At the Rainforest Alliance, we have worked for years to increase yields and incomes, improve social practices and embed environmental sustainability requirements in our certification programs. Yet, a gap remains between the status of certified farms and what we consider truly sustainable production, partly caused by the lack of resources available to producers.
We believe that creating truly sustainable global supply chains requires a shared responsibility approach. This means that the costs and benefits of certification are evenly distributed between farmers and buyers along the supply chain, so that both are rewarded for their efforts to embrace more sustainable practices.
To achieve this, we are implementing two supply chain requirements for companies as part of our Certification Program: the Sustainability Differential and Sustainability Investments. With these requirements, we are encouraging companies to acknowledge the value of sustainability and invest in and reward more sustainable production.
The Sustainability Differential (SD) is a mandatory additional cash payment made to certified producers over and above the market price of the commodity. Sustainability Investments (SI) are mandatory cash or in-kind investments from buyers of Rainforest Alliance Certified products to certified producers for the specific purpose of helping them meet the Farm Requirements of the Sustainable Agriculture Standard.
Shared responsibility in the tea sector: An incremental, brand-led approach to transforming tea supply chains
For our Shared Responsibility requirements to be effective, they need to be adapted to meet the needs and operating realities of each of our sectors. In the tea sector specifically, we support over 500 tea farms made up of nearly one million farmers and 800,000 workers. Together with our partners, we provide the tools and knowledge to implement good agricultural practices and secure access to mainstream markets that are essential for their long-term livelihoods. Our certification program and traceability platform help tea companies contribute to more sustainable supply chains while targeting their investments to where they are needed most, including workers’ wellbeing.
Still, the tea supply chain is complex. Tea moves through different channels from farm to consumer, including through auctions in key countries, and it comes in many presentations – green leaf, made tea in different varieties, tea extracts in powders and liquids.
Because there is no one-size-fits-all, and to ensure our tea Shared Responsibility approach addresses the needs of all the stakeholders involved, from the conceptualization of the new standard we have been in dialogue with many actors across the supply chain, including farmers, buyers, processors, manufacturers and packers, non-commercial tea sector actors, and tea brand companies – corporate, foodservice and retail.
Through these discussions we recognized that because investments and premiums are the exception and not the norm, and that there is pressure on prices, transforming tea supply chains must happen in incremental steps. It also became clear during these consultations that tea brands—particularly retail ones— have a key role to play in advancing a shared responsibility approach and stand to benefit greatly from it. Brand owners connect most strongly with consumers. Often, their investment in sustainable supply chains allows them to make claims and demonstrate their commitment to achieving specific corporate sustainability goals. The brand owner is also the market actor who benefits from displaying the Rainforest Alliance seal on pack, online, or making certified sourcing claims on company materials and websites.
Companies that source Rainforest Alliance Certified tea can make certified sourcing claims about their SD and SI payments on their website and company materials. In turn, consumers can connect with these claims and support sourcing practices that reflect their values. This brand-led approach also allows other supply chain actors, such as retailers, to directly contribute to farm improvements and farmer livelihoods in the shape of payments through their manufacturers and packers.
As consumers increasingly seek brands that do good for people and the environment, shared responsibility provides a mechanism for companies in certified supply chains to demonstrate their impact. Taking this into account, SD and SI payments are the responsibility of brand owners in our tea Shared Responsibility approach.
The specific requirements are set out in our Annex Chapter 3: Income and Shared Responsibility.
We will closely monitor the outcomes of this approach during 2023 to inform future adaptations on shared responsibility needed in the tea sector.
Find the timelines for SD and SI implementation in the tea sector on our Shared Responsibility Page.
Below, we seek to answer many of the tea-specific questions we have received on this topic in the past year. We aim to keep this page and Q&A updated as we evolve our approach.
For general questions about our shared responsibility approach, please refer to our explainer on shared responsibility.
For questions about what is required, and how to interpret those requirements, please refer to Annex Chapter 3: Income and Shared Responsibility.
I am a brand owner. Can I pay either SD or SI i.e., choose between them?
No. All brand owners are required to commit and pay SD and SI both, for the footprint they redeem (sell) in the traceability platform.
Why is the tea approach brand-led?
The Shared Responsibility approach for most of our sectors relies on the first buyer making payments. However, in the case of tea supply chain, which is very fragmented globally, the sheer number, type, and variability of first buyers for tea makes a first-buyer approach too complex to implement efficiently. In most cases, the brand owner is the actor already making claims and investments and driving demand for the investments in the market. As consumers increasingly seek brands that do good for people and the environment, shared responsibility provides a mechanism for companies in certified supply chains to demonstrate their impact.
Why is there no fixed or minimum amount of SD and SI payments for tea?
Paying a premium for certified tea, or making direct investments into certified tea farms, has been the exception rather than the norm in the tea sector. This means that data on premiums and investments have historically not been collected in a systematic way. This also means that producers have had no template for calculating the additional costs and investments that go into compliance with the Rainforest Alliance Certification. As a result, there is currently little data to base a fixed or minimum amount on.
That’s why, in the first year of payments implementation (1 January to 31 December 2023), the Rainforest Alliance will not set a minimum for SD and SI payments. However, to create a level playing field and provide clarity to all Supply Chain Actors, we will propose as a starting point in our guidance, that:
- SDs are paid on the basis of no less than $10/MT for each MT of Rainforest Alliance Certified tea redeemed by the brand owner from their supply chain.
- SIs are paid on the basis of no less than $40/MT for each MT of Rainforest Alliance Certified tea redeemed by the brand owner from their supply chain. These are guidance amounts and are therefore non-binding. The Brand Owner can determine the SD and SI level themselves, with their manufacturer/packer if they require this.
From the second year of implementation (2024) onwards, we may look at introducing a fixed or minimum SD or SI based on further data and insights collected during the initial year of implementation. Any changes to SD and SI levels as a requirement Such shifts will be communicated to the market well in advance to allow for the necessary contracting arrangements to be made.
Is this recommended SD/SI level global? Or does the Rainforest Alliance differentiate between origins/farm types?
Yes, the guidance amounts are global, and we do not currently provide guidance on other SD/SI levels. Please note that SD/SI will be committed and paid based on volumes sold (redeemed) as Rainforest Alliance certified. In most cases these volumes will be blended or processed (segregated) volumes, in which case SD/SI differentiation between regions, origins or farms will not currently be feasible. For IP (identity preserved) volumes, this differentiation will be feasible.
Can already existing investments from brand owners, manufacturers or packers be considered as Sustainability Investments under the Shared Responsibility approach?
Some brands or manufacturers and packers already invest in farm sustainability. However, those investments are not always visible. We want to enable transparency for those that already support producers by making cash or in-kind investments and recognize them within the shared responsibility approach.
Investments already made by brand owner to their certified producers will be recognized as Sustainability Investments, as long as these investments are expressed as investment need by the farm CH, through their investment plans. The Certification Body auditor will verify the extent to which those investments fit the categories of investment as set out in Annex S16: Sustainability Investment Plan Template, and the extent to which the farm CHs (Certificate Holders) benefiting from those investments match the farm CHs in the brand owner’s footprint in the Rainforest Alliance traceability platform. , and the extent to which the farm CHs benefiting from those investments match the farm CHs in the brand owner’s footprint in the Rainforest Alliance traceability platform.
How will the SD and SI payments benefit tea workers?
Workers are at the heart of the tea sector and improving workers’ livelihoods is a key goal of the Rainforest Alliance tea program. The Sustainability Differential and Sustainability Investments empower producers to define what investment support they need to better negotiate and advocate for themselves and their workers. The aim is to increase sustainability at the farm level, including improvements that directly benefit workers. Producers must include investments related to worker benefits in their Investment Plan and worker representatives must be consulted on the allocation of those investments.
How will the SD/SI approach benefit tea smallholders?
Smallholders will have the opportunity to increase their income through the additional Sustainability Differential payments which they will receive from group farm management, pro-rata, based on the volumes of green leaf they have delivered to the group, and based on the volumes sold as certified by the brand owners.
Will contracts for SD and SI payments be required in the tea sector?
No, our standard does not require this. Instead, the tea approach is based on commitments of SD and SI contributions by the brand owner or packer in our traceability platform and retrospective payments to the farm certificate holder for volumes sold as Rainforest Alliance Certified, in the previous quarter, on a quarterly basis.
The commitments will be facilitated in the Rainforest Alliance payment facility. More information about the technical components will be forthcoming in early 2023.
What will be the mechanism to guarantee payment of the SD and SI?
As the tea shared responsibility approach gets going from the second half of 2023, the Rainforest Alliance will be able to monitor the areas of investment required by certified tea farms, to assure correct distribution and use, and to make more visible where investments are most needed.
Although the Rainforest Alliance cannot guarantee payment, it can decertify actors who are in the certification program but who do not comply with the requirements around shared responsibility. Through the certification system, we set the expectation and provide the mechanisms to demonstrate and verify (through audits) that payment has been made.
How will Rainforest Alliance ensure that tax obligations on SD/SI payment are minimised, and payments reach farms in full?
Please note that no tax of any kind including value-added-tax or sales-tax will be included in these payments. Brand owners are fully responsible for complying with applicable laws and regulations, including applicable tax rules, and for payment of any applicable taxes and/or (government) charges. If a brand owner is required by law to withhold any taxes and/or (government) charges on the amounts payable to the Rainforest Alliance, such amounts shall be grossed up so that the net amount received by the Rainforest Alliance shall be equal to the amount committed, thereby ensuring Farm Certificate Holders get the complete SD/SI payment.
I am required to commit and pay SD SI. To whom am I making the commitment on SD SI levels?
This is effectively a commitment to the farm certificate holders in your certified footprint, via the Rainforest Alliance traceability platform. The commitment is to the producers who supplied your brand, not to the Rainforest Alliance.
I am a foodservice/retail brand. Am I required to pay SD/SI?
No. The requirement to commit (set) and pay the SD SI is with the packer (private label manufacturer) who supplies you. They will be audited on the same, not you as foodservice / retail brand. That said, it is still the responsibility of the foodservice or retail brand to ensure that SD/SI is paid for the certified tea used in own-label products, which means that SD SI must be included in negotiations with your packer and included in the contract tea price. You are allowed to take over the responsibility to commit and pay SD SI from your packer. In that case you will need to engage in traceability for tea.
I am a packer supplying a foodservice/retail brand. Am I required to pay SD/SI?
Yes. The requirement to pay SD/SI starts July 1, 2023, for volumes sold as Rainforest Alliance Certified to your brand customer. If you are already locked into a contract packing arrangement with your brand customer, the requirement is that SD SI is included in the contract prices in the next contract cycle, and that said brand owner will include in that price the compensation for the period between July 1, 2023, and the commencement of the new contract.
What is the role of traders and processors in this brand-led approach?
Intermediate supply chain actors i.e., those between farms and brands, are not required to commit and pay SD/SI in the case of tea. As outlined above, a non-packing brand owner can request their third-party manufacturer or packer to pay the SD/SI invoice on their behalf, and those may be “processors” or “traders” in this sense. However, all intermediate supply chain actors have an important role to play in that they are required to report sales and other activities in the Rainforest Alliance traceability platform per Annex Chapter 2: Traceablity requirements to move the certified volumes from one actor to the next in the correct manner; it is important that this is done, otherwise the brand owner at the end of the chain will not be able to commit and pay SD/SI correctly for the farm CHs in their footprint.
I wish to negotiate the SD SI levels, with whom do I do that?
In the case of tea, we do not require this in our standard, so we leave it to the market as there are many supply chain arrangements in place. However, we encourage long-term relationships and long-term forward contracts, as these are most in line with the spirit of Shared Responsibility. If you are a packing brand sourcing tea directly, you can negotiate SD SI levels directly with the farm CHs from whom you source. If you are a non-packing (e.g., retail) brand, you can negotiate the SD SI levels with your manufacturer/packer who supplies your tea product; they in turn can on your behalf negotiate SD SI levels with the farms in question.
I am a brand owner. Do I need to commit and pay SD/SI on the entire tea volume I buy or only on those volumes I “redeem” from the online traceability platform?
SD/SI must be committed and paid on the volumes that you are selling as Rainforest Alliance certified, not the volumes you are buying. If you are making claims about Rainforest Alliance certified tea volumes, those will need to match the volumes you are selling (redeeming) from the traceability platform i.e., all volumes claimed as Rainforest Alliance certified are all eligible for SD/SI.
We are a brand marketing both tea and herbal products. Will we have different SD/SI requirements for these crops, even though we use them in the same product?
In the Herbs and Spices program, first buyers are the supply chain CHs that are responsible for SD and SI payments. In the Tea program, that responsibility lies with the brand owner. If you are the first buyer and also the brand owner for both the herbal and tea ingredients, then you are required to pay SD and SI for both crops per the requirements for those crops as outlined in our Annex Chapter 3. If you source the herbal ingredients not from a farm but from a supply chain CH, then the SD/SI requirements apply only to the tea you sell.
We produce a product combining tea with other ingredients, do we need to pay SD/SI?
No, currently SD/SI is not required for non-pure products however, certificate holders should be prepared to set up mechanisms for payments when this does come into force in the near future.