Voluntary Sustainability Standards (VSS) are widely used market-based instruments for governing sustainability in global food trade. However, their socio-economic and environmental impacts remain inconsistent, raising concerns that VSS may distort trade without delivering sustainability benefits.

This study presents an unprecedented analysis of VSS trade effects across seven tropical commodity sectors, using uniquely compiled data on VSS coverage and gravity models that include all bilateral trade flows. Findings reveal that VSS adoption enhances trade through increased price competitiveness. Specifically, a one percentage point increase in the share of certified production area leads to a 2.1% expansion in bilateral trade volumes and a 0.16% reduction in export prices.

However, trade effects vary depending on VSS design. The largest trade benefits arise when VSS include stringent environmental requirements. Additionally, VSS help reduce the trade-inhibiting effects of governance distance between countries, provided compliance procedures are not overly strict. Ultimately, rather contributing to sustainability ‘trading up’, VSS appear to exacerbate price competition in global food markets.

This event is co-organised with the Vienna Institute for International Economic Studies (wiiw) and the Research Centre International Economics (FIW). The project leading to this webinar has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement No. 101031139. Any dissemination of the results of this event, reflect only the presenters' view. The European Commission is not responsible for any use that may be made of the information it contains.