Impact Alliance: Incentivising better production practices

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The challenge
The opportunity
About Impact Alliance
What are Impact Incentives?
Impact Partnerships
The prototype

Introduction

About the project

Project title: Impact Alliance

Lead organisation: Textile Exchange

Partners: ProTerra Foundation, Global Roundtable for Sustainable Beef (GRSB), Global Food Partners (GFP), ACT Commodities, ChainPoint

Duration: January 2021 - June 2022

Contact: Anne Gillespie - anne@textileexchange.org; Susanna Lehmann - Susanna@textileexchange.org

Funded through the ISEAL Innovations Fund, which is supported by the Swiss State Secretariat for Economic Affairs SECO

The challenge

To address the most pressing sustainability challenges of our time like deforestation, we need practical solutions that reward good production practice and incentivise others to improve performance over time. Government intervention is often not enough, and the burden lies with producers to invest in more sustainable production practices. Voluntary certification has made a difference in some cases, but the cost and complexity of traceability often hinders change.

The opportunity

Brands and retailers are looking for ways they can directly support such efforts at scale, and communicate their contribution, without their services being disrupted by potentially complicated supply chain traceability, across a variety of commodities and landscapes. In addition, the production of deforestation-linked commodities in high-risk areas are often interlinked. In Brazil, beef/leather production occurs in the same landscapes and farms as soy and even cotton. Tackling the sustainability of production of these commodities together allows for a landscape-based approach to the issues, amplifying the impact.

About Impact Alliance

To accelerate impact and the adoption of producer-level sustainability practices that are valued by the market, Textile Exchange (cotton, leather, fibers), with ProTerra Foundation (soy, sugar), GRSB (beef), and Global Food Partners (cage-free eggs) came together in this project to form the Impact Alliance. The Impact Alliance defines, promotes and oversees the trading of Impact Incentives as a mechanism to deliver value for sustainability efforts to both ends of the supply chain.

For more information on the Impact Alliance, please visit www.impactincentives.org

What are Impact Incentives?

Impact Incentives are an evolution of the book & claim or credit trading systems. Farms that meet a chosen standard or benchmark (eg: zero deforestation) will be able to sell incentives for their volume of output, and brands can purchase these incentives to balance out their use of these output materials. The physical goods and the Impact Incentives are traded separately from each other. The farms selling the incentives may or may not be in the supply chain of the brands. This means that brands cannot make any content claims, but it by-passes the cost and complexity of long or opaque supply chains in order to deliver impact quickly and efficiently. And brands can still make claims about their support for best practices.

Impact Partnerships

Along with recognising good practice, the Impact Alliance supports improved practice over time. Where producers are unable to meet the Impact Incentive sustainability trading requirements, brands and retailers can financially support approved on-the-ground capacity building efforts to strengthen practice adoption among producers. These Partner Programs will deliver support and training, provide verification, and collect site-level sustainability data, while offering stories, data and claims to brands.

The prototype

This project served to develop and test the system for trading Impact Incentives, including various policies of the operations of the Impact Alliance and the development of an online registry to manage the Impact Incentives. The clear value proposition for all stakeholders involved has been critical to setting up this approach to tackle sustainability challenges at scale. The Impact Alliance is actively working to expand the number of impact areas in the system (currently limited to animal welfare and zero deforestation) and the number of commodities included to be able to effect change at landscape level.