Shared Responsibility: Balancing Sustainability Values and Costs for Farmers and Companies

The Sustainability Differential is a mandatory additional monetary payment made to certified producers over and above the market price of the commodity. It is intended to reward producers and workers for their efforts in implementing sustainable agriculture practices.

The Sustainability Investments are mandatory cash or in-kind investments from buyers of Rainforest Alliance Certified products to farm certificate holders for the specific purpose of helping them reach compliance with the Sustainable Agriculture Standard. It is intended to help producers reach and maintain compliance with the 2020 Rainforest Alliance Sustainable Agriculture Standard and achieve certification or contribute towards audit costs.

A premium is not clearly tied to either resources for implementation or additional monetary reward for the farmer. Unlike a premium, SD and SI have very clear end usage and requirements set out in the standard.

By separating the two areas (monetary incentive and investments), there is visibility and transparency of the amount paid to the final producers per production unit (meaning that in case of a certified group, the group owner has to transfer that money to the group members and report the amount) and about the total investment required to become certified. Moreover, by focusing on farmer-created investment plans and monitoring the investments, we can ensure that there is full transparency on the investment needs. This way, buyers and farmers have a common understanding of priorities and needs.

The Sustainability Differential rewards producers for producing sustainably. It is an additional payment which acknowledges the added effort, money and time which goes into producing sustainably, and that certified crops should command a better price than conventional crops

In the case of a group certification, the farm certificate holder transfers all of the SD received to the group members (farmers). In the case of an individual farm, the farm certificate holder may choose to spend the SD as they see fit; if the SD is used to benefit workers on the farm, this must be consulted on with worker representation.

SI payments directly support farm certificate holders by helping them make investments needed to meet the requirements of the 2020 Rainforest Alliance Sustainable Agriculture Standard, including those that improve workers wellbeing.

The needed investments are indicated in a producer’s Investment Plan. The Investment Plan is an Excel template provided by the Rainforest Alliance (Annex S16) to producers. In it, the potential investments, including investments towards certification costs, are categorized, and directly linked to the corresponding chapters of the 2020 Rainforest Alliance Sustainable Agriculture Standard. The investment plan takes into account the results of the farm certificate holder’s risk assessment and capacity assessment tools to identify the most pressing investment needs.

Other investments can be added to the Investment Plan under the condition that core, mandatory, and self-selected improvement requirements are met. The Investment Plan and the actual investments made will be checked by a Certification Body auditor.

Yes. Buyers of certified products must pay the Sustainability Differential and Sustainability Investments. The standard and related Annexes and Guidance documents define, per crop, the buyers that are responsible for direct payment of Sustainability Differential and Sustainability Investments. Those buyers must also record the amount of Sustainability Differential and Sustainability Investment paid in our traceability platform.

SD and SI serve different purposes.

The Sustainability Differential is a mandatory additional monetary payment made to certified producers over and above the market price of the commodity. It is intended to reward producers and workers for their efforts in implementing sustainable agriculture practices.

Sustainability Investments are mandatory cash or in-kind investments from buyers of Rainforest Alliance Certified products to farm certificate holders for the specific purpose of helping them reach compliance with the Sustainable Agriculture Standard. It is intended to help producers reach and maintain compliance with the 2020 Rainforest Alliance Sustainable Agriculture Standard.

The amount of SD to be paid by the relevant Supply Chain Actor is generally negotiated between the farm certificate holder and the relevant SCA and is guided by market forces. For some crops, there is a minimum or fixed amount to be paid, as defined in our Annex and guidance documents.

The Rainforest Alliance is focused on a market-based approach. We do not see it as our role to interfere in pricing dynamics. As a starting point, SD and SI are a means for us to signal to the market that sustainably produced commodities must be priced separate from (and above) conventional production.

From there, we hope that supply-demand dynamics will help establish an appropriate price point. In the meantime, we will closely monitor the impact of SD and SI. If we don’t see an adequate impact, we are open to exploring additional mechanisms to reward and support farmers in achieving sustainability improvements.

The farm CH will develop an investment plan. The investment plan will serve as the basis for investment by buyers, except in the case of tea. Investment needs may fall under the following categories 1) Management, 2) Traceability, 3) Shared Responsibility, 4) Farming, 5) Social, 6) Environment, 7) Audit costs, 8) Other (training, printing, IMS maintenance). The investment cost is expressed in amount per production unit (e.g. USD/kg), meaning that a company pays an that additional amount per production unit and the certificate holder executes the received funds according to their priorities in the investment plan. A company cannot choose a specific item they are most interested to fund.

Each farm certificate holder prepares one investment plan. In case of group-certification the group management is responsible for developing the investment plan, in the case of individual certificate holders the farm management is responsible.

No. The investment plan should include the costs associated with reaching and maintaining compliance with the standard, including audit costs, especially costs related to implementing core and mandatory improvement requirements.

Yes, the requirements around Shared Responsibility, i.e., Sustainability Differential and Sustainability Investments are included in the regular certification audit, for the actor that is responsible of paying SD and SI. The CB verifies the correct implementation, as with other requirements of the standard. Same as for other chapters of the standard, there must be compliance with the relevant requirements around Shared Responsibility. With an unresolved non-compliance, certification cannot be granted.

Farm CHs will receive annual audits, during which the use of SD and SI will be verified. The SD/SI related requirements farm CHs are audited against are: 3.2.1 (groups), 3.2.2 (individuals) and 3.3.1 (all).

The use of Annex S16 (developing an investment plan) has become mandatory for all farm CHs starting January 1st, 2022. The investment plan will have been verified for all farm CHs audited after that date. During the initial year, auditors verify whether the investment plan is based on actual improvement needs, which should have been identified through implementing the available tools such as the risk assessment and internal inspection, among others. During subsequent years, auditors will additionally verify that Sustainability Investments received are spent according to the plan.

No, the Rainforest Alliance will not intervene in price negotiations.

Farm certificate holders must forward the SD (in full, taxes and transaction costs can be deducted if proof exists) to group members. During the audit of the farm CH, auditors will verify whether group members have received the SD by asking for receipt at both the management and group member level, and by conducting interviews. The different pieces of information will be triangulated to validate that the correct amount of SD has reached the group members.

The Rainforest Alliance will monitor and evaluate the implementation and the effects of SD/SI. The amounts of SD received by producers on top of the market price will be monitored and reported, as well as the SI needs per topic (chapter of the standard) and the amounts received per topic. Rainforest Alliance is setting up an external evaluation in phases over a 4-year period (2022-2025), assessing both the implementation as well as the outcomes of the SD and SI. The evaluation will answer questions such as, who benefits from SD/SI, in what way(s) they benefit, how substantive these benefits are, to what sustainability outcomes SD/SI do and do not contribute, what the added value (additionality) of SD/SI payments is, whether there are unintended effects of the SD/SI requirements, payments and practices within our Shared Responsibility approach etc.

SI payments can contribute to living wages. Using their Investment Plan, wage improvement plan, and the completed salary matrix, producers can allocate SI payments to incremental wage increases for workers. This can help them close the living wage gap.

SD and SI payments are always mandatory. Living wage contributions are a separate set of self-selected supply chain requirements in the 2020 Sustainable Agriculture Standard. Living wage contributions by brand owners via the additional self-selected supply chain requirements come with the possibility of additional claims and narratives.

Payment of the Sustainability Differential and Sustainability Investments is mandatory for buyers of certified product. If it appears that a buyer is not complying with the relevant SD/SI requirements, the general Certification and Assurance rules apply, and a non-conformity is issued. If that non-conformity is closed (for example, the SD is retrospectively paid), the certification can be continued. If, however, the non-conformity remains unclosed, the certification will be removed, and the buyer is not allowed to sell certified product any longer.

No. Non-payments of SD or lack of investments that were previously agreed between farm CH and buyers are a non-conformity for the buyer, not for the farm certificate holder.

In the logic of continuous improvement in the Rainforest Alliance 2020 Sustainable Agriculture Standard, performance is not static. Since sustainability is a journey, certificate holders will always have opportunities for improving on mandatory and self-selected improvement requirements of the standard for example. Sustainability Investments can be used to achieve compliance with Standard requirements while the Sustainability Differential is intended as a reward for efforts in sustainable production to producers and workers. Moreover, as costs related to self-assessments, internal inspections and audit will always have to be made on an annual basis, like other recurrent costs, there will always be costs related to certification.

Depending on traceability level, supply chain specific reports on agreed SD values will be made available at an aggregate level to SCAs beyond the first buyer through the Power BI reporting platform. This will enable SCAs to base their SD and SI payments on the information provided.

Sustainability Differential payments and Sustainability Investments made must be recorded in the Rainforest Alliance traceability platform. The Rainforest Alliance will publicly report on aggregate Sustainability Differential and Investments per country and sector and provide more transparency within supply chains as well.

Mechanisms currently in place to make voluntary investments in programs supporting social and environmental sustainability at farm level can be used to fulfil the Sustainability Investment requirements. If these investments are financed or supported in-kind by buyers, they are applicable as Sustainability Investments and buyers can report these as their contribution. If farms make their own investments with their own funds, the farm can report on the investment made, but buyers cannot claim these as shared investments. Certificate holders at farm and supply chain level are expected to annually report on investments made so programs already implemented cannot be reported as new investments.

Yes, SI can also be an in-kind payment or provision, and can also be based on a negotiation between the supply chain actor and the farm CH. The basis of that negotiation must be the content of the farm CH’s Investment Plan (Annex S16).

In the case of tea, if you are making in-kind investments to your entire footprint, you can indicate the same in the comments field in the Redeem / SD SI commitment screen on the traceability platform.

For farm CHs, in-kind SIs received from buyers for the investment plan must be documented according to the investment categories. No monetary value is assigned to in-kind investments in the SI Plan.

Yes, as long as it is spent on investments needed to meet the requirements of the 2020 Rainforest Alliance Standard (see question above).

If an organization has farming in scope, they will usually be categorized as farm certificate holder. Farm certificate holders must comply with the requirements around redistribution of the SD to their group members (3.2.1)/allocation of SD to worker benefits (3.2.2) and the investment plan (3.3.1). In case a farm CH purchases certified product from other farm CHs (and there is change of legal ownership involved), the farm CH additionally becomes the first buyer and must pay* the SD and SI to their supplier(s) according to requirements 3.2.3-3.2.7, 3.3.4-3.3.5, respectively.

*in a crop in which first buyers are the SC CHs responsible for SD/SI payment

Internal Inspection must cover all applicable requirements of the standard. Therefore, the Internal Management System should verify that the investment plan meets the requirements of the standard, that investments made have been documented accurately and have been spent in line with the plan and the proof of payment and the investment report has been completed correctly. Internal inspectors will also verify whether the SD has been redistributed according to the relevant requirements. Implementation will be verified during the annual external audit.