In an increasingly interconnected world, the pursuit of sustainable development has become a critical global challenge. As international trade expands, so too does the need for mechanisms to ensure that economic growth does not come at the expense of social and environmental wellbeing. Enter Voluntary Sustainability Standards (or VSS for short) – a set of guidelines that economic actors can voluntarily adopt to make their sourcing and production practices more sustainable.

A new review led by Axel Marx at KU Leuven, along with an international team of researchers, provides a comprehensive analysis of VSS, tracing their development, assessing their impact, and identifying key challenges for their future. This research offers valuable insights for policymakers, businesses, and consumers alike.

VSS have gained prominence over the past three decades as a major transnational governance tool. These standards prescribe social, economic, and environmental requirements that private actors can voluntarily adopt. Upon verification of compliance, usually through third-party certification, companies receive certificates that serve as proof of their commitment to sustainability. VSS reward businesses by helping them reach more sustainably-minded customers through product differentiation, and they ensure a minimum price or a price premium to producers to compensate them for producing more sustainably.

The rise of VSS has been dramatic. From a handful of standards in the 1990s, their number has grown to over 300 today. This proliferation has been driven by various factors, including increased consumer demand for sustainable products, government support, and companies’ sustainability commitments. VSS are now prevalent across various sectors, particularly in land-use and natural resource industries such as agriculture, forestry, and fisheries.

In this latest study, however, the authors assess how effective these standards are in actually promoting sustainability. The study finds that the evidence is mixed and context-specific. While there are many instances of VSS improving some sustainability outcomes, no sector, region, or specific VSS has been overwhelmingly successful in consistently meeting its stated objectives.

On the environmental front, some studies have found positive effects of certification on reducing deforestation and protecting biodiversity. For instance, research shows that there are more mammals, especially large species and those of high conservation priority, in forests certified by the Forest Stewardship Council compared with non-certified forests. However, the impact varies across different contexts and standards. Some studies have found no significant effect of certification on preventing deforestation in certain areas, while others have shown positive impacts on tree cover and forest connectivity.

The social impacts of VSS are similarly heterogeneous. Some studies have documented positive effects on health and educational outcomes. For example, researchers showed that Fairtrade certification of cocoa farmers in Côte d’Ivoire reduced pesticide-related health problems for farmers and farm workers. However, the impact on issues such as child labour and schooling can be mixed and dependent on various factors. One study on coffee certification in Uganda and Ethiopia found positive effects of Fairtrade certification on child schooling, but no associated reduction in child labour on farms.

Economically, VSS uptake among smallholders has shown some positive effects on producer prices and farm income from certified crops. However, these benefits often depend on various factors, including the share of production that can be sold as certified, and the specific price mechanisms employed by different VSS.

The study also highlights major developments in the VSS landscape. Governments are increasingly recognizing and integrating VSS into public policies, from market access regulations to sustainable public procurement. For instance, some countries now recognize VSS certificates as proof of compliance with certain sustainability requirements in their regulations. The European Union’s Renewable Energy Directive, for example, recognizes VSS certificates as proof of compliance with its sustainability criteria for biofuels.

Another significant trend identified is the emergence of national and regional sustainability standards in low- and middle-income countries. These can sometimes act as stepping stones to compliance with transnational VSS, but they can also compete with them, as seen in the palm oil sector with Indonesia’s national standard.

Despite their growing importance, VSS face several challenges. One major issue is the difficulty in integrating low-income countries and small-holder producers into certified global value chains. High costs of certification, lack of incentives, and socio-political resistance can all act as barriers to VSS adoption in these contexts. Evidence shows that VSS adoption among producers correlates with their income levels and that of the countries they operate in, with high- and middle-income countries tending to adopt more VSS than low-income countries.

Another challenge is the proliferation and diversity of VSS, which has raised questions about their credibility and whether they are simply an example of “greenwashing”. Not all VSS are equal in terms of design and effectiveness, even when operating in the same sector. This diversity can create confusion for producers, buyers, and consumers. The study highlights the need for systems that distinguish credible from non-credible VSS, noting that some external recognition systems are already in place.

Looking ahead, the researchers argue that while VSS have not lived up to their promise of fundamentally addressing sustainability challenges, they can continue to play an important role in making trade more sustainable. They often act as catalysts, accelerating the adoption of credible sustainability policies by public and private actors.

To be more effective, VSS need to better address power imbalances along value chains, be more inclusive in their standard-setting processes, and provide capacity-building and training to potential certified entities. Buyers can support this by consistently paying premiums for more sustainable products and supporting VSS schemes that adopt best governance practices.

International organizations and donors can provide technical support to comply with VSS and support firms with more inclusive approaches. National governments can engage more intensively with these private instruments to create more effective policies for sustainable development.

As we navigate the complex landscape of global trade and sustainability, Marx and colleagues’ research serves as a crucial guide. It highlights both the potential and limitations of VSS, offering a roadmap for how these standards can be improved and better integrated with other policy instruments. By understanding and addressing the challenges facing VSS, we can work towards a more sustainable and equitable global economy.