Sustainable Sourcing Commitments Driving ‘Major’ Market Growth

Private sector sourcing commitments from companies including Ikea, Coca-Cola, The Home Depot and Unilever are driving major market growth for sustainable commodities, according to the State of Sustainability Initiatives Review 2014.

Once thought of as instruments primarily tailored for niche markets, voluntary sustainability standards such as Fairtrade, Rainforest Alliance and Organic are gaining traction in mainstream markets. The trend towards mainstreaming of sustainability standards is strongest among newer sector-specific initiatives that explicitly target mainstream markets, according to the research.

In addition to the companies named above, the review documents a trend in sustainable sourcing commitments by manufacturers including Dole, Chiquita, Tetley, Twinings, Unilever, Hershey’s, Lowes, Starbucks, Nestlé, Ferrero Group, Mars, Adidas and others. The growing number of companies that have made commitments to source sustainably illustrates the critical role that the private sector plays in overall market growth of products certified under these initiatives, according to SSI.

The average annual growth rate of certified production across all commodity sectors (excluding biofuels) in 2012 was a 41 percent, outpacing growth of 2 percent in the corresponding conventional commodity markets. Growth in certified production was strongest in the palm oil sector which experienced 90 percent growth in 2012. Companies including Mondelez, Hershey and Unilever have made sourcing commitments in this market. Other leading sectors were sugar (74 percent), cocoa (69 percent) and cotton (55 percent).

The research found that compliant production attained significant market penetration in several major commodity markets. Certified coffee, which led in terms of market penetration, reached a 38 percent market share of global production in 2012 (up from 9 percent in 2008). Other certified commodities with significant market share for sustainable production in 2012 include: cocoa (22 percent); palm oil (15 percent) and tea (12 percent).