Sustainability is a major preoccupation of commodity trading companies. In an industry built around truthworthy and long-lasting business relationships, sustainable development is much more than a concept. Rather, it stands for what is put into practice every day on the ground.
As is to be expected for a industry as diverse as the global commodity trading industry, activity- or commodity-specific best practices have been developed.
For traders, the sustainability imperative can be driven by different factors. While in mining and extractive industries an important challenge is respect for the surrounding environment, in the case of agricultural commodities sustainability is most often associated with the sharing of improved farming or processing techniques. For high-demand products such as specialty coffee or cocao, sourcing quality implies working hand in hand with local producers and striving to establish a win-win-win situation for producers, traders and consumers alike.
A closer look at the FAO's Principles on Responsible Investment in Agriculture
The Food and Agriculture Organisation (FAO) of the United Nations, through its Committee on World Food Security (CFS), has developed and adopted in October 2014 a set of principles on Responsible Investments in Agriculture and Food Systems.
Responsible investment in agriculture and food systems is essential for enhancing food security and nutrition and supporting the progressive realisation of the right to adequate food in the context of national food security.
The principles encompass the entire range of activities involved in the production, processing, marketing, retail, consumption, and disposal of goods that originate from agriculture and aim to address the four dimensions of food security and nutrition - availability, access, stability, and utilization.
Commodity trading companies can play a very positive role as responsible investment in agriculture and food systems refers directly to the creation of productive assets and capital formation. Through their activities, commodity trading firms already engage in the type of multi-stakeholder dialogue promoted by the FAO and actively assist smallholders and farmers in adopting improved agricultural practices and access world markets, while investing in the storage and processing facilities that are needed.
Traders, fair trade enablers
Commodity trading companies play a vital role in bridging market gaps and structuring the production chain. The strong growth in demand for fair trade agricultural products in recent years meant that physical trading firms were able to work with certification bodies, improving living conditions for producers and enabling them to tap into growth markets with higher margins.
FDFA & SECO Publish Guidance on Implementing the UNGPs
STSA warmly welcomes the Guidance for the implementation of the UN Guiding Principles (UNGPs) on Business and Human Rights in Commodity Trading published on 28 November 2018. This is an important step in a dialogue, started in 2013, between commodity trading companies, STSA, representatives of civil society and federal and cantonal authorities. With practical examples, the Guidance illustrates the expectations of the UNGPs and thus also meets an important demand of companies.
Five concrete examples of industry best practices
The Baseline Common Code is a set of principles and practices that serve to pave the way in the understanding and implementation of sustainability in coffee production and processing
Developed a set of environmental and social criteria which companies must comply with in order to produce Certified Sustainable Palm Oil (CSPO).