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Working Document

Geneva, May 2006

The BioTrade Initiative

and verification

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Prepared by Nancy Vallejo and Pierre Hauselmann (PI Environmental Consulting) for the UNCTAD's BioTrade Facilitation Programme

This information document was prepared by UNCTAD/BioTrade Facilitation Programme. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations Conference on Trade and Development concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. This document has not been officially edited.

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Table of Contents

1 – Introduction.................................................................................................................... 5

1.1 Background.................................................................................................................. 5

1.2 Certification and verification ......................................................................................... 5

2 – Creating a Guiding Framework for Incentives............................................................. 8

2.1 Offer assistance ........................................................................................................... 8

2.2 Being part of a prestigious union .................................................................................. 8

2.3 Validation of progress towards BioTrade objectives ..................................................... 9

2.4 Create demand for BioTrade products ....................................................................... 10

2.4.1 Create an ethical image for BioTrade products .................................................... 10

2.4.2 Make BioTrade THE place to find new ingredients............................................... 12

2.4.3 Offer assurance of constant quality and quantity ................................................. 12

2.5 Lesson for the BT initiative ......................................................................................... 13

3 – Existing Schemes and their Compatibility with BioTrade ........................................ 14

3.1 Existing schemes ....................................................................................................... 14

3.2 Compatibility with BioTrade........................................................................................ 15

3.2.1 Standard compatibility ......................................................................................... 15

3.2.2 Product range compatibility.................................................................................. 17

3.4 Lesson for BioTrade................................................................................................... 17

4 – The EBT Union and Verification ................................................................................. 19

4.1 Process to define individual critical paths ................................................................... 20

4.2 Verification system..................................................................................................... 22

4.2.1 Critical path monitoring ........................................................................................ 22

4.2.2 Certification system ............................................................................................. 23

4.4 Lesson for BioTrade................................................................................................... 24

5 – About Costs ................................................................................................................. 25

5.1 Establishing the elements .......................................................................................... 25

5.1.1 Critical Path Definition System............................................................................. 25

5.1.2 Verification and certification ................................................................................. 25

5.2 Running the Union ..................................................................................................... 26

5.3 Cost of verification for members................................................................................. 26

5.4 Lesson for BioTrade................................................................................................... 26

6 – Conclusion and Next Steps ........................................................................................ 27

6.1 The EBT Union .......................................................................................................... 27

6.2 Developing an ethical image for BioTrade products ................................................... 27

6.3 Developing the Critical Path Definition System........................................................... 27

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6.4 Next steps.................................................................................................................. 28

Annex 1 – Comment on the BioTrade Principles and Criteria........................................ 30

Annex 2 – Criteria for identifying Partner Organizations................................................ 32

Annex 3 – References ....................................................................................................... 34

Note about this version The previous version of this document was written in December 2005. In the five months between the original and current version, the BioTrade Principles and Criteria have been adapted into the BioTrade Verification Framework, which has been used to draft “bridges”, i.e. documents indicating the gaps in other standards to cover the BioTrade requirements (refer to chapter 4). Such bridges have been drafted for SAN and IFOAM.

During the same period, the Fair Trade Labelling Organizations International (FLO) has also published a revised version of their standards. This has resulted in a significant improvement in terms of their coverage of environmental aspects and has made FLO go from the last of five in terms of BT coverage to third position.

As the BioTrade Verification Framework has been better defined the comparisons with the other standards was refined. This has resulted in a lower compatibility grade of all certification systems, albeit to different extents for each one.

This revised version takes these changes into account.

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1 – Introduction

1.1 Background

The BioTrade Initiative started in 1997 as a response to the new challenges set by the Convention on Biological Diversity. Since then, it has set up national initiatives in developing countries on three continents, mainly in Latin America. Through its work, it has been able to secure the collaboration of a certain number of companies that produce goods in several product categories such as flowers, ornamental fish, cocoa and, mostly, of the ingredients sectors.

The initiative has developed principles and criteria that define what “BioTrade products” should be. It has also participated in different trade fairs to promote the concept of products coming from biodiversity produced in a sustainable way. During these trade fairs, it has become apparent that potential buyers often ask for certified products, most frequently thought of as FairTrade or Organic.

Producers taking part in the BioTrade programme have also expressed an interest in having their efforts recognized by the market, a recognition that could take the form of a declaration if this helps market uptake. Furthermore, the United Nations Conference on Trade and Development (UNCTAD), who launched and homes the BioTrade Initiative, needs a confirmation that their efforts are indeed resulting in conservation and sustainable use of biodiversity.

As a result of this pressure from buyers and the combined needs of producers and UNCTAD, the BioTrade Initiative has asked Pi to study the possibilities for a verification/certification mechanism for BioTrade (BT).

As a first step, Pi has, along with the active participation of the BioTrade Facilitation Programme (BTFP) team, studied the different documents available from the BioTrade Initiative. Several meetings between Pi and the team have been organized to sort out different issues and better focus on those that need to be resolved. One meeting in September 2005 involved consultants dealing with the ingredient sector in order to better identify the special needs and constraints of this particular domain. Another meeting, in Madrid in October 2005, brought together a group of potential buyers and producers of BioTrade products. A draft proposal was presented at this latter meeting and probed by participants. Pi took part in a workshop on wild collection of medicinal and aromatic plants that took place in December 2005 in Northern Germany. Finally, Pi and the BTFP team took part in the Conference of the parties of the Convention on Biological Diversity (CoP8), in Curitiba, Brazil, in March 2006, where the proposals were further discussed with different stakeholders.

The needs identified during this process have been linked with their associated constraints, which has led to the system presented in this document, composed of an enabling framework (the EBT Union) and a gradually more requiring verification system, following the credibility needs of potential claims.

1.2 Certification and verification While this discussion is framed by the word “certification”, this can mean different things to different people. It is therefore worthwhile drawing up a picture of the different facets of this

Box 1 - What are BioTrade goods and services?

Goods and services derived from native biodiversity collected, produced, transformed and commercialized under criteria of environmental, social and economic sustainability

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activity, as they are understood in this report. The focus here is a certification that is visible to consumers, often conveyed through a label. This is not to ignore the fact that other types exist that are more oriented towards business-to-business (B2B) relations, for example ISO 14001 or SQF, but the assumption is that, as product claims may be required for some products, it is better to develop a verification system that allows both B2B and product claims.

The ISO, the International Organization for Standardization, defines certification as a “procedure by which a third party gives a written assurance that a product, process or service conforms to specified requirements” (ISO/IEC 1996). What defines a third party and how to draw a set of requirements are themselves the topic of several ISO standards, which transforms a rather straightforward definition into a process that can be complex and have burdensome administrative layers. As the fundamental raison d’être of certification is the “written assurance” or certificate, which is used for credibly communicating compliance, it is important to identify where the certificate is needed, and where it can be avoided.

Certification can be accompanied by a certification mark (logo), which in turn has its own set of rules. The main ISO standards ruling certification and declarations are the subject of Box 2. It is important to note that it is increasingly becoming mandatory for certification schemes to be certified themselves as complying with the relevant ISO standards (a process called accreditation) to be able to use the word “certified” on products.

Certification is only the end of a process, and it is not necessarily the most important for those who are using it to promote best practices. Arguably, the participatory definition of best practice or of a desired state in a certain domain is often a very valuable process in itself. For example, the success of forest certification stimulated a standard making process in Madagascar between 2000 and 2002. This was the first time ever that forest issues were discussed jointly by villagers, industrialists, local and international NGOs, and the government. This has led to a whole rethinking of the legislation in terms of forests on the island. Local circumstances may make it very difficult to one day see certified products coming from this country, but the dialogue that was initiated and the change in attitude of the different protagonists was well worth the exercise in itself. Without the prospect of being able to develop certification and get economic benefits form it, this process would never have started.

Box 2 - Some international standards published by ISO on standardization, certification and claims.

Standardization: ISO/IEC Guide 59:1994 - Code of good practice for standardization Certification: ISO/IEC Guide 62:1996 - General requirements for bodies operating assessment and certification/registration of quality systems

ISO/IEC Guide 65:1996 - General requirements for bodies operating product certification systems

ISO 17020:1996 - General criteria for the operation of various types of bodies operating inspection

ISO 19011:2002 - Guidelines for quality and/or environmental management systems auditing Environmental claims: ISO 14020:1999 - Environmental labels and declarations – General principles

ISO 14021:1999 - Environmental labels and declarations – Self-declared environmental claims (Type II environmental labelling)

ISO 14024:1999 - Environmental labels and declarations – Type I environmental labelling - Principles and procedures

ISO/TR 14025:2000 – Environmental labels and declarations – Type III environmental declaration The list of ISO documents given above is not exhaustive. Many other standards and guides might be relevant. However, these are the main ones and reflect the majority of requirements for conformity assessment.

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Once a standard has reached a sufficient level of acceptance amongst stakeholders, and can start to be implemented, technical assistance is required for many producers to reach the level identified in the standard. This is another very important element of “certification”, even if, technically speaking, it has nothing to do with it.

Receiving a certificate can be an incentive only for those producers that are near the point of compliance with the relevant standard. The farther away they are from this point, the more remote is the incentive for them to comply. Costs involved in adapting the management may simply be too big, and the reward for doing it so far away that producers with poor management levels are not too likely to jump on the bandwagon. However, these are arguably those with whom it is most important to promote good practice. Creating incentives for these cases without lowering the standard and diminishing the attraction of getting a certificate is a major challenge for all ethical certification schemes1. In the forest sector, several organizations, notably the WWF and the Tropical Forest Trust, have developed mechanisms often called stepwise, phased or modular approaches to support producers in their path to certification (WWF 2004, TFT 2004). There are mainly two components to these mechanisms:

• A plan of necessary measures to progress significantly has been agreed on by the different partners.

• Compliance with this plan is monitored and can lead to benefits such as better connections with buyers, capacity building, access to finance etc.

Verification, which is a less rigorous practice than certification, can offer a tool to ensure that producers follow a certain path, and provide advantages that are not linked with product claims. It can be first party (self-evaluation), second party (evaluation by the buyer) or third party (independent evaluation).

Verification and certification can be mixed. Progress or compliance can be verified and the system to carry out verification can be certified to ensure that it delivers the stated results.

The BioTrade initiative deals with products that have a final consumer visibility (e.g. cocoa), but many do not and are even small parts in final products (e.g. ingredients in cosmetics). Furthermore, it needs to stimulate all producers to continuously improve their management levels, be they at a low or a high end of the path towards sustainability. Thus, if certification can be an important outcome for some products, it cannot be envisaged alone and must be inserted into a system for continuous improvement.

1 Ethical in the sense that they support social, environmental and/or economic equity

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2 – Creating a Guiding Framework for Incentives However important the objectives of the BioTrade initiative, these will not be reached without convincing both producers and buyers to join it, and this will not be achieved without offering them incentives for doing so.

Broadly speaking, the type of incentives for producers to join or for buyers to purchase BioTrade products will be specific for each of these two groups. It is absolutely vital to keep in mind however, that buyers will not buy if there is no product to buy and producers will not produce if there is nobody to purchase their production. Both incentive types have to be applied in parallel and are absolutely linked.

Given the wide array of situations and companies that the BT Initiative has to involve, the portfolio of incentives must be structured in a way that allows climbing a path from low to high-level management. Thus, incentives must be adapted to the different planes and be effective in stimulating going from one to the next one up.

The range of incentives BioTrade can/could offer includes technical assistance, market linkages, preparation for certification and improved brand management. The latter is conditioned by the ability to create an ethical image of BioTrade in the public eye.

2.1 Offer assistance If, for producers, the ultimate incentive is to improve their financial benefits whilst using a better process, there may be a long way to go to get there. In some circumstances, higher prices may not even be reached, or at least not in proportions that would justify, in themselves, investing in participating in the initiative. However, there are proven benefits that should be sufficient to justify joining. These include getting technical assistance in best management practices (BMP), getting accurate information on markets and being linked to markets.

For products that have little final consumer visibility, and producers who have a significant way to go before reaching any “certifiable” level, technical assistance will most probably be the first and most important incentive at the entrance of the system, provided this leads to some concrete benefits. These can come in the creation of market linkages, which therefore must be an important part of the portfolio of services that the BioTrade Initiative needs to provide – as it already does.

Technical assistance can (and should) be oriented towards preparing for a possible certification at a later stage (see 2.4.1 below), thus diminishing the indirect cost associated with adapting an existing management structure to the requirements of a particular certification approach, when this option becomes desirable.

2.2 Being part of a prestigious union Being member of a prestigious union - one that brings attention to its members - may lead to improved opportunities in terms of international recognition or access to funding and overall branding management.

Such a union can offer two incentives or benefits to its members: prestige (of some kind) and services. Entering the BioTrade Facilitation Programme (BTFP) brings access to services – technical assistance and market linkages, as seen above. By adding a reputation within the public based on an ethical image (conservation, sustainable use and benefit sharing) and a rigourous approach that can avoid free riders, joining the BTFP could be considered as joining a union, the Ethical BioTrade or EBT Union. By promoting these two aspects (image and rigourousness), it would have good chances to gain prestige. It would then add a service: helping to manage brands.

While the primary and early incentive for producers to enter the Union might be technical assistance and market linkages, and thus may not need in itself a good public reputation of

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the Ethical BioTrade Union, for buyers, belonging to this prestigious Union could provide substance in corporate social responsibility systems: a claim that a specific company supports and trades/processes BioTrade products may improve the public image of its brand. As brands are an important part of companies’ value, being part of the EBT Union could even bring them added monetary worth. A Union attractive to buyers will also be attractive to producers. Thus, creating a prestigious EBT Union would indirectly, but powerfully also be an incentive for producers.

Different types of organizations use the “Union approach” with different focuses. For example, the United Nations Global Compact groups companies who have committed to certain objectives. Here the prestige is based on the fact that the grouping has been convened by Koffi Annan. WWF has used this approach abundantly in the forest sector to stimulate companies to commit to FSC certification (WWF 2004) and ITTO to encourage developing countries to go for forest certification (ITTO 2005).

From a BTFP perspective, the “Union approach” could have the added merit of framing most current and future activities and incentives within a single concept. It could offer an important entrance point in the incentive system and allow producers and buyers to show their commitment towards continuous improvement. This could be achieved even if they currently do not reach high quality management levels or if their products are not available in sufficient quantities to visibly reach consumers, i.e. where product claims are not easily achievable.

There is however, a significant constraint to this strategy: the Union has to have a high degree of visibility in the public, or be convened by a widely renowned organization. Currently the BioTrade Initiative does not fulfill these conditions.

As such, the strategy to develop the system of incentives must find ways to make the “BioTrade” Union prestigious, or at least well known. The Union itself must have rules for membership (taking part in the BTFP), and exclusion (avoiding free riders) and membership condition must include commitments from both producers and buyers, albeit different ones. The Union concept is further detailed in Chapter 4 – The EBT Union and Verification.

2.3 Validation of progress towards BioTrade objectives For incentives to be effective, their benefits should be obtained only if the desired conditions have been met. The more concrete the incentive, for instance in market benefits, the stronger the necessity to ensure rigourous compliance.

For example, technical assistance in BMP is beneficial for biodiversity, the environment and the people, which, in itself, is an objective of the BT Initiative. As such, the commitment of a producer to follow the BioTrade path may not need much more verification of compliance than the normal monitoring in any field project. However if market connections are established between a producer and a buyer, a higher degree of confidence that objectives are met is necessary. Similarly, for a buyer to benefit from the good image that claiming to be part of the Union may produce, it is necessary to ensure that the buyer does indeed comply with the conditions for being a member.

An insufficient level of assurance would lead to a loss of credibility of the whole system, which in turn could negatively affect the outcomes of the whole BioTrade Initiative.

However, if verification is indeed needed, it must not impede the competitiveness of participating companies. On the contrary, it should stimulate it. As such it shall be as light as possible, but as robust as necessary. It must also be flexible enough to adapt to situations where there may be limited or no management plan. It must also adapt to the wide variety of products and specific situations that can be found within the BioTrade Initiative.

A proposal for such a gradual verification mechanism is the topic of Chapter 4 – The EBT Union and Verification.

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2.4 Create demand for BioTrade products Ultimately, the only way to convince producers to follow BT principles using market forces is to create a demand for BT products. At each level of the value and distribution chain, the demand by the next layer will create the offer. The final layer is formed by the final consumers.

Creating demand for BT products is thus a key element of the system, which can be articulated along three main themes, creating an ethical image, making BT the place to find new ingredients and offer assurance of constant quality and quantity.

2.4.1 Create an ethical image for BioTrade products The success will depend to a large extent on the ability of the BioTrade initiative to establish itself in the public and amongst consumers as a legitimate ethical approach. To do this, it is necessary to:

• promote the value of biological diversity, its conservation and sustainable use and equitable benefit sharing as at least as important and ethical as FairTrade or organic

• be able to show the connection between the BioTrade Initiative and products reaching final consumers (on product claims).

Promoting the value of biodiversity in the eyes of consumers, while easy to write, and rather obvious for those who are closely involved with this field, is a rather demanding task. The concept is much more difficult to link with the daily reality of the public than fair wages or safe food. Also in a context where the “ethical market” is still limited compared to global trade, there is fierce competition between the different schemes. As there are several certification and labeling “brands” that are well established in this sphere, and they have to protect their own business opportunities, it would be difficult for the BioTrade Initiative to bring about its own image, particularly as the resources available for this are limited. Unless it manages to work in collaboration and build synergies with initiatives and/or schemes that face similar hurdles.

An additional problem to putting the BioTrade image on the final products is that many of those that currently fit within the initiative are mixed with others, often in rather low proportions. For these, certification and labeling will not be an option in the immediate future, and may, perhaps, never be. Incentives for these products are more in the “provide assistance and be part of the Union” category. However, the absence of visibility of BioTrade on the final products would make it more difficult to build the visibility of the “EBT Union”. Thus, even for products that may not need certification, it is important that others get certified and make the EBT Union visible to consumers.

The identification of flagship products, across categories, that can rapidly carry the “BioTrade2” claim would therefore be important. For example, herbal teas (category: ingredients) and cocoa (category: cocoa), might be suited for a product claim based on the same approach as they are both foods and consumers might have similar expectations for them. Going one step further, cut flowers (category: cut flowers and foliage) could be added, as the three are plant products. In general all products that reach final consumers in their more or less natural state (e.g. ornamental fishes, caimans, cut flowers) may prove interesting candidates as flagship products.

The choice of these flagship products can follow two paths, not necessarily mutually exclusive: “facility” and “provocation”. Facility is to choose products for which perception is positive – at least not negative in the public and already available in most households (e.g.

2 This wording is a shortcut to summarize different potential claims. “BioTrade” including the word

“Bio”, may fall under restrictions in certain markets (e.g. EU) as it can be assimilated with “Organic” at least in French speaking countries.

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cocoa), Provocation would be to choose products under CITES restrictions, for which public sensitivity might be rather high (e.g. caiman skins), and show that they can be “clean” if produced under certain circumstances (i.e. following BT requirements). Before embarking in the “provocative” path, if ever, it will be necessary to carefully analyze the associated risks, as a damaged reputation (e.g. laundering biopiracy) is always extremely difficult to rebuild. This analysis should also be carried on in the evaluation of the existing and future product categories. For example, it might be difficult to have the public assimilate trade in live fauna (e.g. birds) with an ethical behaviour.

Beyond the immediate “champions”, the long-term sustainability of the BioTrade initiative necessitates that an ever-growing number of products become visibly “BioTrade”. The system of incentives should thus stimulate the elaboration of increasingly complex products made of different BioTrade produces. The more favourably the EBT Union is viewed, the easier it will be to incite organizations to join it. The more BT products are available, the easier it will be to find BT produces to combine in BT products. The implication of this is, despite the fact that many products may not be candidates for certification now, they may become in the future. Therefore, technical assistance in the framework of BT should always consider the possibility of certification at some point in time and put in place the different elements that will eventually facilitate it at a later stage. In terms of organizations to work with, this indicates a preference for those that have experience both in terms of certification and labelling, and in designing capacity building packages that prepare for certification – but do not imply it necessarily.

Producers and buyers alike are currently faced with many different approaches to certification. The most important ones in terms of certification of responsible management are responsible forest management (FSC), organic farming (IFOAM), fair trade (FLO), and sustainable farming (SAN), but there are many others. For example, in the coffee sector there are, amongst others, “bird friendly”, “shade coffee”, “Utz Kapeh/Eurepap”, “Rainforest Alliance”, “FairTrade”, “Organic”, “Starbucks”, and “CCCC” to choose from. Additionally, there are food safety requirements and associated certification, which are often mandatory to enter markets (e.g. HACCP and SQF). As each of these certification schemes has its own market segment, embracing one or the other means for a producer to limit itself to the said segment, with the possible loss of bargaining power this entails when negotiating prices. Or they have to undergo several certification processes, which adds to costs and can lead to a loss of competitiveness.

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The BioTrade verification/certification should not contribute to this situation and thus, should as much as possible try to build on existing mechanisms and be as cost effective as possible. In terms of organization to collaborate with, this implies

1) the will/acceptance to develop bridging modules, and

2) the experience in doing so. It also entails an agreement not to develop a proprietary mechanism – one that can be applicable to several schemes if and as need be.

2.4.2 Make BioTrade THE place to find new ingredients Creating a situation where the reflex of buyers will be to come and look at BioTrade (or the EBT Union) for finding new products is an element that has been mentioned at several occasions in the consultation carried out for this study. While clearly an important element, it may well be more an indicator of success than a real incentive. If all other elements are in place and work fine, this should be one of the benefits of the EBT Union, but also, once established, a good reason to become part of the Union for producers.

2.4.3 Offer assurance of constant quality and quantity The work of the BioTrade programme to date demonstrates that sustainability issues can be successfully included in productive processes if linked to quality. Thus, quality has to be intrinsically linked with the initiative. Being part of the EBT Union should not only be an indication of continuous improvement towards a sustainable production, but also towards physical quality. Commitment to physical quality should be an element in the membership conditions of the EBT Union and the verification system should be able to check it.

One flaw often mentioned about ethical claims is that they are not necessarily linked with the quality of the product. For example, the taste of FairTrade coffee or Organic wine is often said to be mediocre. The point here is not whether this is grounded into reality, but that it is an image that existing schemes have to fight against. However, quality generally comes before ethic, for consumers and buyers alike. For example, Nestlé has recently launched its AAA programme, in collaboration with the Rainforest Alliance. The purpose of AAA is to bring good quality sustainable coffee in the Nespresso capsules. Of the three As, the first two are for Quality (AA) and the third for sustainability (Nestlé 2005), thus indicating the respective weight of the two concepts for the transnational company.

Introducing strong elements of quality, reliable information and traceability from the onset of the BioTrade verification would help in creating a distinct image to the initiative and give it a comparative advantage.

For buyers to commit to a claim, in addition to constant quality, it is important to have sufficient and constant quantities. Starting to build part of the social corporate image around a claim, and not being able to deliver because supplies do not follow can have devastating effects on the company’s image (Stenmark 2003). As a result few will commit in the absence of insurance that quantity will be sufficient over time. By the very nature of the initiative, many BT products come from small to very small producers who additionally often collect them in the wild. This bears on their possibility to control both quantities and quality. Reasons for this are the dependence on natural conditions – the most important factor in the case of wild collection – and the lack of management capacity.

These two constraints can however be overcome with technical assistance and numbers. The former will increase management practices and is part of the incentives already in place within the BioTrade Initiative. The latter means that bringing together similar products from many small producers may yield sufficient amounts to average adequate quality and quantities on a constant basis. This has at least two implications: the creation of a database in which buyers can identify the products they need from several producers, without having

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to prospect themselves, and the need to focus on products that come from a sufficiently broad geographic base to allow many producers to participate in the BioTrade initiative3. This also entails that the verification/certification system used by BioTrade should include mechanisms to allow simple auditing methods through several producers at once (e.g. group certification).

Considering the argument made above for the necessary lightness of the verification system, this situation entails that engaging in certification should only happen once sufficient and constant qualities and quantities of the product can be ensured.

2.5 Lesson for the BT initiative The creation of a EBT Union would allow bringing together different incentives for joining the BioTrade initiative, and create a framework for continuous improvement. This EBT Union would not be efficient, or effective for that matter, without a mechanism for verifying/monitoring progress and ensuring that members fulfill the conditions for membership. This verification mechanism must be as light as possible, but as rigorous as necessary, depending on the kind of incentive provided to members.

Certification is a necessary outcome, but not one that will work in all situations; there is thus a need to develop a specific BT verification system. However, to be as cost effective as possible, this system should rely as much as possible on existing initiatives. This is particularly true in terms of certification. Do existing certification schemes adequately ensure conservation and sustainable use of biodiversity, and benefit sharing for BioTrade? This is what the next chapter analyzes.

3 This focus should not obscure the fact that there may be excellent reasons (e.g. extreme poverty

reduction), to work with products that would not fit in the first priority. However the success brought by focusing will also increase the capacity to operate in circumstances where the benefits in terms is market linkages will be more difficult to reach.

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3 – Existing Schemes and their Compatibility with BioTrade

3.1 Existing schemes The world of verification/certification schemes is very vast, not to say that there is a plethora that is growing almost every day. However, only a few could be relevant for BioTrade, either because the market demands them in the field where BT works, because their approaches are philosophically similar to BT, or because they include elements and experiences that could be useful for the BT initiative. These are basically, the International Federation of Organic Agriculture Movement (IFOAM), FairTrade Labelling Organization (FLO), the Forest Stewardship Council (FSC), the Sustainable Agriculture Network (SAN) and the Marine Aquarium Council (MAC).

Yet, only these few are already many in a still reduced market for ethical claims. They are strong brands in the market of certification and claims, and trying to introduce a new one may prove difficult.

The FairTrade approach is about setting up an alternative trading mechanism where “Fair prices” are fixed outside the usual supply/demand mechanisms, and focuses on an equitable benefit sharing with less attention to other social and environmental aspects. The umbrella organization for FairTrade certification is the FairTrade Labelling Organization (FLO).

On their side, Organic produces also have a very fast growing acceptance as consumers associate them with food safety, a key concern. Recently, the International Federation of Organic Agriculture Movements (IFOAM), the umbrella organization for organic schemes, has adopted its four principles for organic agriculture: Health, Ecology, Fairness and Care. A standard on biodiversity is currently under development. Obviously, the organic movement is encompassing some elements of sustainable development, but these principles hide to a certain degree the emphasis on the absence of GMOs, chemical pesticides and fertilizers, and the relatively more superficial treatment of the other dimensions.

In the forest sector, the Forest Stewardship Council (FSC) has managed to impose itself as the reference recognized by the public for good forest management. Its approach is more holistic than that of either FairTrade or Organic, in that it puts equal value on social conditions, including workers and communities’ rights, the conservation of biodiversity, sustainable use of resources and economic sustainability. However it is less acute than the other two in, respectively, prices and use of chemicals. It also focuses on timber production, although there are a few standards for non-timber forest products (e.g. Brazilian nuts). Certification under FSC does not apply outside forests.

A fourth actor is worth mentioning here, although not as visible yet as the other three. It is the Sustainable Agriculture Network (SAN), of which the Rainforest Alliance is the flagship. The approach of this group of mainly South American NGOs is, in a sense, similar to the FSC’s (defining sustainability as a balance between environmental, social and economic interests) but applied to agriculture. It is a “growing star” in that it has been able to attract major companies in its system (e.g. all of Chiquita’s banana production is “Rainforest Alliance Certified4”), while maintaining a close relationship with small producers and communities. The network is represented in Ecuador, Guatemala, Brazil, Honduras, Colombia, Denmark, Mexico, United States, El Salvador and Belize.

Finally, in terms of actors, the Marine Aquarium Council (MAC) finds a place here. While the least visible by the public at large of all the schemes listed above, its philosophy resembles FSC’s and SAN’s, and its specific object, ornamental fishes, corresponds to one of the product categories embraced by the BioTrade Initiative5. As it deals with living animals, MAC has incorporated handling and transport as part of its certification approach, a distinct

4 Name of the SAN certification mark

5 The match is not perfect as MAC deals with coral reef fishes and BT with fresh water ones

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characteristic of this scheme.

3.2 Compatibility with BioTrade The BioTrade Initiative, based on the three pillars of the Convention of Biological Diversity (CBD), conservation, sustainable use and benefit sharing, has a broader remit than FairTrade and Organic. Its philosophy is more connected, albeit not identical, to the ones chosen by SAN and FSC in their own fields. The following analysis addresses the standard compatibility and the product coverage of the schemes.

Compatibility, as expressed by standards, is only one element that BioTrade should consider in choosing potential partners. Other variables should enter the equation, such as market coverage, strategic synergies and experience in developing tools such as those needed by BioTrade. These different elements are analyzed in Annex 2 – Criteria for identifying Partner Organizations.

3.2.1 Standard compatibility The following steps were taken in order to achieve the final results presented in Graph 1, below.

An initial comparison was made at the level of indicators between BioTrade6 and five other organizations: FLO7, FSC8, IFOAM9, MAC10, and SAN11. This led to the development of “compatibility grades,” which ranged from zero (not addressed) to five (full compatibility). These were then used to make an average of all the indicators under each separate criterion, leading to a compatibility grade for each criterion. The same method was used to make a compatibility grade for each principle, using all the grades from the criteria, and for each scheme (at the level of standards), using the grades of the principles.

The analysis was carried out at the lowest possible level, thus minimizing the impact of subjective judgment in denoting the “compatibility grades.” However, the results do not have scientific precision. It is for this reason that they are presented in the form of a chart showing the relative compatibility levels, rather than just giving raw numbers (e.g. 76.543% compatible).

The different levels of analysis have generated a significant amount of tables and documents which, if they had been included in this report, either in the text or as an annex, would have made it unduly long, without adding much information to the one provided in the chart below. As such, they have been omitted, but are available on request.

The results of the analysis show that no one single set of standards addresses all items of the Biotrade Principles and Criteria. Overall, FSC is the most compatible, followed by SAN, FLO and MAC. IFOAM comes last. In terms of equitable benefit sharing, FairTrade comes well ahead. SAN seems to best cover BioTrade Principle 6, right of actors.

6 BioTrade Verification Framework (DIS 20060425) 7 Generic FairTrade Standards for Small Farmers' Organizations, December 2005. Generic FairTrade Standards for Hired Labor, December 2005. 8 FSC Principles & Criteria of Forest Stewardship, April 2004. 9 IFOAM Principles of Organic Agriculture. Final Revision Drafts of the IFOAM Basic Standards, May 2005. D2 Draft Biodiversity and Landscape Standards, downloaded December 2005. 10 Core Ecosystem and Fishery Management: International Performance Standard for the marine

Aquarium Trade. Issue 1 – July 2001.

Core Collection, Fishing and Holding: International Performance Standard for the marine Aquarium Trade. Issue 1 – July 2001.

Core Handling, Husbandry and Transport: International Performance Standard for the Marine Aquarium Trade. Issue 1 – July 2001.

11 Sustainable Agriculture Standards, November 2005

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Graph 1 - Compatibility of standards of selected schemes with the BioTrade P&C

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3.2.2 Product range compatibility The following table compares the BioTrade product groups with the coverage of the same certification schemes. This analysis, much more straightforward than the previous one, is nevertheless shadowed by a certain level of uncertainty. While some schemes (e.g. FLO) are quite precise in identifying their product groups, others, notably IFOAM, are less accurate. This is probably due to the high complexity of the system and the number of different crops under organic certification.

BioTrade product categories FSC SAN MAC IFOAM FLO

Ingredients X1 X2 X5

Fruits X1 X X X

Cocoa X X X

Cut Flowers and Leaves X X X

Freshwater Ornamental Fish 4

Eco-Tourism X3

Caiman skins

Fauna 1 Non-timber forest products (NTFPs), provided they are produced in a forest under

certified management. NTFPs are still relatively marginal in FSC’s work. 2 Wild collection is almost not addressed 3 The SAN and the Rainforest Alliance are establishing an accreditation system for

sustainable tourism, the Sustainable Tourism Stewardship Council. It is not operational yet

4 MAC addresses coral reefs ornamental fish. Fresh water fishes are not yet in its radar screen

5 Wild collection certified on an ”ad hoc” basis. IFOAM wants to develop this field and is organizing a conference on the topic to be held in May 2006

Table 1 - BT product categories and their coverage by selected schemes

As can be seen in Table 1, in terms of product category coverage, compared to BioTrade, SAN and IFOAM come ahead of the others, more or less on an equal foot.

3.4 Lesson for BioTrade There is a clear case for developing a verification system specifically for BioTrade.

At the level of the standard, FSC has a high level of compatibility with BioTrade, but not in terms of product coverage. Following are SAN and FLO, both with good product coverage compatibility. SAN has a significantly better standard compatibility than IFOAM and both have similar product coverage compatibility. MAC fare less well. Although SAN and FLO seem overall “more compatible”, they do not cover all the aspects of BioTrade. This means that no existing scheme can fully cover the specific needs of BioTrade.

Yet, as seen above, BT needs to verify compliance with its Principles and Criteria.

At the same time, BioTrade should not embark on developing a new verification / certification scheme.

The still small market for certification is already well occupied and the arrival of a new scheme would probably attract strong reactions from the existing ones. Besides, respectability in the public eye takes years to build. As BioTrade needs to bring products on

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the market with some kind of on-product claim, it should try to create linkages with existing schemes allowing it to address its specificities within the existing approaches.

At this stage of the analysis, SAN comes out ahead, and BT could/should try to partner with them.

An important outcome of such a collaboration is the establishment of “bridges”, which identify only the missing elements in each standard and add them to the original one, leading to a “SAN +12”. At the time of writing, the collaboration with SAN has started and a draft bridge for ingredients ahs been elaborated. This will be tested in June 2006 in Brazil.

FSC, for its high standard compatibility and IFOAM, for its high market demand, particularly in the ingredient sector, and its good coverage of BT product categories are other interesting cases for collaboration. Annex 2 – Criteria for identifying Partner Organizations – provides more elements for refining this choice.

12 How this “SAN +” would be expressed exactly needs to be defined, notably in agreement with SAN.

Similar agreements with other system would also need to be negotiated with them.

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4 – The EBT Union and Verification

Graph 2 - The EBT Union

Being a member of the EBT Union supposes:

Entrance: Agreeing with the BT Principles, to define and follow a process to achieve them and to have progress monitored. Minimum criteria could be set (e.g no slave labour)

Defining the critical path: in agreement with the BT initiative, including smart targets. Targets and timeframe will depend on many factors, including where in the value chain the member is active, the kind of product, the state of the production, resources available, local conditions, etc.

Technical assistance can be provided at any stage of the critical path, as long as the company is a member (i.e. follows the path).

Assistance in market linkages may happen, after a certain level has been reached.

Claims:

EBT Union Member: following the agreed critical path within the agreed timeframe. Based upon BT Initiative verification.

B2B: once a certain management level has been reached. Based on external/3rd party verification

On product: linked with another certificate (e.g. Organic) e.g. claim of being member of the Union.

If required, certification can be used to authenticate the good operation of the verification system.

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As seen in Chapter 2 – Creating a Guiding Framework for Incentives, a “EBT Union” could offer a useful structure for including companies in the BioTrade programme and accompany them in the path to sustainability. It was also established that a verification system should be built into the Union to ensure that companies do indeed continuously improve at an agreed rate, and offer the possibility to make on-product claims. Chapter 3 – Existing Schemes and their Compatibility with BioTrade reviewed existing schemes and their compatibility with the BioTrade approach. The elements stemming out of this discussion and having an incidence on the establishment of a BT verification system can be summarized as follows:

• As no existing scheme fully covers the needs of BioTrade, there is a need to develop a system that is BT specific. At the same time, BioTrade should avoid adding to the “certification overload” that is falling onto companies, as the market might not have the flexibility to absorb another labelling initiative.

• Thus, it would be opportune for BT to link up with existing schemes, adding to them only what is missing in their approach to satisfy BioTrade’s. The development of bridging modules could help solve part of the issues, leading to a “+” to the existing initiatives, for example “SAN +” or “IFOAM +”, where the “+” would represent the BT addition.

• However, certification may be attractive to only a few of the products and companies working with BioTrade. There is therefore a need to develop a full range of incentives to stimulate producers and buyers alike to participate in the initiative. Many of these are already operational (technical assistance, market linkage), but bringing them in a framework stimulating continuous improvement towards the BT objectives would be most helpful. This framework has been dubbed here the EBT Union.

• By providing a public ethical image to BioTrade, belonging to the EBT Union would in itself be an incentive for being part of it and could help manage branding images of participating companies. This, in turn, would stimulate producers to join.

• As the entrance in the system would not be conditioned by a certain management level, except maybe the exclusion of certain “unacceptable practices”, but by a commitment to continuous improvement, the Union concept would stimulate the latter, even for companies with still a long way to go before reaching sustainability.

• As not only flexibility, but also rigour must frame the system, there is a need to define what an acceptable rate of improvement would be for BioTrade.

4.1 Process to define individual critical paths Benefits such as capacity building, being part of the EBT Union and/or gaining better market linkages should be earned only if certain conditions are met. Generally speaking the fulfillment of an agreed critical path towards sustainability should be one of the key requirements for entering and staying in the Union. The path should include SMART13 targets. However, conditions vary according to a multitude of factors, including geographic conditions, development level, national legislation and culture, place in the value chain and the level of a specific company’s management. Graphs 3 and 4 show, in a simplified manner, potential processes to develop individual critical paths for producers and for buyers.

13 Specific, Measurable, Achievable, Result oriented, and Time bound

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Graph 3 – Possible general framework for the definition of Critical path definition for buyer organizations

It is therefore not possible to develop a master plan applicable to all, but there is a need to elaborate a process for developing and agreeing on the targets on a case-by-case14 basis. This process should be framed by the BioTrade Principles and Criteria, and by the need to set in motion mechanisms that could eventually lead to certification – at least not to take options that would close this door. It is referred to here as the “Critical Path Definition System” (CPDS).

The process is not developed yet. A strong recommendation would be to develop the CPDS in collaboration with an organization experienced in developing such verification processes, possibly leading to certification.

The development of the Critical Path Definition System would set the framework for being part of the EBT Union, provide a clear vision to producers of what is required for them to be within the BioTrade Initiative and would establish the foundations for the whole verification system (see below).

One important element of the CPDS might be the requirement to establish the baseline (so as to adapt the progress path). This could prove an efficient mechanism to collect data useful for assessing the impact of the BT initiative as a whole.

14 A case could be anything from an individual producer to a country, depending on conditions and/or

needs. This should be defined while elaborating the Roadmap system itself.

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Graph 4 – Possible general framework for the definition of Critical path definition for producing organizations

4.2 Verification system The overall verification system proposed here has two components:

• one is monitoring of progress, with growing levels of credibility, • the second is full-fledged certification that should allow on-product claims in

conjunction with existing certification systems, if required. Because the latter must clearly come as an extension of the former, both verification elements need to be built upon the same structure. This way, all steps taken in individual critical paths should lead to facilitated certification, if and when desired.

4.2.1 Critical path monitoring As the CPDS is supposed to provide measurable targets for individual cases, a monitoring system to check compliance with the plan is not a special challenge, particularly at the entrance of the system.

This monitoring system, or validation of progress made according to plan, should imperatively be as light as possible, as mentioned in several places in this report. It must also be as tight as necessary to provide the necessary level of confidence to external parties that the critical path is indeed complied with. Accordingly, it is possible to envisage that, at the beginning – i.e. at the entrance into the system – only a self-evaluation is required. As progress happens and incentives become more tangible (market linkages), the robustness

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will need to increase and a second (buyers) then third party (BioTrade Initiative, independent NGO) validation can be imagined. One further step towards robustness would be the use of professional third party auditors, notably if B2B claims are made. Finally, if required for credibility reasons, a certification body could audit this system. Graph 2 - The EBT Union, on page 19, shows the different layers of verification robustness in relation to claims.

For the proposed verification system to work, it should be usable by any of the entities described (BT initiative, NGOs, etc.).

The monitoring system, to be implemented by different actors in a growing level of independence from the producers and the BioTrade initiative itself, combined with the CPDS would provide a flexible structure, adaptable to many different situations and whose burden (cost) would only be as heavy as necessary. This combination, once established, would also offer BioTrade a relatively simple mechanism to demonstrate progress towards its objectives.

4.2.2 Certification system In terms of robustness, the step following a monitoring system that is audited by a certification body is certification itself. This requires a management standard, an accreditation standard and a (or several) certification body(ies). The whole should be credible to major stakeholders.

Credibility itself is derived from a participatory process for developing the standard(s) and the compliance with internationally agreed norms, particularly ISO guides and standards and WTO requirements15.

While summarized in just four short sentences in the previous paragraphs, setting up a new certification system is a major endeavour: major in term of technical expertise, major in terms of financial resources, major in terms of establishing multi-stakeholder mechanisms; probably so major that it would be way outside the possibilities of the BioTrade Initiative alone. For this reason, it is not recommendable that BT embarks on this adventure.

However, as already mentioned, there would be many advantages in linking with one or several organizations operating certification and ready to look for synergies with BioTrade. If undertaken, this collaboration should lead to the establishment of bridging modules between the said certification scheme(s) and the BioTrade specificities, as already mentioned in paragraph 3.4 Lesson for BioTrade16. This should allow for products for which certification is an option to be certified in one operation and within an integrated system under this or these schemes and additionally wear a BioTrade claim17. Specific BioTrade consideration might include traceability and quality to answer the needs of buyers. The standard comparison provided in Graph 1, in Chapter 3 gives an overview of strengths and weaknesses of each selected scheme, compared with BioTrade. A comment on BioTrade Principles and Criteria, based on this comparison and field tests carried out in Peru, Ecuador and Vietnam is provided in

15 There is a huge and long lasting debate to assess whether and to what extent voluntary

mechanisms are subject to WTO rules. Irrelevantly from the outcome of this debate, which is not to be foreseen in a near to medium term future, it is advisable for any initiative using trade mechanisms to achieve its objectives to comply as much as possible with WTO requirements.

16 on page 17. 17 Most probably, this on-product claim should not be related to product compliance with the BT

P&Cs, but solely to the belonging of the organization to the EBT Union. It is advisable to keep compliance claims at the level of B2B declaration, so as to avoid creating competition to the existing schemes.

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Annex 1.

Similarly the requirements specific to this or these schemes that are not part of BT should be identified, so as to be able to use its or their auditing capacity and relevant part of the system in cases where only the BT claim and not the scheme’s own is necessary.

• Seen only from the perspective of their public recognition and field of operations, the most probable candidates for such collaboration would be those mentioned in the introduction (in alphabetical order): FairTrade (FLO), FSC, MAC, Organic (IFOAM) and SAN/Rainforest Alliance. A list of criteria to choose the best candidates, derived from the requirements identified within this document is provided as Annex 2 – Criteria for identifying Partner Organizations. These criteria and the identification of immediate flag products have allowed to decide to start developing a collaboration with SAN and initiate discussions with IFOAM and FSC. Field test will also allow assessing FSC system and standard.

The first collaborations need to initiate a learning curve in terms of inserting BioTrade with the others. An ideal situation for the future would be to have a series of bridging modules allowing a combination with any of these five systems. For the first one(s) with which BioTrade will collaborate this entails agreeing to design a system that will become open (open to be used by other schemes). This system should also be usable by other actors for evaluation purposes, e.g. self-evaluation or NGO. As mentioned in section 2.4.3, if products come in insufficient quantities for buyers to be really interested or if their visibility for final consumers is not sufficient, it is not worth undertaking a whole certification process. But as the whole system is designed to create an ever-increasing proportion of BT processed products visible for consumers, producers should be ready, or at least should know precisely where they stand, to be able to jump on the bandwagon when it passes. While an important element in creating the necessary flexibility of the verification system and minimizing its burden, this entails a risk of unjustified claims, which could damage the whole BT image. It will thus be important to have strict rules in terms of claims and mechanisms to enforce them (e.g. exclusion from the BT process).

To maximize the flexibility introduced from the beginning of the system, it is important that the BioTrade verification system is suited both for small and remote producers and for bigger companies. It is also important that it can be built gradually, allowing some blocks (e.g. one product) to be operational even if not all of them are in place. This way, lessons can be derived and the process can improve gradually as the system is built (learning by doing). For this to happen, a learning component should be consciously introduced at each step.

4.4 Lesson for BioTrade The continuum from entering the EBT Union to certification allowing on-product claims and passing through the definition of the individual road maps entails that all these different stages are intimately integrated. Thus, being at the top of the ladder, the standard used for certification purposes should be connected with the building blocks of the Critical Path Definition System, which form the base of lower rungs. Conversely, as it is not proposed here to establish a new certification scheme, the CPDS will have to be built so as to integrate as much as possible with the systems that will be chosen for initial collaboration. This specific need implies a careful choice of these systems as they may have a long lasting impact on the whole BT verification mechanism and by extension on the BioTrade image itself. This further entails that compatibility of visions and approaches should be a predominant factor of choice, more than an opportunistic current public recognition of one scheme or another.

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5 – About Costs At this stage, establishing the cost of the proposal is difficult. Several layers of details should be further developed, particularly the possible level of collaboration with other partners. It is therefore important to carry out the analysis of potential partners, flagship products and start defining potential collaborations18.

In general terms, costs will be divided into those relating to the establishment of the different elements of the system, running them and the costs incurred to participants in the programme (or EBT Union).

5.1 Establishing the elements

5.1.1 Critical Path Definition System The Critical Path Definition System (CPDS), as the foundation upon which the whole Union will be built will need to be especially well thought out and will probably be the most difficult to elaborate. It will require, inter alia:

• an analysis of the BioTrade P&C from this specific perspective

• the development of an acceptable framework of requirements for buyers, probably divided into different categories, as per Graph 4, page 22

• a significant amount of consultation with stakeholders, including producers, buyers, NGOs and certification schemes

• a significant amount of technical work, depending on the level of collaboration reached with potential partners

How much incremental costs this represents, compared with “normal” BioTrade activities is not clear, however. For example, technical assistance, which supposes some individual roadmap definition, stakeholder consultation and the ongoing analysis of the P&Cs are already happening. The new task will be to bring this into a directing framework. Once established, this framework should ease the reporting charge for the BioTrade intitiative, as it should incorporate the definition of time bound targets that will demonstrate, if achieved, improved compliance with the BT objectives. The work currently underway with SAN will provide better insights on how much this aspect may cost.

5.1.2 Verification and certification Individual critical paths will provide targets. If well designed, verifying compliance with these targets should not be a major problem. Thus, at least for the lowest levels of verification, the system might be little more than usual project monitoring. At the other end, certification will necessitate the development of bridges with the different schemes. This requires identifying first the “flagship products”, then the elements that need to be added to the chosen certification scheme. Developing a bridge necessitates negotiating with the scheme with which the bridge is developed, comparing the standards, preferably with representatives of the scheme in question, and field-testing.

The entire infrastructure for certification would fall upon the existing scheme, as they have already set in place the mechanisms to do this. This aspect is particularly important in terms of cost efficiency. It will benefit both producers and buyers who may need the existing certificate, and the BioTrade Initiative that would have a certification mechanism available for

18 In fact, this recommendations, coming from the previous version of the document, has already been

implemented and a collaboration with SAN has already been initiated. Field tests in Africa, Colombia, Peru and Ecuador will be developed around ingredients and cocoa. The verification framework will also be adapted and tested to Caimans in Bolivia.

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its own purpose, at the lowest possible cost.

In between, e.g. for B2B claims, either the standards used for certification can be used with a less rigorous verification mechanism, or a derivation of it that should not be onerous to develop.

5.2 Running the Union As the whole system is designed to provide services on demand, e.g. certification only when the market demands it, and minimizes the duplication with existing mechanisms, it should be inexpensive to run, or, to put it another way, the market should pay for what it demands.

Elements such as technical assistance and market linkage are already part of BioTrade activities, so there should be minimum incremental costs. On the other hand, if part of the buyer’s commitments, as part of their roadmap, includes providing funds for assisting producers, then the BT activities might expand while diminishing their cost on the initiative. Such a situation would not arrive from one day to the other though, and buyers would need to be convinced they get a benefit from being part of the Union before they would agree to pay for it.

To allow claims to be made in relation of being a EBT Union member would require mechanisms to check them and take measures in cases of abuse. As long as the initiative has not gained major visibility this should not be an important burden. The day it does become very visible, it hopefully will have the means to operate this control. However, it is important to keep in mind that the future should not be jeopardized by a lack of attention to this problem early on.

It may be that the UNCTAD framework will not be perfectly suitable for operating the Union. If this was the case, it would be necessary to identify whether the Union should be a separate legal person or be homed by a separate legal person (e.g. an NGO).

5.3 Cost of verification for members A clear parallel can be drawn between the cost for running the Union and the cost of being “verified” to be a member. The most onerous verification stage would be certification, but as it would be based on, and operated by an existing certification scheme, the cost would be sensibly similar to those already existing to get the relevant certificate.

5.4 Lesson for BioTrade Even in the current difficulty to put numbers on costs, it can be strongly argued that the proposed system, from incentives to certification, through the whole Union structure would be one of the most cost effective – besides doing nothing.

It is clear however that one of the very next tasks to be done before implementing too much of the recommendations would be to carry out a cost analysis, including potential revenues and savings, as further details are developed.

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6 – Conclusion and Next Steps In its totality, the proposed system (EBT Union and verification) is composed of three distinct but interlinked components: setting up the EBT Union, promoting an ethical image for BioTrade and developing the Critical Path Definition System (CPDS). Each of these elements requires blocks to be in place and/or developed.

6.1 The EBT Union The EBT Union supposes membership rules. These should include:

• A commitment to continuous improvement towards achieving the BioTrade objectives, as expressed in the Principles and Criteria. This entails refining the BT P&Cs in this perspective. As they would become the frame of the EBT Union, they should not be changed outside an approved BioTrade process for maintaining the P&Cs, which also needs to be developed.

• A commitment to participate in the development of an individual critical path towards achieving BT objectives, and implementing it. This requires the development of the Critical Path Definition System and the monitoring / verification system to record progress. Critical paths should be developed for producers and for buyers. They may also be developed for “supporting” organizations, for example NGOs who would be part of it, but are not directly involved in the value chain. This would not imply however that they are not stakeholders on the one hand, or that they could be members without specific commitments to comply with.

• Rules for claims stating when and what can be claimed by a EBT Union member, depending on its situation on its own critical path.

• Rules concerning exclusion to avoid free riders in the system, linked with progress monitoring.

The EBT Union also supposes an institutional setting to ensure its best management. This should be as light as possible. The best options should be identified in parallel with the development of the other blocks of the Union.

6.2 Developing an ethical image for BioTrade products The strategy to bring flagship products on the market to promote BioTrade requires a link with existing certification schemes and being able to add the BT added value to their own claim. This requires finding the ideal candidates, identifying with them the synergies that would benefit both the existing scheme and BT, and developing bridges between their own standard and the BT specific elements. In turn this entails that BioTrade identifies/develops a BT baseline standard19, derived from the P&Cs, probably specific for each product category. As this or these baseline standards would be the basis for the BioTrade consumer visibility, it is extremely important that they are supported by the major stakeholder groups and be clearly identified with BioTrade. Their integrity would need to be ensured, which supposes a process for maintaining them. This process can be based on the one for maintaining the P&Cs, but need not be the same, as the purpose would be different. Annex 1 provides general comments on the current BT P&Cs, while Annex 2 gives some criteria for helping identify the ideal partner.

6.3 Developing the Critical Path Definition System The Critical Path Definition System (CPDS) will be a process to identify the steps, milestones and timeframe for achieving them, suitable for each company, within an integrated

19 A draft has been defined: BioTrade Verification Framework for natural ingredients (DIS 20060425)

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framework. This should ensure that even if levels of management are different, the engagement towards continuous improvement is similar for all EBT Union members. The CPDS would itself be build around the BT P&Cs, and be the building frame for technical assistance and identifying when, and what kind of claims are allowed for EBT Union members. As there are already experiences available amongst certification schemes – directly or indirectly, it would be advisable to work with them in developing the CPDS, to ensure its compatibility with certification, and lowering development costs.

6.4 Next steps The following are important activities that need to happen for the development of the proposed system. The first three bullets can and should happen as fast as possible as they are already identified as important services BT can offer to its partner, have a value in themselves (they do not necessarily entail the development of the full proposal) and their quick realization would be an asset for the BioTrade initiative. Most of the following activities should include some stakeholder consultation, particularly when dealing with standards. While it is always a long and often expensive process, using the existing BT network and collaborating with organizations specialized in stakeholder consultation should make this an acceptable burden. The next steps include:

• Identifying flagship products or categories upon which the whole image building process could start to be built, and those on which to focus so as to rapidly increase the number of processed products that could convey the BT image. This identification may take both strategic and opportunistic arguments into consideration20.

• Developing a baseline BT standard for this (these) category(ies), which may/should include field testing21 and reviewing the BT P&Cs as a framework for the EBT Union22

• Identifying one or several certification schemes with whom to develop bridges and negotiate with them the conditions for implementing these bridges23

• Analyzing in more details the costs and possible revenues for the EBT Union proposal

• Identifying partners with whom to develop the Critical Path Definition System (CPDS)24

• Developing the CPDS

• Developing the EBT Union membership conditions

• Identifying if the different BT verification frameworks should be considered as international standards and the implications and available options in terms of governance

• Establishing a stakeholder map

• Identifying who should administer the Union, the different options and their pros and cons:

o UNCTAD (no change to the current structure)

o Another existing organization (governmental or not)

o Creating a new NGO to home the Union 20 Ongoing. Currently Ingredients, Cocoa and Caimans have been identified 21 Ongoing. Draft developed for ingredients 22 Ongoing, insofar as the draft verification framework will serve as the basis 23 Ongoing. Collaboration started with SAN. Discussion with IFOAM and FSC initiated. Draft bridges

developed with SAN and IFOAM 24 Ongoing. Better definition of the project part of the work to initiated with SAN

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o Make the union a new NGO

o Other.

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Annex 1 – Comment on the BioTrade Principles and Criteria The Biotrade Principles and Criteria have been developed with different objectives in mind including: ex-ante project evaluation, sustainability of initiatives, evaluation of the different projects undertaken under the auspices of BioTrade and certification with the purpose of creating a market space for BT products. As such they represent an ideal state – a general framework that has been developed and approved by the BT stakeholders. However, the different objectives suppose different tools and the lack of adaptation of the P&Cs to specific uses has led several national BT partners (e.g. Vietnam and Peru), and external organizations (e.g. the Global Environmental Facility (GEF)) to adapt them to their specific needs, outside an agreed framework and process. This has led to a variety of versions of the P&Cs, which in turn could lead to a loss of identity of the BT initiative. It is therefore important to start developing both a framework for adapting the P&Cs and specific standards for specific uses, notably for certification purposes. Chapter 6 of the report identifies some of the steps that should be taken in this respect.

This work needs to happen, but will not do so in the void. Several field tests25 of the P&Cs, with a focus on certification have already happened and these experiences form a sound basis for this activity. A detailed analysis, while needed in the rather near future, is not in the scope of this report, however some elements coming out of this experience26 and the comparison carried out between the standards of selected schemes and the BT P&Cs can be summarized as follows. In reviewing and adapting the P&Cs for specific uses, it will be important to check whether the following comments, coming from organizations with possibly different focuses than BioTrade, are important to BT,including (some aspects not included):

• Traceability

• Conservation of water resources

• Soil management

• Community well being

• Planning and monitoring

Other issues have been noted such as a lack of flexibility to adapt to several types and sizes of producers and a lack of consultation outside the organizations directly involved in the Bio Trade initiative.

Community well being is probably an aspect that will need development, because it is one of the three pillars of the CBD and the BioTrade initiative: benefit sharing. This is probably one of the most difficult concepts to define generally and it would be useful to review the work developed within the framework of the CBD and other fora on this aspect and check if this is well included in the P&Cs.

Planning and monitoring, and flexibility issues should be addressed while developing the verification mechanisms and the Roadmap Definition System.

The review of the standards of FSC, SAN, IFOAM, MAC and FLO, compared to the BioTrade Principles and Criteria has also revealed a certain number of aspects that are addressed by these initiatives, but not by BioTrade. These are in the field of chemical use, fertilizer and pesticides, employment conditions and workers rights, housing conditions for workers and the recycling of material.

25 Reports available upon request 26 The Ecuadorian field test provided more an analysis of the P&Cs while the Peruvian one was more

focused on evaluating producers with the P&Cs. As a result of this different emphasis, the points made here mainly stem out of the first case

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Chemical fertilizers and pesticides: There is no requirement in the Biotrade P&C about the use of chemicals, pesticide or fertilizers of any kind. This is covered, however, in all the schemes, except MAC:

• FSC criteria 6.6 to 6.8,

• SAN indicators 6.3 through 6.17 and 8.1 through 8.5,

• FLO (standards for small farmers) indicators 4.4.2.2 to 4.4.2.4, (standards for hired labor) indicators 1.6.1.3, 1.6.1.4, 1.6.1.9, 1.6.2.1, 3.1.1.1, 3.2.2.1.

• IFOAM criteria 1.227.

Employment and Workers BioTrade does not insist that employees need be hired directly by the company or producer, as stated in SAN criterion 5.3.

Nor does BioTrade state that their workers may freely organize to form a trade union in order to negotiate their demands with their employers, as embodied through SAN criterion 5.12 and FLO (standards for hired labor) criterion 1.4 (reference to ILO Conventions 87 and 98).

Housing There is no mention of housing in the BioTrade standards, whereas SAN criterion 5.14 states that adequate housing and services must be provided for their workers.

Recycling: There is no mention of recycling in BioTrade (although mechanisms to minimize waste are cited). Recycling is covered, however, in SAN criterion 10.1, IFOAM criteria 2.1 and 2.4 and briefly in FLO (standards for hired labor) 3.2.2.1.

Health and Safety: BioTrade does not insist on rigorous health and safety measures for workers, or at least these aspects are not pointed out. Health and safety measures are required in FLO (standards for hired labor) criterion 1.6, FSC criterion 4.2 and throughout SAN principle 6.

These gaps have been addressed in their majority in the elaboration of the verification framework for ingredients (DIS 20060425)

27 The textual elements of the IFOAM Principles of Organic Agriculture have been divided into

“criteria” for the purpose of this study. The numbering does not refer to IFOAM’s.

32

Annex 2 – Criteria for identifying Partner Organizations Chapter 3 of this report analyses the standards and product coverage of 5 certification schemes, compared to the BioTrade Principles and Criteria. These are the Forest Stewardship Council (FSC), the Sustainable Agriculture Network (SAN), the Marine Aquarium Council (MAC), the International Federation of Organic Agriculture Movements (IFOAM) and the FairTrade Labelling Organization (FLO). This comparison, the results of which are summarized below, provides a first indication of the schemes’ compatibility with BT, but is not the only point to take into consideration when identifying potential partners.

Scheme Standard compatibility

Product coverage compatibility Overall compatibility

FSC High Very low Low

SAN Medium High Medium high

MAC Low Very low Very low

IFOAM Low High Medium low

FLO Low Medium Low

Table 2 - Compatibility of selected schemes with BioTrade

Market demand of each scheme within the BT product categories is also a very important factor to take into consideration. When it comes to identify flagship products and developing the first bridges, it may even become preponderant, as it is this demand that will fuel the promotion of the BT message. A very detailed analysis of market visibility would require a full-fledged market study, way beyond the scope of the present work. However, based on contacts established during its realization and the personal experience of the authors, the following table can be suggested.

BioTrade product categories FSC SAN MAC IFOAM FLO

Ingredients Medium Low NA High NA

Fruits Medium High NA High High

Cocoa NA Low NA Medium Medium

Cut Flowers and Leaves NA Medium NA High High

Freshwater Ornamental Fish NA NA NA NA NA

Eco-Tourism NA Low NA NA NA

Caiman NA NA NA NA NA

Birds NA NA NA NA NA

Table 3 - Scheme visibility for BT product categories

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Adding to the information above, the following table lists a certain number of criteria that should at least be considered, when deciding on a possible partner. The importance of the different element can vary depending on the purpose of the collaboration (i.e. whether it is for flagship products certification or developing the Roadmap Definition System).

Criteria

Imp

ort

anc

e fo

r ce

rtif

icat

ion

Im

po

rtan

ce

for

CP

DS

Scheme covering the different elements of sustainability in relation to conservation, sustainable use and benefit sharing

Medium High

Already covering a maximum number of products in the BT product categories

High High

Market visibility High Medium

Operational in a maximum number of focus countries of the BioTrade Initiative, ideally through a network of local representations

Medium Medium

Have well-established participatory mechanisms for developing standards

High Low

Operating according to recognized international standards High Low

Open to create synergies with the BioTrade initiative, notably because of similar strategic needs in terms of establishing/maintaining an identity in the “ethical schemes market”

High High

Scheme applicable to small and big companies High Low

Experience in developing group certification Low High

Will/acceptance to develop bridging modules and experience in doing so

High Medium

Experience both in terms of certification and labelling, and in designing technical assistance packages

Low High

Experience in developing producer enabling programmes, gradually bringing them to management levels that are certifiable

Low High

Will/acceptance to design a system that will become open - applicable to several schemes

Medium High

No insistence in using their own logo and accepting other logos beside their own

High High

Table 4 - criteria for identifying potential partners

34

Annex 3 – References

Ghillani P (2004), former Director Max Havelaar Switzerland and FLO Chair, personal communication

ISO/IEC (1996) Guide 2, Standardization and related activities – General Vocabulary, ISO/IEC, Geneva

ITTO (2005) ITTO International workshop on phased approaches to certification. Bern 19 -21 April 2005, in On the Conference circuit, International Tropical Timber Organization, Yokohama

Nestlé (2005) Delivering a shared vision through partnership. The Nestlé Nespresso AAA Sustainable Quality Forum, Lausanne 26 – 27 September 2005

Stenmark P (2003), Environmental Senior Staff, IKEA International, personal communication

TFT (2004) The Tropical Forest Trust, The Story So Far 1999 – 2004. Tropical Forest Trust, Gland

Vallejo N & Hauselmann P (2005) Demystifying the jungle of competing certification schemes. In GTZ Certification Book, Deutsche Gesellsschaft für Technische Zusammen arbeit, Eschborn, forthcoming

WWF (2004) Responsible forestry: MIV toolkit. www.panda.org/about_wwf/what _we_do/forests