Tracking and certification

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By RICARDO ABRAMOVAY & ALESANDRA MATTE*

Economic activities tend to be tracked, given the need to accelerate the fight against the erosion of ecosystem services on which life on the planet depends

Tracking and certification are increasingly important in contemporary markets. The allocation of resources through the price system is not capable of signaling to economic agents the urgency of changing behaviors that respond to the three biggest ecosystem challenges of sustainable development: climate change, erosion of biodiversity and different forms of atmospheric pollution, terrestrial and aquatic.

Throughout the XNUMXth century, the focus of tracking and certifying agri-food products was on health concerns. Although this focus is still fundamental, today's tracking (and its proof in certifications) goes much further. Economic activities, as a whole, tend to be tracked, as a consequence of the need to accelerate the fight against the erosion of ecosystem services on which life on the planet depends.

This requirement is not limited to agriculture. It is at the root of the most important global trade treaties, it changes the logic of the World Trade Organization and has a decisive impact on the Mercosur-European Union Agreement. Far from being a disguised form of protectionism or a non-trade barrier, the tracking and certification of economic products are among the most important instruments for tackling the climate crisis, the erosion of biodiversity and different forms of pollution.

These instruments always involve a mix of legal determinations, government action and initiatives coming from both companies and civil society organizations. It is increasingly common for companies to organize themselves in order to manage contestability in advance, signing protocols and commitments, both with public authorities and with civil society organizations. It's more than a question of marketing or image.

There are systems of legitimacy that allow business actions to be justified and whose absence increases the uncertainty of their future horizons in an extraordinary way. These systems are all the more important the more the companies' area of ​​activity is dense in collective goods. It is no coincidence then that the production of commodities (and not just agriculture) has been the subject of round tables around the world since the beginning of the XNUMXst century involving companies, business associations, but also civil society organizations and representatives of social movements. These articulations exert influence on different spheres of the State, whether legislative, judicial or executive.

In the European Union, the Carbon Adjustment Border Mechanism requires that, as of 1/10/2023, importers report greenhouse gas emissions (direct or indirect) contained in the products they intend to sell to consumers in the bloc. The targeted products are cement, iron, steel, aluminum, fertilizers, electricity and hydrogen. These are the products in which the risk of “leakage” (“leakage”), that is, from competitive gains derived not from efficiency but from the delay in introducing innovations that reduce greenhouse gas emissions.

It is only from 1/01/2026 that the importer will have to pay, if their product is more emitting than that produced in the European Union. But it is still in 2023 that importers will have to mobilize the devices that will allow them to track the production processes of what they import.

Another example of the search for transparency (and which requires tracking) as a means of tackling contemporary socio-environmental problems is the approval, by the European Parliament in April 2023, of legislation that prevents the import of products coming from deforested areas from December 2020 onwards. XNUMX: beef, cocoa, coffee, palm oil, soy, wood, coal, and paper are the products targeted by the legislation, which also requires that goods do not violate human rights and especially the rights of indigenous peoples.

Importers will have to collect the geographic coordinates of the land where the goods they place on the European market are produced. Furthermore, the legislation classifies countries (or part of them) as being low, medium or high risk. The greater the risk, the greater the control over importing companies.

Although the United States has not adopted this type of legislation, there is great pressure (with bipartisan support in the Senate) to follow in Europe's footsteps. Also in Great Britain the UK Environment Act – Schedule 17 goes in the same direction. Unlike European law, the British law and the one under examination by deputies in the USA only prohibit illegal deforestation.

In Asian markets, China has already had legislation in place since 2019 (Forest Act) which prohibits the import of wood derived from deforestation. Everything indicates that these restrictions will be expanded under the inspiration of North American and British legislation, that is, prohibiting the entry into the country of products coming from illegal deforestation.

This quick presentation brings two important conclusions. The first is that it is not just niche markets, but, increasingly, the entirety of social production that will be monitored in its socio-environmental composition. This is (and will increasingly be) a way for markets themselves to incorporate the costs of ecosystem services that companies use, often destroy and for which they pay nothing.

Life cycle analyzes and the use of digital technologies in this direction make it possible to massify what, not long ago, required costly and limited-scope checks. O blockchain, for example, has the potential to encourage the sharing of information on a network in an auditable manner and has been used in different segments of the agricultural, forestry and mineral sectors.

The second conclusion is that monitoring the material, energetic, biotic content and social bases of what the economy offers to society has costs that will inevitably fall on companies. Repudiating these costs means perpetuating the destructive use of resources on which economic life itself depends.

*Ricardo Abramovay is a professor at the Josué de Castro Chair at the Faculty of Public Health at USP. Author, among other books, of Infrastructure for Sustainable Development (Elephant). [https://amzn.to/3QcqWM3]

*Alesandra Matte, zootechnist, is a professor at the Federal Technological University of Paraná (Santa Helena campus).

Originally published in the newspaper Economic value.


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