As my career progressed, I saw firsthand the stark contrasts that underpin our global economy. In resource-rich countries, I observed how enduring colonial legacies continue to influence lives and local economies, often resulting in widespread poverty. In the Democratic Republic of the Congo, where local populations have little access to the wealth generated beneath their feet, I led a community investment plan tied to a mining project. I was fully aware that despite the mining project’s scale, the benefit to the communities would be marginal. In India and Nepal, I worked with governments to determine how to modernize forest-management practices that were rooted in a history of cutting down trees to benefit the colonial regime, with little benefit to local economies or consideration of local knowledge, needs and trade objectives.

Again and again, I saw variations of the same story, which left me thinking, “What does it take to create companies that genuinely foster sustainable and equitable development?”

Last year, I concluded that advising companies on environmental, social and governance issues and equity, diversity and inclusion wasn’t sufficient to “raise our wounded world into a wondrous one,” as American poet and activist Amanda Gorman put it. It was time to leverage my expertise to show that it was possible to do more. I established No Women No Spice, a direct trade, certified organic spice company that sources from farmers in Zanzibar, an archipelago off Tanzania.

I had travelled to Tanzania and the island province of Zanzibar many times for work and to visit family and was acutely aware of the region’s innovative approaches to climate change, equity and agriculture. At the same time, I witnessed the lingering impacts of colonialism. These experiences were instrumental in shaping my company’s mission to “reboot the spice route.”

Zanzibar is unique because of its diverse array of crops originating from the African continent and from more distant regions, including India and the Mediterranean. On a single farm, it’s not uncommon to find more than a dozen varieties of fresh spices, including cardamom, black pepper and cinnamon. Despite Zanzibar’s agricultural richness, barriers such as lack of access to markets, destructive climate change and inadequate infrastructure have stymied its potential, reducing “Spice Island” to a mere moniker.

Slavery, women and spice

The quest for spices in the 15th century propelled European explorers to distant shores, spurring the rise of colonial empires. Spice production became a colonial monopoly, marked by severe labour exploitation and the marginalization of local economies. In Zanzibar, the spice trade and the slave trade were deeply intertwined, with Indigenous Africans forced into servitude on Portuguese-, German- and British-owned plantations.

Today’s farmers in Zanzibar face new challenges. They are grappling with climate change through prolonged dry periods, unpredictable rainfall and extreme weather, making crop cultivation increasingly challenging; rising sea levels have led to saltwater intrusion into low-lying fields. Though once a leading spice-trading hub, Zanzibar’s environmental and economic strains have driven many farmers to unsustainable mono-crop agriculture. Despite these shifts, traditional spice knowledge remains vibrant among local farmers. Initiatives like those by Community Forests International are helping communities revive “edible forests” by integrating reforestation efforts.

The spice industry is experiencing a revival driven by consumers’ demand for transparency about spice origins and methods of production. OpenText’s 2021 survey found that 88% of global consumers want to buy goods that are responsibly and sustainably produced; 83% would pay more for goods that are ethically produced. The trend is reshaping the global organic spice market, which is expected to grow from US$10.9 billion in 2023 to US$17 billion in 2033.

In the nascent days of corporate social responsibility, I saw firsthand that the focus was on corporate image with minimal benefit to communities.

Women Who Farm Africa, a social enterprise that provides programs to rural women, reports that women produce approximately 70% of Africa’s food but own less than 20% of the land. In Tanzania, agriculture is a cornerstone of the economy, providing more than two-thirds of employment and nearly one-third of the gross domestic product. The UN Development Programme reports that 67% of female workers in Tanzania are employed in agriculture, primarily as smallholder farmers. However, women remain vulnerable to economic and environmental shifts due to a lack of financial independence. Research suggests that if women had equal access to productive resources, such as financial services, training and land, farm yields could increase by 20% to 30% and reduce hunger by up to 17%. Moreover, women typically reinvest their profits into their households, which alleviates poverty from the bottom up.

In East Africa and South Asia, I’ve witnessed how education on modern farming techniques and access to high-quality seeds and land can significantly improve outcomes for female farmers, paving the way for their financial independence. Higher yields lead to surplus crops and increased incomes, which, in turn, “allows women to invest in their children’s education, improve living standards and further develop their farms,” explains Amina, a cinnamon farmer in Zanzibar.

The demand for spices, coupled with their high value relative to other crops, presents an economic incentive for spice cultivation, but farmers currently lack strong links to more profitable export markets. Sekela Mboya, a Tanzanian agronomist who works with farmers to develop agroforestry plans, stresses that “farmers also need assistance in improving agricultural production and accessing value-add enterprises.” At No Women No Spice, our goal is to increase access to stable and fair income sources for female farmers while supporting regenerative agriculture and agroforestry efforts to combat climate change.

Rebooting the spice trade

The spice industry is at a crossroads, facing the destructive impacts of global warming, growing awareness of unfair compensation for farmers, and increasing consumer demand for organic products. Climate change is already affecting spice yields and quality; forecasts predict a potential reduction in yields globally of up to 23% by 2050. This ancient trade must evolve to align with contemporary ethical and environmental standards.

Many might find it surprising that Tanzania has the sixth-highest number of certified organic farmers globally and is third in Africa. Historically, in an effort to modernize Tanzania’s agriculture sector, there was heavy reliance on chemical pesticides to increase yields of key cash crops: coffee, cotton and tea. In recent years, however, there has been a notable pivot influenced by global environmental movements and a deepening understanding of the long-term consequences of pesticide usage.

Tanzania is now witnessing a paradigm shift characterized by a steady movement toward integrated pest management, organic farming and biopesticides. Remarkably to me, but not Tanzanians, many farmers now practise organic or near-organic farming even without formal certification because it requires minimal external inputs, uses locally available materials and promotes a holistic, diverse and stress-resistant approach to farming. For the smallholder farmer, organic farming is the only viable option.

Tanzania’s organic agriculture sector has also been buttressed by systems and institutions that make sustainable farming more accessible. A network of organic farmers, civil society organizations and businesses further energizes this sector from within. The rise of organic farming in Tanzania represents an opportunity for entrepreneurs, groups and investors to contribute to the nation’s green economy by producing safe, sustainable food.

Grind the gap

Historically, a tiny fraction of a spice product’s final retail value went to the farmer, with the Fairtrade Foundation estimating this at 5% to 7%. This imbalance is even more acute for women, who form a substantial part of the agricultural workforce but typically receive lower wages and have restricted access to resources and land.

While established multinational spice companies have made progress in addressing these disparities, significant gaps persist. Despite a growing focus on sustainability and fair trade, the reality often does not align with corporate sustainability reports. Challenges include opaque supply chains, lack of transparency, and a lack of genuine empowerment of local communities. To cut through the mud, I’ve found that establishing direct relationships with Zanzibar’s sustainable farmers has been the most effective way of ensuring fair pricing that enables farmers to invest in their communities, improve living standards and foster economic independence.

Having spent my entire career working within companies to advance sustainability and equity, my hope is now that the triumphs of one small company can serve as a case study that inspires broader change.

Shilpa Tiwari is the founder and CEO of No Women No Spice and Isenzo Group, an ESG strategy and communications firm.

The post What starting a spice company in Tanzania taught me about sustainability and equity appeared first on Corporate Knights.

The west-end Toronto company reclaims a chocolate legacy that might seem un-chocolatey to many — a healthy, spiritual, dark and bitter-tasting food and drink hailing from Mexico Profundo, the ancient Indigenous Mayan culture of Mexico.

ChocoSol is in the business of selling chocolate bars and drinking chocolates, though its business would more accurately be described as a mission to sell goods or services with a social or environmental purpose.

Even by the standards of a “social enterprise,” ChocoSol’s business model seems quirky. Its unbleached packages feature a Mexican Day of the Dead-inspired skull, with bike chains for eyes and teeth. The company’s “ChocoSolistas” also call themselves chocolate “pedallers” and take pride in using bicycles to transport their display tables and power the blenders that make chocolate drinks at farmers’ market stands across the city. The bicycles brand them as supporters of neighbourhood technologies that feature sweat-equity over bank financing.

ChocoSol founder and owner Michael Sacco, who has a side hustle as a PhD student at Trent University in Peterborough, likes to call the company a learning enterprise, because its staff and customers are learning how to produce and live in tune with the environment. But the real learners may well be today’s conventional businesses that can be taught a thing or two about engaging sought-after youthful customers hungry for food choices that smack of authentic and sustainable experiences.

In its latest Flavor & Trend Forecast, marketing agency THP predicts that in 2020 “brands will need to champion a collective appreciation for sustainability, whole ingredients and minimal processing in order to thrive within this emerging consumer narrative.”

ChocoSol has that whole package down pat.

That’s a way of telling informed customers that ChocoSol’s chocolate comes not from monoculture plantations with reputations for using pesticides and child labour, but from diverse gardens planted with vanilla, achiote peppers, coffee, hardwood and fruits alongside cacao trees.

As a Toronto food policy enthusiast and chair of the Coalition for a Green Economy, I toured these forest gardens with Sacco in 2007. Through “horizontal” trade, ChocoSol cuts out the vertical supply chain relied on by most big companies and deals directly with producers, commonly offering them 15 per cent above the going international wholesale price (up to 300 per cent more for some rarer beans). Relying on face-to-face relationships, direct traders reduce the red tape common with fair trade labels that deal with large-volume producers.

But behind its social, ethical and small-scale artisanal production methods, ChocoSol runs as much on hard-edged business forecasts as integrity and soul.

“They’ve got what all their competitors would die for,” says Barry Martin, owner of the communications firm Hypenotic, which handles ChocoSol’s account, as well as that of many others in the “purpose-driven” space of Toronto food-based businesses.

“ChocoSol makes what people need, does it in a way that’s memorable, generates an experience, tells a great story that makes it bigger than life,” Martin says. “Of all my clients, ChocoSol best expresses the whole range that companies need to strive for” to avoid the downward spiral of competing as a commodity for lowest cost.

Sacco, who brands himself an “ecopreneur,” has raised up the company by its bootstraps since 2006, when he launched with a $15,000 line of credit and $15,000 “from the bank of friends and family.” Purchases from these “bankers” and their contacts probably accounted for most of the $20,000 in ChocoSol sales that year.

In 2019, says Sacco, ChocoSol will clear $1.8 million in sales, half to wholesale accounts — despite the fact it retails for twice the price of conventional chocolate.

The company won top prizes at the 2016 and 2017 Canadian National Competition for chocolate-makers and took gold for its Jaguar Pure, and bronze and silver for its Jaguar Swirl and Crunch, in this year’s International Chocolate Awards.

Jaguar is a ChocoSol standout specialty, inspired by a woman elder from San Pablo Etla, just outside the city of Oaxaca. She took Sacco under her wing when he was a graduate student doing action research on Indigenous food traditions in Oaxaca, the unofficial capital of Mayan corn, cacao and grasshopper-based cuisine.

Struck by Jaguar’s commercial potential to support forest-based peasant-style agriculture in village communities in the Oaxaca region, Sacco developed “direct trade” relationships with small family farmers who sold him chocolate, coffee and vanilla from their communal forest gardens. To support a premium niche market around Jaguar, Sacco and community groups planted more than 50,000 trees yielding the Jaguar species of cacao around tiny villages such as Felipe de Léon.

“Our vision is to reimagine opportunities, techniques and organization models for small-plot intensive and underfinanced producers,” Sacco says.

These forest gardens are an economic boost to villagers and also sink enough carbon in the soil and generate enough plant and insect biodiversity to offset any environmental costs of taking cacao and vanilla beans by boat and train to Toronto.

 

Compassionate cacao

Business analyst Grayson Bass, who’s taught innovation strategies at the University of Toronto and is about to launch an Applied Innovation Certificate program there, thinks ChocoSolistas are spot on the money for a wide spectrum of change- and profit-making economic transformations of the near future.

Sooner rather than later, Bass says, social enterprises “will make the Fortune 500.” Why? Because they have compassion, he says. Compassion is not just a sign of emotional intelligence, he reasons. A “strong compassion muscle” is the precursor to business smarts, he says, because it leads innovators to ask the central question: What good does this do?

This gives compassionate entrepreneurs the edge they need to move up the ladder of innovation, he says.

On the lower steps on the ladder, innovators can optimize — find a faster, cheaper, more effective way of doing the same thing. They can also sustain — keep ahead of competitors by adding new services to an existing device.

At the top rung are disruptive innovators who change the nature of the game. To reach the highest rungs, entrepreneurs need to ask a “why” question, says Bass. That’s where companies such as ChocoSol excel, he says. Their “why” — a passion for a tasty health food that supports peasant producers and environmentally friendly production and distribution — leads them to change the consumer market for chocolate.

“Compassionate organizations have an advantage in solving problems and creating disruption because they have a problem to solve, not just a structure to fit into,” Bass says.

Sacco winces when business people call him compassionate or idealistic. “I don’t want to be called a hippie entrepreneur,” he says. “I’m offering a different value proposition.”

This fall, ChocoSol introduced “Halloween chocolate that isn’t scary” — no child labour and no environmental destruction. But that’s true of all their chocolate, including their seasonal Christmas Cranberry bar, dotted with local organic cranberries, or their Merry-Mint, made with dried mint grown on ChocoSol’s green roof. That roof is where cacao bean shells and other food wastes are composted to become soil to nourish new plants for tomorrow’s bars — the model of a circular economy, where yesterday’s waste becomes tomorrow’s food.

“My biggest challenge is focus,” says Sacco, who struggles with finishing his PhD, on the role of cacao and maize (corn) in Indigenous agriculture, while raising three children and managing an underfinanced social enterprise.

Affinity marketing

There are hidden strengths in a social enterprise, Sacco says. Having a cause helps define ChocoSol’s niche and also helps with customer loyalty, staff retention and developing new revenue streams, such as workshops for students, he says.

“We don’t lose any time selling, persuading or convincing customers to pay extra for real cacao mindfully produced. We work with the willing. That’s affinity marketing,” he says. “Our customers are our ambassadors, which is the best advertising we can afford.”

Sacco would like to see other social enterprises feature hundreds of other overlooked plant medicines that can be vehicles for stories — stories that are often suppressed by the way food is commonly marketed as a no-name and placeless commodity divorced from culture or social purpose.

This vision corresponds with the business scenario laid out to an agribusiness summit in New York in early December. Nick Fereday, of Netherlands-based Rabobank, a major banker to the global food and agriculture sector, predicted that today’s classic “Big Food” brands are doomed.

Upstarts “are tapping into the consumer trends of convenience, of health and wellness, of being a premium product and all wrapped up in a very, very strong mission statement,” Fereday told his audience of Big Food executives. If the big brands don’t smarten up, “we will see the end of iconic brands,” he warned. “By 2030, everything will be niche and focused on small markets.”

Alison Blay-Palmer, newly appointed UNESCO Chair in Food, Biodiversity and Sustainability Studies at Wilfrid Laurier University, agrees that food has what it takes to attract change-makers.

“Food provides a lever to address many intersecting challenges: climate change, biodiversity, rapid urbanization, health, equity, community well-being and more,” she says. “People who can envision how these issues are interconnected understand the potential of food for far-reaching transformation.”

Most of all, having a cause gets Sacco and his team of 25 full- and part-time staff to work every day. “I don’t think you can start with a business plan,” he says. “You need to start with something that calls you, or you’re off to a bad start.”

The post Lessons from pedal-powered ChocoSol appeared first on Corporate Knights.

His new goal?

Helping companies build a better chocolate bar.

Global cocoa demand is on the rise and its market value is expected to double by 2025 compared to 2015 levels. Over half of the world’s supply comes from West African countries like Ivory Coast and Ghana, where cocoa isn’t just one of the hardest supply chains to monitor and track, it’s also one of the most destructive.

For as long as there’s been chocolate bars, the cocoa supply chain has been rife with illegal deforestation, human rights violations and child labour. Just last month, The Washington Post reported that two decades after candy makers like Mars, Nestlé and Hershey pledged to stop using cocoa harvested by children, it’s still likely that a chocolate bar purchased in the United States was the product of child labour.

Major cocoa companies use a few different methods to find out how the beans they put on store shelves were grown, picked, traded and processed. Audits and monitoring are one approach. Certification is another. Still another is legislation.

So far, the system isn’t working.

One reason is size. There are 4 to 6 million smallholder cocoa farms around the world. Three of the largest brands, Mondelez, Mars and Nestlé, have a chain of nearly half a million farms. They usually have a direct relationship with over half of the suppliers that source and sell beans from those farms. This leaves millions of suppliers with whom they have no direct relationship, which is where problems arise.

“Cocoa can’t be sustainable unless it’s traceable,” says Juliette Barre of Sourcemap.

Implementing Sourcemap’s app in the field in Ghana

Another is the paper trail. Low tech commodities like cocoa beans exist in a low tech chain. Transactions are tracked on paper and transported on bicycles and trucks, leaving room for social and environmental corruption that isn’t recorded or subject to regulation. Often there’s no digital tracking or paper trail to verify that payroll was made, or taxes paid, or to ensure that the cocoa being sold by one farm wasn’t smuggled in from another.

Bonanni wanted to build a platform to address these challenges directly. But timing was key. In the last few years, Android phones have become better and cheaper. Mobile phone use in Sub-Saharan Africa is growing faster than in any other part of the world. This laid the groundwork for increased traceability even in parts of the continent where electricity can be sparse, and at the end of last year, Sourcemap launched its Responsible Cocoa Platform.

Today, if a farmer has a smartphone, the platform can trace the cocoa he or she produces down to the size, shape and location of the farm as well as its yields, income and workforce.

Suppliers are registered with an online network (the first of its kind), data is captured and scores on sustainability, social compliance, risk and performance are calculated using web or mobile apps. Everything gets stored in the cloud.

Sourcemap’s app used to outline farms in West Africa

Mapping beans—and communities—can mean addressing the system’s inherent inequality. Knowing whether or not a farmer has enough electricity to turn on the lights, confirming the farm’s proximity to drinking water and useable roads and understanding the availability of health care, schools and access to credit is critical.

“That constellation of support,” says Bonanni, “is what powers a sustainable supply chain.”

Technology has a large role to play: in the search for a solution to cocoa’s ills, political will has often come up short. Agreements meant to reduce child labour, like the Harkin-Engel Protocol from 2001, floundered when the chocolate industry failed to meet its goals. Etelle Higonnet of Mighty Earth, a D.C.-based non-profit that works on environmental protection, says that a recent agreement designed to address deforestation, the World Cocoa Foundation’s Cocoa & Forests Initiative, is important—its 34 company signatories account for 85% of the world’s cocoa use—but still needs to deliver real monitoring and traceability.

While certification accounts for a small portion of the market, approximately 20%, it’s received a large amount of attention. In the last three years, two companies, Cadbury (a subsidiary of Mondelez) and Mars, distanced themselves from the Fairtrade and Rainforest Alliance certification standards they had committed to a decade ago and replaced them with their own programs, a move many consider problematic because of a lack of third-party oversight and international consistency.

While Mars had committed to selling 100% certified sustainable beans by 2020 and 50% of its beans were already certified by 2018, that year the company’s global VP of cocoa told Reuters that “certification isn’t enough.” Said John Ament, “Our belief is that we need to set more demanding standards than certification sets today.”

Ament isn’t alone in his critique of certifications. Mighty Earth’s Higonnet says that certification bodies such as Fairtrade and Rainforest Alliance need to commit to a higher price floor to address extreme poverty and implement more rigorous monitoring and intervention at every stage of production.

All of which makes traceability and transparency pivotal. To Higonnet this means “you know where your cocoa comes from, so you can discover all the problems in the chain, then start fixing them.”

Bonanni agrees. “There’s no excuse for a chain not to be traceable.”

On the platform today, 250,000 cocoa farms are mapped and traceable and thousands are being added each month for clients like Hershey and Mars. Sourcemap is working on a 100% traceable supply chain, including non-certified cocoa, by 2025—the first time non-certified cocoa has been mapped at scale and an important first step.

The post Fixing chocolate’s troubled supply chain appeared first on Corporate Knights.

Restaurant Brands International (QSR:TSX) is a Toronto Stock Exchange-listed quick-serve company that owns Burger King and Tim Hortons, as well as Popeyes Chicken. They sell a lot of burgers and a lot of coffee, two items with a global supply chain and a heavy impact on the environment.

Burger King seems to be trying to revive its sputtering sales by getting in on the plant-based burger craze. By year’s end, its American locations will be serving up the Impossible Whopper, a plant-based alternative that seems to taste just like a regular whopper. Unfortunately, there’s some concern that it uses genetically modified yeast to produce the key ingredient that makes the burgers taste so meat-like. Health Canada has yet to approve the ingredient, so don’t expect to see the Impossible Whopper on Canadian Burger King menus anytime soon.

According to RBI’s short sustainability report, the only measure BK has taken towards sustainable beef production is non-specified ‘support’ for farmers to join the Global Roundtable for Sustainable Beef, and a loose commitment to develop specific criteria by 2020. On the bright side, RBI has said its eggs will be cage-free by 2025 and its pork will be crate-free by 2022.

On the coffee side of things, it’s pretty clear that Restaurant Brands is prioritizing lower costs over sustainable agriculture and fair wages. Instead of using third-party certifications like Fairtrade or organic, it uses an in-house vender code that sets the bar ridiculously low at legal minimum standards, with vague statements about reducing environmental impacts.

Looking for a sustainable alternative in fast food was challenging, but I found a tasty option in A&W Revenue Royalties Income Fund (AW.UN:TSX). You’re forgiven if you haven’t been to an A&W restaurant in a while, but it’s going through a resurgence and is now Canada fastest-growing burger chain, with over 950 locations. It’s now Canada’s second largest burger chain, behind McDonald’s (BK is in fourth place, behind Wendy’s).

A big part of its economic renewal has come from its commitment to bringing in more natural, ethically-sourced ingredients. All of its meat is now antibiotic-free, A&W started selling certified organic, fair trade coffee in 2015 and then started making its famous root beer from natural cane sugar and all-natural flavours in 2017.

While RBI reports that same-store sales are falling at Tims,  A&W’s same-store sales are up 10%. Much of that growth is attributed to A&W’s ongoing sales of the much-hyped Beyond Meat burger (introduced last summer) and the Beyond Meat breakfast patty (introduced close to the end of its first quarter). Plant-based Beyond Meat products are assertively non-GMO certified, so they escape much of the criticism from ardent environmentalists. And Beyond Meat’s soaring IPO debut last week only drew more media attention to the burger.

Besides its recent ingredient innovations, A&W is positioning itself as a sustainability leader by being on top of hot trends like banning plastic straws. Considering Tim Hortons was cited as the second largest plastic polluter in Canada, according to a Greenpeace beach litter audit, A&W’s move to eliminate 90% of in-store disposables gives it a major reputational boost. Being first to market with these small solutions is a great way to differentiate against global fast food chains and lets them reap significant reputational benefits with each incremental change.

A&W still has a long way to go. While it’s made some solid moves towards improving animal welfare, its eggs aren’t yet cage-free and its pork producers are still transitioning to gestation crate-free systems.  I’d like to see a more detailed annual sustainability report and more transparency around carbon emissions and executive pay. That said, A&W is definitely moving quickly towards greater sustainability and CEO Susan Senecal recognizes that these issues are important to consumers.

A&W Food Services of Canada (which has no corporate connections to A&W’s American locations) is obviously a much smaller company than Restaurant Brands, but perhaps that allows it to be nimbler in the quickly-evolving quick-service sector. With a higher dividend and a lower beta, A&W provides a nice mix of income and growth potential. The chain is the clear winner in this week’s Sustainable Stock Showdown.

*A note regarding total Returns: Since RBI first started trading December 15, 2014,  we used that start date to assess both companies.

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Have a company in your portfolio that you want to replace with a more sustainable option? Write us an email or send us a tweet!

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing. Tweet him at @timenash.

The post Tim Nash’s sustainable stock showdown: battle of the burger chains appeared first on Corporate Knights.

These decisions carry even more weight for sustainable procurement professionals. Businesses are under increasing pressure to manage environmental impacts across their supply chains. Growing public scrutiny has pushed corporate environmentalism from the margins to the mainstream of business practices in recent years. Done credibly, corporate environmentalism can help attract new customers and retain old ones. Done superficially, it can do lasting damage to a company’s brand through accusations of “greenwash.”

This was the case for SC Johnson when they put a stem and leaf logo on certain household cleaning products around 2008. The logo proclaimed “Greenlist Ingredients – Same Great Product!” Three years later, the company was forced to withdraw the label and settle two class action lawsuits for undisclosed amounts. Plaintiffs in the cases successfully argued that the Greenlist label was vague and denoted few discernible environmental benefits. While the little stem and leaf looked like a credible eco-label, as it turns out, it was concocted by SC Johnson employees for marketing purposes.

The SC Johnson example illustrates the perils of a going-it-alone approach to eco-labeling. It is for this reason that businesses are increasingly turning to independent, third party standard-setters to help them set and enforce environmental rules along their supply chains. Third party standard-setters craft rules that transcend borders and steer the behaviour of billions of producers around the world. Political scientists refer to them as a form of “transnational governance” inasmuch as they have power, authority and legitimacy that resembles that of international organizations like the United Nations. Moreover, they hold the potential to achieve results when international negotiations remain mired in gridlock. By some estimates, if just 10% of agricultural production complied with rules outlined in voluntary sustainability standards, some of the worst environmental impacts of agricultural production could be avoided.

Yet, for companies looking to bolster their environmental credentials, choosing the right eco-label is far from a straightforward task. The world of eco-labeling is a veritable Wild West where any cowboy with a graphic design program can make a label proclaiming a product to be environmentally friendly. Even some third party standard-setters have come under scrutiny in recent years for setting the bar too low or having poorly designed standard-setting and enforcement systems.

So how can consumers and sustainability professionals separate real environmental claims from fake ones? This is a question I tackle in my new book, Beyond Greenwash. The bad news is that it isn’t as simple as looking at environmental impacts. Deforestation rates may fall and biodiversity rates may rebound, but it is very difficult to isolate the impact of eco-labeling from other variables that might be driving these changes. A more productive approach is to focus on how eco-labels are designed, built, and managed. This has the added value of allowing a common basis for comparison across different types of eco-labels, sectors, and issue-areas. Generally speaking, there are a few characteristics that consumers and companies can look for when selecting a credible eco-label.

Is it independent?

Consumers and procurement professionals should be wary of any self-awarded eco-label. Look for labels that originate from a credible, third-party organization. There should also be independence between the organization that sets the standard and the organization that audits compliance against its criteria. This is important for preventing a conflict of interest. Standard-setters generally receive revenues based on how widely their eco-labels are used. An eco-labeling organization that checks compliance against its own standard has an incentive to overlook non-compliances and set a lower bar for achievement.

How inclusive is it?

The most credible eco-labels are the ones that are developed with close participation from all relevant stakeholders. If an eco-label promotes sustainable coffee production, then it should involve coffee farmers, scientists, processers, NGOs, and community members (amongst others) in standard-setting. Sometimes, stakeholders will lack the means to attend important meetings. In these cases, it is incumbent on the standard-setter to set aside funds to help marginalized stakeholders participate in a meaningful way. Bringing lots of stakeholders to the table is the best way of ensuring that an eco-label is relevant to local conditions, sets the bar appropriately high, and avoids privileging some interests over others.

How transparent is the label?

As a general rule of thumb, credible eco-labels have well-maintained websites. Any interested member of the public should be able to log on and find information about the eco-labeling standard, the process through which businesses become certified, the governance and funding of the eco-labeling organization, and the roster of firms that hold active or withdrawn certifications. Dubious eco-labels keep everything offline or hidden behind pay walls; credible eco-labels make their information freely available online.

Is the label committed to improvement?

Both consumers as well as companies shopping around for a credible eco-label should look for ones that monitor and evaluate their impacts and take steps towards continuous improvement. Often this can take the form of ‘impact reports’ that outline the progress an eco-labeling organization has made towards its sustainability objectives. Impact reporting should feed back into newer versions of eco-labeling standards so that there is a constant dialogue about what is working and what is not. Impact evaluation is a messy science, but credible eco-labels do their best to assess whether their approach is having the desired effect.

Granted, all of this may sound like a lot of work for choosing a cup of coffee.  The latest market research suggests that over one fourth of global coffee production is currently certified to one of five major eco-labels. Indeed, certified production is growing across nearly all sectors. There may soon come a day when most major commodities are produced in accordance with a sustainability standard. The bad news is that not all of these eco-labels will be credible. Thus, it has never been more important to understand what’s behind the little green frogs, blue angels, and white bunnies that festoon grocery store aisles. Digging into the rules and procedures of how eco-labels are made is the key to achieving durable environmental impacts and moving Beyond Greenwash.

Eco-Labels that Follow Best Practices

Coffee/Tea/Cocoa: UTZ Certified

Paper/Forest Products: Forest Stewardship Council

Seafood: Marine Stewardship Council

Sugarcane: Bonsucro

Carbon Emissions: Enviro-Mark Solutions

Fruits/Vegetables: Linking Environment and Farming (LEAF)

Hamish van der Ven is an Assistant Professor in the Department of Political Science and School of Environment at McGill University and the author of Beyond Greenwash: Explaining Credibility in Transnational Eco-Labeling (Oxford University Press, 2019).

The post What’s in a label? Separating credible eco-labels from “greenwash” appeared first on Corporate Knights.

I don’t think there’s a more iconic Easter treat than Cadbury Creme and Mini Eggs. Just seeing the packaging gives me a sugar high. Cadbury is a British confectioner that was bought by American food conglomerate Mondelez International (MDLZ) in 2010.

In 2016, Cadbury made the controversial announcement that it would be removing the Fairtrade logo from the front of its certified brands and replacing it with Mondelez’s in-house Cocoa Life program. While Cocoa Life claims it pays farmers at least as well as Fairtrade requires, questions linger about how stringently its internal guidelines will be applied. For its part, the Fairtrade Foundation says it remains an “implementing partner” and that FLOCERT (Fairtrade’s independent assurance and certification body) will continue to independently verify the supply chain of Cocoa Life as the program grows.

According to Mondelez’s Impact for Growth 2017 Progress Report, 35% of Mondelez’s cocoa was ‘sustainably sourced’ under the Cocoa Life program and the shift from Fairtrade to Cocoa Life covers five times the amount of cocoa previously certified Fairtrade.

While third-party seals have faced their share of criticism for not doing enough to improve the lives of farmers, industry watchdog Fair World Project isn’t impressed with the trend in leading manufacturers moving to self-certification, arguing that it leads to uneven standards, undermines consumer confidence and encourages “fairwashing.”

A fairwashing scandal could trigger a public relations nightmare, and I’d expect the stock to decline in that scenario. For now, I’m happy to see that Fairtrade is still working in partnership with Mondelez and produces an Annual Partnership Statement, but sustainable investors need to keep an eye on Mondelez.

Beyond ditching the Fairtrade logo, Mondelez has been slammed for its deforestation practices. Back in November, Greenpeace issued an entire report dedicated to Mondelez’s troubled palm oil sourcing called ‘Dying for a Cookie – how Mondelez’s dirty palm oil is driving the climate and extinction crisis.’ Greenpeace says that between 2015 and 2017, 22 of Mondelez’s palm oil suppliers cleared over 70,000 hectares of rainforest and almost 25,000 hectares of that was orangutan habitat. With lacklustre performance on other sustainability indicators,  Mondelez only gets one star.

We looked far and wide for the most sustainable chocolate company, but the companies doing really cool things are all either co-ops or private companies. Since we can’t invest in those, we decided to look at Swiss chocolatier Lindt & Sprungli (LISN). Lindt won the Good Egg Award from Mighty Earth in this year’s Easter Chocolate Shopping Guide as the chocolate company with the greatest improvement in sustainable policies.

Lindt also uses an in-house program called the Farming Program to measure progress on social and environmental impact. I’m impressed by their commitment to transparency with 79% of the cocoa beans in their supply chain both traceable and verified by The Earthworm Foundation, up from just 32% in 2015. However, like Mondelez, it doesn’t guarantee a minimum price to farm workers or use third-party labour or environmental certifications, which explains its lack of points for Clean Revenue (below).

Both companies are similar from an investment standpoint. Mondelez is much larger and more diversified, although they both have similar risk and return profiles. This week’s Sustainable Stock Showdown is practically a coin toss, although I’d give it to Lindt by a bunny’s whisker.

Either way, I’m going to satisfy my ‘hair of the rabbit’ craving by supporting Camino, a Canadian chocolate co-op with products that are certified as both organic and fair trade.

Have a company in your portfolio that you want to replace with a more sustainable option? Write us an email or tweet us!  

Tim Nash blogs as The Sustainable Economist and is the founder of Good Investing. Tweet him at @timenash.

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Lindt. Nestlé. Toblerone. Villars. Frey. Favarger. Cailler. The list goes on. And in places such as Geneva, the chocolate isn’t just for eating. Several spas in the country let clients bathe in a bubbling tub of liquid chocolate, no doubt a sold out offering on Valentine’s Day.

Chocolate, quite simply, is at the heart of Switzerland’s international brand and reputation as a global commodities hub. The Swiss are the biggest per-capita chocolate eaters in the world, with each citizen consuming 12 kilograms of the treat annually – about the weight of a large cocker spaniel, and nearly twice as much as the average Canadian.

But the luxurious days of bathing in a plentiful pool of chocolate may be coming to an end if predictions of a global cocoa supply shortage within the next five years come true. Last fall, Swiss-based cocoa manufacturer Barry Callebaut warned of the potential crisis – a big deal, considering the company processes nearly a quarter of the world’s cocoa beans. Company chief executive Juergen Steinemann called it a “serious concern” for the $117 billion (U.S.) global industry.

Two years earlier, the world’s largest chocolate maker, Mars, sparked anxiety among chocolate lovers when it said the industry could face a million-tonne shortage of cocoa by 2020. It also drew attention to the economic and environmental pressures faced by cocoa farmers at a time when demand for chocolate, particularly in developing countries such as China, India and Russia, is expected to grow by 30 per cent within the same timeframe. “It’s just not sustainable,” the U.K. president of Mars said.

To be clear, it’s not like Valentine’s Day will come to a sobbing halt, or for that matter Easter – which by the way is the top-selling chocolate occasion. It means that as demand rises and supply struggles to keep up, the amount and quality of cocoa in what we call chocolate will decline, replaced by imitation fillers. Alternatively, the price of higher-quality chocolate is expected to rise sharply.

A need for sustainable approaches

Switzerland is an interesting case study when it comes to rethinking the way the chocolate industry operates and interacts with cocoa suppliers.

Côte d’Ivoire and Ghana are the biggest cocoa suppliers in the world, representing 36 per cent and 22 per cent of global supply, respectively. They’re also the two biggest suppliers to Switzerland.

“Both face production bottlenecks that threaten cocoa exports in the coming years,” according to the Earth Security Index 2015, a report put out by London-based consultancy Earth Security Group.

“Swiss-based multinationals must go beyond traditional development and CSR approaches to think more creatively about business model innovations that will help smallholder farmers capture more value from the global chocolate market.”

There are many reasons for the bottlenecks in Côte d’Ivoire and Ghana. As Earth Security’s report points out, cocoa trees planted a quarter century ago have hit their production peaks and the land they grow on is no longer as fertile as it once was. “Without large-scale rehabilitation of land and trees production is likely to drop.”

Climate change is also taking its toll, and will continue to do so. Rising temperatures and changing rainfall patterns are affecting the availability of suitable land for growing cocoa trees and increasing the risk of disease.

The bottom line: it’s hard these days to farm cocoa, let alone eke out a living, with roughly 90 per cent of world supply grown on relatively small, family-owned plots. Most farmers are operating well below the line of poverty, forcing them to rely on child labour to lower costs. Alternatively, they abandon cocoa altogether in pursuit of more profitable crops, such as rubber or palm oil.

“Chronic poverty and poor labour conditions are driving an exodus from cocoa farming, just as a new generation of farmers must take the reins of production,” the report states.

The industry hasn’t been blind to these problems. In fact, it has taken some important actions. The largest 13 cocoa-dependent companies have invested hundreds of millions of dollars on sustainability programs, and through an initiative called CocoaAction, have worked with the World Cocoa Foundation to support thousands of farmers.

But efforts so far don’t go far enough. This has many industry observers calling for more innovative approaches, which some smaller and newer chocolate makers are proving can work. London-based Divine Chocolate, for example, has emerged as a successful fair-trade chocolate company that shares ownership directly with the cocoa farmers it relies on.

The company was founded in 1998 as a partnership between Twin Trading, a U.K. fair trade company, and the Kuapa Kokoo cocoa farmer cooperative in Ghana. Cooperative members collectively owns 45 per cent of Divine Chocolate and, on top of being suppliers also get a dividend from the company’s profits. The company, which counts Body Shop among its investors, also devotes 2 per cent of its revenues to farmer education.

Earth Security says this kind of increased integration with farmers is proving so far to be a sustainable model that’s driving positive change in the industry. “However, in order to reach the needed scale, similar innovations must be replicated by the larger players in the industry.”

The value of certification 

For now, the approach to sustainable cocoa production – and specifically, to combat forced and child labour – has been through compliance with sustainability standards, which have experienced strong growth over the past few years. There are four major standards that dominate the cocoa market:

• The Rainforest Alliance Certified seal assures that the cocoa has been grown and harvested using environmentally and socially responsible practices.

• Fairtrade-certified cocoa assures that no forced or child labour is used by cocoa farms, no agrochemicals are used, and that farmers, through membership in a local cooperative, never get paid less than the minimum floor price for cocoa, which assures they make a profit and don’t get taken advantage of by intermediaries.

• Organic-certified cocoa must be produced using natural methods, meaning farmers must adhere to a regime of regular crop rotation that relies on manure fertilization. This assures growing soil remains healthy and productive. Needless to say, no synthetic or toxic pesticides are permitted.

• UTZ Certified farms must used responsible agricultural practices, have a safe and healthy work environment, never use child labour, and meet a minimum standard for environmental protection.

These voluntary sustainability standards first began to appear in the late 1980s, but started to build some serious momentum in the late 1990s. Growth is expected to build, given that major chocolate companies Hershey’s, Ferrero and Mars, together representing nearly half of the confectionary market, have said they will source all of their cocoa supply sustainably by 2020. Which standard they will adhere to, however, is unclear.

To date, the most successful has been the UTZ Certified standard, which represents nearly 15 per cent of the share of global cocoa production, followed by the Rainforest Alliance certification at about 10 per cent. Organic and Fairtrade are far less popular, both sitting at 3 per cent of global production. This is likely because of the higher premium they fetch for farmers. For example, the premium for UTZ Certified cocoa is around 5 per cent, compared to about 18 per cent for organic cocoa.

That said, both organic and Fairtrade cocoa have experienced rapid growth over the past few years. The International Institute for Sustainable Development predicts that Fairtrade certification will continue along this trend, “particularly in light of public commitments by Cadbury and Hershey’s to source Fairtrade cocoa in the coming years, which will likely lead to reductions in the gap between supply and demand in the coming decade,” according to its State of Sustainability Initiatives Review 2014.

Certification may not be a panacea, but industry watchers say it’s a laudable start, perhaps paving the way to more creative business models like that pioneered by Divine Chocolate. Other attempts at addressing a feared cocoa shortage involve genetically modifying cocoa plants to grow in harsher conditions, resist pests and disease and increase their yield.

This may be part of the answer, but beyond concerns about the safety and health issues related to GMO products, the bigger worry for chocolate makers and lovers is that these new super-variety of plants will produce inferior tasting chocolate, the same way GMO strawberries – while larger and more robust – tend to be flavourless and lacking in the rich redness of wild strawberries.

As you savour chocolate treats this Valentine’s Day, ask yourself: How much flavor are you willing to sacrifice? And how much more would you be willing to pay for sustainably grown cocoa and responsibly produced chocolate to satisfy your chocolate cravings?

One thing is for sure: bathing in chocolate in Geneva is going to get mighty expensive.

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In the 1980s, thousands of indigenous peasants like Chavez were forced to leave their homes and farms because of Peru’s civil war, coupled with an agricultural crisis and job shortages. Some of these internal refugees set up shop in abandoned mines, or areas where gold had already been discovered. Their equipment was rudimentary and conditions were precarious.

When Chavez began excavating at what is now the Santa Filomena mine, there were no roads and miners had to walk to the site, carrying heavy barrels of water on their backs. They descended 4,000 to 5,000 metres below ground, lugging the heavy mineral up on their backs.

“The search for work turned us into adventurers,” says Chavez with pride. “The physical exertion was tremendous. It was quite a sacrifice.” Even today the majority of Peru’s estimated 30,000 small-scale miners face abusive labour conditions, health problems from handling toxic chemicals and exploitation from gold buyers, bosses and labour traffickers.

But Chavez is now one of the happy exceptions: He belongs to a cooperative of about 900 artisanal miners who have formed their own company, called Sotrami. With help from non-profits, the company has brought in strict environmental, labour and human rights standards. In 2012, thanks to these reforms, Sotrami became Peru’s first mine to earn Fairtrade and Fairmined certification.

Certification allows indigenous miners to use their natural resources in a sustainable manner while earning extra profits on their gold, which are invested in community development projects. And it provides jewellers and consumers with the guarantee that they’re purchasing gold that has been mined with respect for the environment and human rights.

Tarnished past

Gold has come under attack in recent years as the new ivory or baby seal skin – blamed for fuelling a bloody, decades-long war in the Democratic Republic of Congo, for deforesting the Amazon rainforest and for displacing and exploiting indigenous communities around the globe.

Reality is not so black and white. According to Fairtrade International, about 100 million people worldwide earn a living from artisanal and small-scale mining. Although artisanal miners produce only about 10 per cent of the world’s gold each year, they make up about 90 per cent of the workforce in gold mining, providing important financial support for their families.

But large-scale gold mining by transnational corporations has eliminated jobs by using high-tech machinery, depriving local indigenous communities of employment. Profits typically end up in foreign bank accounts, and most supporting services such as equipment repair and hotels are handled by outsiders. Across the globe, indigenous people are demanding the right to control and benefit from their natural resources, including mineral rights.

Some people within the jewelry industry have been listening. Greg Valerio is one of the founders of Fair Jewelry Action and has been calling for certified gold since the mid-1990s. At that time, most industry people said it would be impossible to certify gold because once it is melted down, it’s very hard to know where it originated. “I challenged the jewelry industry,” says Valerio. “They told me: You are mad, go away, you’re wasting your time and you’re wasting your breath.”

Responsible mining

But the stubborn Brit continued his quest. In 2003 he met people from the Oro Verde mine in Colombia. This cooperative, run by local Afro-Colombians in a fragile ecological zone, was producing gold using chemical-free methods passed down by their ancestors, such as panning for gold in riverbeds. Certification didn’t exist yet, but Valerio took a gamble and marketed “green gold” wedding rings from Oro Verde, with instant success.

“The jeweller met the miner and bingo, we proved you can have certification in mining,” says Valerio. “You can trace where your gold came from, and you can turn it into a product and sell it to a customer at a premium.”

The following year, Oro Verde workers, Valerio and other like-minded people, non-profits and miners joined forces to create the Alliance for Responsible Mining (ARM) to develop the world’s first third-party certification for small-scale mining. Fairtrade International joined the initiative and in 2011 certified gold was launched in the U.K. and Canada. Last year, the two certifiers went separate ways, creating two labels: Fairtrade gold and Fairmined gold by ARM.

“It’s been a long process,” says Manuel Reinoso, vice-chair of ARM’s board of directors. The gregarious Peruvian is also an indigenous artisanal miner, with large muscular arms from a lifetime of manual labour.

Small-scale miners like Reinoso have a long history of clashes with the corporate mining industry. Peru’s trade union representing large-scale miners has called on the government to take a hard line against illegal miners who don’t pay taxes and aren’t subject to environmental regulations. In a published editorial, the union accuses illegal miners of “deforestation, pillaging, tax evasion, corruption and quasi-slavery labor tactics.’”

New narrative

But certification changes the narrative. It requires small-scale miners to become legal operators – a step the corporate mining industry applauds. However, Reinoso and others admit that certification is still in its infancy and the majority of artisanal miners around the world still operate outside the law. One of the problems, says Reinoso, is that many national governments have set up bureaucratic obstacles to legalization, with excessive steps and paperwork that most artisanal miners can’t afford to complete.

On the other side of the spectrum, environmental groups have also viewed certification with some criticism. “The efforts to improve the safety performance and wages for small-scale miners are very important and laudable steps in the right direction,” says Payal Sampat of Earthworks, a U.S.-based environmental group. But that doesn’t address environmental risks, says Sampat, who has been calling on certification initiatives to set a firm timeline for phasing out the use of mercury and toxic chemicals by many small-scale mining operations. “The footprint of these mines is going to expand as certification systems become more successful, and some of these are inside protected areas and ecologically sensitive areas.”

Certification currently allows the use of mercury and cyanide, but miners must follow best practices, using the most environmental technology available. Fairtrade has also created a special label called “ecological gold” for mining processes that don’t use chemicals. This gold fetches a higher price for miners.

In Africa, ARM has joined forces with the Artisanal Gold Council, a Vancouver-based non-profit, to set up pilot projects using a chemical-free processing system. Their first training centre is already operating in Burkina Faso on an artisanal mining site of about 3,000 miners.

“The miners are really interested in the technical issues, in improving productivity,” says Yves Bertran Alvarez, ARM’s project manager. “Right now they’re losing a lot of gold through inefficient mining, so it means more gold for them.” He says that earning Fairmined certification will also mean increased profits for the miners, along with improved health and safety conditions.

If the project takes off, this could have major implications for Burkina Faso, a country with 200,000 small-scale miners and up to a million people earning a living from mining-related industries. And ARM is working on similar pilot projects in Senegal and Mali.

Growing pains

But as the fledgling certification movement grows, divisions have also emerged. In 2012, ARM forged an alliance with the Responsible Jewellery Council (RJC), an organization that certifies some of the jewelry and mining industry’s largest corporations, assuring consumers that their products are environmentally and socially responsible.

Over 150 jewellers and citizens signed a letter opposing the partnership, including Valerio, one of ARM’s founders. Many opponents felt that ARM should not join forces with large corporate interests, and that the organization’s strength was in remaining independent, small and community-based.

The RJC has also been tarnished by criticisms from environmental groups. Three of its members – major Swiss gold refineries – have been accused of purchasing illegal gold linked to the civil war in the Democratic Republic of the Congo and deforestation of Peru’s Amazon.

Those in favour of the RJC partnership say it will allow small-scale miners to sell to large refiners, providing them with a bigger market and integrating them into the global mining sector. But the move has led some ethical jewellers, such as Marc Choyt, to bypass ARM’s Fairmined label and go instead with Fairtrade.

Choyt is president of Reflective Images, a designer jewelry company in Santa Fe, New Mexico. He now buys his gold from Sotrami, the cooperative where Chavez works in Peru.

“In our society, people buy jewelry for symbolic, highly emotional reasons, like commitments and marriage,” Choyt says. “But the materials used in these products are resulting in toxic mercury poisoning and destruction of rainforests and indigenous culture. With Fairtrade gold, we’re trying to create a parallel economic model, something different.”

The choice is ultimately up to consumers. A wedding ring can hold the tears of indigenous peoples who have been displaced from their ancestral lands, or it can represent a more hopeful story: the struggle of indigenous miners around the world to rise out of poverty, and the risk taken by ethical jewellers to invest in a sustainable, more responsible world.

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