Corporate capture of sustainability governance? The case of cocoa value chains in Indonesia

Certification by voluntary sustainability standards (VSS) has proliferated in the past decades, notably in agri-food and forestry sectors. VSS set rules related to sustainable production that producers can voluntarily adopt as a form of self-regulation. Upon third-party verification of compliance, their products are certified and can be sold at higher prices. Yet, the voluntary nature of certification raises questions on the motivations for adoption and the effectiveness of such regulatory tools to generate compliance and, ultimately, sustainability improvements. This paper proposes an empirical analysis of self-regulation based on a case study of cocoa certification in South Sulawesi, Indonesia, where significant, buyer-driven certification dynamics have unfolded in the past 20 years. Based on more than 40 interviews with various stakeholders in cocoa production and certification, complemented by 4 focus group discussions with certified farmers, we identify two important trends in certification in the region. First, we observe an increasing capture of regulatory roles by large buyers, ranging from them taking over traders’ and cooperatives’ certificates, replacing support actors, to the creation of in-house sustainability programmes. This trend is driven by economic rationalization considerations and eagerness to address endemic productivity declines. It nonetheless raises questions on large buyers’ capacity to provide motivations for farmers to comply. These generally include the reception of a price premium, lower transaction costs and knowledge transfer; yet we find shortcomings related to poor enforcement, failures to deliver on price premium, and significant rule-knowledge gaps. Second, the emergence of EU due diligence legislations are generating uncertainties about the role of VSS and buyers start envisaging shifting towards less sustainability-sensitive export markets. While we find that one initial motivation for buyers to adopt certification is improved access to sustainability-sensitive markets like the EU, certification might prove insufficient in light of these policy developments, and might become irrelevant.