Fairtrade Foundation                            DEF0010

Written evidence submitted by the Fairtrade Foundation

1. Introduction

1.1   Fairtrade in the UK is part of a global Fairtrade system which supports 1.71 million Fairtrade workers in 73 countries around the world. Our vision is to make trade fair and secure a better deal for farmers and workers, contributing to the UK’s wider climate crisis, international development efforts and achievement of the Sustainable Development Goals (SDGs).

1.2   The Fairtrade Foundation welcomes the opportunity to submit to the EAC inquiry. This submission will focus on our views on the UK’s deforestation efforts and in particular the Environment Act 2021 in the commodities of cocoa and coffee, which are popular Fairtrade products.

2. Key messages

2.1   The UK Government steps towards due diligence legislation to prevent deforestation in UK supply chains is a step in the right direction but could go further. In particular, the failure to include human rights as part of the legislation was a missed opportunity, and the limited definition of deforestation to ‘illegal’ deforestation in the producing country is likely to limit the intended impact of this legislation.

2.2   The Foundation is awaiting further details from DEFRA on the implementing secondary legislation. We have urged DEFRA, as part of the consultation and bilaterally, to consider the impact of the legislation on smallholder farmers and the need for the inclusion of purchasing practices and pricing to be included in Due Diligence requirements.

2.3   The ability of smallholder farmers and farming communities to achieve living incomes and wages is vital to halting the growth of deforestation. Poverty fuels the cutting down of trees, as communities struggle to make enough money. Added to continued price pressures in the context of the global cost of living crisis, the impact of climate change on crop production, any attempts to tackle deforestation must consider the livelihoods of those producing commodities at the bottom of our supply chains.

Fairtrade responses to specific consultation questions:

3. In what ways and to what extent are UK value chains (in the form of public procurement, goods, services, or the private sector) contributing to global deforestation?

2.1   Coffee and cocoa are classified as high deforestation risk products[1]. The UK is a significant trader in both of these products, and therefore has a significant role to play in leveraging its influence to tackle the high rates of deforestation.

2.2   Coffee is the one of the world’s most popular drinks, and with demand expected to continue to rise, the rate of deforestation is likely to continue to grow. Coupled with the impacts of climate change of coffee growing regions, deforestation will continue to be a serious issue. For example, a regional study by CIAT in 2015 warns that temperature increases of 2 to 3 degrees will push Arabica coffee production higher into the mountains and forested reserves. The expansion of coffee production will displace indigenous communities and the biodiverse wildlife living at these altitudes[2].

2.3   Similarly, cocoa production has long been associated with deforestation. Cote D’Ivoire and Ghana, which are the top cocoa producing countries, lost 25% and 8% of their primary forests between 2002-2019[3].

4. How effective are the measures to improve due diligence and ban imported products of illegal deforestation in the Environment Act 2021? Do these measures target the right sectors? Given that they do not extend to all products of deforestation, are they adequate?

3.1   The Fairtrade Foundation welcomes the deforestation proposals set out in the Environment Act 2021 as a step in the right direction. At the time of the announcement, the Foundation made clear that it believed the legislation could and should go further.

3.2   The Foundation continues to be disappointed that human rights were not included in the proposals. Human and environmental rights are indivisible, with the UN recently declaring access to a healthy and clean environment as a human right[4]. We made this case at the time[5] and have continued to raise this point in the most recent consultation on secondary legislation.

3.3   In addition to the lack of human rights, we remain concerned that the approach to legality will leave the legislation ineffective. The current proposals, which focus on illegal deforestation in sourcing countries, sets an insufficiently high standard to which companies should be held to account and we remain concerned that it will not be effective in ensuring deforestation-free supply chains. It ought to be acknowledged that legal deforestation is also a cause of climate change, leading to a situation where companies remain complicit in unacceptable levels of deforestation but are able to claim compliance with the law. In a worst-case scenario, governments could even be incentivised to roll back existing laws and protections to “legalise” bad practice. The approach taken by industry in recent years - including global initiatives such as the New York Declaration of Forests - has addressed deforestation in all forms. Moreover, local laws are often insufficient, with weak or non-existent enforcement. We would like to see the government take a broader approach, with the legislation applying to deforestation as a whole[6].

3.4   Moreover, requirements for due diligence must address ‘root causes’ of deforestation. In cocoa and coffee supply chains, the legislation will only meet its objective to curb deforestation if the root causes, including smallholder poverty, complex land and forest governance, climate change and lack of access to information and finance are referenced and adequately addressed.

3.5   This is why the Fairtrade Foundation calls for deforestation proposals to make specific reference to pricing and purchasing practices, which has a significant impact on communities’ ability to earn a decent living.

3.6   There will be no environmental sustainability without social and economic sustainability: farmers being able to earn a living income is a key enabler as well as a precondition to secure the sustainable use of forests and foster a just transition towards sustainable and deforestation-free cocoa and coffee smallholder production. The legislation ought to explicitly recognise the specificities of cocoa and coffee smallholder-driven deforestation by referring to its root causes. Working jointly with partner countries to find relevant solutions to these indirect drivers should be a transversal priority of future partnerships and cooperation mechanisms.

3.7   These engagements need to be backed by a complementary and ambitious Human Rights and Environmental Due Diligence (HREDD) law[7] and guidelines setting out how companies placing cocoa, chocolate and coffee on the UK market should deliver on the right to an adequate standard of living for smallholders. Such guidance should highlight the importance of companies addressing their purchasing practices and paying prices that enable a living income as part of a holistic approach to living incomes.

5. To what extent have the Global Resource Initiative (GRI) Taskforce’s recommendations on deforestation and land conversion been met by the Government?

4.1   The GRI in its recommendations, explicitly mentioned the inclusion of human rights in due diligence measures to tackle deforestation. It is therefore regrettable that the Government has refused to include this in the Environment Act 2021.

6. What role can sustainable certification and Government Buying Standards (GBS), have in tackling deforestation? How can the UK Government support the private sector to reduce its contribution to furthering deforestation?

5.1   The Fairtrade Foundation view is that voluntary certification and sustainability standards organisations can be a very useful tool in supporting businesses to implement their due diligence obligations, but important caveats are needed. The responsibility for compliance remains with businesses. The existence of a certification or standards relationship does not automatically demonstrate compliance with legal obligations which remain with the business as primary duty bearer.

5.2   The services provided by a certifier/standards body to a business may vary considerably. Standards bodies have significantly different requirements from each other, and there may be different support options from any individual standards body. So, the fact that a business references a certification relationship in reporting does not necessarily demonstrate what services are actually being provided or whether / to what extent any services help address specific obligations.

5.3   So, while it is helpful for businesses to seek partnerships with voluntary certification and standards bodies, they will need to be able to show how such partnerships contribute to their ability to assess and prevent deforestation risks. DEFRA may also need to independently verify with the standards body that the business’ reported claims about services provided are correct, to avoid an “overclaim” by a business about the role of the standards body.

5.4   Finally, it is important to understand how voluntary certification works in practice. In the Fairtrade system, auditors verify during periodic or unannounced audits that requirements such as measures to prevent deforestation have been complied with, and there is also a secure reporting mechanism for concerns over possible breaches to be raised safely by anyone. Breaches can be sanctioned (for example with suspension or decertification). Auditors cannot of course be on site the whole time, and so while powerful the process cannot offer a full elimination of risk. Noting the caveats above, Fairtrade is an example of an organisation which can partner with businesses to support in various useful areas, such as addressing underlying causes of deforestation or supporting the management of such risks, alongside Fairtrade’s broader offer to farmers.

5.5   Guidance on certifications should include whether the certification:

5.5.1         Involves rightsholders and civil society,

5.5.2         Has inclusive and transparent standard setting,

5.5.3         Has a credible assurance system with ISO17065 accreditation,

5.5.4         Full member of ISEAL alliance, a membership body which sets good practice in voluntary standard setting and operation

5.5.5         Encourage HREDD and continuous improvement among supply chain partners,

5.5.6         Have processes to identify and address the root causes of human rights and environmental violations, including rightsholder disempowerment and unequal value distribution in supply chains,

5.5.7         Accept their accountability for driving impact and utilize independent impact research to develop their scheme on an ongoing basis.

5.6   The above criteria for certifications are crucial to ensure credible standards which address the root causes of deforestation, including living incomes/wages and the systemic inequality of low prices paid to producers. Independent auditing will ensure that results are fair, while inclusive engagement with stakeholders will help to mitigate potential unintended consequences of the legislation on small holders.

5.7   As an example of best practice, Fairtrade’s highest decision-making body is composed of 50% of Southern producers and our Standards are set via extensive rightsholder engagement. Fairtrade’s sole certifier, FLOCERT is ISO17065 accredited. We have a settled ongoing process to support and learn from research on our impacts. Fairtrade has made a Human Rights and Environmental Commitment and is currently conducting an assessment of its own human rights and environmental impacts. The Fairtrade Code lays out our policies and procedures on ethical issues ranging from whistleblowing to safeguarding of children and vulnerable adults.

For more information, please contact Alice Lucas, Advocacy & Policy Manager

September 2022