Are Voluntary Standards and Certifications Becoming Redundant?
Voluntary certifications like Rainforest Alliance, the Roundtable on Sustainable Palm Oil (RSPO), and B-Corp (by B Lab) were once the gold standard for businesses looking to showcase their commitment to sustainability. These certifications, however, are not free to sign up for nor uncomplicated in terms of due diligence to receive; and as such companies invest significant resources in fees, audits, and operational adjustments to meet their criteria.
With governments increasingly stepping in to enforce mandatory sustainability regulations across the globe that aim to ‘raise the floor’ of ESG reporting and standards, businesses are faced with a pressing question: Why pay for voluntary certification when regulations now demand compliance that exceeds these standards?
💸 The Financial Burden of Voluntary Certifications
Certifying to a voluntary standard is not an insignificant expense:
Rainforest Alliance: Certification costs vary, but they include annual audit fees, the cost of implementing required standards, and often group-level fees for smallholders. For larger producers, these can amount to tens of thousands of dollars annually.
RSPO: Membership fees start at €2,000 annually for companies with revenue under €5 million, but implementation, audits, and reporting costs can increase this substantially.
B-Corp: Certification fees alone range from $1,000 to $50,000 annually, depending on the company’s revenue. Add to this the internal cost of meeting B-Corp standards, which often requires dedicated personnel and process overhauls.
For businesses, these expenses only make sense if the certification adds tangible value — and one has to ask where the value is in only meeting these new stringent regulatory requirements?
👮 Mandatory Regulations Raising 'The Floor'
Governments are now enforcing mandatory sustainability regulations that often meet or exceed the benchmarks set by voluntary standards. Examples include:
The EU Deforestation Regulation (EUDR): Requires businesses to provide verifiable evidence that their supply chains are deforestation-free and that in-scope goods are produced legally.
German Supply Chain Due Diligence Act: Mandates that companies assess and mitigate environmental and human rights risks in their supply chains, with penalties for non-compliance.
Unlike voluntary standards and certification schemes, these regulations are not optional—they are legally binding.
For businesses, this raises an important question: If compliance with mandatory regulations is already required, does a voluntary certification offer enough additional value to justify the cost?
🤷♂️ What Additional Value Do Voluntary Certifications Offer?
Proponents of voluntary certifications argue that they can still provide:
Market Differentiation: Certification logos like B-Corp or RSPO may still hold sway with consumers and investors, signalling a commitment to sustainability that goes beyond legal requirements.
Ethical Leadership: Voluntary standards can help companies position themselves as sustainability leaders by adopting practices that exceed regulatory requirements.
Future-Proofing: Staying ahead of evolving regulations by adhering to –in some cases– higher standards now could reduce the need for costly adjustments later.
📉 Why This Value Is Diminishing
Despite these potential benefits, the value proposition of voluntary certifications is rapidly shrinking:
Regulations Already Exceed Many Standards: Mandatory frameworks like the EUDR are more rigorous, measurable, and enforceable than most voluntary standards. Compliance with the law alone now meets (or, in some cases, exceed!) what many certifications require.
Cost vs. Benefit: For businesses already investing in compliance with mandatory regulations, the additional expense of a certification must feel increasingly redundant.
Consumer Scepticism: Scandals and exposés have eroded trust in some certifications bodies, making their logos less effective as a marketing tool.
Technology Makes Compliance Transparent: Mandatory government regulations are increasingly backed by technologies like satellite monitoring, blockchain, and AI, providing verifiable proof of sustainability. This reduces the need for a certification body to “vouch” for a business’s practices.
🤷♂️ So, Are Voluntary Certifications Becoming Obsolete?
The rise of mandatory, enforceable –often stringent– sustainability regulations challenge the very foundation of voluntary certifications and standard schemes. When governments raise the floor to meet or exceed voluntary standards and enforce compliance with penalties, businesses must ask:
What additional value does certification bring, beyond what is legally required?
Is the cost of certification worth the return on investment?
For many businesses that I speak to, the answer is increasingly “no.”
While voluntary standards played an important role in the past, I am afraid to say that their relevance is fading as regulations take their place as the primary benchmark for sustainability.
What do you think:
Is there still a place for voluntary certifications in today’s regulatory landscape, or has the floor been raised such to render them broadly redundant? Or have I missed something critical that underlies the value-add of standard bodies and certification schemes? Let me know!
