Photo Credit: Sustainable Food Lab

An IFC Perspective on Sustainable Sugar Production

By Bruce Wise, Operations Officer - Manufacturing Agribusiness Services, IFC

An IFC Perspective on Sustainable Sugar Production

As mentioned in Business Fights Poverty and the CSR Initiative at the Harvard Kennedy School’s recent report on building blocks for sustainable sugar production at scale, IFC has been engaged in sustainable sugar activities since the early 2000s, when we collaborated with WWF to develop better management practices for tropical commodities such as sugar. In the mid-2000s, as multi-stakeholder platforms took off, IFC became a member of many, including what is now known as Bonsucro. We continued with our investment and advisory work to support clients by developing tools such as IFC’s Sugarcane Manual, and we supported clients and sets of companies in programs that moved them closer to Bonsucro adoption—for example the India Sugar program with Solidaridad.

When IFC’s new environment and social performance standard framework was implemented in 2012, we strengthened the use of voluntary standard systems (VSS) in our clients’ supply chains as a means of addressing risks associated with labor and biodiversity loss. IFC recognized that VSS had the potential to become mainstream. Since then, IFC has also researched how VSS can be used as effective tools for transforming markets to a state where codified sustainability becomes the norm. The building blocks framework in the Business Fights Poverty-CSR Initiative report is consistent with that work.

Here are a few of my own thoughts on the building blocks:

1. Awareness and mindsets – As indicated in the report, stakeholders must believe that the triple bottom line—environmental, social, economic—is important. In this case, Bonsucro provides not just the standard itself, but a learning and collaboration platform for raising awareness of both the risks and the potential opportunities that are emerging as the sector changes. We at IFC would like to see these VSS platforms utilized more to help sectors develop a shared vision among private and public stakeholders as a starting point for the development of joint in-country strategies for moving entire country sugar sectors to full market transformation.

2. Policy and regulatory support – Many sustainability standards were developed because there was either an absence of government regulation, or more commonly, weak enforcement of existing law. Therefore, it is important to recognize that as countries improve public sector governance of natural resources, VSS can provide important pilot case studies for governments to build on and support. The report recognizes that if governments can be convinced that sustainability of raw materials production is not at odds with their country’s development agenda, they can become powerful supporters or partners in the process.

3. Implementation capacity – This is weakest at the smallholder production base in virtually all crops dominated by smallholder production. Sugar has an advantage in that the supply base, including smallholders, has to be close to the mill. The mill will sometimes provide services to support outgrowers, and this interaction can be a foundation for improvement. That said, engaging with hundreds, thousands, or in the case of India, tens of thousands of smallholders is a resource intensive exercise that many companies will not invest in. Organizing the production base and the service sector that supports smallholders remains the biggest challenge for the adoption of any new standards, best management practices or technology in agriculture. Catalytic and time-bound donor support to develop the business models needed to promote this shift is justified.

4. Business case – I agree with the authors that more work is required. We recently worked with Shell and Solidaridad to examine the business case for adoption of Bonsucro at the mill level (presented at the Bonsucro Annual General Meeting in November 2014). Research showed the key benefit was operational efficiency gains, both in traditional and modern mills in Brazil, rather than any premiums that were being paid for the certification. This type of evidence makes the case for adoption at the mill a lot easier to argue. But as the report suggests, more research is required to drill down into the case for outgrowers. Growers won’t invest in change if the main beneficiary is the mill.

5. Voluntary Standards and Better Management Practices (BMPs) – The two are not mutually exclusive, and many of the standard systems now include BMPs in their continuous improvement criteria. This would be the natural area where BMPs and benchmarking could provide the deeper technical guidance that a standard system’s documentation doesn’t. Bonsucro continues to work with in-country sugar associations, often sponsors of localized BMPs. Figuring out how established BMPs can be included as part of stepwise approaches towards internationally recognized sustainability standards is a work in progress.

Finally, the level of partnership required to move sectors like sugar forward is huge. I see standard systems like Bonsucro as more than just the owner and administrator of standards themselves, but as the convening platform for these new, uncommon partnerships that will be required if the building blocks are to be assembled in the right places at the right time.

Bruce Wise works in IFC’s Manufacturing Agribusiness and Services (MAS) Department on advisory and technical assistance programs in sustainability commodities. He sits as IFC’s member in Bonsucro and can be contacted at bw***@if*.org.

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