Explainers

Shared Responsibility: What It Means for the Fruit & Banana Sectors 

Filed Under: Certification  |  Tagged: ,

At the Rainforest Alliance, our goal is to facilitate the creation of global supply chains that share both risk and value and contribute to a more sustainable future. Our shared responsibility approach  allows farmers to share costs with buyers and be rewarded for their efforts towards more sustainable agricultural practices.  

To achieve this, the Rainforest Alliance Certification Program requires payments of the Sustainability Differential (SD), and the Sustainability Investments (SI).   

With regards to the fruit and banana sectors we know that Rainforest Alliance certification is valued by mainstream conventional fruit markets and facilitates market access for farmers. Over 10,000 Rainforest Alliance certified banana and other fruit farms1 employ more than 500,000 workers and cover over 900,000 hectares of sustainable farms. These mainstream markets are essential to the long-term future of fruit producers, workers and the environment.   

Banana & Fruit
Producers		Volume (x 1000 kg) Workers  Hectares 
10,30215,285,156506,684904,177

Companies are also increasingly aware of the sustainability performance of their supply chains, as well as the environmental and social risks in it. Traceability and transparency are key to helping companies target and increase their investments toward areas of greatest need, make the right investments where they are needed the most, including worker wellbeing. They also want to be sure these investments will lead to more sustainable production. 

That is why the Rainforest Alliance is not only committed to ensuring that certified farmers can access markets to sell their sustainably produced goods, but also that there is increased transparency on the sustainability investment needs and associated impact in the supply chain.  

A Fixed Amount for Investments in Sustainability  

We have consulted with and received feedback from producers and buyers of certified bananas and other fruits. Jointly we have looked to find a balance between market access and increasing value to producers, workers and the environment. Both farmers and buyers have indicated a preference for the Rainforest Alliance to mandate a fixed amount for the Sustainable Investment (SI). 

Benefits of the fixed SI amount cited include the ability to create a level-playing field for the whole sector. Transparency on financial resources being invested in producing countries provides clarity on what amount needs to reach the producers and thus eases the negotiating contracts on supply of certified bananas. With this, retailers and other buyers can now directly contribute to farm improvements including worker wellbeing.   

 Amount to increase sustainable farming (SI)(2022), 2023, 2024   
Fixed amount
Per Metric ton (1000 kg) fresh fruits US$5.50   
Per box of bananas (18.14 kg)  US$0.10   

The fixed US$5.50 per Mt in 2023 is a recognition to start sharing sustainability related costs in a mainstream market that often is not used to paying for sustainability. A fixed value to kickstart sharing responsibility with US$0.10 per banana box to encourage buyers to reach the level of those companies that are supporting farmers to invest in sustainability- usually in the range of 10-20 cents per box. At the same time, it would allow buyers to directly share in the investment needed at the farm level to improve sustainable practices, enhance workers wellbeing, and protect the environment. 

The Rainforest Alliance will closely monitor the outcomes of this approach in order to inform future adaptations on shared responsibility needed in the banana sector, as well as for other fresh fruits sectors. 

Timings of SD and SI Implementation  

  • Any volumes physically changing ownership from farmers to first buyer after January 1, 2023, will need to have contracts and invoices in place containing SI and SD payments. Obligations of payment for Supply Chain certificate holders will be binding from this point on, even if the transactions are tied to contracts that precede this time.   

For more information please consult our Sector Guidance.

For more specific Q&A please see below. 

How to Implement SI and SD – Practical Information

The list below sets out the main activities required to implement SI and SD.

  1. Farm CH drafts their Investment Plan based on their risk assessment, capacity assessment and management plan. Investments in relation to worker benefits should be included in the Investment Plan and worker representatives must be consulted on the allocation of those investments.
  2. Farm CH and first buyer include value and payment terms around SI and SD in the contract and invoices for export Rainforest Alliance Certified volumes. If in-kind SI are also negotiated, these shall also be included in the contract.
  3. First buyer includes SI and SD amount in the contract with their buyers. Any other SC CH in the supply chain up to the importer also includes SI and SD in contracts with their buyers.
  4. Farm CH and first buyer register and confirm the transactions details including information on SI and SD payment in the Rainforest Alliance traceability platform, Marketplace.
  5. Management (both of groups and individual CHs) reports on how the SI is invested.

Activities and Responsibilities of each Actor in the Supply Chain

The importer is responsible for payment of SI and SD to their supplier(s). This means they are responsible for :

  • Negotiating and agreeing the SD with its seller (depending on supply chain setup, the seller could be the farm CH, first buyer or an intermediary)
  • Including the SI amount (US$ 5.50 p/ Mt for the Farm CH) and agreed SD amount in contracts and indicate those details on invoices
  • If in-kind SI were agreed between parties, ensuring these are also included in contracts
  • Paying their suppliers the fixed SI and agreed SD
  • If the importer is the first buyer, confirming SI (monetary and in kind) and SD payments are registered in MarketPlace 2.0, the traceability platform linked to transactions

 

Supply Chain CHs in country of production are responsible for negotiating SD amounts with their suppliers and ensuring these are included in contracts with their buyers. They then transfer SI and SD paid by the buyers to the farm CHs they are sourcing from. In summary, they are responsible for negotiating the following:

  • The SD amount with farm certificate holders. The agreed SD as well as the fixed monetary SI will be included in contracts and invoices with Farm CHs. If in-kind SI are agreed between parties, these are also included
  • The SD amount with buyers. The agreed SD as well as the monetary SI will be included in contracts and invoices with buyers. If in-kind SI are agreed between parties, these are also included in contracts
  • Transferring the fixed SI and agreed SD amounts received from the buyer (importer) to the supplier Farm CH. It is possible that the first buyer will advance payments to the Farm CH and later on receive the payment from the next buyer
  • First buyer confirming SI (monetary and in kind) and SD payments in MarketPlace 2.0, the traceability platform linked to transactions

 

Farm CH are responsible for negotiating SD amounts with their buyers, to determine the use of SD and SI and to report on how these payments are used. This means they are responsible for the following activities:

  • Developing an Investment Plan that ranks the investment needs and defines the amounts needed to improve compliance with the 2020 Rainforest Alliance Sustainable Agriculture Standard
  • Farm management consulting with a representation of workers on the allocation of Sustainability Investments to the predetermined worker benefit categories (wages, working conditions, health and safety, housing)
  • Agreeing on an SD value per volume with its buyer(s)
  • Including the monetary SI and SD in contracts and invoices agreed with the first buyer(s). If in-kind SI are agreed between parties, ensuring these are also included in contracts
  • Documenting how much monetary SI, in-kind SI and monetary SD is received
  • Using amount received as SI (monetary and in-kind) according to the Investment Plan
  • Documenting once per year how the received SI has been used and reporting this in the online platform. These documents do not need to be shared with buyers
  • Reporting on the use of SD to benefit workers if applicable

 

The Group Certificate Holder, at least annually:

  • Communicates SD received to group members
  • Distributes full SD amount to group members and documents the transfer of it.

 

Other supply chain CHs outside the country of production – including retailers:

The Rainforest Alliance makes it clear that SI and SD payments must be part of the contracting and purchasing agreements for certified bananas and fresh fruits. All supply chain certificate holders beyond the importer level, including retailers, are therefore also encouraged to contribute to shared responsibility, including the contribution to Sustainability Investments and the payment of Sustainability Differential.

The Rainforest Alliance has expanded the scope of certification to include retailers that are driving the request for purchasing Rainforest Alliance Certified consumer products and/or fresh products, including fruits, vegetables and flowers, sold under their own brand name or as non-branded products. These retailers will be required to register and obtain certification. In case a retailer acts as an importer for Rainforest Alliance Certified bananas and/ or other fresh fruits (vegetables or flowers) compliance with the SI and SD requirements (See “importer activities and responsibilities” mentioned above) will be verified during external audits. You can find more information on our page with dedicated content for retailers.

Questions and Answers  

For general questions about our shared responsibility approach please refer to our explainer on shared responsibility.   

Why a fixed Sustainability Investment in fruit?

Workers are at the heart of the banana sector. Increasing worker benefits is a key goal of the banana program. SI is aimed to increase sustainability at the farm level, including worker wellbeing. Hence the best tool to support farms to increase worker benefits “Investments in relation to worker benefits must be included in the Investment Plan and worker representatives must be consulted on the allocation of those investments”.

What will the Sustainability Investments finance?

Sustainability Investments (SI) directly support Farm CHs in investments needed to meet requirements of the 2020 Rainforest Alliance Sustainable Agriculture Standard including workers wellbeing.

The needed investments are indicated in the Investment Plan; an Excel template provided by The Rainforest Alliance (Annex S16). In the Investment Plan, the potential investments in sustainability are categorized and are directly linked to each of the chapters of the 2020 Rainforest Alliance Sustainable Agriculture Standard including certification costs.

Other investments can be added to the Investment Plan under the condition that core, mandatory and self-selected improvement requirements have been complied with. The Investment Plan and prioritizations will be checked by the auditor. There is no need to include all investments at the farm.

Why not the first buyer approach?

The first buyer is usually inside the producing country and often part of the same company. It was therefore suggested it might make more sense to place SD-SI payment outside the producing country.

The importer will be the responsible Supply chain certificate holder for the payment of SD- SI. Importers are the end-buyer or closer to the end-buyer than first buyers. ​In case the importer doesn’t pay the exporter, it is a NC for the importer, not the exporter.​

Exporters and other supply chain actors prior to the importer, are conveyors of SD-SI payments paid by the importers. They pay the differential to their supplier. This is in line with proven certification practices, and the supply chain actor that is directly linked with the producers in our traceability system (IP).

Why is the importer responsible for the SD/SI?

According to Annex Chapter 3 of our Supply Chain requirements in the case of banana and other Fruit, the importer is the responsible party that needs to ensure SC CH for payment of SI and SD to their suppliers.

SD and SI payments must be part of the contracting and purchasing agreements for Rainforest Alliance certified bananas. The importer has clear contractual agreements in place which specify the amount and other terms around Sustainability Differential payment.  Quite a lot of importers already invest in farm sustainability, however those investments have never been visible nor recognized. We want to enable transparency for those that already pay a top up or provide in-kind support to producers. Therefore, we want to recognize and make those investments transparent.

How will the retailer share in this responsibility?

For the Rainforest Alliance it’s clear that SD and SI payments must be part of the contracting and purchasing agreements for certified bananas.  The scope for traceability has been expanded in the 2020 Rainforest Alliance Certification Program; going from production up until retail purchase of unbranded / private label certified products. This means that sales of certified products to retailers must be reported into the traceability platform.

This mechanism ensures retailers that their investments reach producers. We will enable greater transparency in the traceability system for retailers to be able to visualize the amounts of SD and SI payments into their certified supply chains. This will be combined with robust assurance to ensure that the payments reach producers and are used as prescribed in the standard.

Transparency is key and the whole supply chain is accountable for ensuring SD and SI payments reach farmers. We are dependent on end-to-end segregated traceability for brands, private label and unbranded bananas. As a result, we will be able to report on volumes purchased for retailers’ private label or non-branded bananas, linked to the farm investments and worker benefits.

What will be the mechanism to guarantee payment of SD and SI? 

We see the entire supply chain as responsible for realizing these ambitions. We strongly urge final buyers to support first buyers in working with farm certificate holders to achieve continuous improvement and quality implementation of the Rainforest Alliance Sustainable Agriculture Standard.

Although the Rainforest Alliance cannot guarantee payment, it can decertify buyers who are registered in the certification system, but do not comply with these mandatory criteria. Through the certification system we set the expectation and provide the mechanisms to demonstrate and verify (through audits) that payment has been made. Furthermore, advocacy, in partnership with producers, is key. A growing number of retail chains in Europe and the US see added value in sourcing certified bananas and support our efforts to improve the economic situation of producers and workers, with pressure from NGOs and consumers. Large retailers with public sustainability commitments are prepared to pay extra for certified bananas as a specialized product, but they need a mechanism to do this, as well as assurance on the sustainability impact associated with these additional investments.

Do SD and SI contribute towards a Living Wage?

The Sustainability Investments can contribute towards living wages. However, the buyer cannot classify the amount as a contribution towards a Living Wage. SD and SI payments are always mandatory for supply chain actors, while Living Wage contributions are not and come along with the possibility of an additional claim.

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