De-commoditization - the process of distinguishing products or services - has long been key to maintaining a competitive advantage in business. The pursuit has been ongoing for centuries. From local to conventional farming, over time, commodities have matured to include varying levels of quality or specifications, such as better taste, colour or texture. Commodity trading is rapidly evolving into a race towards differentiation. And the next leg of this race is to tackle the elephant in the room - climate change. Agricultural, forestry and other land use accounts for a fourth of global greenhouse gas emissions, and it is increasingly expected that companies will have to lower their emissions.
Sustainability has become a way of doing a business rather than a "good to have"
Ana Nicod, Head of Climate Change Strategy, ECOM Agroindustrial Corp. Lt
We are living in a time where the food system is broken and in need of transformation in order to ensure affordable food, improved nutrition and that is better for the planet. Many efforts through dedicated organisations, such as the Rainforest Alliance, Fairtrade, UTZ, are working towards tackling this sustainability issue, but it is not enough. While certifications are a big step towards the implementation of ethical and sustainable farming practices, they are rapidly becoming a minimum requirement and a licence to operate for farmers, products and consumers. Sustainability has become a way of doing a business rather than a “good to have”.
Improving existing sustainability practices
The prosperity of farmers is a key element to sustainability, without which they cannot be expected to act on issues such as child labour, climate change or deforestation. Training, inputs and technical assistance in relation to certifications or implementing good agricultural practices are essential to empower farmers economically, socially and in their productivity. For example, if certified with Rainforest Alliance, we can be sure of zero deforestation, which significantly removes the carbon impact. In achieving net zero goals, companies are investigating ways to increase the value of the commodities they work with, such as providing climate services to reduce the carbon footprint of the commodities being sourced using regenerative agricultural practices and removals. A lot of work relates to enhancing existing sustainability practices into carbon footprint goals and building on that. For instance, if a certification can ensure and confirm that there has not been deforestation, that would significantly reduce the carbon footprint of the commodity. Carbon emissions can be further reduced through optimising fertilisers and improving on residue management. The focus is often within the farming units; however, it is also important to ensure the “health” of the general landscape and maintain focus on the other sustainable development goals.
Avoiding greenwashing
The new label of carbon neutrality for commodities needs to be interpreted with caution, especially to head off any greenwashing accusations. First, companies may look at reductions in their supply chain before compensating with offsets in a transparent manner. This strategy ensures that emissions within a product’s supply chain are being tackled in parallel to other carbon removal or reduction initiatives via offsets. This de-commoditization of commodities is drastically changing the future, and is driven by climate action to meet the increasing change in consumer purchasing patterns.
