Stepwise Approaches as
a Strategy for Scaling Up
Background Report - April 2011
Table of Contents
Executive Summary _________________________________________________________________________ 3
1.
Introduction ___________________________________________________________________________ 5
2.
Study methodology _____________________________________________________________________ 5
3.
Stepwise approaches and scaling up ________________________________________________________ 8
4.
A typology of stepwise approaches _________________________________________________________ 9
5.
Structuring steps ______________________________________________________________________ 11
6.
Subsequent steps ______________________________________________________________________ 14
7.
Timing _______________________________________________________________________________ 15
8.
Verifying _____________________________________________________________________________ 15
9.
Responding to (lack of) progress __________________________________________________________ 17
10. Additional incentives and support _________________________________________________________ 18
11. Revenue models _______________________________________________________________________ 21
12. Success? _____________________________________________________________________________ 22
13. Conclusions ___________________________________________________________________________ 24
Appendix 1: Learning about success factors _____________________________________________________ 30
Cover image: © 4C-Association | Claire Hogg
2
Executive Summary
In September of 2010 the ISEAL Alliance initiated a research study on stepwise approaches as a possible
strategy to help scale up the impacts of voluntary standard systems. Stepwise approaches are initiatives or
programmes that enable producers or enterprises to move in a gradual way towards improved social and/or
environmental performance. The defining feature of a stepwise approach is the structured, stepped path to
performance improvement that it lays out for producers and businesses.
Among the seventeen stepwise approaches investigated in the preparation of this report, some have
improvement requirements embedded within standards. Others keep the stepping up outside of the standard
or combine internal and external steps. Some require improvement within a set time frame; others make
improvement optional. Several cases of stepping from one standard to another are included in the report. The
report details possible advantages and disadvantages of each model.
Most of the stepwise approaches bundle a number of different strategies aimed at reducing barriers to entry
for producers and businesses and supporting them in their efforts to improve performance. The steps
themselves are one strategy. Other strategies include:
•
Marketing (use of a label, for instance)
•
Market access
•
Reduced (or no) entry and audit costs
•
Technical support (capacity building, often free of charge)
•
Financial incentives (such as price premiums)
•
Credit access
When asked which strategy seemed to be the biggest draw for bringing participants into a programme, the
majority of respondents answered, “market access”. Some also mentioned free structured support, credit
access, and price premiums.
As many of the stepwise approaches are quite new, it proved difficult to gather data regarding the
implementation and success of stepwise approaches and thus also to draw firm empirical conclusions about the
effectiveness of individual approaches or about stepwise approaches as a generic strategy. Nonetheless, the
study makes some salient observations and recommendations about stepwise approaches as a strategy for
scaling up:
•
The specific structure of a stepwise approach does not seem to be a significant determinant of success.
Market demand, market access, and the provision of free support appear to help ensure success. Steps
by themselves are not adequate to entice large quantities of hard-to-reach participants to join and
improve performance – other complimentary incentives are needed.
•
Stepwise approaches seek to reduce a number of different barriers to certification. At a minimum, they
reduce entry requirements, which is likely to attract more participants. Few actually eliminate all entry
level requirements, however: keeping some entry-level requirements (i.e. most egregious practices are
eliminated) help control risks to the reputation of the stepwise programme. In addition to reducing
barriers to entry, stepwise approaches also try to keep costs low for participants, often by enlisting
actors higher up in the supply chain to subsidise support and audit costs. The stepwise approaches
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studied here have done less to address access to credit and producer organisation (other commonly
cited barriers to certification).
•
The idea of linking existing standards together to create a stepwise approach is appealing, and the
examples provided in this report show a number of ways this could be done. But the report also details
questions and challenges surrounding these approaches.
•
If stepwise approaches are going to contribute to scaling up goals, it is important to identify a
sustainable business model for each stepwise approach, to pay attention to the supply chain and market
demand when designing stepwise approaches, and to structure the incentives included in stepwise
approaches in such a way that they encourage improvement, not just participation in the programme.
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1. Introduction
The ISEAL Secretariat has been investigating the potential of stepwise approaches as part of its development of
a strategy to scale-up the impact of voluntary standards system. Stepwise approaches are initiatives or projects
that enable producers or enterprises to move in a gradual way towards improved social and/or environmental
performance. In most but not all stepwise approaches, the end goal is certification to a recognised standard. For
these standard systems, stepwise approaches are a strategy for bringing businesses and producers with poor
social and environmental performance into their orbit. More generally, stepwise approaches have the potential
to help increase the supply of certified products and to enhance the collective social and environmental impact
of standard systems.
The defining feature of a stepwise approach is the structured path to performance improvement that it lays out
for producers and businesses. Most stepwise approaches define a limited number of steps along the path to
improvement and set requirements about how and when producers or businesses must comply with each step.
Some stepwise approaches track progress using continuous improvement indicators or customised action plans.
While steps and improvement paths make up the core of a stepwise approach, most of the examples studied
for this report also employ other strategies or incentives (such as marketing benefits, capacity building and
price premiums) to encourage participation in and progression through the stepwise programme. Standards
systems also employ some of these strategies and incentives outside of stepwise approaches to attract and
support producers and businesses. In this sense, the stepwise approaches studied for this report are best
viewed as a package of strategies for encouraging performance improvement, of which steps are only one.
This study reviews a sample of existing experiences with different types of stepwise approaches, across a range
of industry sectors. The objective of this study is to explain how the different stepwise approaches are
Structured, managed, and financed, to examine factors that contribute to success, and to make
Recommendations about the design and use of stepwise approaches for scaling up.
2. Study methodology
The findings in this study are based on the examination of seventeen different stepwise approaches. In choosing
stepwise cases to include in the study, the goal was to cover a range of different stepwise models and sectors
and to choose cases that seem to be working as well as cases that have more challenges. The cases included in
the study do not include all existing stepwise approaches, or even all stepwise approaches in which ISEAL
member standard systems are engaged.
The final sample (Table 1) includes 7 examples from agriculture, 2 each from forestry, the building industry, and
tourism, and 1 each from manufacturing, bio-trade, and fisheries. Thirteen of the 17 cases are linked in some
way to an ISEAL member or affiliate.
Information about all but two of the cases was gathered through semi-structured interviews with staff of
organisations running stepwise approaches. In two cases (Costa Rica’s National Tourism Certification Program
and the Qualihab program) information was drawn from existing case studies. In preparing the interview
questionnaire and analysing the results, we also reviewed previous analyses of stepwise approaches from the
forestry and manufacturing sectors.
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BUILDING
AGRICULTURE
Table 1: Cases included in the study
Stepwise approach
Description
4C Code of Conduct
The 4C Association’s Code of Conduct is intended to be a baseline standard for the
coffee sector. It requires continuous improvement following a traffic light system.
4C Verification to
Rainforest Alliance
Certification
The 4C Association and the Rainforest Alliance have undertaken pilot projects in El
Salvador and Colombia to assist 4C members who had undergone a successful 4C
Verification with implementation of the Sustainable Agriculture Network coffee
standard and Rainforest Alliance certification.
Cotton Made in
Africa
This programme seeks to move African smallholder cotton growing towards
sustainable practices. It includes gradual improvement steps for producers, an
ingredient label for retailers, and support to farmers through agricultural training
and community development programmes.
Nespresso AAA
Sustainable Quality
Program™
Since May 2009, the sustainability piece of the Nespresso AAA Sustainable Quality
Program™ (which also addresses quality and productivity) has been aligned with
the Sustainable Agriculture Network Standard. Thus, Nespresso farmers are now
being ‘stepped-up’ to the SAN standard and Rainforest Alliance certification.
Nespresso has committed to sourcing 80% of its coffee from the AAA Program by
2013.
Starbucks Cocoa
Practices
The Cocoa Practices program is designed to ensure that Starbucks sources
sustainably grown and processed cocoa beans. Described as a supply chain
management tool, the program is managed by Starbucks in conjunction with a
large cocoa processor. Participants (farmers, farmer organisations and suppliers)
are guided to a higher level of performance over a 2-year period.
Social Responsibility
in Tobacco
Production (SRTP)
Managed by Leaf TC, the SRTP programme is a stepwise programme covering a
range of sustainability issues (including social issues, pesticides, and climate). It is
used by a large segment of the tobacco industry and could be applied to other
industries as well. Suppliers develop action plans to improve performance scores.
Tobacco manufacturers who use the programme to manage their supply chain can
choose to set minimum performance standards for suppliers.
UTZ Certified
The UTZ Certified Cocoa and Tea standards have always included a stepwise
approach. The UTZ CERTIFIED Coffee standard has included a stepwise approach
since 2009. The objective is to increase the number of producers participating in
the certification programme by offering an achievable entry level. There are 3
steps – some mandatory requirements and then additional requirements must be
met every year. Producers have 3 years to come into full compliance with all
requirements.
LEED
LEED is a certification program organised by the US Green Building Council with
the goal of transforming professional building practice. The standard can be
applied to any building type and any building lifecycle phase. Four levels of
certification are available: LEED Certified, LEED Silver, LEED Gold, and LEED
Platinum.
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FORESTRY
TOURISM
OTHER
Stepwise approach
Description
Qualihab
An initiative of the State of Sao Paolo’s Housing and Urban Development
Company, this program sets stepped requirements for builders who want to
participate in the construction of low-income housing projects. It establishes four
steps toward compliance with ISO 9000.
Forest Stewardship
Council Modular
Approach (draft)
A proposed FSC Modular Approach programme (FSC MAP -- FSC-STD-30-006
Draft 1-0) was circulated for stakeholder consultation in 2010. FSC MAP
provides a platform for forest management enterprises participating in
credible stepwise approaches to apply the FSC Principles and Criteria in a
stepwise fashion. The first step is ‘legal wood’; the second step is ‘controlled
wood’; and the third step is FSC certification.
Rainforest Alliance
SmartWood
SmartStep
As a way of providing more opportunities and incentives for forest
management enterprises to pursue Forest Stewardship Council (FSC)
certification, Rainforest Alliance developed a service called ‘SmartStep’.
SmartStep is designed to provide forest management enterprises with a clear
path to achieving FSC certification while gaining access to potential market
benefits before achieving certification.
The Forest Trust
(TFT)
Using a transparent supply-chain approach, The Forest Trust helps companies
deliver responsible products. Funds from buyers help to support capacity
building programme for producers, enabling them to meet targets and
standards such as FSC, RSPO, and SA8000.
Costa Rican
National Tourism
Certification
The Costa Rican National Tourism Institute runs a certification programme that
covers four aspects of sustainability – physical biological, infrastructure and
services, client interaction, and the socio-economic environment. Tourism
operators receive a sustainability rating between 1 to 5, depending on how
they score on these fronts.
Rainforest Alliance
Sustainable
Tourism Program
This programme was created to increase demand among consumers for
sustainable tourism and to help small and medium-sized tourism businesses
become certified to meaningful, local certification initiatives. Tourism
operators begin by working towards partial compliance with the global
sustainable tourism criteria and then graduate to compliance with a local
tourism certification programme accredited by the Global Sustainable Tourism
Council (GSTC).
Business Social
Compliance
Initiative to SA8000
BSCI was originally created as a step on the way to SA8000. The code is
derived from SA8000, and they use SAAS accredited auditors. An “applicant
status” programme seeks to make the transition to SA8000 certification easier
and less costly.
Fairtrade shrimp
aquaculture
standard (draft)
This draft Fairtrade standard has several embedded steps and then expects
producers to pursue continuous improvement. The standard requires
certification to either an ISEAL or IFOAM member standard within 6 years.
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Stepwise approach
Description
Sustainable
Fisheries
Partnerships
A Fishery Improvement Partnership is an alliance of buyers, suppliers and
producers that work together to improve a fishery by pressing for better
policies and management while voluntarily changing purchasing and fishing
practices to reduce problems such as illegal fishing and habitat impacts. The
objective is to gradually move fisheries towards the MSC standard and
certification.
Union of Ethical
BioTrade
This standard system defines ethical practices in bio-trade and seeks to
expand the use of these practices by different actors in the industry and across
a supply chain. The programme encourages performance improvement over a
5 year period.
3. Stepwise approaches and scaling up
Scaling up is a goal of all of the stepwise approaches included in this report, but different programmes focus on
different aspects of scaling up: scaling up volumes, scaling up numbers, scaling up quality, or scaling up
sustainability performance. Goals include:
•
increasing the number of participants in a specific standards programme
•
improving the sustainability performance of particular producers or businesses (e.g. small or mediumsize business, small-scale producers...)
•
expanding sustainable practices in an industry (in a particular geographic area)
•
ensuring the availability of a stable and high quality supply of a product through a supply chain, and/or
•
improving the sustainability or quality performance of a particular supply chain.
Many stepwise approaches address more than one of these goals. For example, when the explicit goal is to get
more producers or businesses into certification programmes, stepwise approaches do so because they believe
that joining certification programmes will bring performance and sustainability improvement.
While the goals are similar and often overlap, the subtle differences between them have important implications
for how stepwise approaches are designed and structured.
In programmes focused on attracting producers or business to specific certification programmes, the
fundamental question is how to attract and reduce barriers to entry for new entities. Stepwise approaches
generally operate on the assumption that one of the major barriers to entry is the difference between current
sustainability performance and the entry requirements of standard systems or sustainability initiatives.
Lowering the starting requirements should make it easier for producers or businesses to enter; helping them
improve performance is necessary to enable them to access higher levels of certification. Another assumption is
that strong market signals will alter producer or business behaviour and increase the attraction of certification
programmes. For this reason, stepwise approaches build in market incentives or market pressures.
When the primary focus of a stepwise approach is on improving sustainability performance or quality, the major
challenge to overcome is how best to encourage steady and/or continuous improvement (potentially even
8
beyond the requirements of high-level standards). A common underlying assumption is that participants need
guidance, training, or other forms of support in order to start and continue the improvement process. Nearly all
stepwise approaches include some form of support or training. Some programmes see a lack of information as a
major barrier to improving sustainability performance in an industry. In this case, the focus is on providing
information about what would constitute better performance or how to get there (e.g. through the
requirements of a standard, by defining performance levels required at each step, and/or by establishing the
metrics by which performance will be measured). Others believe that hands on, customised support is
necessary to secure improvement. These programmes prioritise having staff on the ground to work directly
with participants on the particular problems they face.
When the goal relates to the performance or stability of a particular supply chain, stepwise approaches are
characterised by strong involvement of market players above the production level (brands or manufacturers).
Some are run by or for brands or manufacturers who are interested in seeing improvements in their own
suppliers. Other programmes are independent of the supply chain but seek to involve actors in the supply chain
because they believe that this is the most effective way to generate change or create incentives for producers
or an industry more generally.
4. A typology of stepwise approaches
The stepwise approaches studied for this report are all very different, but they can be roughly organised into
groups along two different dimensions.
The first dimension captures the relationship to a standard or code of conduct – does the stepping up occur
outside of the standard or are steps embedded in the standard or code of conduct? When the stepping up
occurs outside of the standard, the goal is to help bring producers and businesses up to the level required for
certification to a particular standard. The alternative is to build steps into a standard, allowing producers and
businesses to become certified at a lower level of performance.
Embedding steps into a standard reduces one barrier to certification – the difference between current
performance and demanding requirements of standards. Reducing this barrier enables standard systems to
attract a wider-range of participants and thus presumably more quickly expand certified volumes. Embedding
steps into a standard also carries some risks, however:
•
How will the lower entry level be perceived by the market?,
•
Will participants actually be able to make the improvements required to stay certified or verified?,
•
Will there be pressure on standard systems to reduce improvement requirements in order to preserve
supply volumes?
Organising the “stepping up” outside of the standard avoids these risks by keeping the process of improvement
separate from the standard itself. This model of stepwise approach faces a different set of challenges:
•
Who will run, organise, and fund the stepping up?
•
If standard systems invest in these programmes, what guarantee do they have that participants will
choose to become certified to their standard?
9
•
For stepwise approaches that rely on market incentives to encourage participation , is there a market for
“transition” products on the road to improvement but not yet certified? Or is the promise of future
certification attractive enough to pull participants up through the steps?
The second dimension used to categorise stepwise approaches is whether or not stepping up is required or
expected. Some stepwise approaches set up a structure to encourage or facilitate stepping up, but the decision
about what level of performance to achieve is left entirely up to the producer or business. In other
programmes, producers and businesses participating in the programme are clearly required or expected to
improve. One model is to expect producers or businesses to improve over time, but not set hard deadlines or
targets that they must meet as a condition for continuing in the programme. Another model is to require
producers or businesses to reach a target level of performance (e.g. certification to a standard) within a predefined time frame.
Making improvement mandatory and setting deadlines puts pressure on producers and businesses to step up,
provided that the threat of exclusion from the programme is real. The defined time frame for improvement
also helps preserve the credibility of the stepwise approach – it clearly communicates that all producers or
businesses in a programme are required to improve their performance. The problem with a standard
timeframe for performance improvement, however, is that it could make stepwise progression infeasible for
some producers or business.
Stepwise approaches that make stepping up optional or are more flexible in their expectations for improvement
avoid this problem – producers and businesses can improve at the speed and/or to the level that makes sense
for them. Stepwise approaches that choose not to set a hard time limit for improvement are betting that the
information and support they provide, and the pressures of market demand, are enough to encourage and
enable producers or businesses to improve over time.
Table 2 presents the typology of stepwise approaches, classified along these two dimensions. As the table
shows, some of the approaches in each category have one additional important distinguishing characteristic:
they link together two or more existing standards or codes of conduct. In these programmes that involve
stepping between standards, participants first reach compliance with one standard or code of conduct and
then work towards compliance with another. To qualify as a stepwise approach, the step between standards
needs to lead to improvement (as opposed, for example, to dual certification to similar standards or a lower
level standard).
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Table 2: Classifying cases included in the study by a typology of stepwise approaches
Steps outside of the standard
Stepping up
required or
expected
Steps embedded in the standard
• FSC Modular Approach Program (draft)
• 4C Association Code of Conduct
• Nespresso AAA Sustainable Quality
Program™
• Union for Ethical Biotrade
• Qualihab
• Rainforest Alliance Sustainable Tourism
Program
• Rainforest Alliance SmartWood
SmartStep
• UTZ Certified standards
• Cotton Made in Africa
Stepping between standards:
• Fairtrade Standard for Shrimp
Aquaculture (draft)
• Social Responsibility in Tobacco
Production (Leaf TC)
• Starbucks Cocoa Practices
• Sustainable Fisheries Partnership
• The Forest Trust (TFT)
Stepping between standards:
• 4C verification to Rainforest Alliance
certification
Stepping up
optional
Stepping between standards:
• BSCI to SA8000
• Costa Rican National Tourism
Certification
• LEED
5. Structuring steps
The defining feature of all stepwise approaches is that they incorporate steps. Both initial steps (the entry level
requirements) and subsequent steps can be structured in a variety of ways.
Entry level requirements
Stepwise approaches operate on the assumption that one of the major barriers to entry is the difference
between current sustainability performance of a farm or business and the entry requirements of standard
systems or sustainability initiatives. Lowering the starting requirements should make it easier for producers or
businesses to enter a stepwise approach that will eventually lead them to higher levels of performance.
Barriers to entry are lowest in programmes that focus on improvement and that are committed to working with
all participants regardless of their starting level of performance. LeafTC’s SRTP tool, for example, can be applied
at any starting level of performance (though manufacturers may also choose to set minimum performance
requirements for their supply chains). The Sustainable Fisheries Partnership and Qualihab do not set specific
minimum requirements for entry. Cooperatives that enter the Starbucks Cocoa Practices programme must
11
primarily meet the company’s initial quality standards. Producers that want to work with The Forest Trust do
not need to be able to meet minimum performance requirements, but must demonstrate that they have no
fundamental barrier to achieving the standards they are aiming for and that they are committed to and have
the resources necessary to make the required changes. To enter Rainforest Alliance’s Sustainable Tourism
programme, tourism operators only need to sign a verification agreement.
Other programmes choose to define the base level of performance required to enter the stepwise approach
(see Table 3). All of the standards with embedded steps require that participants eliminate a series of
unacceptable practices or reach a base level of performance for entry. Similarly, the Nespresso AAA Sustainable
Quality Program makes both quality and compliance with “non-tolerance” criteria conditions for entry.
In the “stepping between standards” examples, entry requirements are defined by the starting level standard,
but additional requirements are set to initiate the step up to the next standard. In the case of BSCI and SA8000,
for example, a good BSCI audit report is required to make use of the expedited transition to SA8000. In the pilot
programmes to move from 4C to RA certification, producers needed to have achieved “average yellow” on the
4C Code Matrix in order to qualify for assistance with the stepping up.
Table 3: Structure of steps
Stepwise approach
Performance
requirements at entry
Structure of subsequent
steps
Top step
LeafTC
None
No defined steps: custom
action plan based on pointbased scoring system
Not defined – continuous
improvement
Sustainable Fisheries
Partnership's Fisheries
Improvement Projects
None
Five defined steps
Show improvements in key
scientific indicators
Qualihab
None
Four defined, cumulative
steps
ISO9000 certification
Starbucks Cocoa
Practices
Demonstrated quality
Two steps defined by
percentage-based scoring
system
Full compliance with zero
tolerance criteria; 80%
with other; minimum
overall compliance for full
supply chain
RA Sustainable Tourism
Program
Currently none (but
entry requirements are
in development)
One intermediary step
defined by percentage-based
scoring system
Certification to local
tourism standard
The Forest Trust
Show commitment and
that no fundamental
barrier exists
No defined steps: custom
action plan
Responsible Sourcing
Guidelines beyond
certification standards (not
required)
FSC Modular Approach
Minimum requirements
Three defined, cumulative
steps
FSC certification
12
Stepwise approach
Performance
requirements at entry
Structure of subsequent
steps
Top step
Cotton Made in Africa
Minimum requirements
Three steps based on traffic
light system
All ‘green’
Custom action plan based on
traffic light system;
elimination of “red” within
two years after 1st
verification
Average “green”
4C Code of Conduct
Minimum requirements
UEBT
Minimum requirements
Custom action plan; specific
objectives to meet in years 3
and 5
Meet all UEBT
requirements
UTZ Certified standards
Minimum requirements
Defined number of
requirements to meet each
year, over 3 years
Meet all requirements of
standard
Fairtrade shrimp
aquaculture standard
(draft)
Minimum requirements
Rainforest Alliance
SmartWood SmartStep
Minimum requirements;
> 1 year away from FSC
certification
No defined steps: custom
action plan
FSC Certification
Nespresso AAA
Sustainable Quality
Program
Demonstrated quality;
meet “no tolerance”
criteria
Series of levels with defined
requirement for quality,
productivity, and
sustainability at each level
High performing farm,
including compliance with
SAN standard and RA
Certification
BSCI to SA8000
Good BSCI audit report
to begin expedited
transition to SA8000
No intermediary steps
SA8000 certification
4C Association Code of
Conduct to RA
Certification
4C’s minimum entry
requirements; at least
“average yellow” to
begin stepping up to RA
No defined steps (in initial
pilot projects)
Compliance with SAN
standard and RA
Certification
Costa Rican National
Tourism Certification
Level 1 certification
Five levels defined by
percentage-based scoring
system
Level 5 certification
LEED
LEED certification
Four levels defined by pointbased scoring system
LEED PLATINUM
certification
Two intermediary steps, each
with defined requirements
Certification to an ISEAL or
IFOAM member standard
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6. Subsequent steps
The most prescriptive approach to defining subsequent steps in a stepwise approach is to define exactly what
performance achievements must be met at each step. FSC’s modular approach requires achievement of “legal
wood” requirements at step 1, “controlled wood” at step 2, and FSC certification at step 3. The advantage of
this approach is that it provides clarity for buyers and consumers about what exactly producers or businesses
have achieved at each step. A disadvantage is that it could make it more difficult for some participants to move
up – if they are unable to comply with one requirement of the next step, they get stuck at the lower step.
LeafTC’s STRP programme moved away from its original system of four pre-defined steps for this reason.
Another approach to pre-defined steps is to create process-oriented steps – steps that define what kind of
activities take place at each step. In Brazil’s Qualihab programme, construction firms working towards ISO 9000
certification follow four pre-defined, process-oriented steps, starting with “D” level (engagement and
diagnostic) and progressing to “A” level (certification). Similarly, the Sustainable Fisheries Partnership defines
five steps from launch, to encouraging improvements through regulation, product specification, and
procurement policies, to finally delivering improvements in the water (e.g biomass, fishing mortality, etc).
An alternative to pre-defined steps approach is to use a traffic light, point-based, or percentage-based scoring
system. Performance is assessed in relation to a single set of standard requirements. The level of compliance
with these requirements defines the steps.
•
The LEED multi-level standard uses a point-based system. Projects qualify for different certification
levels depending on the score they achieve.
•
The Starbucks Cocoa Practices programme uses percentages, requiring compliance with an increased
percentage of criteria each year.
•
In 4C’s traffic light system, compliance with each requirement is assessed as green, yellow, or red
(unsustainable). A 4C Unit can score an “average yellow” on a particular dimension if the number of
“red” criteria in that dimension is balanced by an equal number of “green” criteria.
•
In the UTZ Certified standards, producers must meet a certain number of standard requirements each
year, but have some flexibility about the order in which compliance is reached.
LeafTC’s improvement programme also uses a scoring system, but, in this case, participants are expected to
show continuous improvement of the indicators. The scores are not used to define steps.
Process-based steps and scoring systems are useful for showing activity and/or improvement, but provide less
of a guarantee about that actual state of performance in a particular aspect of sustainability during the stepping
up process. One could score well overall, but still have a low score in an area of special importance to a buyer
or a consumer. One way to address this problem is to combine a scoring system with a set of minimum criteria.
Another is to base the final assessment of performance on the lowest level of performance achievement. Costa
Rica’s National Tourism Certification programme uses this approach. The programme covers four dimensions of
sustainability – physical-biological, infrastructure and services, interaction with external clients, and the socioeconomic environment. The assessed certification level corresponds to the lowest percentage score in any one
of the four areas.
Yet another possible structure for steps is to define performance “modules” organised around different aspects
of performance, but to allow participants to decide in which order they tackle the different modules. An
example of this is the Pro-Forest Modular Implementation and Verification toolkit. The guide divides
14
performance requirements into distinct pieces and provides guidance to producers about how to come into
compliance with each set of requirements. The flexible implementation of pre-defined modules has the
advantage that producers and businesses have some say over what to prioritise and what to postpone. Another
possible advantage of this approach is that it could be adapted for use in stepping up to more than one
standard (e.g. compliance with a certain set of modules would lead to compliance with x standard, and other
set with y standard). None of the stepwise approaches studied here adopted this approach.
Finally, the most flexible approach to defining and measuring steps is to base goals for, and assessment of,
performance improvement on customised action plans, designed for a particular producer, producer group,
business, or supply chain. The advantage of this approach is that steps can be designed to take into account the
specific problems and challenges of each entity. The disadvantage is that it is more time intensive to set up and
more complex to monitor improvement and compliance. A third of the stepwise approaches included in this
report base performance improvement on customised action plans. This includes the Nespresso AAA
Sustainable Quality Program, which has adopted custom action plans (developed in cooperation with either
cooperatives or an exporter for a group of producers) as an alternative to its previous system of pre-defined
steps.
7. Timing
More than half of the stepwise approaches studied for this report require producers or businesses in the
programme to reach a defined performance level within a defined period of time (Table 4). The shortest time
period between first to last step is in Starbuck’s Cocoa Practices: producers have two years to step up to the
target level of compliance. The forestry programmes (SmartWood SmartStep and FSC’s modular approach)
adopt 5 year time limits. The Forest Trust is more flexible in the time frame for reaching FSC certification
(usually 3-5 years), but requires that entities in its programme complete agreed actions each quarter.
In choosing a time limit, a number of considerations come into play. How long can a supplier wait for
performance improvements? How long can a standard system wait to increase supply? How long a transition
period will be credible with buyers and consumers? What speed of improvement is feasible for a given industry,
producer group, or producer?
8. Verifying
Requiring defined levels of performance, and achievement of those levels within a particular time frame, has
little meaning unless performance levels are actually verified, and action taken in response to the findings. It is
logical to expect that stepwise approaches would set up a verification system that follows the stepping up
requirements – if progress is required within a two year period, progress achieved would be verified after two
years. Some of the stepwise approaches examined here adopt that approach (Table 4). The Forest Trust sends
its staff into factories and forests on a regular basis to see if agreed actions for the quarter have been
completed. The Starbuck’s Cocoa Practices programme has targets for year 1 and year 2 and includes an annual
independent verification of progress. The FSC Modular Approach likewise expects to see annual progress and
calls for an annual progress assessment. The more frequent the audits, the more pressure on participants to
make the expected improvements and the more frequent the feedback they receive about their performance.
15
Table 4: Time limits and verification
Stepwise approach
Time limits for stepping up
Verification of progress
4C Association
Show progress 2 years after first
verification
Every 3 years, by independent thirdparty verifier
Cotton Made in Africa
Show progress every two years
Every odd year: signed self assessment;
every even year: independent 3rd party
verification.
Fairtrade shrimp aquaculture
standard (draft)
Meet additional requirements in years 1,
3, and 6
Annual surveillance, audits every three
years
FSC Modular Approach
(draft)
Show progress each year; 5 years to
certification
Every year, by certification bodies
Nespresso AAA Sustainable
Quality Program
Goals defined by cluster, global goals
every 4 years
Every year, by inspection bodies
reporting to management and
certification body
Rainforest Alliance
SmartWood SmartStep
5 years to certification
Every year, by auditors appointed by
SmartStep
Rainforest Alliance
Sustainable Tourism program
2 years, after being allowed to use RA
verification mark
Every 18 months, by assessors
appointed by the Rainforest Alliance,
until ready for certification
Starbucks Cocoa Practices
1 year for first step; 2 years to top
Annually by independent verification
organisation
The Forest Trust
Flexible, but usually 3-5 years to
certification
Frequent factory and forest visits by
TFT staff
Union of Ethical Biotrade
5 years to full compliance
Every 3 years, by certification body
UTZ Certified
1 year for first step; 3 years to top
Annually, by certification bodies
contracted by UTZ Certified
Audits are, however, expensive and time consuming. Stepwise approaches studied here have attempted to
address that problem in a variety of different ways. One is to reduce the frequency of audits. UEBT requires
independent audits only once every 3 years, even though they expect more continuous performance
improvement.
Another option is to lower the expectations for the assessment or vary the type of assessment required. The
Sustainable Fisheries Program and LeafTC use self-assessment. LeafTC’s staff also reviews the self-assessments
to look for inconsistencies and do some site visits each year. Members of the 4C Association (producers and
other members of the supply chain) are required to send annual updates to the Secretariat to monitor their
performance, while verification takes place only every three years. Cotton Made in Africa requires selfassessments every other year, and third party verification every other year (at which time management plans
16
are updated). In the Rainforest Alliance Tourism programme, operators are first verified by assessors appointed
by Rainforest Alliance and then progress to audits by accredited certification bodies.
The agricultural stepwise approaches included in this study generally work with producer groups. Group
verification and a group’s internal control systems can also help reduce costs. Starbuck’s Cocoa Practices has a
system for directly collecting data at the farm, farmer organisation, and cocoa processor level. The
improvement is measured by the change in the scores of each of the entities in the supply chain. In Nespresso’s
AAA Sustainable Quality Program, a sample of farmers is inspected by internal inspectors and a smaller sample
is verified by SAN auditors. The LeafTC programme requires tobacco processors to have a system in place for
auditing the farmers that supply their tobacco and reporting on what percentage of farmers have adopted
certain management practices.
Another approach to cost reduction is to pursue joint verification. For example, the Starbucks Cocoa Practices
verification can also be performed jointly with other certification systems (e.g. UTZ Certified).
9. Responding to (lack of) progress
Taking action in response to improvement (or lack thereof) is as important as verifying progress. In many
stepwise approaches, achieving the required performance level (on time) opens up benefits (see more below).
What happens when supply chains, producers, or producer groups fail to reach a target level of performance?
Are there any consequences for not stepping up?
In general, programmes in which stepping up is optional or no firm deadlines are set for improvement do not
have any pre-defined consequences for not improving. These programmes would prefer to keep working with
participants who have not made sufficient progress. Still, they may include some consequence for failing to
achieve improvement targets. The Forest Trust, for example, encourages buyers to put pressure on their supply
chains by imposing a levy on members whose supply chains do not reach FSC certification. In addition, they will
withdraw from the relationship completely if producers do not make the progress needed to reach the targeted
performance level or standard. LeafTC recently introduced a “minimum requirement” (defined by each tobacco
company for its own suppliers) in order to address the problem that some of the suppliers participating in the
SRTP programme repeatedly failed to improve performance. Tobacco companies are notified when suppliers
fail to reach the minimum requirements, and buyers decide how to respond. In the Sustainable Fisheries
Partnership’s Fisheries Improvement Projects, buyers are similarly informed about progress (or lack of
progress). Instead of establishing minimum requirements, progress reports on all agreed indicators are shared
regularly with potential buyers. As in LeafTC’s programme, buyers can then make their own decisions about
whether or not to continue to buy from a supply chain that makes no progress. The Nespresso AAA Sustainable
Quality Program reserves the right to decrease the volume purchased from a particular supplier if they do not
meet improvement requirements.
The story becomes trickier with stepwise approaches that set hard deadlines for improvement. Incentives for
enforcement of these performance goals can be mixed. The reputation of stepwise approaches (and particularly
of standards with embedded steps) depends on being able to show that they deliver the improvements in
environmental or social performance they promise. On the other hand, if the programme depends on certified
volumes as a revenue stream, disqualifying some participants for not achieving a step reduces revenue or
potential revenue.
17
One way to reduce this conflict of interest is to establish clear verifiable improvement targets and require
independent verification of progress against those targets. In the FSC Modular approach, both are listed as
required characteristics of credible stepwise approaches.
Nearly all of the stepwise approaches studied for this report are quite new, and participants have not yet
reached all the critical stages in the stepped approach. It is thus too early to draw conclusions about how
performance goals will be enforced in practice.
10. Additional incentives and support
The step structure adopted in a stepwise approach provides guidance (information) about how to improve
performance and set improvement targets and also establishes the basis for verifying and acting upon actual
progress. This step structure makes up the skeleton of a stepwise approach. Most approaches supplement this
with additional incentives or support to producers or businesses who are working towards improvement.
A main incentive is attached to the improvement itself. Better practice may increase yields, reduce costs,
and/or improve product quality. Achieving certification also brings management, marketing, and market access
benefits. The more attractive the final certification, the stronger the inherent incentive to improve.
On top of this underlying incentive, stepwise approaches offer additional benefits and support services in order
to sweeten the offer to producers and enterprises, and to increase their chances of success in the stepwise
programme. Any benefits provided to all participants in the programme are best seen as incentives to enter the
stepwise programme; there is no added incentive to step up while in the programme. Many programmes make
some benefits of participation (e.g. use of a label) conditional on reaching a particular performance level. This
helps protect the reputation of the stepwise programme and provides a clear incentive for producers and
businesses to improve.
Labels and logos
The stepwise approaches that permit use of a label directly upon entry are generally those that have higher
entry level performance criteria (Table 4) – such as standards with embedded steps. For example, coffee, cocoa,
and tea can be marketed as UTZ Certified once producers are certified at the entry level of compliance. Those
in the UEBT programme (a membership-based programme) can use the UEBT logo on corporate communication
upon entry.
Other stepwise approaches condition access to labels and compliance language to the level of achievement. In
the Rainforest Alliance Sustainable Tourism program, operators must comply with 50% of the requirements
(based on the criteria of the Global Sustainable Tourism Council) before they can publically claim participation
in the Rainforest Alliance programme. Members of the 4C Association cannot market 4C Compliant Coffee until
they reach an average level of “yellow” on the 4C Code Matrix. FSC’s modular approach would only allow B2B
claims about progress once forest management entities reach the level of “legal wood”. In Rainforest Alliance’s
SmartWood SmartStep programme and the FSC modular approach, forest management entities are authorised
to use different language depending on their level of involvement and progress.
Market access
Another incentive is to offer participants improved access to a market. The best examples of this are the
stepwise approaches run by or for brands, such as Nespresso’s AAA Sustainable Quality Program or Starbuck’s
Cocoa Practices. Participants in these programmes are included in the brand’s buying programme. In
18
Nespresso’s case, stepwise progress towards Rainforest Alliance certification also offers farmers the promise of
higher prices for the part of their crop not purchased by Nespresso.
The Rainforest Alliance’s SmartWood SmartStep programme and Sustainable Tourism programme both make
use of a web listing to market the products and services of participating entities. The Tourism programme also
makes agreements with intermediaries in the value chain to work with participating operators. The Sustainable
Fisheries Programme provides a listing and tracking of progress indicators on their Fishsource website. The
Cotton Made in Africa programme offers an ingredient label for textile retailers to help build demand for cotton
from the programme. The Forest Trust seeks to link participating entities into member supply chains.
Financial incentives
Five of the stepwise approaches offer or plan to offer producers some sort of financial premium for
participating in the programme (UTZ Certified, Fairtrade, Nespresso, Starbucks, and Cotton Made in Africa). In
Starbucks Cocoa Practices, the premium above the market price is split between the farmer and the farm
organisation, offering an incentive to both parties. Cotton Made in Africa offers producers the possibility of
eventually receiving a dividend, but only after the programme reaches a certain level of sales. Cotton Made in
Africa also funds a number of community based projects in CMiA producer communities. Both the dividend and
the projects are funded out of revenues from the ingredient label.
In the case of LEED, builders receive financial incentives for participating in the programme, but not from LEED
itself. Some governments in the United States offer incentives and rebates for achieving LEED certification.
The Rainforest Alliance Sustainable Tourism programme offers discounts on the cost of technical assistance,
with the discount increasing with the level of achievement reached. The Forest Trust takes the opposite
approach – it imposes levies on members whose supply chains do not achieve FSC certification. This gives actors
higher up in the supply chain an incentive to encourage change in the forest management entities and other
actors with whom they work.
Credit
Another way to support participants in their attempts to step up performance is to provide credit. Many of
those interviewed for this study said that providing credit should be part of stepwise approaches. Surprisingly,
few programmes offer credit as part of their programmes now. Starbuck’s Cocoa Practices is working with Root
Capital Verde Ventures and the Calvert Foundation to provide loans to cocoa farmers. UTZ Certified, the
Rainforest Alliance Sustainable Tourism, and Nespresso have pilot credit projects. The Sustainable Tourism
programme also has works with other organisations that provide credit or grants to tourism companies
committed to sustainability.
Reducing entry and audit costs
Another way of enticing participants is to reduce administrative or financial barriers to entry. For example,
several programmes facilitate or provide the initial audits that assess baseline sustainability performance, a
requirement for entry in the stepwise approaches. Many programmes protect producers and businesses from
the costs of participation – audits, membership fees – though there may be costs applied to others in the supply
chain. The Social Accountability International “applicant status” programme allows a Business Social
Compliance Initiative client with a good audit report to make a seamless application from BSCI to SAI (3 to 6
months to reach applicant status) and then another year to certification.
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Technical support and capacity building
Nearly all of the stepwise approaches offer some form of technical support to assist businesses or producers
participating in the programme in improving their operations. An exception is the FSC Modular Approach, which
is a structure set up by FSC to be used by other organisations offering a stepwise approach to FSC certification.
These organisations that may well decide to provide some support.
When support and capacity building is provided, it is usually highly subsidised or free for participants, providing
what could be a powerful incentive to join the stepwise programme. A few programmes charge a fee for the
services (LEED, SmartStep, and The Forest Trust) or aspire to in the future (Rainforest Alliance Sustainable
Tourism Program). In membership-based organisations (4C Association, UEBT, BSCI), fees are used in part to
subsidise support, training, and tools. Cotton Made in Africa uses part of the revenue from its ingredient label
to offer agricultural training.
Some programmes provide the capacity building themselves (The Forest Trust). Another approach is to make
capacity building available by training trainers (4C Association), contracting with locally operating NGOs
(Starbucks Cocoa Practices), partnering with other programmes (e.g. Rainforest Alliance Sustainable Tourism
Program with Tourism Ecuador, Nespresso with Rainforest Alliance trainers), or other actors in the supply chain.
Which incentives are most important?
Asked which incentives and benefits were most critical to the success of stepwise approaches, the most
common answer was market access. Ultimately, producers and businesses join stepwise approaches in search
of stable markets for their products. Stepwise approaches that can guarantee market access and particularly
stable market access – either through a label that is in high demand, a direct link to a buyer, or another
mechanism – are highly attractive. Conversely, stepwise approaches without an obvious market benefit are
much less attractive.
Respondents also considered price premiums, free support, and capacity building to be important incentives.
Several mentioned that including credit would help overcome barriers to making improvements.
Table 5: Additional incentives and support programmes
Stepwise
approach
Technical support or capacity
building
Market access
4C Association
Free/ fee-based in future: help
with initial assessment and
improvement plans; training of
trainers; tools and training
material, project facilitation,
sustainability events
Through membership
concept; In future
more demand-driven
approach
4C to
Rainforest
Alliance
certification
Free support to farmers provided by
pilot project
BSCI to
SA8000
Free for suppliers: training
programme (not specific to step to
SA8000)
Financial
incentives
Credit
20
Stepwise
approach
Technical support or capacity
building
Market access
Financial
incentives
Cotton Made
in Africa
Free: help with improvement plans
and agricultural training
Marketing with textile
retailers
Community
projects; dividends
(planned for)
Nespresso
AAA
Sustainable
Quality
Program
Free: initial assessment;
improvement plan; capacity building
Inclusion in Nespresso
buying programme
Price premium for
producers
Rainforest
Alliance
SmartWood
SmartStep
Fee-based: capacity building and
support
Web listing
Rainforest
Alliance
Sustainable
Tourism
Program
Free (fee-based in future): info
sessions; initial assessment;
improvement plan; tailored training;
help connecting to certification
bodies
Agreements with
tourism websites and
other intermediaries;
website listing
Starbucks
Cocoa
Practices
Free (for farmers): self-evaluation
kit; scorecard on results; training by
local NGO
Inclusion in Starbucks
supply chain
Sustainable
Fisheries
Programme
Free: help with initial assessments
Union for
Ethical
Biotrade
Support and tool as part of
membership services
UTZ Certified
Free / some fee-based support:
initial assessment; improvement
plan; capacity building
Credit
Pilot projects
Pilot credit
programme
Price premium, split
between farmer
and farm
organisation
Loan
programme
(Root Capital,
Calvert
Foundation,
Verde
Ventures)
Price premium for
producers
Pilot credit
programme
11. Revenue models
As with standards systems themselves, most of the stepwise approaches rely on a variety of revenue sources to
cover core operations and to provide associated incentive and support programmes – membership fees, fees
imposed on users of labels, grant support from donors, and grants or in-kind contributions like training by NGOs
and entities, etc. Reliance on donors and NGOs as sources of funding has the advantage of enabling the
21
programmes to remain independent and to protect participants from the costs of the programmes. On the
other hand, it raises questions about the long-term sustainability and scalability of the programme. A number of
respondents mentioned lack of sustainable revenue as a major weakness of the stepwise approach they run.
An alternative source of funding is the brands, retailers, or other businesses at the top of the supply chain. For
example:
•
In the Nespresso and Starbucks programmes, the costs are shared between Nespresso and coffee
exporters and between Starbucks and a cocoa processing partner.
•
In The Forest Trust, 60% of total costs are covered by businesses beyond production in the supply chain
(e.g. traders). The goal is to increase this to 80% in order to reduce dependence on donors.
•
In the 4C Association costs are covered by members and supply chain actors.
•
Cotton Made in Africa receives donor support to get off the ground, but is transitioning to funding based
on licensing fees associated with its ingredient label.
As discussed above, in the majority of cases, the producers or other entities seeking to improve performance do
not pay for participating in the programme or for the support they receive. If required to bear some of the cost,
it is usually the costs of audits, not of capacity building, but several programmes also cover the costs of audits.
Finding a way to fund free support to participants is an on-going challenge. The Rainforest Alliance Sustainable
Tourism programme wants to make aspects of its programme (such as the hotel listing service and verification
assessments) fee-based in the future in order to increase the sustainability of the programme. The 4C
Association will also begin to offer some fee-based support.
The structure of the revenue model affects more than just financial sustainability. Revenue models can also
affect the viability of establishing certain types of stepwise approaches, particularly those that involve stepping
between two standard systems. If stepping from one standard to another involves passing on clients to another
standard system (as opposed to dual certification), then baseline standards that have volume or client-based
revenue models have a disincentive to “graduate” clients. Also, if a goal is to reduce the cost to participants of
support and training, it is not clear which standard system would take responsibility for providing and paying for
the incentives or support needed to get participants to move up from one standard to another; or how those
costs would be shared.
12. Success?
One goal of this study was to determine to what extent the different stepwise models have been successful in
attracting participants and ensuring that they improve performance through the stepwise approach. One main
finding on this point is that it is difficult to draw conclusions about the performance of the programmes at this
time. Information about performance is hard to come by, either because the programmes are still new (2 to 3
years only) and have not hit critical points (such as deadlines for reaching certain levels of compliance) or
because those running the programme are reluctant to share details. In other cases, data on numbers of
participants and production volumes are available, but it is not possible to tease out the effects of the stepwise
approach on these numbers, as opposed to other scaling up efforts an organisation may be making. Nor is it
possible to draw conclusions about the overall impact of stepwise approaches as we do not have a clear view on
whether stepwise approaches are collectively bringing new participants into standards programmes.
22
It is easier to point to examples of programmes that have experienced challenges. The SmartWood SmartStep
programme and the BSCI-SAI step, for example, have had very few businesses participate. For SmartStep, for
example, only 8 forest management entities have entered the programme and only three are still active. The
other 5 have left the programme. UEBT has also had lower uptake and retention than expected.
The survey respondents had some theories about why their programmes had experienced problems. According
to UEBT, some enterprises dropped out because they did not understand the system or think they could
comply. Those forced to join (for example by governments) were the most likely to have problems. To help
address these problems, UEBT is studying the market to understand why enterprises are not joining. They are
also seeking partnerships with NGOs who would be able to help enterprises improve performance.
Cost is a possible reason behind the low uptake in the SmartStep programme – SmartStep is fee-based, while
there are other programmes like The Forest Trust that offer more subsidised support. There are also a number
of other options for obtaining marketing benefits before reaching full certification. Two former SmartStep
participants have moved over to “controlled wood”. If there is a market for a level of sustainability performance
lower than the end goal (FSC in this case), then producers may not have sufficient motivation to make it to the
last step. Compared to the other sectors examined here, forestry has more alternative stepwise approaches and
more demand for products in the “transition” phase.
The BSCI to SAI stepwise programme has been little more than a framework available to businesses that want
to demonstrate performance improvement. Aside from the possible market value of the SA8000 standard,
there were no incentives for companies to make this step. In trying to revitalise this programme, SAI is working
on reducing administrative barriers to stepping up in its “applicant status” programme, making it easy,
inexpensive, and fast for companies with a good BSCI audit report to make the transition.
Aside from low uptake by producers and businesses, two other problems were present in the cases studied
here. One related to the long term financial sustainability of the programme. In programmes that rely heavily
on donor funding, respondents were worried about future of the programme. Those most confident about their
financial future had found a way to generate financial support for the programme through supply chain actors
above the production level (cost coverage, in-kind support, or fees for label use).
The second problem is insufficient demand for products generated through the stepwise programme. 4C
Association has had trouble finding sufficient market demand for the coffee from its programme and will
therefore move to a more demand-driven model in the future. This experience stands in contrast to the
experience of the forestry sector, where there is significant demand for products on lower steps on the
sustainability scale. One respondent remarked that government requirements and the commitments of large
actors in a particular industry are critical to shaping the structure of demand for sustainable and “transition”
products in different sectors.
The study also found some programmes that, at least from the perspective of scale, have been a success. By
linking up with Nespresso’s supply chain, Rainforest Alliance gained access to a large new source of producers
(mostly small holders) for its certification programme. LEED has more than 30,000 registered projects and over
6,000 certified buildings. The Starbucks Cocoa Practices programme includes 42 co-ops and 16,000 individual
farmers. In 2010, the Rainforest Alliance Sustainable Tourism Programme was working with 4% of hotels in
Ecuador (169 tourism businesses) and 5% in Costa Rica (125). The number in the programme has increased
steadily each year.
Notable is that these programmes all have external factors helping to contribute to their success. The Nespresso
and Starbuck’s programmes are driven by brands’ buying programmes. The LEED programme receives some
23
boost from government subsidies and incentives for achieving LEED certification. The Rainforest Alliance
Sustainable Tourism Programme has enlisted the support of national partners (like Tourism Ecuador) to support
its programme.
Though the scale of these programmes is impressive compared to experience of others, there are still some
questions here. LEED is not sure whether all registered projects will eventually be certified or some will drop out
in the process. In the Rainforest Alliance Sustainable Tourism Programme, the number of new hotels reaching
certification each year has been lower than the number entering the programme, particularly in Ecuador. This
may simply be because the programme is still quite young (participating businesses have two years after
Rainforest Alliance verification to achieve certification). Rainforest Alliance has found that not all producers in
the Nespresso programme are equally motivated to make improvements, particularly in the environmental
area. It is possible that they will not all reach Rainforest Alliance certification, which would limit the
environmental impact of the programme. Also from an impacts perspective, Starbucks is a relatively small
player in the world cocoa market; even a highly successful programme for its own supply chain will not begin to
approach the potential impact of the Cocoa Livelihoods Project (funded by the Gates Foundation and aiming to
reach 200,000 cocoa farmers), in which Starbucks is also participating.
When asked what factors contribute to participants’ success in a stepwise approach, the respondents
mentioned little about the structure of the stepwise approaches themselves. The most common answer was
market demand or market requirement. If markets (or governments) require higher levels of sustainability
performance, participants are motivated to make improvements. A second factor is the self-motivation of the
producer or enterprise – some are motivated on their own to produce sustainable products or improve
performance. Those that enter just for marketing purposes have more problems than those who are truly
interested in improving their sustainability performance.
Overall, the message is that stepwise approaches need to do more than set out an easier path for participants
to improve. They need to deliver what the market needs and wants (and possibly build demand for transition
products), so that they can give clients a clear reason to participate. Appealing to market needs and demands
means thinking about the structure of demand (what products, at what level of sustainability, from which
regions, for which market) in the design of the programme. It also means considering what buyers and brands
are looking for in stepwise approaches – a sustainability story, confidence about sustainability performance
levels, reliability of supply, quality of product, or other characteristics. As these factors will differ across sectors,
it is reasonable to expect that successful stepwise approaches will look different in different sectors.
13. Conclusions
What sets stepwise approaches apart?
Many of the challenges that stepwise approaches face are no different from those faced by all standard
systems. Is there sufficient market demand for the product? What forms of capacity building are most effective
at helping participants improve their performance? What would be a sustainable business model?
What, then, is different about a stepwise approach? Are there any advantages for standards systems or for
producers of adopting a stepwise approach as opposed to using a more standard capacity building programme
to prepare participants for certification to a high level standard?
What sets stepwise approaches apart is that they are a structured, multi-faceted approach to encouraging
participants to improve their performance and to become certified. The step structure offers guidance to
24
producers and businesses on the path to improvement and a way to assess whether improvement goals are
being met. This can take the form of a pre-defined step, but some of the stepwise approaches studied here
have found that tracking performance improvements according to a continuous scoring system or individual
action plans is more effective.
Capacity building is one additional facet of these programmes, and an important one in most cases. Most also
offer some other forms of incentives for participants, including marketing and market access benefits attached
to the learning and improvement phase. The preliminary findings in this report suggest that stepwise
approaches that cannot offer these market benefits are unlikely to be attractive. The same is true of the
stepwise approaches that provide little free structured support for participants. The added value of a stepwise
approach lies in finding an attractive and effective combination of incentives and guidance.
That said, it is important to recognise the similarities between stepwise approaches and other strategies that
standard systems use to attract and retain clients. The experiences of stepwise approaches can provide valuable
lessons for standard systems more generally. Likewise, general lessons about business models, barriers to
certification, market demand for standards, and effective capacity building are all relevant for stepwise
approaches.
Do stepwise approaches reduce barriers to entering certification programmes?
The main structural contribution of a stepwise approach to this problem is reducing the barrier that initial
performance requirements might present to poorly performing producers or businesses – offering an initial
step. A few impose no minimum performance level and are willing to work with producers or businesses at any
level. However, dropping all initial performance requirements is not necessarily feasible or desirable. Having
some entry requirements makes producers and businesses demonstrate a willingness to improve before
entering a stepwise approach and using programme resources. Moreover, low initial performance requirement
can pose a reputational risk for the organisations that run stepwise approaches, particularly when participation
opens access to a logo or marketing language. Most of the programmes choose to impose some basic
requirements, such as the elimination of the most egregious practices. In this sense, stepwise approaches lower
the bar, but do not eliminate all initial performance requirements.
A few programmes have found ways to balance the desire to reduce entry level requirements with the need to
protect reputation and have participants show commitment. One way to do this is to require improvement
before allowing use of a logo or brand in marketing (for example, the 4C Association). Another is to require
participants to show they have no barriers to making improvements before they begin and closely and
frequently monitoring achievement of agreed improvement steps throughout the programme (for example, The
Forest Trust).
Low starting performance level is just one of many possible barriers to certification. To what extent do stepwise
approaches address other known barriers to certification? In terms of cost, these approaches do, for the most
part, try to keep costs low for participants, often by enlisting actors higher up in the supply chain to subsidise
support and audit costs. The stepwise approaches studied here have done less to address access to credit and
producer organisation. There are some efforts on credit, but they are not yet mainstreamed in the stepwise
approaches, even though many respondents agree that producers need access to credit in order to meet more
demanding requirements.
In terms of producer organisations, the agricultural stepwise approaches are generally able to work with
individual producers or producer groups. Where farmer organisations are weak or non-existent, organising the
stepwise approach on the basis of these organisations will face problems similar to those that all standards
25
systems face. Moreover, these stepwise approaches do not escape the well-known challenge of figuring out
how to monitor performance and particularly performance improvement of a large group of producers. Still, the
stepwise approaches studied here do demonstrate some flexibility in how groups are defined and administered.
Some operate through supply-chain based groups (like groups of producers that deliver their product to a single
gin, processor, exporter, or trader). Working through supply-chain based groups appears to facilitate offering
market access and marketing benefits as an incentive to participants; it also opens a funding avenue for
stepwise approaches. It was beyond the scope of this study to examine in any detail how well these groups
function, and whether they in any way limit the benefits received by small producers.
Producer knowledge and capacity is a fifth recognised barrier to certification. Nearly all of the stepwise
approaches include some form of support, and most try to make it free to producers and enterprises. As the
goal is learning and improvement, some programmes have turned audit reports into a learning device,
providing feedback to participants on where they stand and what needs improvement. The intensive,
customised capacity building provided through The Forest Trust appears to be one of the factors in the success
of this programme. Respondents from SmartWood SmartStep and UEBT identified lack of (sufficient and/or
free) capacity building and technical support as a possible explanation for the low uptake of these programmes.
An important question for stepwise approaches is how to offer effective capacity building and technical support
in a way that is scalable. Some stepwise approaches outsource the capacity building to the group organisers
(such as traders, exporters, or processors).
At the same time, the models studied here suggest that there are also limits to the ability of capacity building to
bring about full compliance with standards. A number of respondents gave examples of participants who were
simply not interested in making certain improvements, or of requirements that were cost-prohibitive in some
regions. It is still too early to tell how organisations will handle the inability or unwillingness of producers or
businesses to meet all requirements on time.
How could existing standards be linked to create stepwise approaches?
The idea of using existing standards to create a stepped path to improvement is appealing, and the examples
provided in this report show a number of ways this could be done. The way BSCI’s Code of Conduct was
developed facilitates linking it to SA8000 – the Code of Conduct was based on the SA8000 standard. 4C
Association and Rainforest Alliance have developed materials and capacity building to help move producers
between these two standards. Fairtrade’s draft standard for shrimp aquaculture makes the top step in this
stepped standard compliance with an IFOAM or ISEAL member standard (organic or Aquaculture Stewardship
Council). But the examples also point to outstanding questions and challenges.
Will standards that serve as the base level be able or willing to give up producers or revenue to higher level
standards organisations? This is a problem if the base level standard has a volume or producer based revenue
model and if dual certification is not possible.
What is the advantage for a higher-level standard of working with an independent baseline standard rather
than creating a multi-tiered standard under their own brand (like LEED) or creating steps within a single
standard? A multi-tiered standard might lower the brand image of a higher-level standard and would offer
participants the option not to scale up. LEED avoids this problem by making its standard certification the
bottom rung (baseline) and creating additional levels for those looking to demonstrate higher performance.
Creating steps within a single standard places the responsibility for ensuring that participants step up with the
standard system itself; their reputations are dependent on showing that participants can make the
improvements. This reputational risk is lower when the “step up” is located outside of the standard, for
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example in a standard-to-standard stepwise programme. On the other hand, placing the step outside of the
standard gives standard systems less control over the improvement process.
If the step occurs outside of the standard, who will assume responsibility for the costs, services, and incentives
required to bridge the gap between two standards? The 4C Association to Rainforest Alliance stepwise pilots
were supported by grant funding. Relying on donor funding can be a promising route in the short run, but will
limit the ability to take these programmes to scale. In the BSCI – SA8000 case there really is not much activity
associated with the stepwise programme – it is just a structure that companies can take advantage of. This kind
of link is relatively easy to organise, with few costs involved, but unlikely to attract many producers or
businesses.
For future links between standards, other options could be considered. Would buyers that have an interest in
transitioning their supply chain from a base level standard to a higher level standard assume the cost of the
stepwise approach? Would base-level standards be willing to assume responsibility for costs, services, and
incentives associated with facilitating a step up to a higher standards if this link would help increase demand for
their standard by producers and enterprises or by retailers and brands? If base level standards are sufficiently
aligned with higher level standards, then achieving compliance with the base level standard reduces the
distance that producers need to travel in order to reach compliance with higher level standards. Would higher
level standards be willing to pay base level standards a fee to compensate them for their contribution to group
organisation and capacity building?
Can stepwise approaches contribute to ISEAL members’ efforts to scale up the supply of
certified products?
The short answer to this question is yes, but an important conclusion of this study is that not all stepwise
approaches deliver new participants and more product supply in significant quantities. Another important
conclusion is that there is not one successful model for stepwise approaches. Instead, the study points to three
ideas that stepwise approaches need to take to heart if the goal is to scale up supply.
1. Pay attention to the supply chain and the market
Nearly all respondents agree that stable market access is one of, if not the, most important, incentive for
producers or enterprises to join a stepwise approach. If obtaining or keeping this access to the market is
contingent on successfully stepping up, participants have a strong incentive to not just join stepwise approaches
but also step up performance. Engaging actors along the supply chain is a good way to plug into the market.
Partnerships with retailers, manufacturers, and brands help ensure that stepwise approaches are working
towards delivering the type and geographic distribution of products, producers, and businesses that the market
demands and can provide access to stable markets for products.
Moreover, actors in the supply chain above the production level are a potential revenue source for stepwise
approaches. All of the stepwise approaches that are confident about their financial future are receiving some
form of revenue from supply chain actors above the production level. In supply chain management programmes
like Nespresso and Starbucks, they cover all costs. In other cases, they pay membership fees, levies, or provide
in-kind support in the form of capacity building and other types of support.
In addition, supply chains can also be used to identify, organise, and push or pull participants (in large numbers)
into stepwise programmes. Working with supply chain-based producer groups (such as those delivering product
to a particular processing plan, trader, exporter, or brand) offer an opportunity for standards programmes to
reach large numbers of participants. Programmes like the Sustainable Fisheries Partnership make working with
a full supply chain the basis of their approach.
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A related point is that the nature of market demand for sustainable products affects the incentive structure set
up by stepwise approaches. The practical implication of this is that successful stepwise approaches will look
different in different sectors and possibly in different countries. Though we did not take an in-depth look at
specific sectors in this study, a few examples of how sectoral differences could affect the functioning of
stepwise approaches did emerge.
In the case of FSC’s Modular Approach, the levels for stepping up (legal timber, controlled wood and FSC
certified) were all defined with a clear overview of the market demand for these three main types of timber
products. That makes public claims about reaching each transition step valuable. Market recognition of
transition steps could be a double-edged sword for stepwise approaches, however: it could reduce the incentive
to move up to the top level of performance and certification.
In coffee, 4C’s experience suggests that demand for coffee that meets a baseline standard is lower than the
supply. If reaching a lower-level standard or transition step does not open up guaranteed markets, then the
path to achievement of high-level certification needs to be especially clear to producers and enterprises. Also,
extra non-market incentives like the quality of capacity building, the availability of credit, or the ability to
generate cost savings associated with improved management practices take on added importance during the
transition phase. A structure like the 4C verification to Rainforest Alliance certification stepwise approach could
address both issues.
2. Think scale and viability
Funding represents a major impediment to the scalability and long-term longevity of most of the stepwise
approaches examined in this study. Donors and NGOs are the major contributors to most of the stepwise
approaches. In the long run, this threatens the viability of the stepwise approaches and limits the ability to take
them to scale. Thinking carefully about the business models and funding models behind new stepwise
approaches will help ensure that these new approaches are able to make a significant contribution to scaling
up.
The programmes have understandably tried to protect participants from sharing in the cost of running the
programmes. Whether participants could or would be willing to make larger contributions will most likely vary
by market and by sector. In general, it is reasonable to expect that raising costs for the producers and
businesses participating in the stepwise approaches will limit the attractiveness in some areas and markets. On
the other hand, (partial) cost recovery for some elements of the stepwise programmes would be an indication
of demand for and commitment to the programme or the programme’s support activities.
The most promising, non-donor funding alternative for stepwise approaches appears to be funding from
businesses in the supply chain, above the production level. Supply chain actors have a strong incentive to
contribute to stepwise approaches if they help increase and guarantee supply of high quality, certified and/or
more sustainably produced products.
Aside from funding, another possible barrier to scalability is the challenge of verifying improvement. Stepwise
approaches do not escape the problems that normal standards programmes have taking audits and verification
systems to scale. The study revealed a few examples of how stepwise approaches try to address this issue.
Starbucks Cocoa Practices, for example, found the process of collecting data on many farms cumbersome and
time consuming. They will address this problem by moving to digital data capture at origin. Combining audits
with the self-assessment approaches, as done in some improvement programmes, or making audits and selfassessments part of the training are two other possibilities for reducing auditing burden associated with
stepwise approaches.
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3. Provide incentives for stepping up
Stepwise approaches that attract producers and enterprises, but then do not get them to step up, not only fail
to meet their goals; they also undermine the credibility of the approach (or of the standard in the case of
standards with mandatory steps). To increase the chances that participants will work their way through the
steps, stepwise approaches can incentivise improvement, not just programme participation. This study provides
many examples of how to do this. Marketing benefits and price premiums could be delayed or scaled according
to performance level. The costs of training or audits could be reduced for producers or businesses that reach
performance targets, or increased for those that do not. Credit programmes could be made available only to
participants that have reached a defined level of performance or interest levels could vary along the
performance scale. In short, an intentional strategy for developing a comprehensive set of incentives that are
relevant for a particular sector and market could strengthen stepwise approaches as tools for scaling up.
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Appendix 1: Learning about success factors
There are still many unanswered questions about stepwise approaches; and how they will fare as participants
reach critical deadlines for stepping up. It is also unclear what the overall impact of stepwise approaches is.
ISEAL members could learn more, individually and collectively, about stepwise approaches by monitoring and
sharing information about:
•
The number of producers and enterprises entering stepwise approaches
•
The reasons participants give for joining the stepwise approach
•
How many of these participants are “new” to certification versus come from (or are simultaneously
participating in) other existing standards programmes or stepwise approaches
•
The number of participants who successfully achieve each step (on time)
•
The number who leave the programme or are removed from the programme, and at what stage
•
The reasons participants leave the programme and where they go (e.g. transfer to other stepwise
approaches or standards programmes)
•
The effect of stepwise approaches on participants’ sales and revenue
Moreover, collective learning about the structure of demand for sustainable products in different sectors, about
how to organise and work with producer groups, about how to reduce the cost and burden of verification
programmes, and about how to improve the effectiveness of capacity building and improvement programmes
would all be extremely useful for the design of stepwise approaches.
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