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Business models of standard setting organizations

Aidenvironment supports Solidaridad South and Southeast Asia (SSEA) in its efforts to sustainably transform tea production in India and recently concluded an assessment of the business models of different sustainability standard setting organizations (SSO). Solidaridad SSEA uses the findings to develop a business model for the Trustea program, a groundbreaking initiative to introduce a national sustainability standard for tea in India.

The assessment covers five different organizations. Their core value proposition is to make sustainable production the norm and to make this happen they provide a number of services, first and foremost sustainability standards and systems to assure their implementation. Compliant companies are rewarded with market access and sustainability claims which can be used in corporate or on-product communication. Other services are tools for traceability, support in implementation and platforms for industry dialogue.

To provide those services in the long-term, SSO need to generate sufficient revenues. While all of the organizations were initiated with grants, grants currently make up 23% of revenues on average. More important are membership fees, generating 38% of revenues, followed by a fee on products traded which contributes 29%. Other revenue sources are organizing events or the provision of paid consulting services like trainings. The share of different revenue sources varies widely between the SSO, depending on what services they provide and how they position themselves in the market.

Who pays for what and how are crucial questions when introducing a sustainability initiative. They need to be asked early and answered with the involvement of all relevant stakeholders to ensure that the initiative has a solid customer and revenue basis to operate in the long-term. We are confident that our assessment will provide valuable for Solidaridad SSEA to answer those questions and contribute to the success of the Trustea program.

For more information contact Jonas Dallinger