5. Implementing Sustainability Standards in your Company’s Supply Chain

If you are reading this chapter, we assume that you have chosen the level(s) of sustainability for your company’s main agricultural raw materials and now need to implement those sustainability standard(s) (cf Chapter 4). Implementation may produce questions and problems that may lead to re-thinking or even changing the standards or even your company’s supply chain and procurement strategies. In the real world, questions addressed in this chapter and in Chapter 4 will often come up simultaneously. 

The question addressed in this chapter is:

How do you implement your firm’s sustainability standards throughout the value chain?

Throughout this chapter, we assume that your company does not actually produce the agricultural raw materials itself but sources them from farmers – either directly or indirectly via suppliers (processors, traders, etc.). This being the case, implementing a standard for sustainable agriculture means: making sure that producers comply with the requirements set in the sustainability standard (on top of any other requirements set by the company). Generally, there are two sides to this implementation: on the one hand, the company sets conditions in its supply contracts; on the other hand the company assists its suppliers in complying with these conditions. Therefore, relationships with suppliers are characterised by both cooperation (development of best practices, assistance with compliance, etc.) and monitoring (rewarding compliance and continuous improvement, de-incentivising non-compliance).

Implementation can vary considerably between different commodities because of the differences in sustainability issues and in the supply chains.

There are six sub-questions to consider in order to answer this general question: 

  1. Can you get the sustainably sourced raw material through your existing supply network or do you have to develop new sources of supply?
    First and foremost, the way to implement your firm’s sustainability requirements will depend on how sourcing is organised. It makes a great difference whether your company sources directly from farmers or whether the raw materials are obtained from processors or traders further up the supply chain. In some cases, sustainable sourcing may provide an (additional) argument to redesign the supply chain, for example to allow for more direct sourcing, closer partnerships with intermediary suppliers, or changes in price-risk management strategies.
  2. How do you include sustainability issues in your general supplier requirements?
    Relationships with suppliers of agricultural raw materials are already subject to different requirements, such as general supplier conditions. It makes sense to integrate new sustainability requirements with already existing requirements, such as codes of conduct or supplier terms of trade.
  3. How do you support your suppliers to meet the chosen sustainability requirements?
    If you make it a strict requirement to supply your company, farmers will ultimately have to meet your company’s sustainability requirements. But real engagement will only happen if they don’t feel forced into implementation and rather feel that a strong relationship is being built whereby your company provides incentives and assistance. This can be achieved either directly with the farmers or more indirectly through suppliers or third-party organisations, depending on the sourcing model (referred to in Question 1).
  4. How do you monitor implementation?
    To obtain reliable information about progress in implementing the sustainability standard, there is a need to monitor the farmers’ performance. How this can be done, is dependent on the sourcing model addressed in the first question.
  5. How do you verify compliance with the sustainability standard? Is there a role for third-party certification? Is there a need for chain of custody certification?
    Third-party certification can be an element in implementing the sustainable sourcing standard, but not necessarily. Whether certification is useful depends on the company’s needs and the sustainability issues attached to the particular raw material.
  6. How do you measure and assess the impact of your sustainable sourcing strategy?
    The question here is to what extent the implementation of your sustainable sourcing strategy is contributing to reaching the underlying goals. For example: is it contributing to protecting biodiversity, to reducing greenhouse gas emissions, to eradicating poverty or to reducing some other negative impact? SAI Platform proposes guidelines for the measurement of several sustainability indicators, in form of a guide entitled Sustainability Performance Assessment (SPA). The guide also provides a benchmark between these guidelines and the best calculators available on the market today to implement such measurement – such as SAFA, RISE, Field to Market®.
Next Previous