Skip to content

Global Risks Forecast™

Certification: Collaboration is key to make schemes more effective

Certification: Collaboration is key to make schemes more effective

Certification schemes must adapt or die in the face of criticism that they are not effectively improving respect for human rights at the producer level

  • Demand for certification is growing rapidly to satisfy the need among companies and investors to conduct adequate human rights due diligence across their supply chains
  • But certification schemes have been criticised for their compliance-based approach that fails to eliminate violations and for the fact that they don’t produce systematic, transparent data
  • Certification houses are responding to the criticism, but the jury is out on how quickly they will adapt and modernise, and in the meantime some brands have moved their programmes in-house
Download a PDF of the Human Rights Outlook 2018

Issue

Certification schemes such as Fairtrade, RSPO, UTZ and the Rainforest Alliance are integral to the management of human rights risks deep in the supply chain. But confidence in the effectiveness of these schemes has been shaken by media reports of labour violations, such as forced labour, occurring on certified plantations and farms. The reports have alarmed businesses accustomed to viewing certification as a guarantee that commodities, such as flowers or cocoa, are violation free.

In practice, of course, certification demonstrates only that a producer’s efforts to uphold labour standards are inspected and – depending on the scheme – supported through a cycle of continuous improvement. Experts raise doubts about whether certification, like audits, can drive real change. They question, for example, the benefit of one-off assessments of minimum standards or the usefulness of outdated reporting models, and highlight the lack of meaningful data to help brands understand the challenges facing their producers. Failure to quickly address these concerns contributed to some brands like Mondelez and Sainsbury’s abandoning external certification and moving it in-house.

Challenges and opportunities

Restoring confidence in certification is essential since, together with the audit, it is one of the fundamental tools for monitoring and improving ethical standards in supply chains. So far, however, there are no signs that certification schemes are collaborating to find a solution, in contrast with the decision by audit firms to set up an association to register and certify professional auditors. There is, nonetheless, evidence that individual certification schemes are adapting and innovating. Fairtrade, for example, is partnering with Mondelez and embedding its values into the company’s own ‘Cocoa Life’ programme, which has replaced external certification. UTZ and the Rainforest Alliance are expanding their reach, too, by merging together and developing a new standard that will strengthen the recognition of improvement among producers. The RSPO is tightening up the labour standards it monitors, while ISEAL is encouraging its certification members to produce better data to measure progress, and to exploit new technologies. However, more collaboration – among certification schemes and with the brands they service – is essential for this industry to effectively meet ever-increasing demand for supply chain due diligence.

Extreme social risks in key coffee producers may indicate failure of certification schemes

Source: Verisk Maplecroft, 2018; FiBL, IISD and ITC

Explaining the data

The figure above shows the potential impact of certification schemes on the production of coffee in top producing countries. In it we have combined our commodity data, which assesses social risks linked to the farming of coffee, with data showing how much coffee produced by that country is certified by five schemes: Fairtrade International, Organic, Scheme 4C, Rainforest Alliance / Sustainable Agriculture Network, and UTZ.

The figure indicates that we classify coffee production in Brazil, Colombia and India as extreme risk for social issues. This suggests that certification schemes in these countries face a challenging environment, with issues such as forced labour likely to occur. Given that Colombia certifies 70% of its crop, but is still extreme risk, this could indicate that certification is failing – though this risk rating, may derive only from violations in the non-certified crop. If, on the other hand, certification is working, labour standards should be improving faster for coffee sourced from Colombia and Brazil (where 70% and 49% is certified, respectively) than from India (where just 14% is certified).

Spotlight

Criticism of certification has mirrored that directed against audits by focusing on the limitations of compliance. However, the debate has also produced suggestions about how to strengthen certification as a driver of change in parts of the supply chain difficult for all brands to reach. Key recommendations suggest that certification schemes should:

  • Recognise improvement over time as well as compliance
  • Use and produce better data to monitor progress and understand change
  • Prioritise dialogue and capacity building with producers being certified
  • Turn certification into a bridge between companies and supply chains
  • Ensure that producers find a market to recoup the costs of certification
  • Incorporate new technologies into the certification process to improve communication and data gathering
Download a PDF of the Human Rights Outlook 2018

Key issues covered by Verisk Maplecroft’s Human Rights Outlook include:

  • Automation (Read the press release)
    Rise in worker exploitation predicted as robots revolutionise jobs market

  • Human rights defenders (Read the global risk forecast)
    Business is facing growing pressure to protect campaigners

  • Compliance (Read the global risk forecast)
    Despite multiplying laws and standards, a common approach is emerging

  • Certification
    Collaboration is key to make schemes more effective and rebuild confidence

  • Social impacts
    Investor community expects business to up its game

To discuss this topic with an analyst or to request a Country Risk Report contact info@maplecroft.com
Return to the Global Risk Forecast
Verisk Logo

Verisk Maplecroft is a Verisk business.

Verisk Analytics®