Accelerating Sustainable Trade

Toespraak | 03-11-2009

Ladies and gentlemen, distinguished guests,

It’s a pleasure to speak to you today. I’d like to begin by thanking the organisers of this congress – the Dutch Sustainable Trade Initiative, AKZO Nobel and the Nederlandse Vereniging voor Inkoopmanagement – for the invitation.

(inleiding)

The subject of this congress – sustainable trade – is very near to my heart. Global value chains offer many opportunities to rural entrepreneurs in developing countries to become competitive actors in world markets. And if local power relationships are seriously taken into account - and they should - than value chain development is likely to reduce poverty. My slogan today is not ‘Trade for Aid’, but ‘Aid and Trade’, if not ‘Aid for Trade. Modern development cooperation in essence relates sustainable growth to jobs as major instruments for development. Jobs help people help themselves and therefore stimulate growth and distribution. Therefore simulating equitable value chains are a priority of my policy. Just yesterday I returned from a trip to Ethiopia and Egypt. In both countries I discussed with small farmers and the authorities the enormous role of value chain development as a catalyst and as a mobilizing strategy. Tareq in el Fayoum felt for the first time he was taken seriously in his profession. Thirty five years old, he is now able to grow sorghum for beer, can express his newly earned professionalism, feels part of a larger world and can finally care for his family's education. In the end, that - for me - is what this meeting is all about. But there are larger issues that relate to the future of us as producers and consumers in the Netherlands and elsewhere…

The international chains of trade and production have to be made sustainable: it’s that simple. The welfare of our children and the future of our planet depend on it. Making the transition to an economy of sustainability is one of the major challenges of the 21st century. At a time of global economic crisis we should ensure that we do not go back to business as usual, instead we should make the link between the food-, climate- and financial crises. That is not always easy and the risk does exist in certain sectors. This is particularly important at a time when many countries in Asia, Africa and Latin America want to keep growing in order to lift their peoples out of poverty. Meeting these different needs demands political vision and leadership. I notice that more and more people are aware of this. This is a positive sign – one month before the start of negotiations over a new climate agreement in Copenhagen. As you know, the agendas of poverty reduction, development and climate are closely related.

In the end, I believe that the roots of any solution lie in cooperation. Only by working together can governments, businesses and civil society take the steps necessary to achieve efficient and effective sustainable development on a global scale. Governments like ours stand ready to be a broker, setting a framework and ensuring the common interest. We’ve recently seen several good examples of this in the field of sustainable trade:

• In the tea sector, Unilever and Sara Lee have concluded a partnership agreement on mainstream certification.
• By making a voluntary agreement to respect the criteria of the FSC – one of the leading certification services for tropical wood – Akzo Nobel has become a supplier of sustainable wood. A commitment like that has a powerful multiplier effect: all of Akzo Nobel’s partners will now have to adopt sustainable practices.

(Breed: beïnvloedende factoren/gevolgen wereldwijd)

Ladies and gentlemen,

As Minister for Development Cooperation, I do a lot of travelling. I am sure like many of you. Earlier I mentioned I mentioned I have just returned from Ethiopia and Egypt, but in March I was in Mali. There, I had an opportunity to see with my own eyes how small investments can make a great difference at the junction of sustainability and poverty reduction. Working with a number of private-sector partners, the Netherlands helped finance a cooling station. This cooling station – called PLAZA – enables Malian farmers to store their perishable products for longer periods, making them more suitable for export. The first results of the project are encouraging: in three years’ time the export of mangoes has risen by 400%. This not only means more income for many farmers and their families; it will also benefit the logistics, transport and storage sectors. The advantages are actually even greater: an increase in tax revenue means that Malian society as a whole can profit from the economic growth generated by projects like these. This money can fund the construction of schools and hospitals, bridges and roads; it can pay the salaries of civil servants. And last but not least: improved storage facilities also mean higher profits for our companies, as more than half of Malian mangoes find their way to Dutch supermarkets.

The positive effects of projects like PLAZA are sorely needed at a time when we are increasingly facing the cumulative impact of the economic, food and climate crises. The economic crisis in particular has underscored the need for a more inclusive growth model. Developing countries had little or no part in causing the crisis, but they are some of the hardest hit. Fragile states; landlocked, resource-poor countries; LDCs with low productivity and a poor business climate; workers who toil away in unhealthy conditions in factories and sweatshops; small farms that cannot meet strict safety and quality standards – this is where suffering is most acute. Many people in the Netherlands and abroad are rightly concerned about this.

They are also concerned about issues like child labour, deforestation and climate change. Right after taking office, I made sustainable international trade and production one of the central themes of my policy priority of ‘growth and equity’. I did this in the conviction that we cannot close our eyes to the negative aspects of globalisation. And let’s make no mistake about it, we still do. We do not see the billion people in developing countries who experience these problems in their daily lives. And not to ourselves: if we have any hope of leaving our children a liveable and more equitable world, we need to take action.

(Eerste successen IDH)

In this respect we should not be overtly optimistic. Yesterday we could read in the paper that 70 percent of the largest Dutch companies are not doing enough for sustainability: transparency and chain management are simply not good enough. With this in mind, exactly a year ago, I launched the Sustainable Trade Initiative – the IDH – together with many of you. The initiative unites trade unions, NGOs, the business community and government, drawing on expertise from multiple parties for the purpose of improving working and environmental conditions in international trade. In launching the IDH, we plugged into a number of existing programmes. Many of those involved were enthusiastic about developing new initiatives; everyone wanted to get to work. And this drive and energy has yielded results.

Last week the balance sheet of the IDH’s first year was released, based on the outcome of a quick scan in three sectors. The results are very encouraging. I quote, ‘This study leads to the conclusion that the IDH has demonstrated within one year its ability to work with international chains that are important to the Netherlands and push them in the direction of sustainability.’

The study mapped out the results of programmes in three areas: cacao, stone mining and soy. I was pleased to hear that the programmes are on schedule. Within one year they’ve led to higher incomes for farmers, a substantial rise in productivity, better prices for products and greater involvement by the players in the field.

The cacao programme, for example, works with the three largest processors and the two largest chocolate companies in the world. Together they control a market share of 40% of global cacao processing and 30% of global chocolate production. The largest chocolate producer in the world, Mars, has set the ambitious goal of purchasing nothing but fully certified, sustainable cacao by 2020. This is the attitude shift, the multiplier effect we’re looking for. This is the path that leads to results! The programme has already trained over 2,800 farmers in Côte d’Ivoire and certified 180 of them.

This process of fostering sustainable business practices has been given an enormous boost, thanks to a focus on the buy-side of the market. The major challenge now is to reach even more local producers. 30,000 farmers in Ghana and Côte d’Ivoire are likely to be certified by 2012. In the coming period, the programme will be expanded to embrace Indonesia as well. This shows that setting our sights high can yield impressive results, with high expectations for the future.

In the cacao sector we run the risk that only a few larger or more innovative farmers will be able to continue producing cacao for the world markets of the future. We also will have to work with smaller farmers and ensure that rural entrepreneurs get power in the value chain; in its management, and its agreement. They too should have the power to agree on the functioning of the value chain. I welcome the pre-competitive cooperation that is so crucial for the work of IDH, since consumers, businesses and workers have a common interest in the economic and environmentally sustainability of supply: you don't want to buy chocolate based on child labour or from farms that will not be ecologically viable in the future.

This also applies to the other programmes that were studied. The IDH’s stone mining programme led to a broader dialogue with stakeholders. And within the soy sector, the number of members of the Round Table on Responsible Soy has grown significantly, due in part to the IDH.

In short, we can observe mounting enthusiasm for sustainable practices within the sectors we’ve examined. And when a substantial proportion of market players are willing to make the transition to sustainability, as we’ve seen in the cacao sector, we can transform entire markets. That’s when we can really make a difference!

(Belang werkzaamheden IDH, draagvlak bedrijfsleven)

One of the key elements of this whole process is the momentum that all our efforts have created. Now it’s time to seize this momentum and ramp it up. I’m willing to do whatever I can to make this happen. The IDH brings together the two facets of sustainable trade: the ecological and the social. This is why I’m such a strong supporter of the initiative.

In my efforts to modernise our development policy, I want to get trade unions and the business community involved in the pursuit of the Millennium Development Goals. Without the private sector – without you – there’s no way we can ever meet them. It’s vital that the experience, knowledge and know-how of private actors like you can be harnessed in the interests of sustainable development and poverty reduction. That’s why the Dutch government as a whole is working to establish better connections with Dutch companies. My colleagues, environment minister Jacqueline Cramer and agriculture minister Gerda Verburg, and of course foreign trade minister Frank Heemskerk – who is also here today – are committed to public-private partnership in the areas of food, the environment and corporate social responsibility. As the minister responsible for policy coherence for development it is my job to stimulate to them to aim high and go further. This also goes for sustainable procurement by the Dutch government. I strongly believe as a government we should also be looking critically at ourselves: have we made our own purchasing practices more sustainable by buying certain categories of products only when a number of social criteria have been met?

I welcome the growing enthusiasm of many members of business community in cooperating with us in the field of sustainability. Working sustainably goes beyond social responsibility: it deals with core business, and vital interests. It is not simply a hype that goes only in economic easy times. In September I received a letter from 54 CEOs, which demonstrated not only clear interest but a practical readiness to invest in sustainability. This commitment took the form of a pledge to invest as a group more than half a billon euros in sustainability between now and 2015. It’s reassuring to think that there’s so much support for sustainability and cooperation in the business community, in the very areas that fall under my remit, that will have the most impact on developing countries. On the basis of shared interests, government and business can work together to make production and trade more sustainable.

The process has many positive effects for all parties; it creates synergy. An endeavour like this is a great example of enlightened self-interest: it safeguards sustainable consumption in the North and provides continuity of sourcing (for companies) and continuity of demand for sustainable products (from consumers here). At the same time, it helps reduce poverty, create jobs and draw attention to environmental issues in the South. It links consumers to producers; it creates a bond between here and there. And it guarantees employment in companies in the Netherlands.

(Bijdrage overheid)

The Dutch government is also actively supporting the sustainability process for trading chains in a number of areas:

• To begin with, the government invests in a large number of partnerships, offering financial support to cooperative ventures that ignite synergy, achieve a multiplier effect and share risks among the parties involved.
• We also work with other governments on better regulations and laws to make more sustainable trading chains possible. In this way, the government creates the most favourable parameters it can.
• In addition, the government makes its networks available to business like yours, giving them better access to international partners. For example, Dutch embassies can assist your firms in establishing business contacts abroad, with other companies and with local governments. This can have major advantages for you.

(Toekomst plannen/verwachtingen)

Ladies and gentlemen,

Heightening the sustainability of international trade is not only feasible; it is a necessity. The IDH has demonstrated this. The report also shows that the IDH has to continue its activities. A certain momentum has been created, and we have to retain it by expanding and monitoring activities.

A number of new programmes are in the works in sectors like aquaculture, cotton, herbs and spices. These plans sound promising. Given the outcome of the IDH’s activities last year, I have every confidence that it can achieve comparable successes in these new sectors. Provided, that is, that it sticks to its core business. The IDH does not run programmes. It stimulates and facilitates them. Its main job is to bring together partners and stakeholders in a given sector and to create and sustain momentum.

(slot: taak/toezegging overheid)

Ladies and gentlemen,

I’m thrilled about the results the Dutch Sustainable Trade Initiative has achieved so far, and about the commitment shown by the business community. Therefore – as part of my effort to use modern development cooperation as a catalyst for development - I am today announcing an extension of the IDH programme until 2015 and an additional grant of €20 million in 2011. As has been agreed I expect this amount to be matched by at least a similar contribution of the other partners, thereby creating a multiplier effect: more value for money for both the private and the public sector.

Let me conclude by saying development cooperation - in my view - is more important than ever. In the press these days we read a lot of slogans about the effectiveness of development cooperation. It is my deep conviction that these slogans will not help. Institutional change, in Europe and at the multilateral level, is key. We have to do things different. Critics like mrs Moyo should know that the private capital market is not able to solve the problems of the poorest countries. There are barely any bonds issued right now. In contrast modern development cooperation links poverty alleviation with markets and sustainability. That is an important recipe: for the future of Tareq in Egypt, but also for our own future. I welcome our common effort to make this a reality.

Thank you very much.