Doing well by doing good with certified commodities

Certified commodities, whether rain forest coffee or carefully selected wood for a toilet seat, are going mainstream as more big businesses see profit potential in saving the world, industry sources say. Coffee, cocoa, orange juice, sugar and wood are just a few of the commodities that are certified as grown in an environmentally and socially responsible manner by various independent non-governmental organisations. Long supported by speciality buyers and niche markets, the certified market is attracting more blue chip firms despite stringent voluntary commitments.
"More and more, the financial institutions are actually looking for companies who are engaging in this corporate responsibility behaviour, and that it is externally verified," said Tensie Whelan, executive director of Rainforest Alliance.
"Companies and banks are using certification as a tool," Whelan told Reuters, pointing out that even big banks like ABN-Amro and J.P. Morgan Chase have adopted their own programs to account for environmental and social responsibility.
Over the past two decades, non-governmental certified programs have emerged as an answer to a lack of domestic or international regulations, with the aim to balance economic interests with environmental and social development.
For instance, coffee farmers may secure a better price and get access to financing by certifying their crop from independent groups like TransFair USA, which verifies the "Fair Trade" seal in the United States and protects small-scale farmers in developing countries.
"The explicit demand is there for speciality products," said Annemieke Wijn, senior director of commodity sustainability programs at Kraft Foods Inc the largest US food company.
"Mainstream brands that are 100 percent certified is a new thing. We would like to see that our business units have success in marketing certified products," she said.
Kraft already blends some Rainforest Alliance certified coffee into its popular Maxwell House brand. The company plans to launch a 100 percent certified coffee product in Europe by the end of the year, Wijn said.
Ron Jarvis, vice president of merchandising at Home Depot, said the company only buys certified wood products when it deals with suppliers in known problem areas, such as in Indonesia or the Amazon basin.
"We are the largest purchaser and seller of FSC certified wood in North America and maybe even the world," he said, referring to the Forest Stewardship Council, an international forest certification organisation known for strict standards.
FSC wood only represents less than five percent of Home Depot's total purchases, because the company gets 95 percent of its wood from North American suppliers who engage in some form of sustainable logging, Jarvis said.
With a certified brand under its wing, a company may enhance its social-responsibility status and get access to a growing investment niche.