BRINGING GOOD PRACTICE TO SCALE UTZ CERTIFIED ANNUAL REPORT 2013 TABLE OF CONTENTS 3 Introduction 4 Message from the UTZ team 6 Highlights of 2013 8 Monitoring & Evaluation: Proving and improving impact 14 Field Development: Reaching out to farmers 20 Standards & Certification: Enhancing the rigor and relevance of the UTZ Code 22 Traceability: Tracing UTZ Certified, RSPO and BCI crops 24 Market Development: Creating sustainable markets 30 Governance 32 Global Presence 34 General Notes on the Accountings 35 Comments on the 2013 Financial Statements 36 Financial Accounts 2013 38 Auditor’s report 39 Funders INTRODUCTION UTZ CERTIFIED BETTER FARMING. BETTER FuTURE. UTZ Certified was established over a decade ago to make UTZ REQUIRES UTZ CONTRIBUTES TO sustainable farming the norm. Since then we have achieved a lot and seen phenomenal growth, but our core purpose remains the same. We stand for sustainable farming and better opportunities for farmers, their families and our planet. BETTER FARMING BETTER CROP METHODS The UTZ program enables farmers to learn better farming methods, improve working conditions and take better care of BETTER INCOME their children and the environment. Through the UTZ program BETTER WORKING CONDITIONS farmers grow better crops and generate more income while safeguarding the environment and securing the earth’s natural BETTER FARMING BETTER FUTURE resources, now and in the future. BETTER CARE BETTER FOR NATURE Coffee, cocoa and tea products do not get the UTZ label easily. ENVIRONMENT Our strict requirements on good agricultural practices and management, safe and healthy working conditions, no child BETTER CARE FOR labor and protection of the environment are closely monitored NEXT GENERATIONS by independent third parties. UTZ tracks and traces the coffee, cocoa and tea from the farm to the store. This way, consumers can be sure that their trusted product was grown, harvested and processed sustainably. And that tastes a lot better. Annual Report 2013 - 3 MESSAGE FROM THE UTZ TEAM 2013 has been a year of growth and consolidation for our program. With more farmers and clients joining our program, we are now coming close to a point where sustainability is seen as an essential part of production and sourcing in the coffee, tea and cocoa sectors. At the same time a growing volume of evidence is demonstrating the positive impact of UTZ. Bringing good practice Demonstrating and improving impact to scale With growth comes greater impact. One of the most We are proud to report important achievements in 2013 was the work done to significant growth this year in publish the UTZ Certified Impact Report in January 2014. both the supply and demand of Bringing together the results of 24 independent studies, UTZ certified products. Cocoa it shows the positive change that UTZ is creating for had the highest growth, with farmers. The findings reveal the impact the UTZ program supply increasing by almost is having, with farmers tending to achieve higher yields of 30%. The supply of UTZ certified cocoa is almost as large as better crops and being able to improve the quality of their UTZ certified coffee and cocoa has now surpassed coffee lives as well as those of their families and their workers. For in terms of demand. We saw continued support from major example, Kenyan tea farmers were able to improve their global brands as well as new partners joining the program, yields by 11% and Vietnamese coffee farmers found that increasing the volumes of UTZ certified products on store they were able to market their coffee more easily, thanks shelves around the world. to higher-quality crops. The report also shows challenges, which we seize as learning opportunities. Certification once meant niche products for niche consumers. Today that picture has completely changed. According to We will continue to measure our impact through further the IISD’s State of Sustainability Initiatives Review (2014), studies over the coming years to help us strengthen and of all cocoa produced in the world, 13% is UTZ certified and improve what we do. together all certification schemes account for 22% of global production. In coffee, certified production is now at 21%, Our work to update and strengthen our Code of Conduct with UTZ contributing 9%. Together, we are approaching the continued this year, as we prepare to relaunch it in 2014. This tipping point where sustainable farming is becoming the rule process has involved wide consultation with our stakeholders rather than the exception. As more major brands and retailers and we are confident that the new Code will help us achieve commit to sustainable sourcing, this process will accelerate. even more for farmers in the years ahead. 4 - UTZ Certified Innovation and partnership partners, the farmers and farmer groups, traders, brand Our continued success and growth enable us to look beyond manufacturers, retailers, governments and NGOs across the our core activities at new and innovative ways of creating globe who, like us, are committed to progress in sustainable positive change on some of the most challenging issues for farming. It is through our partnerships with industry on sustainable farming. topics such as climate change, with civil society on, for example, child labor and with fellow certification schemes Climate change is one such issue, with agricultural production on living wage that we can create the momentum needed to at risk from the impacts of a changing climate while also bring about real change. We look forward to continuing to contributing to growing volumes of greenhouse gas emissions work with you in 2014. in the earth’s atmosphere. The results from an exciting UTZ pilot project were gathered in November, demonstrating a new Next year will see a focus on the quality and consistency of our way that coffee producers can reduce emissions, conserve standards and assurance processes. While the UTZ Certified water and improve their own health and livelihoods. These standard provides a clear and trusted definition for sustainable results are widely available for UTZ partners and producers farming, there will always be local differences in how it is to learn from and possibly adopt in their own work. We have implemented and the effort needed to monitor compliance. launched a second project in Vietnam, looking at further ways coffee producers can cut emissions and adapt to the effects During 2014 particular attention will be given to: of climate change. y UTZ presence in producing countries through a network of We are also looking at new ways we can collaborate to extend representatives, consultants and partner organizations. the reach of our work. One example is our collaboration with y Ensuring the quality of audits and certification bodies, the Brazilian certification scheme Certifica Minas Café, which through close monitoring and intensive training. will support many more small- and mid-size coffee producers in y Monitoring and evaluation of our program through the Brazilian state of Minas Gerais to access the UTZ program. systematized data collection and in-depth impact studies. y Finalizing and implementing the new UTZ standards: We are pleased to report that we began the process of through communication and training for our network. extending UTZ standards to a new crop – hazelnuts. We plan to test our draft hazelnut module during the 2014 harvest which will allow us to work towards the first UTZ certified hazelnuts following the 2015 harvest. Of course, none of our achievements in 2013 could have Han de Groot happened without the support of our funders and our Executive Director Annual Report 2013 - 5 HIGHLIGHTS OF 2013 164,721 Coffee smllholders were reched b the UTZ prorm in 2013 in 2013 845 Coffee frms or enouh coffee ws esttes were In 2013, enouh coco UTZ certified ws sold s UTZ certified to mke over UTZ certified to mke over 7.3 billion milk-chocolte brs 88 of 100 rms. billion You cn drink cup cups of of UTZ certified te in sustinbl 29countries sourced of22% coco produced The te cn oriinte from coffee lobll is certified. More thn hlf of this different is UTZ certified. 10countries 6 - UTZ Certified The public consulttion rounds for our Code revision received input from The sles of UTZ different certified coco 220 stkeholders More thn incresed b 1.5 million metric tons of RSPO certified plm oil were trced 149% in the eTrce in 2013 99% trcebilit s stem of UTZ coco frmers re smllholders In 2013, enouh 350,786 UTZ certified te ws sold to brew 21%of coffee produced workers more thn lobll is certified. (includin sesonl Almost hlf of this workers) in our 1.3 billion is UTZ certified. coffee prorm. cups of te Annual Report 2013 - 7 MONITORING & EVALUATION: PROVING AND IMPROVING IMPACT By investing in monitoring and evaluation, UTZ aims to measure, understand and improve our impact, enabling us to assess progress in creating positive change for farmers, their communities and the environment. In 2013 we developed the first UTZ Certified Impact Report to give our partners, funders and other stakeholders information on the impact that UTZ is making. Assessing our impact and research collaboration UTZ collaborates with local and international academic We finalized the development of the UTZ performance researchers to shed light on the role of voluntary standards indicators during 2013, to create a robust tool to assess the in addressing the most pressing sustainability issues for impact of UTZ Certified. To improve monitoring, we have the production, trade and consumption of the commodities integrated data collection for some indicators such as volumes covered by the UTZ Code. By working together with third and numbers of participating farmers (our level 1 indicators) into parties, we get a better insight into the progress made and the our audit and traceability systems.