beyond certification (see section below).

Companies search for ways to go beyond certification

Some brands and buyers in Europe, especially those active in niche segments, search for ways to go beyond certification. This might be a strategy to differentiate themselves on the market and/or a belief that certification on a stand-alone basis cannot address the challenges a company needs to deal with. Other reasons could be that a product is not yet part of an existing certification scheme or that brands are no longer willing to pay licensing fees.

Going beyond certification may imply that these companies work with shortened supply chains and aim for high transparency and traceability from source to consumer. This does not mean that certification is no longer required: it is and most likely will remain a much-used tool to guarantee fair trading principles.

In Europe there are numerous ethical trading companies that only source certified products while also aiming to go beyond certification. These include GEPA (Germany), Fairtrade Original (the Netherlands) and Ethiquable (France). Each of these companies is specialised in the import, sale and marketing of fair trade products.

Research shows that, in many cases, strong relationships between suppliers and buyers and ethical buying practices of buyers influence supplier performance instead of social audits. Ethical trading companies tend to invest in strong buyer-supplier partnerships, while adhering to ethical buying practices. In addition, these companies are keen to know the origin and story behind the products they source as they use this information to build their brand and market share.

Certification standards adapt to rising sustainability concerns

With sustainability becoming more and more important in Europe, the discussion of what socially responsible business practices entail may evolve. For example, the discussion around living wages and a living income has gained increased attention in recent years. A growing number of companies in Europe will take this into account when looking for new suppliers.

Certification standards and social compliance systems aim to adapt to these changing concerns. Fairtrade International and Rainforest Alliance, for instance, are active members of the living wage coalition. Fairtrade has worked with established minimum prices and premiums paid to farmers, but launched its Living Income Reference Price in 2020. At the same time, Rainforest Alliance also addresses living wage in its new certification programme. The Ethical Trade Initiative and SA8000 create awareness for living wages, by including the topic in their sets of requirements.

Caution: supply of certified products may overshadow demand in some sectors

Although demand for certified products is increasing, in several sectors there is still a mismatch between supply and demand of certified products. In some sectors, certification standards are seen as a factor contributing to overproduction. Specifically for cocoa, it is said that the attractive price premiums of some standards have led to overproduction. Based on interviews with traders, some sources indicate that this has resulted in declining prices in West Africa in the last decade.

Figure 5 shows the misbalance between supply and demand for certified products. A little less than 30% of total Fairtrade-certified produced cocoa was actually sold as certified in 2020. For bananas, 54% of Fairtrade-certified produced bananas were sold as such, and for Fairtrade produced coffee that number was just 25%. For Rainforest Alliance, shares of certified product sales of total production volumes were: 29% for bananas, 57% for cocoa and 52% for coffee. In the case of UTZ, 68% of UTZ produced cocoa was sold as such, and 57% of UTZ-certified coffee. That means that many producers are not able to sell (all) their certified products at a premium price as they have to sell their products on conventional markets, while they did make the investments to certify farming operations. This may put farmers at financial risk.

Due to the imbalance between production and sales of certified products, some standards have taken additional measures to counter this. As of mid-2020, Fairtrade has introduced new requirements for certification for coffee and cocoa. Coffee and cocoa cooperatives and traders are now required to have commitments for new Fairtrade sales volumes, which must be confirmed by the end buyer and validated by the respective national Fairtrade organisation.

* Although Rainforest Alliance and UTZ merged in 2018, full mutual recognition for cocoa and coffee comes into force as of 2022, when all volumes will be changed to Rainforest Alliance volumes regardless of the original programme.

**Data has not been corrected for double certification.

Drive for standardisation in certification schemes and standards

This study includes several examples of social certification standards, out of 400+ voluntary standards available to companies. Where the early 2000s marked a time where multiple new standards were created, currently there is a growing call for standardisation of such standards.

For consumers, the wealth of labels is starting to cause label fatigue: there are too many labels on products for them to know what they all mean. This is a threat to certification standards, which risk being drowned out by competing certifications.

On the side of suppliers, it is difficult to comply with lots of different audits that require substantial investments in money, time, and other resources. For example, fresh fruit importers supply products to European buyers who need SMETA, buyers who need BSCI and/or buyers who expect compliance with GRASP standards. As such, importers generally require their own exporting suppliers to participate in all these schemes. Excluding costs of implementing these standards, certification costs may amount to €1,000–€1,500 per certificate. Although large producers can afford to do so, small companies struggle to make these investments.

Some certification standards respond to these developments by recognising other standards as equivalent, such as Fair for Life which allows for possible recognition of ingredients certified according to Fairtrade, FairWild, SPP, Fair Trade Certified (FT USA) and Naturland Fair. The 2018 merger of Rainforest Alliance and UTZ goes even further. In addition to providing certified producers access to additional markets and growing consumer interest, the certifiers also expect this will help brands to simplify their message and prevent a proliferation of messages that can confuse consumers. At the same time, this merger can also be a response to the demand for greater efficiency and effectiveness.

There is also a growing number of initiatives which are benchmarking different schemes and standards. These initiatives aim for traders and retailers to accept different schemes that have been benchmarked positively, instead of only requiring one specific scheme. This will reduce the pressure on suppliers to comply with a wide series of different standards. Examples of these initiatives include the Global Sustainable Seafood Initiative (GSSI) for fish and seafood and the Higg Index for apparel. In addition, you have the Global Social Compliance Programme (GSCP), which also aims to create a common understanding of best practices for sustainable supply chain management.

4. What are the most demanded social certification standards in Europe?

Which certification standard is most demanded differs largely per sector. In general, Fairtrade, Fair for Life and Rainforest Alliance are among the most demanded product certification standards in the agro-food sectors. In the non-food sectors, buyers often require suppliers to comply with social compliance standards. BSCI, ETI and Sedex are among the most requested by European buyers.

Most demanded product certifications in agro-food sectors

Based on a series of interviews and the specific market studies available on our CBI Market Information website, the following table lists the most common social certification standards for products, specified per sector.

Table 2: Most common product certifications with social criteria requested by European buyers in agro-food sectors

* In 2022, the Rainforest Alliance and the Union for Ethical BioTrade (UEBT) developed a joint Herbs & Spices Program. All ingredients certified under this new program will be able to carry the Rainforest Alliance Certified seal.

As the above table shows, the most common product certification standards across all sectors are:

• Fairtrade: Fairtrade International (FLO) has set standards to improve the living conditions of southern producers. More than 1.9 million farmers and workers from 70 countries are involved in Fairtrade. The Fairtrade mark is the most recognised ethical label globally, with certified products being sold in 131 countries.
• Rainforest Alliance/UTZ: Rainforest Alliance aims to preserve biodiversity and improve working conditions. There are more than 2.3 million Rainforest Alliance and UTZ certified farmers, mainly from the coffee, cacao and tea sectors. Consumers in 100 countries can buy products with the Rainforest Alliance or UTZ label.

As of early 2022, there is full mutual recognition for cocoa, hazelnuts, tea, coffee, herbs and spices, processed fruits (including coconut oil) and flowers. This means that volumes of these products that are certified under the old Rainforest Alliance standard, UTZ and/or the new Rainforest Alliance programme are all considered ‘Rainforest Alliance’ (i.e. regardless of the original programme).

• Fair for Life: There are about 100 companies certified and 100 operations registered according to the Fair for Life (FFL) certification programme. Producers and brand holders must be certified, while traders and processors suffice with registration. Over 3,000 Fair for Life products are sold at mainstream and specialised retailers, with sales concentrated in about 20 countries.

Global production and sales size of Rainforest Alliance/UTZ and Fairtrade

Rainforest Alliance/UTZ and Fairtrade certification have shown significant growth both in terms of production and sales across most sectors over the last ten years. The below figures provide an overview of the production and sales volumes development between 2016 and 2020 of three main commodity products: bananas, cocoa and coffee. The figures show how certified volumes showed an upward trends. In the case of cocoa there is a noticable decline, mostly due to a ban on dual certification per 2020 for Ghana and Ivory Coast as well as strong requirements on GPS data for cocoa. Demand for certified cocoa, however, is expected to take the same course as the other products in that it is likely to increase or remain stable. Still, supply is expected to remain much larger than market uptake of certified products.

Largest Fairtrade markets in Europe

Germany is the largest Fairtrade market in Europe, with retail sales of Fairtrade-certified products amounting to almost €1.45 billion in 2020. Between 2019 and 2020, sales registered an annual decline of -3.2%. After more than a decade of growth, Fairtrade sales in Germany declined for the first time as a result of the COVID-19 pandemic. The main Fairtrade-certified products sold in Germany were coffee, cocoa, textile, bananas and flowers.

The United Kingdom is another large Fairtrade market with annual Fairtrade retail sales reaching about €1.2 billion in April 2021, registering a value sales growth of almost 14% compared to the year before. It illustrates that people are becoming even more open to ethical consumption in the UK. The size of the UK market is in part thanks to partnerships between retailers and Fairtrade. For instance, retailer Sainsbury’s offers almost 27% of total Fairtrade-products on sale in the UK. Sainsbury’s is the UK’s second-largest supermarket chain.

France is the third-largest Fairtrade market in Europe. In 2020, Fairtrade retail sales in France reached €1.0 billion, marking a growth of 12% since 2019. Another important Fairtrade market is Switzerland, with annual Fairtrade retail sales of nearly €831 million in 2020. Between 2019 and 2020, retail sales of Fairtrade products in Switzerland increased by 5.6%. Swedish Fairtrade market amounted to €467 million in 2020, also registering growth of 11% despite the COVID-19 pandemic.

Annual Fairtrade per capita consumption is highest in Switzerland with almost €96. To compare, the per capita consumption of Fairtrade products in Germany amounted to €24 and in Austria €46.

Rainforest Alliance market in Europe

The merger between UTZ and Rainforest Alliance in 2018 has resulted in a large market for Rainforest Alliance products across Europe. As full mutual recognition for certified products will only enter into force as of early 2022, data on UTZ and Rainforest Alliance markets are still given separately.

One way to look at the size of the market in Europe is to see how many UTZ-certified supply chain actors are active on a particular market. This indicates the largest markets are Germany with 320 actors active in December 2021, followed by the Netherlands with 253 and Italy with 213. Other important markets are Belgium (133), the UK (116), Switzerland (110) and Spain (103). Cocoa is the largest UTZ-sector in terms of certified supply chain actors.

Germany also hosts the most Rainforest Alliance-certified supply chain actors (140 in December 2021). The United Kingdom (98) and the Netherlands (76) follow as the second and third-largest. These three markets offer the largest assortment of Rainforest Alliance-certified products. For instance, German retailers Edeka, Rewe, Kaufland, Penny and Lidl have private label products certified by Rainforest Alliance. Italy, Switzerland and Spain follow with a number of actors ranging between 40 and 50.

Logo recognition is another way to look at the importance of Rainforest Alliance in several European markets. By looking at logo recognition, slightly different markets come forward as most important. According to data from 2019, 62% of consumers from the UK recognise the Rainforest Alliance logo, followed by 48% of Swedish consumers, 38% of German consumers and 34% of consumers from the Netherlands.

Fair for Life market in Europe

There is little data available on the size of the Fair for Life market. By far the largest market is France with well over 170 registered and certified companies in 2021. Germany follows as the second-largest market with 35 companies dealing with FFL products, followed bly the Netherlands with 22, Switzerland with 14 and the United Kingdom with 11 companies registered and/or certified by Fair for Life.

The Fair for Life certification programme was launched in Switzerland in 2006. In 2017, Fair for Life and the global French-based organic certification organisation Ecocert merged into Fair for Life certification as we know it today. It partly explains the large presence and popularity of the label in France.

Social certification for natural ingredients

Social standards are important in all food sectors, and increasingly so due to new legislative requirements on European level. Still, some sectors put a larger emphasis on certification than others. Product certification with social standards such as Fairtrade and Rainforest Alliance are most used in commodity food value chains, such as coffee, cocoa, tea, fruits and sugar.

For natural ingredient sectors (including herbs, oils, extracts, among others) the use of and demand for certification is less clear-cut. Whether or not European buyers are interested in buying certified natural ingredients depends on how buyers communicate this to their customers. For instance, industry sources indicated that 80-90% of spices and herbs are used as food ingredients, instead of final products. When a spice makes up a small share of a product, it is difficult to communicate its sustainability to consumers. European food manufacturers may be more interested in certified spices and herbs if they are part of an entirely certified food product.

In the case of natural ingredients for cosmetics, manufacturers more often choose certified ingredients as a means to support their brand image as ethical. This means they often adhere to fair trade principles, though their final cosmetic products are not necessarily certified as such. This has several reasons. For one, because cosmetic products commonly contain at least 10-20 ingredients. Moreover, most cosmetic products consist for up to 90% of water, which cannot be certified as fair trade.

Not all social certification standards cover cosmetic ingredients. Fairtrade, for instance, is limited to ingredients mainly used in food, such as cocoa and shea butter, coconut oil and sugar. For final cosmetic products to be able to have a Fairtrade label on their packaging, they need to contain at least 5% of Fairtrade ingredients in leave-on products and 2% in rinse-off products. However, this does not mean that cosmetic companies do not work with Fairtrade. The German cosmetics company Fair Squared is an example of a company using Fairtrade certified ingredients in its products where these are available.

Standards such as Fair for Life and FairWild can be adapted to a much larger variety of products and ingredients. Both have separate criteria for sustainable wild harvesting of plants, while Fair for Life can also be used for cultivated ingredients. These standards are more commonly used for natural ingredients, though some cosmetic brands choose to focus on Fairtrade certification, likely using the existing consumer awareness of this certification from their use in food sectors.

Most demanded standards in non-food sectors

There are several certification schemes that were specifically developed to certify non-food products. Based on interviews and our studies about sustainability in home decoration and home textiles (HDHT), sustainable materials and sustainable apparel, the table below gives an overview of the most commonly demanded certification standards that include social critieria in these European non-food sectors.

Table 3: Most common product certifications requested by European buyers in non-food sectors*

* Some of these standards include, besides social criteria, very strong environmental elements (examples: GOTS and OCS).

In general, most European buyers in the HDHT and apparel sectors do not demand certification. Instead, many buyers increasingly demand their suppliers to comply with certain social compliance standards. With these standards buyers want to ensure that the products they source are produced in fair and safe working conditions. The most common requested standards in Europe are:

• amfori Business Social Compliance Initiative (BSCI): This is a suply chain management system that helps manufacturers drive social compliance. The amfori BSCI Code of Conduct includes 11 principles, ranging from fair remuneration to no child labour. To prove compliance, a European buyer can request a third-party audit of a supplier’s production process. If you get audited, you will be included in a database together with all BSCI members.
• Ethical Trade Initiative (ETI): This initiative is an alliance of companies, trade unions and voluntary organisations. It aims to improve the working lives of people across the globe who make or grow consumer goods. The ETI Base Code consists of 9 principles, one of them being the payment of living wage. It is possible to audit your company for ETI compliance.
• SMETA: Sedex Members Ethical Trade Audit: This guideline does not specify a particular code, instead it stores information on ethical and responsible practices covered by ILO Conventions, ETI Base Code, SA8000, ISO14001 and industry specific codes of conduct. Sedex members can use the information on the system to evaluate suppliers against any of these codes or the labour standards provisions in individual corporate codes.

The above standards are applicable to companies of all sizes and from all sectors. Even if these standards are not requested by your buyer, you can still use their guidelines to assess your sustainability. For instance, complete the Self-Assessment Questionnaire (SAQ) to identify important ethical, social and environmental issues in your business and share this with (potential) buyers. Altough non of the above-mentioned standards provide certification, they show European buyers that you are actively working on and are concerned with social sustianability within your company.

In which markets are most member countries of these initiatives found?

ETI is most requested by buyers from the UK. Among the members of ETI are also UK’s three largest retailers: Tesco, Sainsbury’s and ASDA. With over 500 member buying companies, the UK also has by far the largest number of Sedex buyers, followed at a large distance by the Netherlands (34), Germany (30), Ireland (16), Spain (16), Italy (14) and France (12). BSCI finds its largest company member base in Germany (850 members), followed by the Netherlands (411), France (191) and Denmark (162). This is just an indication of what you may expect from specific countries. In the end it depends on your buyer’s preference which standard is required, if any.

5. What are the main differences between the most demanded social certification standards?

The standards for Fairtrade, Rainforest Alliance and Fair for Life vary across several indicators. Of these standards, Fair for Life covers the widest product range and allows for recognition of ingredients certified according to other standards, which both Rainforest Alliance and Fairtrade do not. Regarding eligibility, Fairtrade is most restrictive, both in terms of geography and type of actors that can be certified. Fairtrade is also the only standard of the three that works with a guaranteed premium. Rainforest Alliance and Fair for Life include more extensive environmental sustainability criteria than Fairtrade, which is often used in combination with organic certification.

Table 4: Main differences between Fairtrade, Rainforest Alliance and Fair for Life standards

The social compliance standards BSCI, ETI and SMETA are all based on international labour standards. Of these standards, SMETA includes the highest share of environmental criteria (if you chose the 4-piller audit). Regarding eligibility, companies from all sizes and sectors can be required by their buyers to get an audit. Benefits for each standard are fairly similar, and all aim to avoid unnecessary duplication efforts for suppliers in their own way. Still, buyers often have the final decision on which standards they request and to what extent they recognise standards as equivalent.

Table 5: Main differences between BSCI, ETI and SMETA standards

6. What are possible benefits of social certification standards?

For SMEs there are different reasons to obtain certification. Examples include demand by your buyer, ensuring transparency and traceability, improving company reputation, dealing with specific social issues in your chain, and/or adding credibility to your sustainability claims.

Social certification standards claim various benefits by obtaining their certification. These generally include that certification contributes to achieving Sustainable Development goals, that you receive a fair price for your products and thus improve the livelihoods of smallholder farmers and that companies can demonstrate that they are reliable partners that are serious about (social) sustainability. Research has shown that the benefits and impact of social certification may vary per standard, region or company/cooperative that obtains the certification. Moreover, as supply of fair trade products exceeds demand, not all certified products can be sold as such.

Table 6: An overview of different possible benefits of social certification standards

7. What are hurdles related to social certification standards?

Though certification of social standards can lead to several possible benefits as highlighted in chapter 6, they are not without their challenges. Before determining whether certification is the right move for your company, and which standard offers the most opportunities, you need to have a good understanding of the hurdles you can expect.

Table 7: An overview of different possible hurdles related to social certification standards

8. How to choose the certification standard that fits your needs best?

As discussed in this study, you have many social certification standards to choose from if you want to obtain such a standard. Some are more in demand than others, some may be a better fit for a specific product or end-market, benefits and limitations may vary, and each standard has its own requirements. To determine which standard best fits your needs you will need to determine your objectives and compare the different standards available to see which one helps you meet them.

To determine your objectives, you should be asking yourself: why do you want to obtain a social certification? What problems do you have that you expect this standard to solve or what do you expect to gain from having this certification?

Once your needs and objectives are clearly defined, you need to consider your options and do your own research into different certification standards. You should look for a product certification or social compliance standard that fits both your identified objectives and your target market. Moreover, you need to determine whether you can meet the requirements of these standards and whether you need to make additional investments. To make your choice, you may need to compare different standards on these various indicators.

The table below can help you to make a comparison between different standards available to you in order to select the one that best fits your needs. It provides an overview of questions to consider regarding your needs and objectives; market demand and strategy; and requirements.

Table 8: Guiding questions to decide on which social certification standards to obtain

Case study 1: Target Agriculture, Sri Lanka

Target Agriculture is an exporter of coconut products, spices and processed fruits. The company has grown significantly over the past year. From Sri Lanka, it expanded business operations into Vietnam, Indonesia and Thailand. Target Agriculture is no stranger to certification: 100% of its products are organic-certified and an increasingly large share of products is also certified to Fairtrade and/or Rainforest Alliance standards.

Why so many certifications? One of the main reason is to increase competitiveness and become more attractive to buyers. On a farmer level, Fairtrade was specifically interesting in order to build a rapport with farmer communities. Through the premiums paid, Target has helped to set up several projects for their farmer base and strengthened its relationship with its suppliers.

Besides product certifications, the company holds a series of food safety certificates such as BRC and FSSC22000. To prove social compliance specifically it holds a SMETA certificate. Complying with SMETA means that most of buyers’ general social compliance requirements are covered. Still, however, European buyers will demand their own codes of conduct, which might include additional requirements.

Complying with these standards is a benefit to customers and employees alike. For Target it means meeting customer demand, while also ensuring its employees stay healthy and work in safe conditions.

Besides the benefits, however, there are also challenges to deal with. One of them: maximum working hours. All social compliance standards will have criteria on weekly work-hour limits. For many, however, working overtime has become the rule rather than the exception. Because of low minimum wages across Asia, people try to secure their income through working extra time. Allowing excessive overtime for BSCI-certified operations is not an option, and because of price pressure by European buyers on their suppliers, paying higher salaries is often not an option either. These employees, however, are assured to be working in safe and healthy working conditions.

In addition, the COVID-19 pandemic has brought new challenges to the certification process in general. It has become more challenging to conduct physical audits while adhering to government COVID-19 guidelines. Also, Target Agriculture has experienced restrictions and increased costs for international travel by quality experts and auditors, which have delayed audits. The company has managed these challenges by splitting and conducting audits throughout the year using local auditors. Moreover, they ensure continuous monitoring through online methods to avoid any unwanted surprises.

Figure 9: Target Agriculture

Source: Target Agriculture

Case study 2: Accessory Arcade, India

Accessory Arcade is an Indian private label manufacturer of eco-friendly yoga, meditation, and acupressure equipment. Through its products, the company is fully committed to achieving health and wellness, both physical and mental, for its customers and employees alike. Core values of the company include minimising its ecological footprint as well as providing a healthy working place for its employees.

To support these claims, materials of Accessory Arcade have been certified with the Organic Content Standard (OCS) since 2018. As of this year, Accessory Arcade also expects to achieve Global Organic Textile Standard (GOTS) certification. GOTS has a wider scope than OCS; evaluating the entire processing and manufacturing of textiles on the basis of both environmental and social criteria. This implies assessing everything from the chemical inputs being used to the ethical treatment of workers.

Going for GOTS was a logical next step. As the company was growing, it decided to open a new factory, after which they decided to go for GOTS certification. Accessory Arcade has been in the certification process for three years now; a rather long process due to the opening of its new production facility.

With help from the auditing entity, becoming certified is not the main issue, explained Accessory Arcade’s director Mr. Albin. Maintaining the certification status is where most costs and efforts will be spent. With limited manpower it can be challenging to keep up with monitoring practices and sound bookkeeping of the social compliance management system. Having adequate factories, cash flow and qualified people taking care of needed issues is crucial, said Mr. Albin, pointing out that this makes it increasingly difficult for small-scale companies to gain certification status.

One of the main reasons for Accessory Arcade to become GOTS-certified is to safeguard social security for employees, and to maintain and grow the company’s client base. Mr. Albin’s experience is that middle-sized and larger European buyers are increasingly requesting certified products. GOTS is a great tool to secure sustainability commitments and meet up with traceability requests, which are much-demanded by European buyers. Mr. Albin also stressed the importance of having realistic expectations for SMEs entering the scene: the industry is competitive and being certified will help secure a spot in the marketplace but do not consider it a free pass to fetching higher prices for your products.

Figure 10: Accessory Arcade

Source: Accessory Arcade

Case study 3: Shochoch Trading and Bench Maji Coffee Farmers Cooperative Union, Ethiopia

Shochoch Trading is an Ethiopian exporter of coffee, spices, honey and grains, and was founded in 2019. The export company’s director Terefe Tadesse Godi used to be the marketing manager for Bench Maji Coffee Farmers Cooperative Union (BMCFCU). In that function, Terefe assisted BMCFCU and its 85 member cooperatives to become organic-certified in 2013, Fairtrade-certified in 2015 and Rainforest Alliance-certified in 2016.

In preparation for obtaining the certification an internal control system was set up and many trainings were organised to train coaches, who then trained smallholder farmers in groups. These steps are crucial in the way towards certifications; organising this is often a constraint as it is costly and requires organisation. BMCFCU paid for these investments themselves.

Terefe explained that after the trainings, the certification process took about three months. It required a representative sample to be audited on site; requiring smallholder farmers to be interviewed on a wide range of topics, from gender to farming practices. The certification cycle included document preparation, application, on-site audits and review time.
 

Shochoch Trading is now also organic, Fairtrade and Rainforest Alliance-certified. As a trader, becoming certified is much faster as you only deal with a certified product. It suffices for office and processing facilities to be audited, and the whole process of becoming certified took Shochoch Trading less than 1 month. Certification costs for all three schemes were similar.

Specific for Rainforest Alliance, it took Shochoch Trading about two weeks to fill out the forms, which was all done online through a specific portal system. Documents were then reviewed by Rainforest Alliance, after which an invoice was sent. After payment, an auditor visits the site and issues the certificate. In case of any incompliance, a list of compliance issues is given, which requires you to document corrected measures and resubmit online. Some additional costs will be invoiced for the auditing of the corrective measures.

Terefe explained that the objective behind obtaining certification is to create market opportunities for sales at premium prices. Uncertified commercial-grade coffee fetches low prices, Fairtrade-certified coffees guarantee a premium price. Equally important, stressed Terefe, is that the products exported are also traceable, which can be guaranteed by certification.

Figure 11: Coffee drying beds in Ethiopia

Source: Shochoch Trading

ProFound – Advisers In Development carried out this study on behalf of CBI.