Sustainability: Choosing between beet sugar and cane sugar

While sustainability considerations are not yet a major concern in sugar sourcing, developments in the cocoa and palm oil sectors suggest it will be only a matter of time before sustainability certification is increasingly demanded by food and beverage manufacturers in the EU.  the Bonsucro initiative is an attempt to get ahead of the curve on sustainability certification in the sugar sector. To date however there has been little engagement by ACP sugar exporters in the Bonsucro initiative. Given smallholder sugar producers struggle to obtain sustainability certification there appears to be a case for EU supported ‘aid for sustainability’ programmes to ensure smallholder sugar producers are not systematically discriminated against.

The EU food and drink industry is facing some tough choices, not only related to the health aspects of sugar usage but also over the sustainability of sugar production. While sustainability considerations are most prominent in cocoa and palm oil sourcing, it is beginning to become an issue in sugar sourcing.

According to reports on the website, in 2014 Ferrero ‘committed to sourcing all its refined cane sugar from sustainable sources by 2020’. This commitment was made in a context where Ferrero ‘sourced 25% of its sugar from cane and 75% from beet’.  This cane sugar is currently sourced from Brazil and Australia. Unilever has similarly committed to sourcing ‘all its cocoa and sugar sustainably by 2020’. Currently Unilever sources its sugar from CristalCo and Tereos whose production comes from France, Brazil and India.

For most food and drink products beet sugar and cane sugar are interchangeable. In certain categories cane sugar plays a dominant role. For example, representatives of Bonsucro estimate that cane sugar accounts for around 80% of the sugar usage of confectionery manufacturers.  However the abolition of beet sugar production quotas could mark a turning point in cane sugar utilisation in the confectionery sector. A lot could come to hinge around the credibility of sustainability claims, as the issue of the sustainability of sugar production gains prominence amongst industrial users, which account for 70% of EU sugar consumption.

This has seen the emergence of the ‘Bonsucro’ certification initiative, which focusses on sustainability certification for cane sugar production and processing. This scheme primarily addresses the needs of large sugar producers in both developing, advanced developing and developed economies (with it being acknowledged that smallholder producers struggle to obtain sustainability certification). Bonsucro is pushing larger confectioners to engage with supplies to obtain sustainably certified sugar.

What is Bonsucro?
Bonsucro was established in 2008 to promote sustainable sugar cane production and now has 450 members in 41 countries, encompassing around 24% of the land area under sugar cane.  Its members include Cloetta, Mars, Kellow, General Mills and Olam. Its stated aim is to reduce ‘the environmental and social impacts of sugarcane production while recognising the need for economic viability‘. ‘It does this through setting sustainability standards and certifying sugar cane products including ethanol, sugar and molasses’ (2).

Bonsucro is one of few certification schemes’ to have developed measures for greenhouse gas emissions, and consequently the European Commission has stated that the Bonsucro standard can be used to demonstrate compliance with the EU Renewable Energy Directive (EU RED) when importing ethanol fuel’ (2).  This is important given moves to diversify revenue streams within the sugar cane processing complex.

While there are no regulatory initiatives in regard to sugar sustainability, concerns over deforestation saw the European Parliament, at the beginning of April 2017, vote in favour of new regulations on palm oil which could introduce ‘minimum sustainability criteria and anti-deforestation articles in future trade deals’.  This came about against the background of a general consensus that insufficient is happening on the ground to eliminate deforestation from palm oil and cocoa supply chains (3). The vote in the European Parliament could thus be a sign of things to come, in terms of increased regulation of sustainability requirements (3).

While to date there has been little pressure from investors to ensure the companies they deal with comply with deforestation commitments, HSBC recently published a new ‘zero deforestation’ policy for its lending activities, in response to an investigation by Greenpeace (3).

In terms of ensuring corporate compliance with palm oil and cocoa sustainability commitments, a report by the NGO Fern found one of the challenges facing companies such as Nestle, Mondelez, Cargill and Unilever was the absence of global agreements on definitions and standards for sustainability certification. It is felt the development of common standards and reporting frameworks on sustainable sourcing could help avoid deforestation. There is also felt to be a lack of regulation in developed country markets banning illegally and unsustainably sourced palm oil and cocoa (3).

A further challenge faced was held to be the failure of governments to enforce compliance with existing codes of practice.  It is maintained ‘lack of good governance, clarity on tenure rights and law enforcement combine to make it difficult for companies to meet their commitments’. This, it was held is undermining efforts to end deforestation in cocoa and palm oil supply chains.

In this context the European Parliament called for ‘technical and financial assistance’ to producing countries to ‘strengthen their land registry regimes and improve the environmental sustainability of palm oil plantations’.

Comments and Analysis
Most of the sustainably certified sugar under the Bonsucro label supplied to confectionery producers, who have made sustainability commitments, comes from non-ACP countries. Indeed, there is only a limited engagement by ACP sugar exporters in the Bonsucro certification scheme.  This could change however as more and more end users insist on sugar sustainability certification as part of broader efforts to promote sustainability across their supply chains.

If these demands for sugar sustainability certification gain traction then there may be a need for ACP governments to take up European Parliament calls for ‘technical and financial assistance’ to countries to help them comply with certification requirements. Indeed the observation by Bonsucro that smallholder producers struggle to obtain sustainability certification suggests there may be a need for ‘aid for sustainability’ programmes to ensure smallholder producer can remain part of mainstream commercial supply chains.

(1), ‘The ignored commodity: Confectioners face touch choice on sugar sustainability’, 13 September 2016
(2) Wikipedia, ‘Bonsucro’
(3), ‘Palm oil and cocoa commitments undermined by poor regulation’, 6 April 2017

Key words:          Sugar, Bonsucro, Nestle, Unilever, Mondelez, Cargil, CristalCo,
Tereos, Ferrero
Area for Posting: Sugar, Corporate