How Certification Adds Regulatory Value
Today companies experience increasing societal and governmental pressure to do the right thing and establish social and environmental due diligence across their global supply chains.
This is an important step towards achieving the UN Sustainable Development Goals and ensuring a healthy and prosperous future for people and the planet. 4C certification represents a viable tool for identification and mitigation of risks in coffee supply chains, enabling roasters and brand owners to take a proactive approach and verifiably close human rights and environmental gaps in their supply chains. Scroll down to learn how.
Supply chain due diligence regulation: Background
According to the OECD and FAO Guidance for Responsible Agricultural Supply Chains, “due diligence is understood as the process through which enterprises can IDENTIFY, ACCESS, MITIGATE, PREVENT and ACCOUNT for how they address the actual and potential adverse impacts of their activities as an integral part of business decision-making and risk management systems”. Today we experience the rise of multiple due diligence regulations around the world. These include the UK and Australian Modern Slavery Acts, the French Duty of Vigilance Law, the Dutch Child Labor Due Diligence Law, and the German Act on Corporate Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains. Further regulations are being developed in Switzerland and Canada.
The EU is also working on cross-sectoral European due diligence solutions within the frame of the EU Green Deal: among others the EU Regulation on Sustainable Investment (EU Taxonomy) and the EU Legal Framework to Hold and Reverse EU Driven Global Deforestation. The European Supply Chain Law is to follow in 2021. Apart from that, additional sector-specific requirements, such as the EU Timber Regulation, are already in place.
4C supports the move towards introducing mandatory due diligence regulations. We believe that a smart mix of approaches is needed to build a sustainable future for all.
Requirements in a nutshell
| Risk assessment | Identify, analyze and map the risks resulting from the company’s activities. A basis to determine mitigation measures |
| Prevention and mitigation | Mere assessment and reporting have limited effectiveness, therefore companies are also required to establish further suited measures |
| Monitoring | Set mechanisms to assess the effectiveness of the measures that have been implemented |
| Reporting | Disclose identified risks and negative impacts and inform whether any action is being taken to address these risks |
| Enforcement | Administrative and criminal sanctions might come into force as a result of non-compliance |
4C is a due diligence toolbox
The primary role of 4C, as a voluntary sustainability standard (VSS), is to collect and enable access to information about environmental and social aspects, identifying risks and thus preventing or mitigating negative impacts. Sustainability criteria of VSS align with the OECD due diligence framework, as these cover the “assess, prevent, monitor and mitigate” steps. Some of the existing and upcoming regulations directly refer to certification as a useful tool for supply chain due diligence, e.g. the EU Legal Framework to Hold and Reverse EU Driven Global Deforestation and the EU Supply Chain Law.
4C enables credible and efficient due diligence process in green coffee bean supply chains through:
Identifying risks in the green coffee bean supply chains
Risk and negative impacts assessment
- Regular risk assessment procedures for 4C certified products conducted within professional third-party audits in a thorough manner to determine potential adverse impacts
- Innovative risk assessment tools, e.g. satellite monitoring system to verify sustainability criteria and assess risk levels for the relevant topics such as land use change, deforestation, biodiversity and carbon stock
- Integrity program additionally strengthens the certification process. Audits are planned on risk or random basis and conducted by independent auditors, reporting directly to 4C
Providing support in ceasing, preventing and mitigating risks and negative impacts
Mitigation of risks and prevention of serious violations
- Supply chains mapping and ensuring their traceability
- Improvement plans include corrective actions and progress targets
- Regular trainings with the 4C System users on general certification topics and specific challenges, e.g. in the field of biodiversity
- 4C projects on the ground to tackle root causes of complex issues and amplify positive impact
Monitoring and keeping track
Monitoring systems to follow-up on the measures taken
- Transparent and secure 4C certification database as well as further tools to automatize and digitalize data collection, e.g. Independent Smallholder App
- Using remote sensing technologies, 4C regularly screens the progress of the 4C producer groups
- Improvement plans enable monitoring of the implementation status, allowing for targeted addressing of issues, developing efficient data-based intervention measures, thus, minimizing negative impacts
- Mandatory commercial reporting allows 4C to follow 4C certified green coffee beans
Facilitating efficient communication and fulfilling of reporting obligations
Transparency and disclosure
- 4C provides data and functions as a versatile tool for communication and reporting
- Audit reports, Business Partner Maps and Improvement Plans are securely stored in the 4C database allowing 4C and the 4C System users to keep track of certification process and corrective actions
- 4C certificates are publicly available on the 4C website to ensure transparency
- 4C logo off- and on-pack credibly supports companies’ sustainability commitments
- 4C certification significantly reduces red tape efforts for companies connected to the mandatory reporting under upcoming due diligence requirements
4C Supports the German Supply Chain Act
In 2020, 34 stakeholders of the Sustainable Agricultural Supply Chain Initiative [1], among them 4C, have committed themselves to the Supply Chain Act in a joint statement.
“We pledge our support to the German government for a national supply chain law and an ambitious European regulation.”
The Supply Chain Act lays out the responsibilities of German companies with regards to their supply chains and envisions obliging companies to take a proactive approach against human rights and environmental violations. In February 2021, the German government reached an agreement on legislation that obliges German companies to carry out due diligence regarding human rights and environmental issues in supply chains on a global level. The law is supposed to come into force in 2023.
Actively supporting the Supply Chain Act signifies the willingness to take responsibility together with the German government to make an effort and do whatever is in one’s power to establish more sustainable and transparent supply chains.
To read more and download the statement, please follow the link.
[1] The Sustainable Agricultural Supply Chain Initiative (INA) brings together numerous actors from the private sector, civil society, and politics. Together they want to achieve more sustainability in global agricultural supply chains and improve farmer living conditions.
Upcoming due diligence requirements create and increase legislative pressure on companies to uphold environmental and human rights standards in their supply chains.
As a reliable and trustworthy certification scheme, 4C helps companies to take due care of their supply chains. 4C already creates shareholder and consumer value for companies, enabling responsible sourcing, transparent reporting and credible communication. Now it also provides regulatory value, helping to meet increasing due diligence requirements on national and global levels.