CORPORATE SUSTAINABILITY COMMITMENTS
Corporate sustainability commitments represent a key leverage point for shifting production practices through companies exerting market influence on producers and other supply chain actors. Understanding the barriers of translating corporate commitments into producer implementation will be key to informing the development and implementation of strong, achievable future commitments, and to ultimately achieve greater sustainability.
To more fully understand the role of producers in implementing commitments, researchers asked:
How do companies, through supply chain sustainability commitments and related initiatives, motivate producers to change management and production practices to more sustainable operations?
The research shows that corporate instruments do influence producers to varying degrees, but the effectiveness is contingent on several factors.
Some key findings include:
Commitments need to set clear and rigorous targets and specify their implementation mechanisms. Many current commitments are general pledges to improve sustainability, but lack clear environmental targets and implementation mechanisms. Commitments are more likely to be implemented, and therefore improve environmental outcomes, if they are unambiguous with specific targets and cut-off dates for behavior change and linked to a particular implementation strategy and action plan.
Impacts of supply chain efforts can be greatly enhanced by increasing the scale and scope of commitments. The best way to achieve scale and strengthen market signals for sustainable products is to involve a significant share of producers and suppliers, including coordination between large companies that represent a large market share of a given commodity, as well as second-tier suppliers. If commitments only cover first-tier suppliers, smaller farms can launder their products through compliant farms, significantly reducing the scale and magnitude of positive impacts.
Producers require streamlined and accessible financial and technical assistance. Producers face a number of economic and technical constraints, such as high adoption costs and lack of access to credit, as well as land tenure, governance, and supply chain complexities that present barriers to their adoption of sustainable practices. Currently, few supply-chain companies provide positive incentives or assistance that would help producers in the transition toward more sustainable practices. Instead, many corporations rely on disincentives to implement their commitments, such as avoiding sourcing from blacklisted municipalities or areas covered by a moratorium or excluding farmers that do not meet company sustainability criteria.
Without a direct link to producers, companies have a limited ability to track performance and enforce policies. Most tropical commodities rely at least partially on dispersed, highly fragmented networks of producers. Increased connectivity and enhanced transparency along the supply chain could increase the ability to reach producers, enforce policies, and deliver incentives to change.
Contextual governance factors affect supply chain practices. Existing land use practices, property rights, and coherence between public and corporate policies influence companies’ ability to successfully transform their commitments into impact. Effective public-private cooperation and commitments that are complementary to local laws and regulations could increase the impact of company commitments.