Continual improvement’ has become one of 2017’s buzzwords in sustainability circles – from serving as the theme of Sedex’s conference in April, to almost two million search results for the term in Google.
Driving improvement beyond the bare minimum is clearly front of mind. Positive change can be driven through a range of approaches and by various actors: from legislating increased transparency to spur action on key supply chain challenges, like the UK Modern Slavery Act, to supporting supplier improvement programmes run by companies. Yet the role of sustainability standards in driving continual improvement is often absent from discussions on this topic.
There are some perceptions that standards systems are all about certification – separating the ‘good’ from the ‘bad’ and companies must use other tools if they are in search of continual improvement. However, in ISEAL’s member-focused Task Force on Driving Continual Improvement, we have reached the opposite conclusion – continual improvement is central to both standards systems and businesses alike for identifying and making changes that result in better sustainability outcomes. In fact, 100 per cent of ISEAL’s 19 standard-setting members refer to continual improvement in their standard.
What exactly do we mean by ‘continual improvement’?
If improvement is defined as making a change that results in a better outcome, then continual improvement is simply always identifying and making changes that result in better outcomes. Within the ISEAL membership, we seek to deliver social, environmental and economic improvements, specifically for enterprises and therefore focus on continual improvement at the enterprise level, and the different approaches systems can use to encourage this. We use the term ‘enterprise’ to capture the range of end users reported by members. These include, producer organisations, mills, certificate or license holders, workers, traders and exporters, amongst others.
Sustainability standards often face the question of whether they have already reached the extent of their potential. However, the environment in which standards operate is changing rapidly – new technologies, new collaborations, and a new sense of urgency in achieving ambitious sustainability targets are driving innovation within and outside of standards systems.
Strategies to drive change where it is needed most
As part of the work of the Continual Improvement Task Force, we have identified five strategies used by many standards systems to drive change where it is most needed, at scale.
Stepwise approaches: initiatives that enable enterprises to gradually move towards improved social and/or environmental performance. The business agrees to meet higher performance tiers over time within a standard, or they step up between standards - incentivised to eliminate the worst practices through standard A, then to meet more stringent requirements in standard B. 79 per cent of ISEAL standard-setting members have an (optional or required) stepwise approach dimension built into their standard. And, 47 per cent of standard-setting members require both minimum and improvement steps to be met in order to achieve and maintain their certification/license.
Rewards and incentives: these spur desired actions, usually through the expectation of a reward. Standards systems most often deploy incentives to encourage enterprises to meet and/or exceed the standard’s performance requirement. For example, higher performance against the standard may result in more credits to sell volumes of certified product, preferential lending terms from financial institutions or recognition amongst peers.
Building the capacity of individuals and organisations: is another tool sustainability standards use to drive change at scale. Through partnerships standards systems can help scale up the support to enterprises on the ground in the pre-certification phase through training or improvement programmes – building their capacity to meet the standard.
Business model transformation: a better understanding of both ends of the value chain and how they support each other is necessary in order to drive continual improvement. Therefore, business model transformations are often linked to increased partnerships, changes in the governance structure or services offered by the standard-setting organization, in order to create greater market value.
Performance assessment tools: these are used to measure an enterprise’s compliance with a standard’s requirements but also broader sustainability performance. Providing more immediate, user friendly insights to the participating enterprise, such as benchmarked performance against peers in the region/sector, can draw on an individual’s internal motivation to optimize their operations and improve practices. This can lead to further improvements. The information reported by enterprises is also valuable for a standards system’s monitoring and evaluation, helping them to better understand change over time and the effects of applying the standard in different social and environmental contexts.
Systemic change requires collaboration
The Task Force has identified a need to further explore what pre-conditions for enterprises need to be in place to ensure these strategies have uptake, such as a culture of commitment to improve or effective feedback loops of sustainability performance information.
There is also a balance to strike in ensuring any initiative working on continual improvement has a credible, robust way in which to address the hotspot issues in the supply chain, as well as allowing room for improvement over time.
Sustainability standards do not operate in a vacuum, and systemic change requires collaborative action. It will be important to better understand the roles that standards systems, alongside other market actors, can play in scaling up these efforts.
ISEAL will continue to explore some of these approaches in 2018, such as the role incentives can play to drive improvement at the enterprise level. We look forward to sharing more with you on the value that standards systems can bring and how we can best address potential barriers to driving improvement.