"Sustainable" Certifications are Siphoning Billions from Organic

(Image courtesy of La Fourche)

This is Part I of a two-part series on “sustainable” certifications.

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Never before has there been more interest in making environmentally friendly purchases or supporting companies that are committed to protecting the planet.

While there are several indisputably sustainable standards applied to agriculture — such as USDA organic, EU organic, Regenerative Organic Certified®, Real Organic Project and Demeter — there has been a rapid emergence of seemingly similar but less rigorous certifications that are seeking to capitalize on powerful ESG trends.

In the process, what often gets hidden is that the actual environmental benefit of these “sustainable” certifications may be incredibly different from what consumers and investors are assuming.

But they aren’t the only ones coming up short.

The organic industry, as a whole, is losing billions in lost sales and investment dollars.

In an attempt to push back against unfair and misleading labels, IFOAM Organics Europe and the French Association of IFOAM Members have taken legal action against the Eco-Score certification before the Paris Court of Justice.

At issue is that the certification is unlawfully using the term “eco” with non-organic certified products. Under EU law, Article 30 of Reg 2018/848 states that the terms “bio” and “eco” are labels only to be used for certified organic products.

“Instead of fighting greenwashing, labeling schemes like the Eco-Score contribute to it,” said Jan Plagge, President of IFOAM Organics Europe. “They potentially mislead consumers about the organic or non-organic nature of the food products on which they are displayed and favor products from intensive agriculture. The organic movement is concerned about the spread of such labeling schemes in several EU countries.”

Back in the U.S., real estate managers of organic farmland are facing similar challenges when competing for institutional investment dollars.

With large pension funds, insurance companies, endowments and family offices seeking to deploy capital into environmentally friendly agricultural initiatives, in line with their ESG goals, billions of dollars are potentially available to convert more farms to organic.

One certification that has been garnering attention from these institutional agriculture investors for its promise of sustainability is Leading Harvest.

Whereas USDA organic certification makes it very clear as to which processes and ingredients are allowed and not allowed, Leading Harvest has no such policy. Instead, the farmers decide completely on their own, as to which processes and ingredients are used.

The Leading Harvest Farmland Management Standard 2020 is outcome-based through the use of qualitative indicators that serve as operational goals. It does not prescribe practices necessary to conform with the Standard; rather, it provides family farmers and farm managers the flexibility to select best practices for sustainable outcomes. An outcome-based approach recognizes that prescribing the same processes and metrics across geographies can be ineffective.

Since Leading Harvest is not a prescriptive standard, destructive industrial farming practices, such as GMO monocropping or the heavy spraying of the super-toxic herbicides glyphosate and dicamba, are not specifically excluded in its standard. Furthermore, there are no specifically mandated practices when it comes to cover crops, crop rotations or pollinator protection.

According to Craig Wichner, CEO of Farmland LP, the largest U.S. real estate manager focused on organic farming, many institutional agriculture investors are not having the kind of environmental impact that they think they are.

“These investors want to do the right thing and invest in real sustainability, but they need to make sure there are actual requirements for sustainable practices. The USDA’s organic standard was developed and passed into federal law to protect soil and human health, biodiversity and clean water. With clearly defined standards for all to meet, it prevents investors and consumers from being misled by greenwashing that uses the unregulated terms ‘sustainable’ and ‘regenerative.’ Institutional investors falling for this may risk reputational harm and fail to make a meaningful impact.”

With less than 1% of U.S. farmland as organic, losing out on institutional investment dollars to “sustainable” farmland investment managers — whose investment criteria fall well short of organic and allow GMO, chemical-intensive farming practices — is something that the organic industry cannot afford to bear.

To get a sense of just how big this pool of capital is — and how much organic is potentially missing out on — the Washington State Investment Board just approved $400m to be invested in agriculture, with $200M each to UBS Farmland Investors and a Homestead Capital farmland fund.

It just so happens that UBS Farmland Investors was one of 13 members in the working group to help create the Leading Harvest standard.

Needless to say, it doesn’t require a big imagination to guess what kind of farms UBS will be investing in.

With trillions of dollars at stake in the overall ESG space, investors and consumers can no longer take certifications at face value. They must fully understand what each certification is promising and delivering on.

The consequences for the planet are far too great to act otherwise.

With gratitude, Max Goldberg, Founder