Coffee farmer; image courtesy of Nestlé
The Linking Landscape and Livelihoods collaboratory is designed for companies that have important relationships with smallholder farmers and seek to create positive social and environmental impact through their interactions. For some companies, this means enhancing their reputation for responsibility and maintaining their licence to operate, but for others it is critically important to improve the reliability, quality and volumes of agricultural commodities from smallholder farmers in their value chain as competition for natural resources grows.
For many smallholder farmers the productivity of the land on which they depend for their livelihoods is being degraded and agricultural productivity is in decline. While some companies have adopted individual strategies, often through intermediaries or partners, they are still struggling to demonstrate impact and identify viable business models that can be scaled up without undermining natural capital.
Effective smallholder engagement is essential for increasing sustainable production – if there is no loyalty between the buyer and smallholder, corporate interventions to improve agricultural productivity are at risk of being undermined. The challenge for a buyer is to identify the principles and key interventions that can deliver direct benefits to the company, farmer and the landscape on which both depend. This helps build important supplier loyalty and uses a company’s resources more efficiently.
Currently there are many opportunities for new sectoral and cross-sectoral partnerships that allow for interventions to become cost effective through co-investment. The collaboratory offers business the opportunity to navigate through a bewildering array of initiatives to identify these opportunities effectively.
The collaboratory builds on the wider work of the Natural Capital Leaders Platform by recognising the importance of smallholders into commodity value chains, highlighting social causes that are likely to contribute to low agricultural productivity and promoting sustainable agricultural practice.
By working in a collaborative fashion, companies share and refine their individual approaches based on a deeper understanding of costs and benefits, so effectively targeting and aggregating incentives that drive effective and quality production. They explore how to increase the viability of systematic interventions that really address root causes in the interests of both company and smallholder, so sustaining trading relationships. An important factor being considered is the improvement of the interaction and relationships with intermediaries through a clear management framework. The collaboratory helps companies identify overlapping needs and take forward new partnership opportunities identified through CPSL’s Business Platform networks with NGOs, academics, aid agencies, banks and insurers.
The output for this phase of the collaboratory is a practical assessment tool to create new systematic opportunities for interventions so that companies are better able to identify key principles, allowing for more robust business models, easier measurement of impact and effective implementation.
River at dawn; photo: Chris Loades
The Right Value for Externalities: Phase II
Download the Phase II proposition document.
Business is becoming more aware of the need to consider the impacts of its activities upon the natural environment and the subsequent risks to business. Leading companies recognise the need to identify and address externalities, and there is now an opportunity to build a deeper knowledge base around the uncosted impacts associated with the production and consumption of goods and services.
In 2012, Phase I of the Right Value for Externalities collaboratory brought together a group of leading companies to develop an evidence-based, pragmatic framework to outline the methodologies for valuing externalities. The framework sought to make the evaluation of externalities accessible, designed to guide companies transparently through a process to undertake an evaluation of externalities.
Phase II builds upon this first phase by enabling companies to pave the way on the actions that are needed to address externalities. The collaboratory objectives include a) to develop the outputs from Phase I to internally engage business around externalities and the valuation process; b) to communicate why the presence of externalities is of material consequence and significant concern for business; c) to outline where action is required and how companies can respond; and d) to develop policy engagement to bring about change where the evidence suggests it is needed.
This collaboratory enables companies to be the frontrunners on the evaluation of externalities. It enables participating businesses to go beyond other valuation initiatives by engaging at the policy level to promote measures designed to internalise externalities for all companies, levelling the playing field and benefiting those who are leading on this issue.
The collaboratory has two streams of work. The first is to develop the Evaluation Framework. The Evaluation Framework from Phase I is developed to incorporate more practical tools and decision aids alongside the evidence base to better articulate that externalities matter to business. This provides a stronger basis for communication within businesses and inform risk management and response strategies. The second work stream is to establish business leadership on policy engagement. Joint action of business and policymakers is required to agree on appropriate mechanisms to respond to the need to internalise the costs of externalities. The materiality of these externalities are becoming apparent and this collaboratory works with companies to identify the key asks for policymakers to engage and bring about real change.
This collaboratory offers companies the opportunity to work together to develop rigorous and realistic business targets and plans relating to natural capital. It helps companies benchmark their ongoing performance in comparison with others and share their progress in adopting strategies that promote and protect natural capital.
There are a multitude of initiatives developing sustainability indicators and the collaboratory helps identify those that are relevant to the business sector and natural capital. With the goal of developing metrics that are both practical and rigorous, the collaboratory is exploring two different but complementary strands. The first focuses on developing an appropriate benchmarking process using information already in the public domain. The second draws on the latest ecological and water footprinting methods, focussing on national and product footprinting data. This offers a more nuanced story, using the context of a company’s products, production processes and geographical locations that shape their unique natural capital challenges and analyses their progress in responding to them.
With increasing awareness among stakeholders of the pressures on natural capital, companies need to be able to articulate their impacts and dependencies across the organisation. Ecological and water footprints have helped us identify humanity’s demands on the bio- and hydro-sphere by comparing humanity’s consumption against the Earth’s regenerative capacity, or biocapacity. National Footprint Accounts (NFAs) go further by tracking the supply and demand upon this biocapacity for individual countries by key components such as carbon, cropland, fishing, grazing, timber and built-up land.
In developing a business metric for natural capital based on footprinting, the collaboratory builds on these NFAs with an increasing body of knowledge derived from product lifecycle analysis (LCA) and product category footprinting. This is particularly helpful in analysing the sourcing of resources along a company’s own value chain. Using this approach, the collaboratory explores the relationship between National Footprints, LCAs, Product Category Footprints and company-wide impacts and dependencies.
By combining both benchmarking and footprinting into a new set of rigorous natural capital metrics, individual members are able to demonstrate their progress and more clearly define their leading position. In addition, the footprinting analysis can be used in specific case studies, helping interpret the relationship between a company and natural capital for board members, investors and policymakers.