Voluntary Sustainability Research Articles

Voluntary Sustainability Report Assurance by the Fortune 100

Voluntary Sustainability Report Assurance by the Fortune 100

Life cycle assessment research and application in Indonesia

This paper presents a review of the research and application of life cycle assessment (LCA) in Indonesia over the last 20 years and analyzes challenges and opportunities for future development. The study assessed 107 peer-reviewed scientific publications on LCA about Indonesia or written by authors affiliated with institutions in Indonesia. Relevant programs and recommendations to advance LCA adoption were elaborated. The first paper on the subject of LCA appeared as early as in 1996, while the number of publication significantly increased since 2010. The majority of these articles came from universities, research institutions, and international organizations. Drivers were mainly related to product competitiveness aiming to fulfill sustainability requirements of the global commodities market. Government policies also played an essential role in many aspects, including a reduction in greenhouse gas emissions, sustainable consumption and production, green public procurement, eco-labeling, and green industry. Simultaneously, life cycle thinking has been embraced by governments and industries, especially with an immediate increase in the number of organizations implementing the recent version of ISO 14001. Increased participation in voluntary sustainability reporting also provides evidence of the prevalence of the sustainability concept. We believe that this development can serve as an essential step toward the spread of LCA studies in the future. Furthermore, the recent adoption of ISO 14040/44 as national standards in 2016/2017 also marked the commitment of Indonesian governments in LCA and is expected to stimulate the adoption of LCA-based environmental labels, such as carbon footprint, environmental product declaration, and product environmental footprint. The research and application of LCA in Indonesia are still in its infancy, as partly proved by a relatively small number of publications as compared to some other Southeast Asian countries. However, there was a notable increase in publication over the last 5 years, indicating a growing interest in LCA, mainly from academics and to less extent from private sectors. Although LCA has not been explicitly formulated in the national strategies and legislation, Indonesian governments do require life cycle thinking to inform policy-making. Nevertheless, the lack of incentives for green products, LCA programs, LCA expertise, and localized inventory data hampers its implementation. In the future, improvement should focus on LCA capacity building, the establishment of a forum to communicate LCA studies and resources, development of national life cycle inventory databases, and provision of market incentives for green products.

Credibility of sustainability reports: The contribution of audit committees

AbstractConcerns about the credibility of sustainability reports can be mitigated through assurance. Although audit committee remit encompasses monitoring of sustainability issues, there are potential complementary and substitution issues between governance mechanisms. This paper explores the relationship between audit committees and sustainability reporting assurance using resource dependency theory. We find audit committee characteristics have an impact, additional to that of the board of directors and the existence of sustainability committees, on voluntary sustainability assurance. Our results also show that audit committee independence is associated with use of a Big Four audit firm for sustainability assurance. A negative association between sustainability committees and assurance, however, indicates assurance could be a burden for small firms. Overall, the findings suggest audit committees add credibility and help improve sustainability reporting through their independence, expertise and oversight.

Governance Options to Enhance Ecosystem Services in Cocoa, Soy, Tropical Timber and Palm Oil Value Chains

Dutch policies have advocated sustainable commodity value chains, which have implications for the landscapes from which these commodities originate. This study examines governance and policy options for sustainability in terms of how ecosystem services are addressed in cocoa, soy, tropical timber and palm oil value chains with Dutch links. A range of policies addressing ecosystem services were identified, from market governance (certification, payments for ecosystem services) to multi-actor platforms (roundtables) and public governance (policies and regulations). An analysis of policy narratives and interviews identified if and how ecosystem services are addressed within value chains and policies; how the concept has been incorporated into value chain governance; and which governance options are available. The Dutch government was found to take a steering but indirect role in all the cases, primarily through supporting, financing, facilitating and partnering policies. Interventions mainly from end-of-chain stakeholders located in processing and consumption countries resulted in new market governance, notably voluntary sustainability standards. These have been successful in creating awareness of some ecosystem services and bringing stakeholders together. However, they have not fully addressed all ecosystem services or stakeholders, thus failing to increase the sustainability of value chains or of the landscapes of origin. We argue that chains sourced in tropical landscapes may be governed more effectively for sustainability if voluntary, market policy tools and governance arrangements have more integrated goals that take account of sourcing landscapes and impacts along the entire value chain. Given the international nature of these commodities. These findings have significance for debates on public-private approaches to value chain and landscape governance.

Explaining New Models of Global Voluntary Regulation: What Can Organisational Studies Contribute?

AbstractGlobal governance in its myriad forms and actor constellations has decisively demonstrated the potential for rule‐making above the nation state to be liberated from the ‘iron cage’ of traditional intergovernmental forums and multilateral bureaucracy. To further investigate an increasingly complex global reality, we propose drawing on organisational theories and methods for penetrating the internal dynamics of global governance processes and outcomes. This article begins by mapping out the current use of organisational theories in global governance research. It then turns to exploring the potential for other areas of organisational theory and conceptual development to shed light on the governance dynamics and performance of voluntary sustainability standards (VSS), a significant site of transnational rule‐making and experimentation by private actors. We highlight a paradigmatic shift from ‘arms‐length’ to ‘embedded’ models of VSS monitoring and regulation, reflected in new modes of engagement and interaction between rule‐makers and rule‐takers. This new generation of embedded VSS governance is distinguishable by enhanced information provision, learning and knowledge creation. The implications of embedded governance for VSS monitoring and performance are explored with reference to the experience of the Fair Wear Foundation (FWF).

Challenges and Opportunities for the Sustainability Transition in Global Trade (Introduction)

In this special issue, we explore the challenges and opportunities arising with respect to normative goals of shifting production and international trade in agriculture towards greater sustainability. Private voluntary sustainability standards have experienced substantial growth in various global markets, reaching 40% of global coffee production, 25% of cocoa, and 15% of palm oil1. Given the rapid expansion of private standards, whether third-party certifications, corporate codes of conduct (Vermeulen 2010), or ‘newer’ regulatory approaches such as multi-stakeholder initiatives, public-private partnerships, and efforts to develop new sustainable business models, it is important to consider what such approaches offer. All of these approaches are seeking to contribute, at differing levels of ambition, towards a sustainability transition.

The Effect of Sustainability Assurance Demand on Information Asymmetry: Evidence from French Companies

The purpose of this paper is to examine whether voluntary demand for sustainability reporting assurance by French companies is associated with lower information asymmetry. The use of the generalised least squares method (GLS) for a sample of 768 firm-year observations of French companies belonging to the SBF 250 and CAC All-Tradable indices during the period 2010-2012, highlights how voluntary sustainability assurance demand reduces the problems of asymmetric information between the different market agents. To our knowledge, this study is the first that has examined the impact of sustainability assurance on the information asymmetry in code-law countries, with low investor protection rights, such as France. Moreover, this research examines the effect of sustainability reporting assurance on information asymmetry measured by bid-ask spread. In addition, this study makes a link between two important areas of sustainability assurance and finance.

An Analysis of Oil & Gas Company Disclosures from the Perspective of the Task Force on Climate-Related Financial Disclosures

We conducted a type of “field experiment” to evaluate how difficult it will be for companies to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) published in June of 2017. These recommendations are based on the four categories of governance, strategy, risk management, and targets and metrics. Beneath these are 11 more detailed recommendations. We selected an industry that will be especially challenged by these recommendations — oil & gas. We examined the disclosures of 15 of the largest oil & gas companies by market cap that had filed a 10-K or 20-F in 2016, so before the TCFD’s recommendations were published. We also examined their sustainability reports. Our reasoning was that if companies were already doing a reasonable amount of disclosure before these recommendations were published, then it would be more feasible to implement the TCFD’s recommendations than if virtually no related disclosures were being made. In general, we found reporting for that year uneven, with some TCFD categories fairly well covered and others not. We also found variation across companies, with most making fairly modest disclosures but some being fairly progressive in this regard. Significantly, we also found that most of the disclosures were in voluntary sustainability reports, not the financial filings required by statute and as recommended by the TCFD. Taken in the aggregate, at least one company was reporting on each of the 11 recommendations with one exception. This suggests that it is feasible for companies in this sector to follow the TCFD’s recommendations if they are interested in doing so.

Dispute Settlement for Labour Provisions in EU Free Trade Agreements: Rethinking Current Approaches

While labour provisions have been inserted in a number of EU free trade agreements (FTAs), extant clauses are widely perceived as ineffective. This article argues that there is a need to rethink the dispute settlement mechanisms related to labour provisions if their effectiveness is to be increased. It proceeds in three steps. First, we look at the current state of the art of labour provisions in EU FTAs in terms of legal design and practice and argue that the current arrangements are ill-equipped to foster compliance with labour standards. Second, we explore avenues to enhance the design of FTA labour provisions by reconsidering basic elements of the dispute settlement structure. Examining US FTA labour provisions, we highlight the importance of a formal complaint mechanism, on the one hand, and the availability of economic sanctions, on the other. Based on a review of existing practice, we contend, however, that these elements alone are not sufficient to effectively enforce FTA labour provisions. We argue that for FTA labour provisions to be effective, the current state-to-state model of dispute settlement needs to be complemented by a third-party-state dimension and that, additionally, there are good reasons to consider a third party–third party dispute settlement component. We ground these reflections in experiences with already existing instruments in other areas, namely investor-state dispute settlement and voluntary sustainability standards. Thirdly, we discuss options to better connect the dispute settlement mechanisms of FTA labour provisions to other international instruments for labour standards protection with a view to creating synergies and avoiding fragmentation between the different regimes. The focus here is on the International Labour Organization’s supervisory mechanism and the framework of the OECD Guidelines for Multinational Enterprises.

Where are commodity crops certified, and what does it mean for conservation and poverty alleviation?

Voluntary sustainability standards have expanded dramatically over the last decade. In the agricultural sector, such standards aim to ensure environmentally and socially sustainable production of a variety of commodity crops. However, little is known about where agricultural certification operates and whether certified lands are best located for conserving the world's most important biodiversity and benefiting the most vulnerable producers. To examine these questions we developed the first global map of commodity crop certification, synthesizing data from over one million farms to reveal the distribution of certification in unprecedented detail. It highlights both geographical clusters of certification as well as spatial bias in the location of certification with respect to environmental, livelihood and physical variables. Excluding organic certification, for which spatial data were not available, most certification of commodity crops is in tropical regions. Certification appears to be concentrated in areas important for biodiversity conservation, but not in those areas most in need of poverty alleviation, although there were exceptions to each of these patterns. We argue that the impact of sustainability standards could be increased by identifying places where it would be most beneficial to strengthen, consolidate, and expand certification. To achieve this, standards organizations will need to undertake more rigorous collection of spatial data, and more detailed analysis of their existing reach and impacts, with attention to potential trade-offs between different objectives. Efforts to promote spatial prioritization will require new partnerships to align specific conservation aims with the interests and capabilities of farmers.

Sustainability Reporting Practices: Evidence from Bangladesh

The objective of this paper is to examine the nature and extent of sustainability reporting practices by the listed companies in Bangladesh. In order to fulfill this objective, the research has examined the content analysis of annual report (2015-2016) and website of the top 50 listed companies (according to market capitalization). Based on Global Reporting Initiative (GRI) G4 guidelines, the study investigates three broad areas i.e. economic, environmental and social with 40 indicators. The findings of the study demonstrate that organizations in Bangladesh address few sustainability issues. Companies focus more on community development which is 90%, followed by employment and employee benefits (67%). The level of disclosures in website is meagre where only 26% of the sample companies disclose at least one indicator. Organizations’ attention on issues like environment, human rights and product responsibility is limited in relation to other issues. The extent of disclosure is also poor that is 66% of the companies use less than 25 sentences in sustainability reporting. Moreover, only 16% of the sample companies use separate sustainability reporting section. The limited disclosures on sustainability issues may be because of voluntary sustainability reporting in Bangladesh.

Tracking the Quality Premium of Certified Coffee: Evidence from Ethiopia

Summary Certification of Voluntary Sustainability Standards (VSS) is rapidly increasing in global value chains. While consumers, mostly in developed countries, are willing to pay significant premiums for the certification of such standards, it is not well understood how effectively these incentives are transmitted to producing countries. We study VSS—more in particular Fair Trade and Organic certification—in Ethiopia’s coffee sector, the country’s most important export commodity, using a unique census of transaction data at the export level and large-scale data at the production level. We find that transmission of export quality premiums to coffee producers is limited, with only less than one-third of this premium being passed on, and we find limited evidence of effects due to communal investments. Moreover, as quality premiums are small and average production levels in these settings are low, we estimate that these premiums would only lead to an increased income for coffee farmers of 22 USD per year even with a perfect transmission scenario, and therefore would have little impact on the welfare of the average coffee farmer. Given that the VSS studied are characterized by the highest premiums among VSS schemes, it can be assumed that even lower benefits from other VSS certification schemes trickle down to producers.

Voluntary Sustainability Standards: A Squandered Opportunity to Improve Workers' Wages

AbstractThe sustainable development agenda has long been linked with social justice, income equality, and workers' rights. This article argues that voluntary sustainability standards‐setting organizations (VSSSOs) can contribute to these goals by requiring employers to pay living wages and actively support collective bargaining. Examining the content of 25 voluntary sustainability standards (VSS) set by 16 systematically selected VSSSOs, this study finds that only 32% of VSS mandate a living wage, and only 16% rigorously support collective bargaining. It argues that supporting national minimum wages is helpful but not sufficient, examines sources of downward pressure on VSS, identifies potential explanations for variation among standards, and briefly describes a new initiative promoting living wage standards. While VSS are not a silver bullet for sustainable development or wage equity, VSSSOs are overlooking a significant opportunity to be a transformative part of a broader solution. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Design and development of a digital farmer field school. Experiences with a digital learning environment for cocoa production and certification in Sierra Leone

This article reports on the design and development of the Digital Farmer Field School (DFFS). The DFFS offers a tablet-based digital learning environment for farmers and extension agents for knowledge sharing and knowledge co-creation. It provides an alternative to conventional agricultural extension training and monitoring. The prototype DFFS applies Farmer Field School (FFS) learning principles and is designed and developed following user experience (UX) design principles and user interface (UI) design principles from a responsible innovation perspective, using existing FFS material and tailored films which support and enrich the content. The prototype DFFS has been tested in Sierra Leone to assess its success in providing a substitute for face-to-face voluntary sustainability standard certification training for cocoa farmers. Results show that the DFFS as an off-line, telephonically connected and regular on-line updated learning platform offers an appropriate environment in which collective and individual learning is stimulated and facilitated. The DFFS prototype was socio-culturally and technologically appropriate and fitted the operational and strategic communication skills of cocoa farmers and other value chain stakeholders. Films capturing the testing are available as additional learning media.

Voluntary disclosure of sustainability reports by Canadian universities

In contrast to corporate firms, voluntary sustainability reporting by universities is still in its infancy. Against this background, we have investigated which Canadian universities report their sustainability performance and what specifically is reported. Our study applies content analyses as a methodological approach to determine the relative importance of disclosure topics by using a university-specific catalogue of indicators. This unique study completely covers all sustainability reports published between 2011 and 2015 by Canadian universities and as such provides evidence and analyses of voluntary sustainability reporting by universities, which has been the subject of very little research to date. The findings show that sustainability reporting by Canadian universities diverges considerably and the range of aspects included is relatively narrow. Overall, the results show a clear focus on the environmental dimension and very weak coverage of the social dimension. The environmental orientation of many Canadian universities seems to be a result of their participation in the STARS program.

Sustainability assurance and cost of capital: Does assurance impact on credibility of corporate social responsibility information?

AbstractThis paper aims to examine the credibility value of sustainability assurance and the type of assurance provider on cost of capital. A large sample of international companies from the period 2007–2014 was used to develop our models of analysis. We find a greater decrease in cost of capital for companies that publish and assure their social and environmental reports. Thus, voluntary sustainability disclosures decrease the cost of capital. However, companies also have the opportunity to reinforce this decrease by providing an assurance statement, so increasing the credibility of corporate social responsibility information. In addition, the decrease in the cost of capital is significantly higher when such assurance is provided by a top‐tier accountancy firm instead of by engineering or consultancy firms; this result supports also the reputational capital of accountancy firms.

Strengthening Labour Rights Provisions in Bilateral Trade Agreements: Making the Case for Voluntary Sustainability Standards

AbstractSince 2008, most bilateral and regional EU trade agreements contain so‐called Trade and Sustainable Development chapters. Such sustainability chapters typically include commitments to core ILO labour rights and provide specific monitoring mechanisms to ensure compliance. Several observers however, have voiced concern about the enforcement potential of these provisions in practice, beyond legal and institutional reforms. As a means to overcome this compliance gap, this article explores how the inclusion of existing Voluntary Sustainability Standards (VSS) in trade agreements could potentially enhance the monitoring and enforcement of labour provisions in EU trade agreements. Based on experiences captured in a case‐study on the functioning of the 2013 EU‐Colombia Trade Agreement, we argue that linking VSS to labour provisions in trade agreements could significantly contribute to rendering these provisions more effective. Linking labour provisions to the monitoring and auditing mechanisms of accredited but independent VSS, we argue, could help close a regulatory gap, add credibility to the provisions and help overcome capacity challenges in the implementing countries. In turn, the integration of VSS in trade agreements offers public regulators the opportunity to demand a strengthening of the quality of VSS in terms of their design and procedures.

Problems with Firm-Led Voluntary Sustainability Schemes: The Case of Direct Trade Coffee

Ensuring sustainable consumption and production is one of the United Nations’ Sustainable Development Goals. Sustainable consumption can be supported through regulatory processes. Voluntary private regulatory schemes claiming to contribute to sustainability are a rapidly growing form of regulation. We study one such voluntary sustainability scheme in order to look at the opportunities and challenges this type of regulatory process poses using Abbot and Snidal’s regulatory standard-setting framework (2009). Specifically, we examine direct trade voluntary schemes in the coffee industry. To do this, we selected six leading direct trade firms in the US and Scandinavia, analyzed firms’ websites in 2015 and 2016 and conducted interviews with four of the firms. We found direct trade as a voluntary scheme was an attempt to market and codify good sourcing practices. US-based founding firms have distanced themselves from the term due to perceived co-optation, which we conceptualize as the failure of industry to self-regulate and argue was enabled by the re-negotiation of standards without the power to enforce or penalize misuse of the term. Firms reacted to co-optation by releasing data to consumers directly; we argue this puts too much responsibility on consumers to monitor and enforce standards. By contrast, Scandinavian firms maintained standards enforced through trademark nationally. Both US and Scandinavian contexts demonstrate a weakness of firm-led agenda-setting for sustainable development in that schemes may be optimized for a particular business concern—in this case quality—rather than to achieve sustainable development goals. This is problematic if schemes are marketed on contribution to the public good when incentives within the scheme are not aligned to produce an optimal result for the public good.

Towards a Balanced Sustainability Vision for the Coffee Industry

As one of the world’s most traded agricultural commodities, coffee constitutes a significant part of the overall economy and a major source of foreign revenue for many developing countries. Coffee also touches a large portion of the world’s population in the South, where it is mainly produced, and in the North, where it is primarily consumed. As a product frequently purchased by a significant share of worldwide consumers on a daily basis in social occasions, the coffee industry has earned a high profile that also attracts the interest of non-governmental organizations, governments, multilateral organizations and development specialists and has been an early adopter of Voluntary Sustainability Standards (VSS). Responding to the trend of increased interest on sustainability, it is therefore not surprising that coffee continues to be at the forefront of sustainability initiatives that transcend into other agricultural industries. Based on literature and authors’ experiences, this article reflects on the VSS evolution and considers a sustainability model that specifically incorporates producers’ local realities and deals with the complex scenario of sustainability challenges in producing regions. Agreeing on a joint sustainability approach with farmers’ effective involvement is necessary so that the industry as a whole (up and downstream value chain actors) can legitimately communicate its own sustainability priorities. This top-down/bottom-up approach could also lead to origin-based, actionable and focused sustainability key performance indicators, relevant for producers and consistent with the UN’s Sustainable Development Goals. The initiative also aims to provide a sustainability platform for single origin coffees and Geographical Indications (GIs) in accordance with growers’ own realities and regions, providing the credibility that consumers now expect from sustainability initiatives, additional differentiation options for origin coffees and economic upgrade opportunities for farmers.

Supplierss Access to Voluntary Sustainability Standards

Voluntary Sustainability Standards (VSS) have long become a usual attribute of international production and trade. Despite the fact that VSS are not legally binding, in order to be a part of global value chains, they have become de facto mandatory, and non-compliance may lead to exclusion of producers from the value chains. The relevance of VSS is reflected by a growing literature across social sciences, in particular economics and political science. This paper describes a new database that collects comparable information on 180 standards and their governance structure, across a wide range of products and countries. We conduct a first empirical analysis of this data with a primary focus on two aspects of standards and their governance: their practices and features in support of producers, and their geographic availability. We find high variability of support and availability across standards systems and countries respectively. Finally, we identify standards- and country-specific features associated with higher support to producers and higher geographic availability.