This article is part of a Synergies series on Next generation trade arrangements for environment and sustainable development. Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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Trade policy is increasingly expected to address societal challenges such as environmental degradation, climate change, and social concerns in the operation of global value chains. Governments are under growing pressure to ensure that goods traded across borders are produced in ways that protect the environment, respect labour rights, and support sustainable development. 

In this context, voluntary sustainability standards (VSS) have become an important tool. VSS are systems that define environmental, social, and economic requirements for producers to improve their practices. They typically include sustainability criteria, mechanisms to verify compliance, and support for producers. Products that comply with these standards can signal their sustainability performance through certification or labels in the market.

In recent years, VSS have increasingly been incorporated in trade policy to achieve sustainability objectives. Their growing use raises important issues. Not all standards are the same—they differ widely in their scope, governance structures, and compliance mechanisms, raising concerns about credibility and effectiveness. Despite their role in promoting sustainable practices, certification can be costly and smaller producers may struggle to comply with complex requirements. 

This leads to a key question for trade policy. What does the growing use of VSS mean for the design of a next generation trade arrangements committed to the principles of sustainability and what role should these instruments play within them?

Although VSS were originally developed as market-driven initiatives, they are increasingly being integrated into trade policy frameworks.

One channel is free trade agreements. A growing number of such agreements reference in some way eco-labelling or fair and ethical trade schemes, incentive-based mechanisms, or certification schemes. These provisions typically appear in chapters on trade and sustainable development and are generally promotional in nature. 

VSS have also become relevant in market access requirements. Some regulatory frameworks allow certification schemes to serve as evidence that sustainability criteria have been met. In these cases, products are granted entry or preferential treatment only if they are certified under specific VSS or meet equivalent sustainability standards. An often cited example is EU’s Renewable Energy Directive. 

Another area where VSS are increasingly relevant is due diligence regulations. Governments are adopting rules that require companies to identify and manage environmental and human rights risks in their supply chains. Certification schemes can support these processes by providing monitoring systems, traceability tools, and risk assessment mechanisms.

VSS are also used in sustainable public procurement, where certification can serve as an indicator of the positive social or environmental performance of production processes, enabling procurement agencies to better identify sustainable products or assess a bidder’s credentials. Some governments are also promoting certification through export promotion strategies to help domestic producers meet sustainability requirements in international markets.

Taken together, these developments illustrate how VSS have become embedded in trade policy frameworks. As a result, the distinction between voluntary and mandatory requirements is becoming less clear. While complying with VSS remains formally optional, in practice it may become necessary to access certain markets or demonstrate compliance with regulatory expectations.

Ignoring the growing role of VSS as a key tool for demonstrating compliance with environmental and social expectations carries risks. 

First, the manner in which governments reference or rely on VSS is fragmented. Different countries recognize different schemes or use certification in varying ways, creating a complex and sometimes confusing landscape for producers and exporters.

Second, VSS can function as de facto trade barriers when certification becomes a practical requirement for market access. This can disproportionately affect producers in developing countries, which face challenges related to certification costs, limited technical capacity, or lack of information.

Third, the large number of VSS raises concerns about credibility and trust. Not all schemes are equally robust. Differences in governance structures, transparency, and verification procedures can undermine confidence in sustainability claims.

These challenges highlight the importance of distinguishing credible standards from weaker ones. Ensuring transparency, accountability, and reliable verification mechanisms is essential to maintain trust in sustainability certification. 

At the same time, the growing use of VSS also presents an opportunity. Trade cooperation could play a role in providing guidance, benchmarks, or shared criteria for how these standards are used in trade policy.

Existing trade instruments already offer examples of how VSS intersect with trade policy. As noted, many free trade agreements now include provisions encouraging cooperation on eco-labelling or sustainability certification. 

An innovative example is the Agreement on Climate Change, Trade and Sustainability (ACCTS). The agreement includes a dedicated set of non-binding guidelines on eco-labelling that aim to improve the credibility and transparency of voluntary labels. These guidelines seek to ensure that sustainability claims are not misleading, encourage alignment with international standards, reduce unnecessary trade barriers, and help manage implementation costs. While still voluntary, such provisions represent an attempt to provide clearer guidance on how sustainability labels can interact with trade policy.

Regional initiatives also illustrate how standards can support trade cooperation. Some countries, for example, have explored aligning national sustainability standards with international schemes or developing mutual recognition initiatives to facilitate trade in certified products. In 2018, Chile and Brazil signed a memorandum of understanding on organic products, for instance, establishing a mutual recognition system for organic certification covering products such as wine and fruit. By recognizing each other’s certification systems, the initiative seeks to boost exports, support value addition in organic agriculture, and reduce certification costs for producers. Notably, this type of arrangement can make it easier for smallholder farmers to access international markets by avoiding the need for multiple certifications.

These examples illustrate the potential for VSS to support trade cooperation around sustainable production. Yet, they remain relatively fragmented and limited in scope.

Looking ahead, VSS are likely to remain a central feature of global supply chains. A next generation trade of arrangements committed to sustainability should therefore approach their integration and use more systematically. This should include the following considerations:

Clearer Principles on the Use of Voluntary Standards

Trade cooperation could help clarify how VSS are referenced and used in trade policy. Clearer and agreed principles would also help ensure transparency and predictability for producers and exporters navigating sustainability requirements across different markets.

Cooperation on Credibility and Transparency

Next generation trade arrangements could promote shared approaches to assessing the robustness and reliability of sustainability standards. Governments could cooperate on developing guidance or benchmarks to help identify credible schemes and strengthen transparency in sustainability claims. Such cooperation could reduce the risk of greenwashing while building trust among trading partners.

Linking Standards to Capacity Building and Support

Trade cooperation should also address the practical challenges producers face in meeting certification requirements. Certification and compliance often involve high costs and technical requirements. These challenges are particularly significant for smallholders and small and medium-sized enterprises in developing countries. Trade agreements could therefore link sustainability standards with the provision of technical assistance, financial support, and institutional capacity building to help producers meet sustainability requirements and access international markets.

Voluntary standards have become a permanent facet of the global trade and sustainability landscape. The design of a next generation of trade arrangements for environment and sustainable development provides an opportunity to organize this interaction more deliberately. Rather than treating voluntary standards as external to trade governance, policymakers can help shape how these instruments support sustainability objectives while maintaining fairness and inclusiveness in global trade.

The future of trade cooperation cannot ignore VSS. The question is no longer whether to engage with them, but how to do so in ways that strengthen credibility, transparency, and access for producers. 

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Florencia Sarmiento is Policy Advisor, International Institute for Sustainable Development (IISD).

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Synergies is an online platform featuring expert commentary and opinions curated by TESS. We foster dialogue and incubate ideas on how to shape a global trading system that effectively addresses global environmental crises and advances sustainable development. Synergies draws on perspectives from leading experts and practitioners across policy communities from around the world. We cultivate solutions-oriented policy analysis for a sustainable future.

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