Coffee Sustainability Catalog 2016

Coffee Sustainability Catalogue 2016 A collective review of work being done to make coffee sustainable

Coffee Sustainability Catalogue 2016 Š Global Coffee Platform, IDH Sustainable Trade Initiative, Specialty Coffee Association of America, Sustainable Coffee Challenge

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Coffee Sustainability Catalogue 2016 A collective review of work being done to make coffee sustainable Steering committee: Annette Pensel (Global Coffee Platform) Bambi Semroc (Sustainable Coffee Challenge) Joost Gorter (IDH Sustainable Trade Initiative) Kim Elena Ionescu (Specialty Coffee Association of America) Author: Sanne Steemers (Valued Chain) Contributors: Matthew Quinlan & all respondents that provided input in interviews and2016 a survey Coffee Sustainability Catalogue Š Global Coffee Platform, IDH Sustainable Trade Initiative, Specialty Coffee Association of America, Sustainable Coffee Challenge

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Foreword Coffee Sustainability Catalogue 2016 The coffee sector has invested heavily in sustainability for decades, recognizing that we must ensure our ability to meet rising demand for coffee while also increasing the prosperity and well-being of producers and conserving nature. In 2014, leaders in the sector came together to develop a vision for coffee sustainability that resulted in Vision 2020: a call for improved alignment within the sector on our sustainability efforts.

In late 2015 the Global Coffee Platform, the Specialty Coffee Association of America and the Sustainable Coffee Challenge jointly recognized the need to inventory existing efforts to make coffee a sustainable agricultural product, understand who is doing what sort of work, where the investments are going and how we can better understand and share our impacts and experiences.

We are grateful for the collaboration and participation of over 80 respondents in this first-ofits-kind catalogue of efforts underway to increase sustainability within the coffee sector. This report, which synthesizes the contributions of those respondents, attempts to organize this work into a coherent strategy that recognizes the role and contribution of actors throughout the sector – retailers, roasters, traders, producers, governments, certification organizations, NGOs and many others.

We hope that this study sheds more light on the tremendous efforts already underway to advance sustainability in the coffee sector and catalyses the additional collaboration and investment necessary to achieve our shared sustainability objectives.

Coffee Sustainability Catalogue 2016 Š Global Coffee Platform, IDH Sustainable Trade Initiative, Specialty Coffee Association of America, Sustainable Coffee Challenge

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Table of contents Coffee Sustainability Catalogue 2016 • • • • •

Executive summary

•

HOW: collaboration for strategy, funding and measurement

• • •

Appendix A: current initiatives framework: overview of current sector strategies

WHO: the actors in coffee sustainability WHY: what we aim to achieve WHAT: our activities WHERE: geographical focus

Appendix B: stakeholder directory Appendix C: list of respondents

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Executive summary A collective review of work being done to make coffee sustainable

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WHO WHY WHAT WHERE HOW

Wide involvement in sustainability dialogue Good mix of value chain actors and partners, but low representation of government and specific stakeholder groups Source: interview and survey respondents

 Partnerships between coffee companies and non-profit organizations are common practice and mentioned as a strength by many respondents.

Sustainability stakeholders in and around the value chain Roaster

 Sustainability is on the agenda of most large value chain actors.

23%

Trader Producer (organization)

47%

Exporter

20%

Retailer

7%

• Low inclusion of specific stakeholder groups in our sample of the current sustainability dialogue: producers, specific large consuming countries in Asia and Europe (Italy, France and Eastern Europe), smaller roasters and retailers that together represent a large share of total coffee volume, governments, service providers in inputs and finance.

Non-value chain actors

Representation by region Sustainability stakeholders included in mapping (headoffice location)

45%

Share of consumption (ICO 2014)

34%

Share of production (ICO 2014/15) 11%

Europe

North America

Africa

32%

18% 7% 20%

57%

Latin America

11% 8%

21%

31%

Asia

Source: interview and survey respondents, ICO

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WHO WHY WHAT WHERE HOW

Impact priorities aligned with Global Goals Social and economical impact together with climate action are pursued by most respondents, but individual priorities vary Source: interview and survey respondents

 Objectives are naturally aligned with UN Global

Top 5 coffee sector desired impacts

Goals (Sustainable Development Goals).

No Poverty

 Most respondents share the consensus that economic sustainability is a pre-requisite for prosperity and well-being of producers and environment conservation.

Climate Action

Decent Work And Economic Growth Responsible Consumption Better Coffee Quality

Prosperity and well-being of producers Forest, water and soil conservation Sustained supply of coffee

• Respondents are missing one documented

Prioritization by respondent type

• Priorities vary between individual respondents and any shared vision needs to allow for different practical definitions to meet the various aims of actors involved.

% of respondents prioritizing this impact in their top 5

shared vision on sustainability.

60% 50% 40% 30% 20% 10% 0% Forest, water and Prosperity and well- Sustained supply of soil conservation being of producers coffee coffee value chain

non-value chain actors

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Sustainability embedded in business models Certification is common business model, several other activities are introduced, but strategy is rarely fact-based  As a sector, we jointly have experience to

Sustainability activities

address most needs. Experienced respondents are willing to share best practices and lessons learned.

Agricultural Extension Services

 Certification/verification is a common business

Social Inclusiveness

model included in most sustainability initiatives.

 Coffee value chain has largely integrated farmer outreach in business as usual.

• Identify and share tools and best practices for supply chain services.

• A sustainable smallholder farm is diversified, sufficiently large and inclusive, but this needs to be more widely addressed in programs.

Business Support

Traceability And Assurance Access To Finance Incentives Access To Inputs Demand Generation Diversification Support Value Addition In Origin Logistics Services Disaster Relief 0%

20%

40%

60%

80%

100%

% of respondents including this in their programs

• Develop strategy based on facts and research.

Increase involvement from governments in embedding measures in policy and law.

Certification/verification

Supply chain services

Non-coffee activities Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Geographical focus follows supply & demand Geographic focus follows flows of coffee and origin needs, with risk of overlap in East Africa, and some origins left out Source: interview and survey respondents, ICO

 Several volume origins have embedded sustainability in business as usual.

 Focus countries for sustainability mainly prioritized because of quality, potential productivity increase and supply risks.

Sustainability focus of main consuming regions 60% 30% 0% LatAm

 Strong regional sustainability relations

% of ICO production 2015/16

programs likely reach out to the same farmers.

Discuss justification of current investments in East Africa in relation to possible overlap, efficiency and impact achieved.

North American respondents

European respondents

• Innovation budget is mainly focused on Latin

• The Tanzania case illustrates how different

Africa

% of respondents active in sustainability in this region

between North and Latin America, and between Europe, Africa and Asia building on current supply and demand.

America. Budget per farmer in Africa is low, partly attributed to economies of scale, but also to low volume per farmer resulting in high cost per MT which puts pressure on cost.

Asia

Innovation and scaling projects per region 100%

$600 $519 $423

$400

50%

$256

0%

$200 $-

LatAm

Asia

Africa

Innovation projects >$500 per farmer Scaling projects <$500 per farmer Average budget per farmer Source: data provided by donors, public spending databases, interviews

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WHO WHY WHAT WHERE HOW

Strategy, funding and measurement With current approach we need until 2045 to become a ‘sustainable’ sector Source: data provided by donors, public spending databases, interviews, Valued Chain

 Collectively, the sector has a lot of experience

overlap is less than perceived.

 Annual available budget of 350M$ (2% of

400 M$ 350 M$ 300 M$ 250 M$ 200 M$ 150 M$ 100 M$ 50 M$ 0 M$

• Ensure that variety in platforms does not lead

via a platform or fund. Explore carbon financing for funding coffee sustainability.

• Impact measurement not yet embedded in sustainability work, because of cost and effort.

1,5% 1,0% 0,5% 0,0%

Annual private sector premiums paid Annual private sector budget (excl premiums) Annual other funding Annual donor budget

Estimated time to become a 'sustainable' sector # farmers (millions)

• Explore pooling resources by investing jointly

2,0%

350 M$

Estimated total annual budget

green coffee value), in sector with low margins.

to a scattered approach by coordinating between platforms. Balancing inclusiveness and ability to act of platforms.

2,5%

% of green coffee value

 Existing platforms have trust of members and

Estimated current annual budget for coffee sustainability in relation to green coffee value Annual total budget

in developing sustainability programs.

Attributed to experience, most respondents feel comfortable with communication, collaboration and learning.

20 10 0 1985

2000

2015

2030

2045

2060

2075

time to implement current sustainability approach/definition At current implementation speed (350.000 farmers/year) At historical realized implementation speed (140.000 farmers/year) Producers reached to date

Source: interviews, Coffee Barometer, Valued Chain

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Coffee Sustainability Catalogue 2016 Mapping initiatives, understanding impacts and identifying gaps

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WHO The actors in coffee sustainability

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WHO WHY WHAT WHERE HOW

Coffee sustainability stakeholders Coffee value chain actors are supported by a large number of other public and private organizations Source: interview and survey respondents

Source: interview and survey respondents

Respondents in and around the value chain

Respondents in coffee value chain

Roaster

13% 47%

Coffee value chain 53%

44%

Non-value chain actors

•

The sample of participating organizations is representative for the membership and network of GCP, IDH, SCAA and SCC. Roasters and traders are well represented, whereas many unorganized producers are less active in the international sustainability dialogue.

High number of non-profit organizations compared to coffee value chain actors. Partnerships between coffee companies and non-profit organizations are common practice and mentioned as a strength by many respondents.

Producer (organization) Exporter

37%

•

Trader

Retailer

Types of non-value chain actors NGO 7%

Platform / partnership

10% 10%

49%

Government / public Research

24% Service provider / supplier Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Value chain representation Roasters and traders lead the sustainability dialogue, producer and retailer representation is limited • Sector has an hourglass shape: volumes are concentrated with a few large roasters and traders, whereas the top and bottom of the value chain have many more smaller actors.

• Large roasters and traders are considered to be leading the sustainability dialogue. Some small roasters are specifically committed to integrating sustainability. Involvement of retailers in sustainability is limited, and often mainly a certification policy managed by their private label roaster and/or trade supplier.

• Involvement of producers and local exporters is limited, attributed to a lack of organization and resources, and language. Some stakeholders believe that this underrepresentation also relates to a demand-driven agenda more than real needs, although this is debated by others.

Coffee value chain actors - overall

Coffee value chain respondents Retailer

Coffee value chain

Coffee value chain

Retailer Roaster Trader Exporter Producer (organization)

Roaster Trader Exporter Producer (organization)

# estimated large actors

500

1.000

1.500

2.000 >2.500

# estimated small / other

Source: estimate Valued Chain

0

5

10

15

20

25

# actors included in mapping Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Enabling environment representation Sector is supported by civil society and research, but needs more government involvement • Public representation in the sustainability dialogue is still considered too low by most respondents.

Government involvement is needed for an effective enforced legal framework and extension to farmers.

• ICO is an exception but has only a representative role, whereas a few producing countries have national platforms where government participates. The UN "Protect, Respect and Remedy" Framework for Business and Human Rights developed by Special Representative John Ruggie provides a starting point for defining roles and responsibilities.

• Larger involvement of service providers especially in inputs and finance is considered a success factor in realizing a sustainable sector, as inputs and finance are a pre-requisite for impact in agricultural practices. Several respondents suggest that a number of large industry associations in consuming countries should become more involved in sustainability.

Ruggie framework: Protect, Respect, Remedy The State Duty to Protect The Corporate Responsibility to Respect Access to Effective Remedy

Non-value chain actors

Non-value chain respondents NGO Platform / partnership Government / public Research Service provider / supplier 0

5

10

15

20

25

# actors included in mapping Source: UN "Protect, Respect and Remedy" Framework

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Stakeholder representation by region Sustainability agenda appears to be influenced mainly by consuming regions, missing certain markets and many origins Source: interview and survey respondents, ICO

• Representation is based on the headoffice location of the organization which causes some bias, especially some very large roasters are based in Europe and market their coffee globally. Even correcting for this bias, sustainability seems to be led from consuming regions Europe and North America.

• Europe is missing representation from large consuming countries including Italy, France and Eastern Europe. Several respondents believe this is partially caused by a lower interest in sustainability, and by a dominant national regulatory approach from government reducing the interest in international dialogue.

• Representation of producing regions with domestic markets in Africa, Latin America and Asia is low. There is a partial bias following the decision to conduct the survey only in English.

Respondents however believe that producer representation in the international dialogue is low, even when corrected for this bias.

Representation by region Sustainability stakeholders included in mapping (headoffice location)

45%

Share of consumption (ICO 2014)

34%

Share of production (ICO 2014/15) 11%

Europe

North America

Africa

32%

11% 8%

18% 7% 20%

57%

21%

31%

Latin America

Asia

Sustainability stakeholders by country in Europe Switzerland 5% 5%

Netherlands 26%

10%

Germany United Kingdom Spain

23%

26%

Belgium Italy Norway

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

WHO: summary of strengths and gaps Building on existing collaboration and commitment, the agenda should address inclusiveness Strengths already achieved:

Gaps and challenges going forward:

 A good mix of value chain actors and other

• Low inclusion of specific stakeholder groups in

stakeholders.

 Partnerships between coffee companies and non-profit organizations are common practice and mentioned as a strength by many respondents.

 Sustainability is on the agenda of most large value chain actors.

our sample of the current sustainability dialogue:

• Producers • Specific large consuming countries in Asia and Europe (Italy, France and Eastern Europe)

• Smaller roasters and retailers that together represent a large share of total coffee volume

• Governments • Service providers in inputs and finance

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WHY What we aim to achieve

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Current collective desired impact People planet profit widely recognized as sustainable impact categories, large overlap with global goals Prosperity and wellbeing of producers

Forest, water and soil conservation

Sustained supply of coffee

No poverty

Clean water and sanitation

More coffee availability

Zero hunger

Affordable and clean energy

Better coffee quality

Good health and wellbeing

Climate action

Stable coffee prices

Quality education

Life on land

Value addition for improved margins

Gender equality

Sector trusted by society UN Sustainable Development Goal

Decent work and economic growth Coffee Sustainability Catalogue 2016

Responsible consumption and production

Coffee sector objectives

Source: UN, interview respondents, Valued Chain

Š Global Coffee Platform, IDH Sustainable Trade Initiative, Specialty Coffee Association of America, Sustainable Coffee Challenge

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Impact priorities aligned with Global Goals Social and economical impact together with climate action are pursued by most respondents, but individual priorities vary • 4 out of the top 5 coffee

Prioritization of desired impact

sustainability impacts link directly to UN Global Goals (SDG’s 1, 13, 8 and 12).

No Poverty Climate Action

Decent Work And Economic Growth

• Most stakeholders are

Responsible Consumption And Production

driven by social impact, with profit being the main shared interest, and climate change considered the largest risk.

Better Coffee Quality Value Addition For Improved Margins Gender Equality More Coffee Availability Stable Coffee Prices

• No poverty is pursued

Good Health And Well-Being

by most but only half of the respondents, priorities vary between individual respondents.

Clean Water And Sanitation Zero Hunger Quality Education Life On Land

• Desired impacts are

Sector Trusted By Society Affordable And Clean Energy 0%

10%

20%

30%

40%

50%

60%

% of respondents prioritizing this aim in their top 5

Prosperity and well-being of producers

Forest, water and soil conservation

overall aligned, with no significant differences between regions and types of actors.

Sustained supply of coffee

Source: interview and survey respondents

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Supply impact more important to value chain Desired impacts are overall aligned, with economic and commercial impact more important to coffee value chain actors • Respondents in the value chain (mainly

• Most respondents share the consensus that economic sustainability is a pre-requisite for prosperity and well-being of producers and environment conservation.

• Most programs are executed in partnerships between profit and non-profit actors, which should ensure impact is balanced.

• Whereas profitability is a shared aim for most, the focus varies between volumes, quality, price and cost.

Prioritization by respondent type 60%

% of respondents prioritizing this impact in their top 5

roasters and traders) prioritize economic impact, whereas non-value chain actors more frequently pursue social and environmental impact.

50%

40%

30%

20%

10%

0% Forest, water and soil conservation

Prosperity and well- Sustained supply of being of producers coffee

coffee value chain

non-value chain actors

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

WHY: summary of strengths and gaps We are aligned on activities and aims, but relation between implementation and impact is rarely explicit Strengths already achieved:

Gaps and challenges going forward:

 Objectives are naturally aligned with UN Global

• Respondents are missing one documented

Goals (Sustainable Development Goals).

 Most respondents share the consensus that economic sustainability is a pre-requisite for prosperity and well-being of producers and environment conservation.

shared vision on sustainability.

• Priorities vary between individual respondents and any shared vision needs to allow for different practical definitions to meet the various aims of actors involved.

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WHAT Our activities

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Current initiatives framework Current individual sustainability strategies and theories of change are classified in a theory of change framework WHAT / Activities

WHY / Motivations Implementation

Outcomes

Policy / law

Extension

Yield / productivity

Research

Business support

Quality

Sustainability definition

Social and community

Price

Platform

Disaster relief

Cost

Diversified farm & household

Resilience

Impact Profitability

Enablers

Prosperity and well-being of producers

Forest, water and soil conservation

Sustained supply of coffee Access to inputs

Cashflow

Access to finance

Market access

Logistics

Inclusivity

Incentives

Labour conditions

Traceability & assurance

Ecosystem services

Value addition in origin

Green house gas reduction

Demand generation

Coffee Sustainability Catalogue 2016

Source: Matthew Quinlan, interview respondents, Valued Chain

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Common implementation activities Certification is the common business model, additional activities are introduced • Almost all programs include

Sustainability activities

outreach via agricultural extension services.

Agricultural Extension Services Business Support

•

Certification is the common business model, including consumer awareness, social inclusiveness, traceability and assurance and incentives.

•

Business support, access to inputs and access to finance are recognized as important but challenging with a lack of best practices available.

Social Inclusiveness And Community Welfare Traceability And Assurance Access To Finance And Risk Management Incentives Access To Inputs Demand Generation And Consumer Awareness

• Value addition via grading or

Diversified Farm And Household Support

washing is gaining interest.

Value Addition In Origin

•

Logistics Services Disaster Relief 0%

10%

20%

30%

40%

50%

60%

70%

80%

% of respondents including this in their programs Certification/verification

Supply chain services

90%

Fewer programs have activities outside the coffee value chain. Diversification and disaster relief are least addressed.

Non-coffee activities

Source: interview and survey respondents

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Common enabling activities Dialogue and sustainability definitions are well-developed, fact-based research and government regulation are needed Source: interview and survey respondents

• Platforms and partnerships are common and

Enabling activities

Enablers

Platform

47%

Sustainability Definitions

45%

Research Policy/Law

32% 18%

% of respondents executing this activity

appreciated by respondents for sharing lessons learned.

• Many recognize the need to define sustainability in a certification code of conduct, supplier code, or national curriculum, but agree this needs to be complemented with other activities. Few respondents can provide a definition, but several tools and curricula are available.

• Several respondents see a need for more agronomy and development research to substantiate strategies and measure impact based on facts instead of assumptions. This is currently in progress but takes time.

• Many indicate they would like more involvement from governments in embedding measures in policy and law.

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Enablers

Implementation

Outcomes

WHO WHY WHAT WHERE HOW

Impact

Stakeholder roles in execution Coffee value chain executes many sustainability activities and has largely integrated farmer outreach in business as usual • Implementation largely executed by actors that

Research

Enablers

Incentives

Demand Generation

Business Support

Logistics Services

Access To Inputs

Sustainability Definitions Implementation

My organization executes this - Coffee value chain

My organization executes this - Coffee value chain

My organization executes this - Non-value chain actors

My organization executes this - Non-value chain actors

Source: interview and survey respondents

Traceability And Assurance

Platform

Agricultural Extension Services

Policy/Law

Value Addition In Origin

# of respondents executing this activity

Enabling activities by actor type

Social Inclusiveness

support and diversification.

Access To Finance

• Civil society works on inclusiveness, business

Diversification Support

enabling activities, although their research findings and sustainability definitions are not always shared outside of their own organization.

Disaster Relief

• Value chain actors also very involved in

Implementation activities by actor type # of respondents executing this activity

are a direct part of the coffee value chain, embedded in core business.

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Vision on sustainable smallholder farms A sustainable smallholder farm is diversified, sufficiently large and inclusive, but this is not widely included in programs • Several respondents suggest that smallholder coffee farms are sustainable when: • they are diversified with multiple cash and food crops and other income sources • have a minimum size allowing to generate enough income and implement good practices • are managed jointly by the full household of man, woman and youth

• Whereas inclusiveness is generally considered, diversification is not widely implemented, following the sector interest in mainly coffee.

• Diversification reduces economic risks of price and productivity. It also conserves biodiversity on the farm, increases self-sufficiency, and offers inclusive opportunities to women and youth. A mix of coffee, food crops, livestock, processing and/or renewable energy generation is recommended.

• In addition, certain very small and unproductive farms are considered not viable and will never provided a living income to the household, even with support. The sector needs to discuss farmer segmentation and what is considered viable, and what alternatives can be offered to those farmers that are not in that position.

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WHO WHY WHAT WHERE HOW

WHAT: summary of strengths and gaps Certification is common business model, several other activities are introduced, but strategy is rarely fact-based Strengths already achieved:

Gaps and challenges going forward:

 Many activities being implemented in the field.

• Identify and share tools and best practices for

Each project has a different individual focus, sometimes limited in scope. As a sector, we jointly have experience to address most needs.

Experienced respondents are willing to share best practices and lessons learned.

 Certification/verification is a common business model included in most sustainability initiatives.

 Coffee value chain executes many sustainability activities and has largely integrated farmer outreach in business as usual.

business support, access to inputs, access to finance and logistics.

• A sustainable smallholder farm is diversified, sufficiently large and inclusive, but this needs to be more widely addressed in programs.

• Increase involvement from governments in embedding measures in policy and law.

• Relation between activities and desired impact is rarely explicit. Develop a sector wide strategy based on facts and research, and define and measure explicit tangible outcomes.

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WHERE Geographical focus

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WHO WHY WHAT WHERE HOW

Focus countries for sustainability Sustainability work focuses on Latin America and Africa, interest of stakeholder varies between origins • Most coffee value chain

Stakeholder sustainability focus

actors focus on a limited number of origins for their sustainability work, mainly the origins that are important for their sourcing.

50%

40%

• Non profit actors more

30%

frequently work across a wide range of origins.

20%

Number of origins in which respondents work on sustainability 10% > 16 origins 0%

LatAm

Tanzania Uganda Ethiopia Kenya Rwanda Burundi DR Congo Cameroon Côte d'Ivoire Madagascar

Indonesia Vietnam India Papua New Guinea Laos China Thailand

Colombia Guatemala Peru Honduras Brazil Nicaragua Mexico El Salvador Costa Rica Ecuador Venezuela

11-15 origins

Asia

% of respondents active in sustainability in this origin Source: interview and survey respondents

6-10 origins < 5 origins 0%

10%

20%

30%

40%

% of respondents

Africa

Coffee value chain

Non-value chain actors

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Relation between volumes and sustainability Sustainability interest is less driven by current volumes, more by quality, potential productivity increase and supply risks Sustainability focus in relation to production volume 25%

• Less focus on Brazil,

Colombia, Vietnam, Indonesia and India where certification has become common with local ownership.

• Larger interest in

Central American countries with specific challenges from leaf rust and climate change.

Brazil Colombia Honduras Mexico Guatemala Peru Nicaragua Costa Rica El Salvador Ecuador Venezuela * Vietnam Indonesia India Papua New Guinea Laos Thailand China * Ethiopia Uganda Côte d'Ivoire Kenya Tanzania Cameroon Madagascar DR Congo Rwanda Burundi *

0%

LatAm

-25%

Asia

Africa

Difference between % of respondents active in sustainability in this origin and % of ICO production volume Regional total

Sustainability interest smaller than share of volume

• Larger interest in Africa because of coffee quality in combination with livelihood needs.

• Larger interest in origins in Africa and Asia that have a potential for productivity increase: Kenya, Tanzania, Laos, Thailand, China.

• Ease of working in a country and donor priorities influence prioritization.

Sustainability interest larger than share of volume Source: interview and survey respondents, ICO

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WHO WHY WHAT WHERE HOW

Sustainability relations are regional Regional ties between North and Latin America and between Europe, Asia and Africa Source: interview and survey respondents, ICO

Source: interview and survey respondents, ICO

Sustainability focus by respondent type

Sustainability focus of main consuming regions

60%

60%

30%

30%

0%

0% LatAm

Asia

Africa

% of respondents active in sustainability in this region % of ICO production 2015/16

coffee value chain

non-value chain actors

LatAm

Asia

Africa

% of respondents active in sustainability in this region % of ICO production 2015/16

North American respondents

European respondents

• Following a larger commercial interest of value

• Sustainability relations build on current

chain actors, there is some more activity in high volume origins by coffee roasters and traders compared to non profits in the enabling environment. This is visible both on a regional and country level.

physical flows of coffee, with strong ties between North and Latin America, and between Europe, Africa, and Asia.

• The general alignment in focus origins can be explained by the partnership approach that the sector has developed, with companies and other organizations working together in projects in the same countries.

• Consumer palates differ between consuming regions and affect demand for a specific quality or flavour profile.

• Geographical proximity is a key factor in supply chain relations, especially for volume.

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WHO WHY WHAT WHERE HOW

Regional focus of investments Sustainability investments by major donors and their private partners focus on Africa • Major donors are USAID, World Bank, IDH, Bill & Melinda Gates Foundation and regional development banks.

Total donor budget allocated to regions

• Overall donor focus on Africa, driving investment in the region.

• Major donors each have different individual focus:

LatAm; 30%

• USAID invests mainly in Latin America • • • •

and Africa World Bank invests more in Asia Gates Foundation focuses on Africa IDH invests in line with private sector priorities across all continents Regional development banks invest in their own region

Africa; 46%

Asia; 24%

Source: data provided by donors, public spending databases, interviews

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WHO WHY WHAT WHERE HOW

Public and private investment priorities Projects in Africa and Latin America largely publicly funded, with larger outreach and lower budgets per farmer Source: data provided by donors, public spending databases, interviews

• Interest in Africa and specific origins in Asia is

Private/public funding ratio per region

strongly donor driven.

• Projects in Africa are generally larger scale with lower investment per farmer. This can be partly attributed to economies of scale and lower cost levels locally, but is also attributed to low volume per farmer resulting in high cost per MT which puts pressure on cost.

Africa

21%

Asia

79%

32%

68%

LatAm

51% 0%

20%

49% 40%

60%

Private sector %

Average project size per region 30.000

$600

Matchfunding %

$520 $420

20.000 15.000

100%

Average project budget per region

24.000

25.000

80%

$400 14.000

$260 8.000

10.000

$200

5.000 -

$0 LatAm

Asia

Africa

Average # of farmers/households per project Source: data provided by donors, public spending databases, interviews

LatAm

Asia

Africa

Average budget per farmer (excl certification premiums) Source: data provided by donors, public spending databases, interviews

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WHO WHY WHAT WHERE HOW

Investment categories Implementation projects in all regions, innovation focus in Latin America to address climate change impacts • Projects can be categorized: • Implementation projects, aimed to reach out

Investments in innovation are currently mainly in Latin America, attributed to research in relation to leaf rust and other climate change impacts. With existing high reach of certification reaching further scale is less needed.

Total donor budget allocated to project types

52%

48%

Enabling/innovation

•

>$1000

$500-1000

$300-500

Implementation/scale

•

to farmers, with an average budget of around $200 per farmer.

Enabling environment and/or innovative pilots, with high budgets per farmer, or even pure research without any farmer outreach.

Innovation and scaling projects per region

$150-300

$100-150

Enabling/innovation Implementation/scale

<$100

0%

Source: data provided by donors, public spending databases, interviews

5%

10%

LatAm

Asia

15%

20%

25%

Africa

Source: data provided by donors, public spending databases, interviews

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WHO WHY WHAT WHERE HOW

Risk of overlap in East Africa High interest and investment in East Africa suggests risk of overlap and emphasizes need for coordination and reliable data • Several respondents see risk of overlapping

•

Respondents consider it likely that some overlap occurs, while there is also still a large number of farmers that have not been reached. There is a need for coordination and reliable data.

Analysis of sustainability focus and volumes suggests the same risk applies in Kenya, Rwanda and Burundi.

Reported farmer outreach compared to estimated number of farmers in Tanzania

% respondents active in origin

•

45%

6%

30%

4%

15%

2%

0%

0%

% of ICO production 2015/16

Sustainability focus and production volume

investments. This is illustrated by the case of Tanzania.

Summing up reported project outreach compared to different assumptions about the numbers of farmers, we are not sure whether there is an overlap in projects or a gap in outreach.

500.000 400.000 300.000 200.000 100.000

Potential gap Potential overlap

0 Cumulative reported Estimated # coffee # farmer outreach farmers in Tanzania

Potential gap or overlap

Source: data provided by donors, respondent progress reports, interviews

% of respondents active in sustainability in origin % of ICO production 2015/16 Source: interview and survey respondents, ICO

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WHO WHY WHAT WHERE HOW

WHERE: summary of strengths and gaps Geographic focus follows flows of coffee and origin needs, with risk of overlap in East Africa, and some origins left out Strengths already achieved:

Gaps and challenges going forward:

 Several large origins show local ownership and

• Innovation budget is mainly focused on Latin

embed sustainability in business as usual, need for temporary projects is decreasing.

 Focus countries for sustainability are mainly prioritized because of quality, potential productivity increase and supply risks.

 Interest in ‘new’ origins that have potential to increase productivity.

 Strong regional sustainability relations between North and Latin America, and between Europe, Africa and Asia building on current supply and demand.

America. Budget per farmer in Africa is low, partly attributed to economies of scale, but also to low volume per farmer resulting in high cost per MT which puts pressure on cost.

• Discuss justification of current investments in East Africa in relation to possible overlap, efficiency and impact achieved.

• Increase activity in origins currently left out because of perceived difficulty to work there, including Venezuela and West Africa.

 Large investments in all regions.

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HOW Collaboration for strategy, funding and measurement

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WHO WHY WHAT WHERE HOW

Sustainability challenges Financing, strategy and impact measurement are current challenges, respondents suggest a role for platforms • Financing sustainability, developing strategy and measuring impact are the largest challenges. Most respondents see a role for platforms to address these: • Explore pooling resources for cost efficiency by investing jointly via a platform or fund. Explore carbon financing as a means of funding coffee sustainability programs. This is not currently on the agenda in the platforms.

• Develop a sector wide strategy and define contributions of different platforms and actors.

• Develop a set of common indicators for outputs and impact. This facilitates individual organizations in measuring their impact, as well as allows for comparison.

Financing our sustainability work

Ranking of challenges

Developing an appropriate strategy for our sustainability work

Financing our sustainability work

Measuring impact

Developing appropriate strategy

Executing our sustainability work

Measuring impact

Executing our sustainability work

Collaboration in the sector Communicating about our sustainability work Learning from other sectors Source: interview and survey respondents

Collaboration in the sector Communicating about sustainability Learning from other sectors Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Sector organization The coffee sector cooperates in a number of platforms, partnerships and alliances Global Coffee Platform

Specialty Coffee Association of America

Sustainable Coffee Challenge

Alliance for Coffee Excellence

African and Malagasy Robusta Coffee Agency (ACRAM)

African Fine Coffees Association (AFCA)

Coalition for Coffee Communities

Coffee & Climate

Coffee Farmer Resilience Fund

European Coffee Federation

Finance Alliance for Sustainable Trade

Green Coffee Association

International Coffee Genome Network

International Coffee Partners

National Coffee Association USA (NCA)

SAFE Platform

Specialty Coffee Association of Europe

Sustainable Commodity Assistance Network

World Coffee Research

several national coffee platforms

several non-coffee specific platforms

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Overlap in platforms There is less overlap between platform membership than most respondents expect • Interviewed respondents perceive a large

Overlap in platform memberships

overlap, and “see the same people in different settings”. This is likely within their own ‘circle’.

13%

• The overlap is visible but appears to be less

Global Coffee Platform

2% 8%

14%

6%

Sustainable Coffee Challenge

1%

0%

0%

0% 0%

IDH Sustainable Trade Initiative (field level)

than expected: • GCP has largest unique membership.

• Largest overlap in membership between SCAA and SCC. • Also large overlap between GCP and IDH, which is now formalized with the merger to GCP.

0%

16% Specialty Coffee Association of America

8% % of respondents member of this/these platforms No memberships: 18% / Unknown: 14% Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Platforms are regionally organized Platform membership confirms the perceived ‘Atlantic divide’ which builds on current trade relations Source: interview and survey respondents

• The perceived ‘Atlantic divide’ is visible in platform membership and is in line with current supply and demand relations:

• Respondents in Africa, Asia and Europe are more likely to be members of GCP and IDH.

• Respondents in North America are more likely to be members of SCAA and SCC.

Platform memberships per region Africa

Asia Europe Latin America North America 0%

• Respondents in Latin America adhere to

20% GCP

40% IDH

60%

SCAA

80%

100%

SCC

these platforms equally.

• Common platforms appear to have a good mix between value chain actors and the enabling environment.

Platform memberships per respondent type

Coffee value chain

Non-value chain actors

0% GCP

20%

40%

IDH

SCAA

60%

80%

100%

SCC

Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Feedback to sector organization Respondents see large progress made in collaboration, but also a tension between inclusiveness and ability to act Importance of inclusiveness

Importance of ability to act

• Coordination, shared vision and interest,

• Commitment, innovation, scale directly visible

learning, embedding sustainability in policy and value chain

• Importance of inclusiveness mainly emphasized by NGO’s and large companies, specifically in Europe

• But: inclusive dialogue is time-consuming &

on the ground

• Mainly emphasized by private sector, specifically in North America

• But: assumptions are made in order to act quickly & specific interests may dominate

several respondents feel that producers and governments are not sufficiently involved

“Producers are not sufficiently heard”

“We should not try to create another United Nations”

Source: interview respondents

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WHO WHY WHAT WHERE HOW

Private sector and matchfunding Private sector is financing major part of sustainability work, matchfunding and certification premiums are common Source: interview and survey respondents

• All types of actors use matchfunding grants especially when reaching out to new farmers, on average between 30-50%. Major part of sustainability work is funded privately. This is in line with the data obtained from major donors.

• Certification has led to a business model for

Financing sources for sustainability Private funding: investment Private funding: premiums

sufficient to reach out to full value chain and address issues beyond the immediate coffee sector interest.

• Other sources of funding are not yet common, but some respondents are exploring specifically carbon financing.

33%

Other / own sources of funding

29% 0% 10% 20% 30% 40% 50% 60% 70%

% of respondents using this type of financing

• Traders indicate that declining premiums are

• Respondents indicate that budgets are not

48%

Public funding / grants

sustainability based on premiums which are commonly used to maintain existing programs. insufficient to implement and maintain outreach. Several respondents indicate that certification has an impact but does not address all needs.

67%

Coffee value chain

Non-value chain actors

Public / grants contribution as % of total budget 71% - 100% 51% - 70% 30% - 50% < 30%

% of respondents Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Estimated total sustainability investment Implementation speed has increased, significant investments still needed to reach all farmers and address wider challenges Source: data provided by donors, public spending databases, interviews, Valued Chain

• Annual available budget of 350M$ represents 2% of A lot of work has been done since the 1980s, but we are not there yet. At current implementation speed we could complete outreach by 2045. Required budget to completion (based on current practices) would be 4,1 bln$.

•

This can be adjusted up or down based on increased efficiency, new challenges, new definitions of sustainability and/or new findings about the size of the producer population.

# farmers (millions)

Estimated time to become a 'sustainable' sector

Annual total budget

•

400 M$ 350 M$ 300 M$ 250 M$ 200 M$ 150 M$ 100 M$ 50 M$ 0 M$

2,5% 350 M$

2,0% 1,5% 1,0% 0,5% 0,0%

% of green coffee value

Estimated current annual budget for coffee sustainability in relation to green coffee value

green coffee value, in sector with low margins.

Annual private sector premiums paid Annual private sector budget (excl premiums) Annual other funding Annual donor budget

Estimated total annual budget

Estimated budget needed to become a 'sustainable' sector in 2045

20 10

Implementation ($200/farmer)

0 1985

2000

2015

2030

2045

2060

2075

time to implement current sustainability approach/definition

1.500 M$ 2.600 M$

At current implementation speed (350.000 farmers/year)

Research and innovation budget needed (50M$/year)

At historical realized implementation speed (140.000 farmers/year) Producers reached to date

Source: interviews, Coffee Barometer, Valued Chain

Source: data provided by donors, public spending databases, Valued Chain

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WHO WHY WHAT WHERE HOW

Ongoing efforts on financial constraints Respondents are working on increasing available funds and decreasing cost of implementation

Wider private sector involvement and investment

Reducing cost of assurance

Standards collaboration reduce cost of audits and traceability (ISEAL)

Increase commitment from stakeholders in large coffee markets (e.g.

Sustainable Coffee Challenge)

Company own standards and auditing (various)

Data-driven assurance (suggested)

Regional assurance (suggested)

Pooling resources for cost efficient direct investment via a platform or fund

Funding for research via a check-off program (e.g. World Coffee Research)

National ownership and investments

Coffee sustainability outreach contributes to climate action and can tap into climate financing

Farmer outreach via national extension services (e.g. Minas Gerais Brazil)

Carbon credits and loans (various)

Involvement of national research institutes for plant material (e.g.

Vietnam)

Nationally Appropriate Mitigation Actions (NAMA) (suggested)

Shared investment in baseline studies and impact measurement (e.g.

SAFE) Non-coffee specific investments in landscapes and communities (e.g.

Coalition for Coffee Communities)

Source: interview respondents

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WHO WHY WHAT WHERE HOW

Monitoring depends on supply chain data Impact measurement is not yet embedded in sector sustainability work, mainly because of cost and effort Source: interview and survey respondents

• Cost and effort of impact measurement are given as a main challenge.

• Current impact measurement mainly based on activity outputs: farm data and traceability.

This quantitative data is collected within the supply chain, often in relation to certification.

• Programs are evaluated annually but not always with a baseline. Attribution is a challenge, with rarely a control group in place and very few longitudinal studies.

• Currently impact measurement is mainly driven by donor demands. Respondents suggest these could be aligned.

• Impact measurement is gaining interest.

Current workgroups exist within GCP, SCC and COSA, as well as many individual organizations.

Some NGO’s and research institutes have developed specific expertise in impact measurement.

Data collection methods Coffee Traceability Farm Performance Data Narratives Structured Surveys Control Group Outside Of Project 0%

10%

20%

30%

40%

% of respondents

Data collection frequency Annual Progress Evaluation Baseline End Of Project/Program Evaluation Longitudinal Study After Project/Program End 0%

10%

20%

30%

40%

50%

% of respondents Source: interview and survey respondents

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WHO WHY WHAT WHERE HOW

Lack of consensus on indicators Common indicators are not comparable, and mainly measure coffee output and outreach but not impact • Even common indicators for outreach to farmers, inclusiveness, volumes and yields are used in different ways and as such can’t be added up or compared easily.

• A number of respondents are currently working on defining indicators, as well as several platforms notably the Global Coffee Platform and Sustainable Coffee Challenge.

• Most respondents agree that certification data provides a good starting point for measuring output.

Some respondents indicate that the IDH KPI framework is a good starting point, while others say this is too much focused on output not impact.

Indicator categories

Different definitions for common indicators

Coffee Output Outreach Economic Impact Activities Performed Environmental Impact Social Impact Inclusiveness Investments

Output Impact

0%

10%

20%

30%

40%

# farmers/ # households reached

% farmers reached

by M/F by age <25/<30/<35

sustainable/ certified/ verified

# yield / % increase per tree/ ha/ farmer in MT/ kg/ bags

in MT/ kg/ bags

% of respondents Source: interview and survey respondents

#/% coffee produced/ sourced

Source: interview respondents

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WHO WHY WHAT WHERE HOW

HOW: summary of strengths and gaps Whereas collaboration on strategy and impact measurement is recognized as a need, funding is still a less visible challenge Strengths already achieved:

Gaps and challenges going forward:

 Collectively, the sector has a lot of experience

• Ensure that variety in platforms does not lead

in developing sustainability programs.

Attributed to experience, most respondents feel comfortable with communication, collaboration and learning.

to a scattered approach by coordinating between platforms. Balancing inclusiveness and ability to act of platforms.

 Existing platforms have trust of members and overlap is less than perceived.

 Certification premiums have allowed to integrate sustainability in business as usual.

 Annual available budget of 350M$ represents 2% of green coffee value, in sector with low margins.

 Indicators from certification and current global programs are a good starting point in developing indicators, and further development and harmonization is underway.

• Develop a sector wide strategy and define contributions of different platforms and actors.

• Explore pooling resources for cost efficiency by investing jointly via a platform or fund.

• Explore carbon financing as a means of funding coffee sustainability programs.

• Align different initiatives that are developing a set of common indicators for outputs and impact. This facilitates individual organizations in measuring their impact, as well as allows for comparison.

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Coffee Sustainability Catalogue 2016 We have a way to go, but a good foundation to build on

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Notes on interpretation of this study A reliable catalogue but not exhaustive, as input for further sector discussion • Study summarizes the current initiatives in coffee sustainability. This is on overview of what we are currently implementing. It does not specify what the agenda forward should be, this is up for sector discussion.

• Study has focused on organizational strategies not individual projects.

• Findings are based on a sample of respondents from the membership and network of the organizations in the steering committee that were willing to provide input. The overview is not exhaustive. The participation of respondents is however sufficiently large and representative to allow for interpretation.

We have consulted 36 respondents in interviews and 51 organizations participated in a survey.

• Perspectives from producing countries are possibly underrepresented following the membership and network of the steering committee, and the decision to conduct this study in English only. Any bias is mentioned in the applicable section of this report.

• Historical data on investment, output and impact is rarely available. Furthermore, most sustainability work is done in partnerships of public and private organizations who all report on investment and outreach, so there is overlap in the numbers reported. We have used mainly data from donors and roasters. Donors and roasters most commonly collect data, and partnerships rarely contain more than one donor and more than one roaster.

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