Trade: tomorrow’s sustainable sectors?

How can we make global trade more sustainable? By measuring the stability and intensity of the relationships between actors in raw material supply chains and production areas. Patrick Meyfroidt’s team (ELI) offers a specific methodology for analysing these business relationships. It’s an evaluation process essential to ensuring effective environmental protection measures.

The Covid-19 health crisis is forcing the business world to rethink how it produces and consumes. At a time when international authorities are discussing future trade relationships, UCLouvain researchers are deploying all their expertise to submit recommendations based on concrete data. In a study published on 24 July in the journal One Earth (read the article here), Prof. Meyfroidt, an FNRS research associate at the UCLouvain Georges Lemaître Centre for Earth and Climate Research, researcher Tiago Reis, and other team members elaborated the concept of geographical stickiness in the global commodities trade. They analysed the relationships between actors in supply chains and production areas, and in the latter examined land use, including deforestation. A better understanding of the nature of the ties that bind stakeholders (producers, traders and consumers), as well as of the stability or volatility of those ties, makes it possible to ensure the sustainability of trade relationships.

Stability: a guarantee

The study is timely. Indeed, three major agreements related to the future of world trade are currently being negotiated. First, the United States and the European Union are debating a Green New Deal to promote sustainable development in certain regions of the world. In addition, the European Commission is working on deforestation regulation that would be incorporated into contracts regarding imports into Europe. Finally, the EU and Mercosur are discussing a commercial treaty that would exert immense impact on agricultural products produced in South America. The research carried out by Prof. Meyfroidt’s team provides scientific input for such discussions by delivering objective analyses. Prof. Meyfroidt explains, ‘Many governance mechanisms aimed at increasing respect for the environment in international trade chains are based on the following idea: if certain stakeholders (consumers, governments or associations) send a strong signal to companies by demanding goods produced more sustainably, the message will be passed on to farmers, encouraging them to improve their production methods, for example by renouncing deforestation.’ But this ‘theory of change’ driven by those stakeholders is based on stable sectors. ‘Stability is necessary for demand to spread significantly enough to force intermediary companies, and then producers, to be held accountable for their environmental impact.'

Brazil case study

What do these sectors look like today? Do retailers source routinely from the same production areas? Do they usually serve the same consumer markets? Geographical stickiness in the supply chains of basic products essentially represents the stability of trade relationships between regions and actors in the chain, the resistance of these relationships to shocks (political, economic, production, etc.) and their ability to recover from disruptions. In their study, the researchers developed a conceptual framework and methodology to measure geographical stickiness, using Brazil's soybean export chain as a case study. Mr Reis, the study’s lead author, explains, ‘We find that the soybean traders in Brazil with the largest market shares have high stickiness scores, which means they are the most committed to sourcing more or less from the same areas over time. They also exhibit higher risks for deforestation.’ Nevertheless, the researchers observed that the companies most concerned about deforestation in their supply areas are those that are geographically sticky and in more stable sectors. Such companies, in fact, are the most likely to be signatories to the zero deforestation commitment. What’s drives this phenomenon? Why do some relationships persist over time while others are volatile? At this point, the researchers can only speculate as they explore several factors. Their research results will be the subject of a second chapter of Mr Reis’s PhD thesis.

Explaining the relationships

The methodology developed in the first part of the published work is innovative. ‘We’ve always known that supply chain actors have stable or volatile relationships with production areas, that is, the areas where companies source the goods they supply to their customers,’ Mr Reis says. ‘But we’ve never conceptualised, measured and calculated the strength and intensity of the relationships.’ Researchers can now make connections and associations with other processes, indicators and phenomena to improve their knowledge of how supply chains and landscapes interact. What causes stickiness? What are its social and environmental consequences? Answering these questions will allow them to come up with the best solutions for ensuring future business relationships that respect our environment.

By Anne Mauclet

Photo credit : © Thiago Foresti/IPAM

Have a look on Patrick Meyfroidt's bio

Patrick Meyfroidt is passionate about geography and sociology. Through the lens of land use, he studies the interactions between human society and the environment. Watch his video portrait here.