What are Voluntary Sustainability Standards?
Voluntary Sustainability Standards or VSS are private standards that require products to meet specific economic, social or environmental sustainability metrics. The requirements can refer to product quality or attributes, but also to production and processing methods, as well as transportation. VSS are mostly designed and marketed by non-governmental organizations (NGOs) or private firms and they are adopted by actors up and down the value chain, from farmers to retailers. Certifications and labels are used to signal the successful implementation of a VSS.
In practice, this means that VSS exist in many forms: focused on different economic sectors; addressing varied environmental, social and economic issues; adopted by producers, traders, manufacturers, retailers or service providers; and certified by a broad variety of initiatives.
As of April 2020, there are 264 active VSS worldwide.
Why are they used and where do they come from?
Consumers are increasingly aware of sustainable development issues and are now more than ever willing to pay a mark-up for products and services that are sustainable. But it is difficult for them to verify whether a product or service is actually produced sustainably.
Without this information, producers cannot be compensated for additional costs incurred in keeping production processes sustainable, which means they do not have incentives to switch to sustainable production practices.
VSS emerge as a market-based mechanism that allows producers to credibly signal the sustainable characteristics of their products. VSS also allow consumers to allocate their expenses according to their preferences for sustainability and provide incentives for firms to adopt production processes that are more sustainable.
The existence of VSS systems enables the existence of markets for sustainable products and services.
- By using VSS….
…producers can obtain the mark-up on the price of sustainable goods.
…producers can access specific markets that have a preference for VSS.
…producers can benefit from the higher growth rate of some sustainable markets.
- When some actors use VSS, others may have incentives to also become more sustainable.
- VSS can support the achievement of the SDGs directly, but also through their potential impact on trade (additional value added and diversification through quality).
- VSS may…
…become market access barriers, particularly for smallholder farmers and MSMEs that cannot afford or implement them.
…make smallholders and MSMEs more dependent on larger, more powerful buyers in the value chain.
…displace bad practices – e.g. creation of pollution heavens.
…not be suited to local needs or aligned with local development strategies.
- The proliferation of VSS increases the costs related to information and may lead to the need to adopt multiple standards.
- VSS can be designed in a way that only certain dimensions of sustainability are systematically addressed.