Scaling Sustainability: Why Certifications, Premiums, and Labels Won't Solve our Problems
Houston, we have some problems in the food and ag sector. Equity and Access. Climate. Human Rights. Biodiversity. Governance and Trade. Animal Welfare. Productivity. None of these issues are new. The more I read and dig, the more I realize the roots of these challenges go back centuries, not just decades as is the common WWII trope in many sustainable ag circles. There is also no shortage of certification schemes and labels that aim or claim to address one or more of these. I’m not going to name names, but there are MANY. I appreciate these efforts. I spend extra money to support many of them. They adorn the coffee, flour, and canned fish in my pantry. They’re stamped on the milk and tofu in my fridge and the meat in my freezer. But, will they save our collective behinds from our biggest problems?
Uh, no. Nope. Most definitely not.
Why?
Scale. Systems. Stakeholders.
Is there any hope?
Yes - but we need scalable, systemic changes, accessible and inclusive of ALL stakeholders. No specialty niche, no matter how mature, is going to get us where we need to go.
Okay, so let’s back up and unpack each of these to sketch out some possible paths. As seems to be a frequent mantra of mine with clients, I’m not here to wring hands: let’s focus on solutions.
Scale. Gosh, I have a love-hate relationship with that word. Having worked in the start-up space, I’ve heard it so much that the mere sound or sight of it makes me physically recoil and cringe. Yet, for all its use and over-use, it is a critical and under-appreciated concept. Before we can scope any solution, we must understand the scale of the problem relative to the scale of projected impacts. The problems I think about most in my day-to-day this quarter are climate change; illegal, unregulated, and unreported (IUU) fishing; and food borne illnesses. While these issues might sound unrelated and widely divergent, grappling with all three simultaneously has actually shown me how they are all global, massive-scale issues in terms of impact and importance that result from the sum of trillions of tiny individual-scale actions, largely at the primary production/raw materials end of the supply chain.
Certifications, Premiums, and Labels, Oh My!
The preponderance of labels on food packaging these days can be overwhelming. What do they all mean? Why are they all there? Are they really on everything?
While there have been tremendous growth rates in many eco and social labels on foods, the absolute scale of any of the labeling programs remains relatively small overall, even within particular segments. They are typically understood to mean enhanced environmental and/or social impact, paired with premiums of 5-300% for differentiation, depending on the product and stage of the supply chain. Organic, one of the best known labels has seen tremendous growth over the past 2 decades, but remains a single-digit sized segment of the consumer-side food market in the US. On the production-side, it is an even smaller segment with less than 1% of cropland and 0.5% of pastureland certified. Imports and the substantial portion (~40%) of US cropland devoted to non-food and non-direct food uses explain the production and consumer size scale mis-match. On the seafood side, MSC is most prominent, but still only accounts for around 15% of the market. So while many of these labels purport to convey superior impact, none are currently operating at a scale relevant to the scale of the issues they strive to influence. Further, their very nature as premium is at odds with their achievement of sector-wide impact (growth undermines the premium, which limits expansion, and thereby impact).
IUU Fishing - A large-scale, Systemic Problem
Like land based agriculture, the seafood sector suffers from many of the same systemic challenges related to consolidation, worker exploitation, and governance. IUU fishing, an emergent issue that is arguably the result of strong price pressure and weak governance, is the source of about a third of the global catch. A recent report out of the Coastal Resources Center estimated the extent of IUU fishing in the Philippines could be even greater, at 30-50% the volume reported by the Philippine Statistics Authority in 2019. These statistics illustrate the scale of the issue is quite large, with correspondingly significant consequences for the ecological, economic, and social health of fisheries and their fishers. Sustainability certifications promise to address these challenges by offering additional due diligence on these actors, with great success in the marketplace. Of all ecolabels, seafood has possibly the greatest success, with nearly 15% of seafood sold certified under the MSC label.
Great, right? Just needs more time?
Not necessarily.
Certification in the seafood space is a costly endeavor that, despite marketing that touts impacts on small-scale or marginalized actors, tends to exacerbate existing inequities. Rather than lifting all boats, these label-based schemes lift only the largest boats or those that were already most successful. As a current project collaborator from the Philippines noted on our call last night, “it’s just not going to help very many of the fishers.” Therein lies the central problem with approaches that hinge on differentiation for value delivery - they exacerbate rather than alleviate inequities that lie at the root of IUU fishing. Market-based “solutions” share this all share this Achilles heel. While they may be useful in testing the efficacy of an approach at a scale larger than an entity, by virtue of their value-add nature they do not offer a solutions at a sector-wide scale.
To truly “solve” a problem, we need sector-wide change and action that is reinforced by eliminating market access for the non-compliant. These changes must become standard business practices that fit within a non-premium based cost framework. Downstream actors who stand to lose the most market share or brand value when investigations reveal unsavory labor or environmental impacts in their supply chains also have the greatest leverage to enact durable change. Through initiatives like the Global Dialogue on Seafood Traceability’s standards and emerging digital platforms and solutions for recording and transmitting data across supply chains, downstream actors can collaboratively work with fishers to document their catches and root out IUU fishing by cutting off market access. It is only through a multi-stakeholder approach that acknowledges the systemic nature of this challenge, and requires a change in routine business practices across all actors without the expectation of a premium, that we will overcome the IUU issue.
Climate Change - Another worsening, Systemic issue
Climate change continues to loom large and, despite our brief Covid-related blip, global emissions are not on the necessary trajectory. Rather than decreasing, they were up 2% December 2019 to December 2020. As we’ve come to appreciate the frequency, scale, and cost of events and trends attributable to the warming we’ve already experienced, the urgency and ambition of action required has only intensified. Scientists, policy makers, and increasingly business leaders have aligned on the target of halving emissions by 50% by 2030 and achieving net zero by 2050.
Food and agriculture has been and continues to be a major contributor to greenhouse gas emissions, from both a global and domestic perspective the sector is responsible for roughly a third of emissions (21-37%). These emissions stem from 3 primary buckets: nitrous oxide from cropland soil (>50% of sector emissions), methane from ruminants and rice (40% of sector emission), and carbon dioxide from land use change (10% of sector emissions). Wait, some of you might be saying, what about SOIL CARBON sequestration. Welp, that’s complicated, but the big picture at present consists of the 3 items listed above and you’ll note soil carbon sequestration is not currently tipping the scales. In fact, ag soils are net sources of greenhouse gas emissions globally and domestically, thanks to the nitrous oxide emissions and carbon dioxide emitted from recently cleared lands.
Much like global emissions that continue heading in the wrong direction, ag sector emissions, particularly in the US have increased 10% between 1990 and 2018. This increase is primarily attributable to increases in cropland nitrous oxide emissions due to increase in fertilizer applications and a nearly 60% increase in the amount of nitrous oxide and methane emissions from shifts to liquified manure storage systems. Global ag sector emissions have also increased, although the split is different, with more of the increase attributable to land clearance and land use change (e.g., forest to pasture or cropland and pasture to cropland). Those shifts result in emissions as carbon stored in the trees and soils is released to the atmosphere.
Accounting Considerations. It’s also important to note the IPCC does not account for the emissions associated with manufacturing agricultural inputs or fuel combustion on farms within the agriculture sector. Those activities are associated with significant emissions, but they are accounted for under the industrial and transportation sectors in the global accounting framework. This creates some apples to oranges challenges when trying to compare entity-level emissions to the global picture, since businesses account for scope 1 (direct combustion) and scope 2 (emissions associated with electricity and heat generation) first, meaning ag businesses are working on emissions that are material to them at an entity scale, but irrelevant to progress on the sector level due to the accounting methodology. That doesn’t really matter in the big picture (we all share one atmosphere), but is an important methodological consideration.
So, what are the key take homes of this climate-scale discussion?
The scale of the climate problem is large and growing more rapidly now than it was 1970-2000.
The problem is diffuse and the result of many small actors.
What’s material at the corporate scale differs from what is material at the sector scale.
From a US perspective, nitrous oxide from soil and methane from ruminants, manure, and rice dominate the greenhouse gas emission picture for ag.
Globally, land use change is the third wheel on this wagon of doom.
The necessary scale of climate action is 50% reduction by 2030 (relative to 2010) and net zero by 2050.
Ok, great, Alison. How again is it that climate action in ag relates to IUU eradication in seafood or food safety?
These problems are all currently driven or at least exacerbated by disconnections. Disconnections between scale of the problem and the scales of the solutions being proposed. Disconnections between food producers (farmers and fishers) and downstream parties (everyone - processors, manufacturers, distributors, retailers, the eaters). But, I see hope in democratized, digital data capture at the start of supply chains. Aggressively pursuing and enhancing access to this technology - making it accessible to farm workers and fishers via smartphone apps or even text could empower them and the system to overcome some of our most intractable challenges. Cross-stakeholder connections via digital traceability are key to universal improvements in the food and ag space. Without this infrastructure, we will continue to flounder in a blurry abyss of obscurity. If we can’t answer who grew it/caught it and where, how will we answer how it was grown, whether it was caught legally or by forced labor, and what it’s resulting footprint was?
I’m still working all of this out in my own head, and as I continue working through projects on these topics for clients. But, as this quarter draws to a close, I have hope that there may be hope in addressing our most intractable challenges through better, more equitable deployment of technological tools to create a transparent and traceable framework for our food an ag sector. Such a framework would enable progress on many of these fronts - climate, food safety, and IUU fishing for starters.
Thanks for reading - and feel free to shoot me an email if you have feedback. alison@growwellconsulting.com
