New Research Shows Voluntary Sustainability Standards Can Reduce Financial Risks for Investors

At a time when sustainable investments are increasingly sought, new research shows that farmers adopting voluntary sustainability standards (VSSs)—such as Bonsucro and Fairtrade—can lower financial risks and potentially catalyze investment in sustainable agriculture, according to a new report from the International Institute for Sustainable Development (IISD).

“We need investment to achieve zero hunger, and VSSs can support producers in securing the financial resources needed to become more sustainable and resilient,” said Vivek Voora, Senior Associate, IISD and the report’s lead author. “This is a pressing issue as farmers contend with economic volatility and climate change that will increasingly disrupt global food production.”

The new report from IISD’s State of Sustainability Initiatives (SSI) project benchmarks the production criteria of 12 widely adopted sustainability standards against the themes of 10 sustainable finance frameworks. Researchers also surveyed financial service providers to understand how sustainability affects their investment decisions.

“In the eyes of agricultural investors, a farm’s risk and sustainability profile are becoming synonymous,” said Cristina Larrea, Lead, Sustainability Standards, IISD and report co-author.

Beyond reducing financial risks, the research shows how VSS-compliant producers tend to adopt better business practices. For example, a farm that is keeping detailed business records to adhere to sustainability criteria is a more attractive business to investors.

“These results are encouraging, and we have identified concrete actions for VSS bodies, financial service providers, and governments to leverage standards to stimulate sustainable agricultural investment,” Voora said. “We need immediate action to ensure a viable global agriculture sector in years to come, and VSSs could be an important part of the solution.”

ABOUT THE INTERNATIONAL INSTITUTE FOR SUSTAINABLE DEVELOPMENT 

The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies. Our work inspires better decisions and sparks meaningful action to help people and the planet thrive. We shine a light on what can be achieved when governments, businesses, non-profits, and communities come together. IISD’s staff of more than 120 people, plus over 150 associates and consultants, come from across the globe and from many disciplines. With offices in Winnipeg, Geneva, Ottawa, and Toronto, our work affects lives in nearly 100 countries. 

ABOUT THE STATE OF SUSTAINABILITY INITIATIVES 

IISD’s State of Sustainability Initiatives (SSI) is an international research project that aims to advance sustainable and inclusive value chains. It provides credible and solutions-oriented analysis and dialogue on voluntary sustainability standards and their potential to contribute to sustainable development outcomes. 

Our flagship SSI Reviews are evidence-based reports on the characteristics and market performance of VSSs to help supply chain decision-makers and policy-makers navigate the complex field of sustainability standards.