Epic Fail in Sustainable Practices Certification Exposes Flawed System

Who Audits the Auditors?

Recently, the Brazilian Government investigated a number of coffee farms and found that farm workers were working in Slave-like conditions. As shocking as this is in 2018, the brutal reality is that unethical labour practices are rampant not only in Brazil but anywhere where ruthless people in power can get away with exploiting the vulnerable.

This is why conscious, discerning consumers all over the world use certifications & labels to ensure that they buy only products that come from supply chains that are certified to be free from such practices. The label/ certification system is used to reassure consumers of other qualities of produce: organic, free range, local, etc.

And here is the bombshell: at least one of the farms in Brazil that was using slave labour held some of the most trusted certifications: The Starbucks C.A.F.E. Practices certification, owned by Starbucks in partnership with SCS Global Services, a global leader in sustainable practices certification. The same farm also holds the UTZ seal, a respected Dutch sustainable farming certificate.

The Auditor Problem: A single Point of Failure

What is going on here? There are two fundamental problems with any traditional global certification systems:

  1. Certification requires a third party, independent auditor who is supposed to visit the farm at least once a year to go over a checklist; and
  2. The producer has to pay for this audit, which is not cheap.

Because of this, small producers usually cannot afford the certification, therefore they will struggle to access any meaningful market. Large producers, on the other hand, will easily afford the audit. They also know the checklist very well. And because they pay the auditor they plan the trip together. This allows them to set the scene for the inspection and score very high on the audit.

Meanwhile, the auditor understands the economics of this arrangement very well and will always err on the side of getting paid, as it were. Noone should be surprised if auditors themselves cut corners or outright collude with producers.

The whole system sucks, basically.

Peer-to-peer certification

But there is another way — already used succesfully by small, passionate organic producers all over the world — that could eliminate most of these problems AND make certification available to small producers at the same time.

Here is how it works: an inspection date is set and made public. Anyone with an interest in the industry is welcome to join: neighbors/ other producers, buyers, local/ government authorities, workers, etc. Everyone fills in the same checklist (on a publicly available app). The results of the inspection is published on a public, immutable ledger (on a blockchain).

The standard such verified can be accessed with a simple scan of a QR code on the label of the product — at any point on the value chain —and, as a bonus, buyers at Walmart can interact with the producers by means of the same QR code. They can see videos of the farm, they can learn about that particular batch, about the family of the farmer and, if they feel so inclined, they can even tip the producer right there and then, with a tap of a button.

Meanwhile, in the producer community, throughout the year, neighbors, other producers, workers, anyone else is welcome to send updates, including pictures, etc. and raise the alarm at any point when practices may have changed. Make no mistake — the community and neighbors where 18 people are kept in slave-like conditions on a farm KNOWS about this. They need to be empowered.

Elsewhere, anyone interested can study the ledger to learn about specific (tokenized) standards on that particular farm. Certification labels can simply pick and choose those standards that are relevant to their certification from the ledger, and label products as needed. Consumers don’t need to navigate all the arcane standards, they can simply go back to trusting the labels.

Bonus: Stronger communities

Once small producers can get certified, they will start joining forces — as producers have done for centuries — and strengthen the cooperative arrangements that are in place already. If money flows back from the market, (those tips?) they can make investments that will benefit everyone: warehousing and packaging facilities. Crop insurance. Health insurance. They will be able to negotiate with retailers directly, eliminating more middle-men and accessing a higher percentage of value of their product. They will be able to take credits if needed and weather bad years. This will trigger a virtuous circle that will lead to more wealth, better produce and more sustainable practices.

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