Simplifying Multi-Stakeholder Initiatives

Thank you for the invitation to share with you views on the theme of your conference: “Simplifying Supply Chain Sustainability”.

The modern world is about making the complex, simple. It is about transforming streams of data into understandable information and providing transparency through easier access.

As consumers increasingly become more powerful and their choices have an almost immediate impact on the nexus of demand and supply, business has an obligation - and in fact an economic necessity - to ensure that supply is sustainable and those providers of supply: producers, traders, brands and retailers areaccountable for their sustainability claims.

Ensuring sustainable supply chains matters for the consumer but it has an equally profound impact on trade. Trade impact is undermined if supply chains are weak.

The market treats the uncertainty generated by weak and opaque supply chains with caution. This can impact the long term growth and employment benefits that sustainable production and supply chains can offer. All actors - from upstream producers to the ultimate consumers - can benefit enormously if sustainability is placed at the heart of trade.

And it is not just trade in the strict sense of the word. Effective supply chains can contribute to inclusive growth and be major tools to implement the United Nations 2030 Sustainable Development Goals. It is therefore no surprise that Goal 2 speaks of Sustainable Agriculture and Food Security, Goal 8 speaks about Decent Work and Goal 12 about Sustainable Consumption and Production.

Put simply, sustainable supply chains matter to everyone: to consumers, businesses and civil society.Sustainability initiatives therefore need to involve a variety of stakeholders by their very nature. They require a multi-faceted approach and understanding of the fundamentals as well as the levers that the private and public sector have to improve the functioning of international value chains.

The public sector has an important role to playthrough the implementation of sustainable public procurement policies and guidelines. Public spending here in the United Kingdom accounts for over 20 percent of GDP, and in developing countries can even be as high as 30 percent of GDP. Investing public spending into sustainable goods and services therefore offers great potential to contribute to a more sustainable economy.

The private sector is a key driver of sustainability too, implementing voluntary or private standards and codes of conduct to ensure their supply chains produce with environmental, socialand quality criteria in mind. Importantly, the private sector is in direct relationship with consumers and can therefore adapt to consumer demands as we have seen with Unilever committing to source 100 percent of agricultural raw materials sustainably by 2020 or IKEA aiming to source 100 percent of cotton for its products from sustainable sources by the end of this year. And the list goes on.

With a growing worldwide middle class, it is also consumers that are at the frontline of the shift towards sustainability. Yes, consumers still seek products with competitive prices but increasingly it is quality and ‘good’ or ”do no harm” products that they are turning to. What are ‘good’ products? Increasingly these are products with lower environmental impacts and greater consideration of human rights and labour practices - products where women are not marginalised, products that understand that ‘doing business’ and ‘doing good’ are not inimical or mutually exclusive.

This “conscious” consumer has emerged as a powerful force. They want more information on the origins of the product and services they buy. For example, 66 percent of global consumer respondents in a recent Nielsen survey (2015) say they would pay extra for products and services from companies that are committed to positive social and environmental impact; this is up from 38% in 2011.

Let us look at consumer behaviour here in the United Kingdom: In a 2015 ‘Ethical Performance’- study that looked into the attitudes of British consumers, 60 percent of respondents said that that a company that guarantees the ingredients used in its products are responsibly sourced is among the top issues that make a food company ethical, followed by a company that guarantees good worker welfare (57%) and a company that guarantees to improve the environment (42%). Importantly, half (52%) of British consumers are even ready to stop buying products from a company if they found out it was acting unethically.

The International Trade Center through its more than 50 years in existence has always sought to promote business while doing ‘good’. This notion of sustainability in its myriad forms is at the centre of what we do.

In 2009, ITC launched the Trade for Sustainable Development Programme to promote sustainable supply chains as a means to help developing countries and their small and medium enterprises (SMEs) add value to their products and services.

Initially the focus was on ensuring transparency over the myriad of voluntary standards and codes applied in supply chains.

It soon became clear that the proliferation of sustainability standards, codes of conduct and initiatives was leading to confusion.

And confusion was leading to costs: for SMEs, it is particularly costly to find and trace the relevant sustainability standards. Beyond that, compliance typically entails high fixed costs that affect SMEs disproportionately compared to larger firms. Yet, sustainability standards can be a game changer for SMEs to aiming to internationalize within global sustainable value chains.

To address these challenges ITC has developed three solutions.

Transparency and self-assessment: Let’s start with Standards Map, an online tool that provides comprehensive, verified and transparent information on close to 200 sustainability standards and similar initiatives covering issues such the environment, labour, food quality and safety. It allows businessesto compare standards requirements and complete an on-line shareable self-assessment or diagnostic report, providing a roadmap to compliance.

The database powering Standards Map is being used by industry associations such as AIM-Progress, the Global Social Compliance Programme (GSCP), the Sustainable Agriculture Initiative (SAI) Platform whose members include among others Unilever, Pepsico, Cargill, Danone, Illy Café, Mondelez, Tchibo, Diageo, and Nestlé. ITC is working closely with these groups to benchmark their audit protocols and codes of conduct,reduce duplication, drive synergies and promote a common harmonised approach to agricultural sustainability.

Visibility and traceability: Let me turn to the second tool, the Blue Number initiative. This new programme provides farmers with a geolocation number - the Blue Number, which is part of an on-line profile that contains the farmer’s name, gender, product, and email address or mobile number. Once the farmer is in the registry, he or she will be able toconnect to a sustainability marketplace with other trading partners and share their sustainability achievements. Think of it as an online networking platform – a Facebook or LinkedIn for farmers.

Having a Blue Number gives farmers a voice and access to sustainability resources. It increases their visibility and allows them to better connect with global buyers.

It will help buyers with improved traceability of their value chains, as well as with data to make informed purchasing decisions such as identify women-owned farms with whom to trade.

It will also provide us with incredible sources of data- big data- that can inform policies ranging from women’s economic empowerment to land registry issues and from food security to quality standards.

Today, already over sixty thousand farmers havereceived their Blue Number. Major global brands and thousands of farmers will gain access to sustainability information that will allow their business networks to be better connected with each other and with their sustainability goals. The Blue Number Initiative is powered by the Global Standard 1 (GS1) system and can be plugged into most supply chains worldwide.

Rseults and impact: ITC’s third response is the R.I.S.E. platform, an innovative scheme to enable sustainable trade, social and environmental sustainability, traceability and impact in the fashionvalue chains. The platform allows for monitoring of activities of producers. The overall outcome is to ensure their activities lead to a socially and ethically responsible supply chain.

This information is communicated via the R.I.S.E. passport tag which is attached to each product made by producers and artisans. The result is that the R.I.S.E passport tag will effectively become a recognised “signature” or “mark” guaranteeing social and environmental responsibility, traceability but more importantly, impact. We have already tested this in our own “Ethical fashion initiative”.

These three ITC initiatives represent scalable, neutral and adaptable tools that can lower the information costs of SMEs while giving them a voice and a better shot at entering higher value and more dynamic markets. At the end of the day success requires that we marry the increasing demands for ‘good products’ with facilitating participation in sustainable value chains.

It is about moving towards simplification of multi-stakeholder initiatives engaged in sustainable supply chains.

Just two years ago ITC launched the “Trade for Sustainable Development (T4SD) Principles”, a setof core values – transparency, sustainability, harmonization and alignment with the SDGs - that are intended to support more equitable and impactful trade while simplifying the drive towards sustainability. Over 60 companies and organizations have already endorsed these Principles, including SEDEX and many private companies present at this conference.

Let me add a couple of additional ideas regarding simplification.

Multi-stakeholder initiatives must include all relevant stakeholders, also those that tend to be marginalized - such as women and SMEs in developing economies-, in order to ensure sustainability impact. Consider the fact that full gender equality would add 26 percent, or $28 trillion, to global GDP in 2025, or the fact that in emerging economies, SMEs contribute to over 30 percent of GDP. The sustainability impact of multi-stakeholders initiatives grows with their inclusiveness.

Multi-stakeholder initiatives also depend on engagement. Only continuous dialogue through technical collaboration among the various working groups and stakeholders allows them to operate efficiently, using common language , shared information platforms and, more importantly, the right “framework”.

A framework of “core” indicators common to all initiatives. This will help define “sustainability” from the perspective of suppliers, buyers and consumers, taking also into consideration the sector specificities and geographic locations where the sustainability initiatives operate. We should be ambitious here.

A framework with clear processes to gather demonstrable information on sustainability impacts on the ground, especially in the poorest and most vulnerable economies;

A framework of capacity building at all levels of the supply chain, specifically with a strong focus at the primary production level where most of the sustainability impacts are meant to take place. This requires concrete actions by governments to support the work of all parties involved on the ground in making sustainability more than a buzzword.

Finally, simplification of multi-stakeholder platforms would greatly benefit from "honest brokers". Think of ITC as an honest broker. With our universal reach and neutrality, ITC can help all stakeholders along the value chains to simplify the drive towards greater sustainability.

While these are practical steps that can and should be taken, it will be a long process that involves dedication and effort from multiple parties.The participants in the last panel session have demonstrated that progress is being made in this direction. But we still need to build consensus on the way forward among standards-setting organizations, NGOs, multinationals, and other stakeholders in global supply chains in order to simplify and increase the impact of sustainability initiatives.

The International Trade Centre is your partner in these endeavours. I invite you to explore and benefit from ITC’s sustainable supply chain tools that we have developed to facilitate initiatives for ‘good’ products and services. We wholeheartedly support the work of SEDEX in the area of building sustainable supply chains and we commit to you to bring our tools, networks, and project teams to operate in an efficient and complementary manner to achieve our common goals this this area.

Thank you.