Voluntary Sustainability Standards and Investments in Sustainable Agriculture

This policy brief by the International Institute for Sustainable Development (IISD) examines how Voluntary Sustainability Standards (VSSs) can mitigate financial risks for financial service providers (FSPs) investing in sustainable agriculture, particularly in developing countries. By benchmarking 12 VSSs against sustainable finance frameworks, the report identifies gaps in economic viability and climate adaptation criteria while highlighting strengths in legal compliance, soil and water conservation, and labour rights.

• Financial service providers (FSPs) are often reluctant to invest in agriculture in developing economies due to perceived risks, including weather, climate change, and market dynamics. In 2014, UNCTAD estimated an annual investment gap of USD 260 billion for meeting Sustainable Development Goal 2 (zero hunger) targets in developing countries.
• VSSs can reduce financial risks for investors by requiring farmers to adhere to criteria that support legal compliance, sustainability planning, and the preservation of natural resources. The examined VSSs show high coverage of criteria for obeying international, national, and local laws, as well as measures for soil and water conservation and forest protection.
• There is a significant gap in VSS coverage regarding economic sustainability and business management, which are highly valued by FSPs. Specifically, VSSs have low to little coverage of criteria related to corruption and bribery prevention, business transparency, and economic viability, such as the requirement for formal business plans or productivity improvement measures.
• While VSSs strongly cover basic environmental protections, they provide limited support for climate-specific financial risks. Only four of the 12 examined VSSs require climate adaptation activities, and only one—Rainforest Alliance—requires hazard emergency response plans.
• VSSs provide high coverage of social sustainability criteria, particularly regarding labour rights and workplace health and safety. Almost all examined standards require adherence to International Labour Organization (ILO) conventions, including the prohibition of forced labour and the protection of child labour.
• FSPs can leverage VSSs to improve their investment processes by using them for ESG screening, structuring sustainability-linked loans, and pre-selecting investees. Examples include the Moringa Fund's use of VSSs for ESG screening in Mali and the Mercon Group's use of a Rainforest Alliance-aligned index to determine interest rates for coffee farmers in Africa and Latin America.

APA

Larrea, C. (2023). Voluntary Sustainability Standards and Investments in Sustainable Agriculture. International Institute for Sustainable Development. https://www.iisd.org/system/files/2023-04/ssi-brief-standards-investments-sustainable-agriculture.pdf

Chicago

Larrea, Cristina. Voluntary Sustainability Standards and Investments in Sustainable Agriculture. International Institute for Sustainable Development, 2023. https://www.iisd.org/system/files/2023-04/ssi-brief-standards-investments-sustainable-agriculture.pdf.

Wikipedia

{{cite report |last1=Larrea |first1=Cristina |title=Voluntary Sustainability Standards and Investments in Sustainable Agriculture |publisher=International Institute for Sustainable Development |date=April 2023 |url=https://www.iisd.org/system/files/2023-04/ssi-brief-standards-investments-sustainable-agriculture.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{larrea2023voluntary, author = {Larrea, Cristina}, title = {{Voluntary Sustainability Standards and Investments in Sustainable Agriculture}}, institution = {International Institute for Sustainable Development}, year = {2023}, month = apr, url = {https://www.iisd.org/system/files/2023-04/ssi-brief-standards-investments-sustainable-agriculture.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }