Rainforest Alliance Requires Tea Brands to Share Sustainability Costs

×

Expand

Robbie Hogervorst, Rainforest Alliance's global strategy manager for tea. (Photo courtesy North American Tea Conference)

Many of the world's leading tea brands will soon pay farmers more to uphold greener practices. Starting January 1, 2023, the Rainforest Alliance  will require brand owners to pay certified producers a premium to offset the cost of implementing and investing in sustainable operations.

The Alliance's "Sustainability Differentials" (SD) and "Sustainability Investments" (SI) are contributions intended to augment producers' incomes for certified tea. The amount is based on unit volume and is payable in U.S. dollars.  The group will collect the premiums quarterly and pass them on to the farms they certify.

More than a hundred tea brands purchase tea certified by Rainforest Alliance. These include names like Lipton, Yorkshire Tea, Republic of Tea, Walmart, Lyons, Kroger, Nestea, Typhoo, Nerada, and Fuze.  As for producers, the Alliance certifies tea farms and farm groups that employ 950,000 farmers and 790,000 workers worldwide.

Rainforest Alliance’s global strategic accounts manager for tea, Robbie Hogervorst, told attendees at the North American Tea Conference in September, “We are encouraging companies to acknowledge the price of sustainability and invest in and reward more sustainable production — because a more sustainable product is a better product that deserves a better price.”

Hogervorst said that the new differential and investments help ensure “the burden of certification and the opportunities that arise from certification are shared more fairly along the supply chain.”

The SD/SI payments supplements tea producers' sales income.  This helps ensure that farmers have the financial resources to meet and progress against the Rainforest Alliance's 2020 Sustainable Agriculture Standard (SAS) requirements.

To determine the amount for a Sustainability Investment payment, the Rainforest Alliance encourages the buyer and farm or farm group to discuss needs based on a farming investment plan. The Rainforest Alliance has not set a minimum level for the Sustainability Investments but recommends at least $40 per metric ton as a threshold.  The recommended minimum for the Sustainability Differential is $10 per metric ton.

“The Rainforest Alliance does not intervene in these negotiations, but the brand owner’s commitment is recorded in the online platform, invoiced, and paid via the Alliance's payment facility,” the group has stated.

The group's Guidance statement says that $40 per metric ton “is a starting point to set a level playing field for all brand owners to help farmers reach compliance with the Sustainable Agriculture Standard."

There are no requirements on how farms or farm groups may spend the differential, but in the case of smallholder farms that are part of a farm group, the full amount must be paid to the smallholders.  However, funds distributed as "Sustainability Investments" must be used to meet sustainability standard requirements identified in the certificate holder’s investment plan.

“We are moving away from a model that places the burden of investing in sustainable production mainly on producers and towards a new system where responsibility for sustainable production is shared across the entire supply chain,” said Hogervorst.

“Rather than setting a fixed commodity price that could make certified commodities less competitive, our approach is systemic. It aims to tackle the root causes of inequality and poverty in supply chains by empowering producers to define what investment support they need to better negotiate and advocate for themselves,” he said.

“We know that brands, companies, traders, are already supporting producers with certification costs and audits and funding living wage initiatives,” he said. The new program makes it more transparent by integrating that support with the credibility and assurance the Rainforest Alliance can provide,” said Hogervorst. “Aggregating funds from every brand and company also makes it more  feasible."

According to Hogervorst, the Alliance developed its traceability platform to improve transparency along the entire supply chain. The platform will provide data to help companies target their investments to where they are needed most, including workers’ well-being.

In the tea sector, Rainforest Alliance defines a brand owner as the market actor that makes claims demonstrating their commitment to achieving specific sustainability goals. These claims include displaying the Rainforest Alliance seal on packaging, social media, company materials, and websites. A brand owner might be a corporate entity, private label brand, or packer.

“For retail and food service brand owners, the brand owner is responsible for making sure that SD/SI is paid for certified tea volumes packed on their behalf, by the packer, and compensating packers accordingly,” according to the group's Tea Sector Guidance. “Tea differs from other sectors by the granularity of traits other sectors don’t have. The bigger brands already invest and participate in investment programs through sector actors like  Ethical Tea Partnership and other organizations. So hence, the focus is on brands,” he said.

The Rainforest Alliance recognizes that the tea sector is recovering from geopolitical, weather-related, and pandemic setbacks, Hogervorst told attendees.

The group's Sustainable Agriculture Standard requires that brands pay the SD/SI contributions quarterly. For tea, the Sustainability Differential and Sustainability Investments are required to be paid for teas sold as Rainforest Alliance certified from January 2023 onward, with invoicing and payments starting in the first half of the year.