You see them so often that you no longer notice them. Green claims. They flood our feeds, proclaim good deeds, and tick the “we’re a good corporate citizen” box. Many are false. Unverifiable claims and opaque supply chains dupe consumers who are willing to pay more for sustainable products. New EU regulations require proof from the first mile to the store shelf. Technology can provide transparent and verifiable supply chain data for compliance.
The European Union Deforestation Regulation (EUDR) targets deforestation. The EUDR became law on June 29, 2023. It targets “reducing the EU’s impact on global deforestation and forest degradation” to “bring down greenhouse gas emissions and biodiversity loss.”
The Green Claims Directive will reel in the claim game. It requires companies to prove claims like ‘eco-friendly,’ ‘biodegradable,’ ‘environmentally friendly,’ and ‘green.’
Source: European Commission
The EU is also tackling forced labour under a September 2022 proposal that “specifically prohibits the placing of products made using forced labour on the EU market.”
Anyone doing business in the EU is accountable for their entire supply chain.
This has prompted debate about how the laws impact first-mile producers like smallholder farmers. Several farmer-first organizations maintain farmers will not have the resources and technical support to geolocate their plots, verify supply chains, and comply. They suggest it will lead to selling non-compliant products in countries with lower standards and have little or no impact on protecting the environment.
ECOSHIFT supports legislation that protects the environment, workers and consumers.
Our model gives smallholder farmers smart technology to comply with EU regulations FREE of CHARGE. The pilot initiative supports cocoa farmers in Thailand and provides training, expert guidance and long-term buying contracts, enabling farmers to earn a fair living income.
Green Claims, Certifications, Monitoring and Compliance
The smell of ‘green’ money pollutes the air. Companies have long profited from consumers’ willingness to pay more for environmentally friendly, equitable and socially responsible products. Unverifiable, misleading green claims trended. Private labelling initiatives flourished, often lacking supporting evidence.
“If environmental claims are not reliable, comparable and verifiable, consumers and other market actors cannot fully leverage their purchasing decisions to reward better environmental performance.”
EU Green Claims Directive
ESG (Environmental, Social and Governance) is another grey market flooded with consultants, apps and software platforms. Reducing environmental impact and enhancing social equity are critical. But who regulates and verifies these private businesses?
“The uncontrolled establishment of new labelling schemes developed by private operators will also be reduced.”
EU Green Claims Directive
EU Measures to Tackle Green Washing
At the same time, the number of organizations promoting sustainability certification is growing. Yes, these programs can be effective. However, they often come with barriers like complicated application forms, drawn-out approval times, time-consuming monitoring reports and entry fees. That excludes the average smallholder farmer who may not have the money or time to complete the forms and documentation.
Improving the Thai Cocoa Market with a Verifiable Supply Chain
ECOSHIFT is building a sustainable path to profitable trade for smallholder cocoa farmers in Thailand. Farmers equipped with smart technology participate in the supply chain, documenting the cocoa lifecycle and complying with applicable regulations. Our technology provides conclusive and verifiable supply chain data, enabling smallholder farmers to thrive sustainably. Best of all, there is zero cost to our farm partners.
And with cocoa demand rising and prices climbing, the timing is perfect.
Bloomberg recently noted, “Cocoa prices have soared about 47% in the past year on fears that bad weather and crop disease will hurt output in Ivory Coast and Ghana, which make up two-thirds of world supply. An El Nino weather phenomenon could make matters worse, and analysts expect a third straight global shortage for the new season that’s just starting.”
Although New York cocoa futures prices have been hitting highs not seen since 1979, none of that is translated back to smallholder farmers. And higher input costs for fertilizer and pesticides mean farmers cannot afford them, opening the door to disease and exacerbating the problem.
The ECOSHIFT model presents a scalable solution.
Deforestation
Successful agriculture takes its toll on nature, farmers and their families. A booming Thai chocolate market adds new pressures on smallholder cacao farmers who already struggle to earn a fair living income.
Keeping up with strong demand can lead to deforestation and exploitative labour practices.
The rate of deforestation in Thailand is staggering. In 2021 alone, Global Forest Watch reports deforestation in Thailand was 11,000 hectares due to urbanisation and 86,500 hectares to commodity-driven deforestation - over 8 times the size of metro Paris.
Source: Global Forest Watch
Combating Child and Forced Labour
Child and forced labour are issues. The International Labour Organization (ILO) says, “The global number of people in a situation of forced labour at around 27.6 million, including 3.3 million children.” In West Africa alone, there are an estimated 1.5 million child labourers.
Child labour is low in Thailand, and the government has implemented policies to reduce rates. The official minimum age to work is 15 years. Still, in 2017, an estimated 13% (1.3 million) of kids aged 7 to 14 were working.
And unfair/exploitative labour practices disproportionately impact workers from Burma, Laos and Cambodia. The EU proposal to prevent products produced through coercive means from entering the EU market will help resolve this problem.
EU legislation will help clean up Europe’s supply chains.
ECOSHIFT partners are required to certify no child labour in their production chain.
Shifting the Thai Cacao Market
Smallholder farmers face huge hurdles even before they struggle to sell their products. The cost of land, seeds and seedlings, water, fertilizer and day-to-day expenses are high. And that’s before buyers try to push prices down, delay or deny payment and erect roadblocks that prevent the average farmer from achieving a fair living income.
Globally, 75% of farmers live below the poverty line. In 2017, 40% of Thai farmers lived below the poverty line. While this is improving, “More than 90% of Thai farmer households are indebted at an average of 450,000 baht, and the vicious cycle of debt and reliance on credit to overcome the burden pushes them into a trap,” according to a study by the Puey Ungphakorn Institute of Economic Research.
To help combat this, the Thai Government is implementing a debt moratorium plan to help millions of farmers. It will allocate 12 billion baht to cover interest on loans held by around 2.7 million farmers. The moratorium will last three years and will cost the government around 30 billion baht, according to Deputy Finance Minister Julapun Amornvivat.
According to a New York Times report, “The pattern of exporting cheap raw materials to richer countries that use them to manufacture valuable finished goods is a hangover from colonial days. Growing and harvesting cocoa is the lowest-paid link in the chocolate value chain. The result is that farmers receive a mere 5 or 6 percent of what a chocolate bar sells for in Paris, Chicago or Tokyo.”
That’s why we are working with farmers, research institutes, our team of expert advisors and the chocolate industry to give our members the technology and tools to comply, establish long-term buying contracts and achieve a fair living income free of charge.
Verifying Compliance with Technology
We provide smallholder farmers with all the necessary tools to document and verify growing and post-harvest processes without relying on expensive certification programmes. We call it participatory compliance.
Here’s how it works.
We set up everything for the farmers using a URL-based platform, record farm data and show farmers how to participate as they choose.
Satellite mapping accurately geolocates an area as s
mall as 10m2, monitors activity on the ground, stores the data on a blockchain, and verifies EUDR compliance.
We build a Self-Sovereign Identity (SSI) for each farmer to safeguard personal data.
Incentivizing smallholder farmers to benefit from long-term buying contracts, training and support.
Farmers can confirm transactions.
A QR code directs buyers and consumers to a URL to view the whole supply chain, including farms, facilities (processing/storing places, port of loading/discharge, etc.) and the product page.
Buyers have access to all of their orders with batch numbers with their routes.
With traceability built in, we help ensure a verifiable, sustainable cocoa supply.
The result: Thai cacao is now tracked from a certified non-deforested farm, sustainable methods verified, and every transaction from the farm to the manufacturer is tracked to validate the chain of custody. Consumers can also “look” at chocolate products on the shelf and trace them back to the source.
A Sustainable Path to Profitable Trade and Production
EU regulations, including EUDR, the Green Claims Directive and the proposal for a ban on goods made using forced labour, present opportunities for positive change, benefiting stakeholders from farmers to consumers.
Technology is a transformative tool for progress, with ECOSHIFT diligently monitoring the supply chain from cultivation to the final product to ensure quality, sustainability, and compliance.
By helping smallholder farmers sustainably earn a fair living wage, these efforts distribute the gains more equitably throughout the Thai cocoa supply chain. Technology can provide transparent and verifiable supply chain data.
ECOSHIFT builds scalable supply chains for smallholder farmers with end-to-end traceability for verification and compliance with EUDR and other standards.
by Tim Morch, Freelance Writer