By Nova Institute Team
This report examines the role of sustainability standards in shaping trade and market access, particularly in the context of bio-based products within the European Union (EU). Sustainability standards, which encompass environmental, social and economic criteria, are becoming increasingly important in global trade as consumers, businesses and governments seek to promote responsible practices.
Evidence suggests that the effect of sustainability standards on market access and trade is nuanced, as they can act as enablers or barriers. When well harmonised and aligned with international norms, these standards improve product quality, increase transparency and reduce transaction costs, thereby facilitating market access. However, for small-scale producers, particularly in developing countries, the high costs of complying with these standards can create barriers that limit their ability to participate in international trade.
Analysis of bio-based trade flows, such as wood, cotton and palm oil, reveals significant differences in certification levels between regions. Certification levels for cotton, for example, remain low in many major cotton-processing countries such as Bangladesh (8% certified cotton area), but are much higher in regions such as Brazil (78% certified cotton area), highlighting the need for targeted efforts to harmonise certification levels globally and to promote certification where it is lacking.
A number of challenges emerged during the study, particularly in relation to data availability and quality. The diverse and complex nature of bio-based value chains required tailor-made methodologies, which limited the comparability of results across sectors. Despite these challenges, the mass balance approach provided a useful framework for tracking the certification status of bio-based trade flows in the EU.
To realise the full potential of sustainability standards and certification, it is crucial that policy makers and stakeholders work together to overcome existing barriers. This includes promoting the adoption of trade-enhancing standards, particularly in regions where compliance costs are prohibitive. It will also be essential to increase certification rates in key bio-based sectors, focusing on countries that are lagging behind in meeting sustainability criteria.
Improving the quality and availability of data, standardising methodologies and working with international organisations and industry stakeholders to ensure accurate tracking of certification trends will further facilitate progress in this area.
In conclusion, while challenges remain, sustainability standards have the potential to drive more inclusive and responsible trade. Through targeted policy interventions and improved data collection efforts, the bio-based economy can better align with the growing demand for sustainable products, ultimately promoting fair and environmentally sound global trade practices.
