Sustainability claims for international markets

ASSURING AGRICULTURAL SUSTAINABILITY
CLAIMS: DISCUSSION PAPER

Submission to the Department of Agriculture,
Fisheries and Forestry

March 2025
1
Australian Grape and Wine Incorporated (Australian Grape & Wine) is Australia’s national association of winegrape and wine producers. Although winegrapes are not individually listed in the scope of the discussion paper, the sector has been at the forefront of efforts to promote sustainability, with its world-class sustainability program Sustainable
Winegrowing Australia (SWA) contributing to its success. There are learnings relevant to wine that are likely to be relevant across other primary industry exports. Winegrape producers also stand to benefit from any government support for the advancement of sustainability efforts and ensuring sustainability becomes a market access opportunity rather than a market access problem.

Wine producers are interested in being able to provide evidence of sustainability to meet the various needs of their stakeholders, to protect market access and ensure they are not excluded from competitive tenders to supply wine.
As a result, many grape growers Australia wide are being asked to have their vineyards certified as a condition of their grape supply agreements. This has seen a rapid and relatively recent growth in certified vineyard area from
32, 144 hectares in 2020 to 94, 400 hectares in 2024 (bringing it to approximately sixty-five percent of Australia’s vineyard area). This increase in sustainably certified vineyard area has required a significant increase in the number of businesses certified under SWA. This has been happening at a time when the industry is facing an unprecedented economic downturn. Communities across the three inland regions, in particular, are heavily reliant on wine export sales and amongst the hardest hit by the recent loss of sales to China, a major contributor to the hardships the industry faces. Despite the necessity to do so, providing evidence for sustainability is seen as a burden by a significant cohort of growers and wine producers who are seeking a more efficient and less costly process for gaining market access. Outcomes of the report should focus on cost beneficial mechanisms for primary industries to meet the sustainability-related demands they face. New data-driven technology should be a strong focus of solutions to deliver upon these demands.

Australian Grape & Wine congratulates the Government in having recognised the importance and timeliness of this discussion. The significant public benefit attached to sustainability means there is justification for the Government to provide support for primary producers and their respective value chains to ensure they can rise to the challenge of growing sustainability demands.

Consultation question 1:
What other current and emerging regulatory requirements are missing from Section 2.1? Please include in your response which markets and/or sectors the requirements apply to.

There are multiple cross-jurisdictional policies and regulations that impact on the trade of wine globally. These include those imposed by governments as well as self-regulatory regimes developed by industry or top-down organisational policies of large retailers. A growing number of governments have introduced, or are considering introducing, supply chain due diligence legislation, requiring organisations to take responsibility for certain supply chain issues. Although most focus on modern slavery, EU due diligence standards cover both social and environmental issues.

There is a significant variation in pesticide legislation and maximum allowable residue limits worldwide, with developed nations like those in the European Union (EU) having more stringent regulations compared to developing countries. This disparity creates technical barriers to trade, as exporting countries struggle to meet the
EU’s high standards, particularly those that are not necessarily of the same significance in their country. For example, copper contamination is an issue specific to European agricultural soils and has led the EU to set
Page |3 regulations limiting the application of copper-based fungicides to levels that would likely be unwarranted in
Australian vineyards.

The EU continues to set the highest standards for environmental social governance and extends its reach into driving sustainable agri-food systems through its trade policies. Government actions that cost their producers more, can also lead to advocacy from industry groups to ensure that production does not simply transfer to their less regulated competitors. The EU recently abandoned an ambitious target to reduce pesticide use by fifty percent by 2030 due to fierce opposition from farm industry groups. There are over one hundred EU directives relating to environment, consumers and health and those not mentioned in the discussion paper that remain a concern for wine either directly or through the retailers that wine producers trade with include:

• The EU Green Deal and associated Farm to Fork Strategy (as highlighted in the discussion paper).
• The Corporate Sustainability Due Diligence Directive (CSDDD) which requires that every company must
identify and stop all negative impacts on human rights and the environment caused by their actions.
• The Corporate Sustainability Reporting Directive (CSRD) that seeks to ensure robust reporting, requiring
that large businesses openly disclose their sustainability practices mandating them to provide
comprehensive reports that include disclosure of greenhouse gas emissions data. When it comes to what
must be reported, they have adopted an expanded definition of what should be considered “material”
compared to other nations. They not only include information that affects an investor’s decision to buy or
sell (financial materiality), but also how a company’s operations impact the climate, its employees,
consumers, and society (environmental and social materiality).
• The EU Green Claims Directive will become the most prescriptive piece of greenwashing legislation and will
impact businesses that trade with the EU and through their dominance as a trading bloc, could effectively
set a new global standard. The proposal requires that assessment be made to substantiate explicit
environmental claims, and those assessments need to consider the full lifecycle of the product or of the
overall activities. In other words, it prohibits making environmental claims about the entire product when
the benefit only relates to one aspect of the product. It sets out to prohibit sustainability labels that do not
fulfil a minimum set of criteria, and to “limit the proliferation of environmental labels”. For existing EU
schemes, the directive has a measure for the “establishment of a verification mechanism to ensure that
minimum criteria on substantiation of claims are implemented and enforced, that a level playing field on
the EU market is created, and that companies operating in the market have more legal certainty”. The
information used to substantiate explicit environmental claims should make it possible to identify a
product’s environmental performance in comparison to the common practice for products in the respective
product group or sector and to demonstrate that a product has a positive impact, or no impact on the
environment and it is less damaging to the environment than other products. The information used to
substantiate explicit environmental claims therefore needs to include primary, company-specific data for
aspects that contribute significantly to the environmental performance of a product referred to in the claim.
• The EU Packaging and Packaging Waste Regulation will tackle the EU’s growing waste problem. The rules,
provisionally agreed by the European Parliament and Council in March 2024, will phase in packaging
reduction targets to achieve a fifteen percent reduction by 2040 and set limits for reduction of empty space
or filler materials. Under the new rules, all packaging (except for lightweight wood, cork, textile, rubber,
ceramic, porcelain and wax) will have to be recyclable and will need to contain information for people
receiving or disposing of the products about the ingredients processed in the packaging. It contains specific
targets for reusable packaging for alcoholic and non-alcoholic beverages of at least ten percent by 2030.
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Final distributors of beverages along with take-away food in the food service sector would be obliged to
offer consumers the option of bringing their own container. They would also be required to endeavour to
offer ten percent of products in a reusable packaging format by 2030. Certain single use plastics will be
banned from 2030.

The discussion paper also mentions Carbon Border Adjustment Mechanism (CBAM) which we understand will be rolled out in EU and UK by 2026 and 2027 respectively for some products. The feasibility of implementing a CBAM for agriculture is still being considered. 1 At last count, there were forty-six countries with a carbon tax implemented that could follow suit including Argentina, Canada, Chile, China, Colombia, Japan, Kazakhstan, Korea, Mexico, New
Zealand, Singapore, South Africa, and Ukraine. The response from countries with alternative carbon pricing instruments such as a cap and trade is uncertain.

Consultation questions 2-4
The insights provided in response to the next three questions are the result of a series of qualitative interviews conducted in late 2024 to gain a better understanding of the value, if any, that market gatekeepers place on sustainability and sustainability programs and why some stand out as being superior to others. Five liquor monopolies across Scandinavia and Canada and the two largest retailers in the United Kingdom were selected for in person interviews. The buyers represent some of the most significant for Australian wine, or in the case of markets such as Canada and Scandinavia, are important due to their tendency to set the highest bar when it comes to sustainability demands. Online interviews were also conducted with several retailers, producers, wine associations and sustainability program providers in Australia, United States of America and Canada as well as one major bank in Australia. One retailer based in Asia was approached but claimed to have very little insight relevant to the research. These findings were further evidenced with quantitative assessments of the material needs of a set of stakeholders through desktop assessment of what lies behind those needs in terms of public expectations, as well as regulatory and non-regulatory drivers. The report is yet to be released publicly however findings are included in the responses below.

Are you aware of other expectations for evidence (form or subject) that are not included in Section 2.2?
Please include in your response which markets and/or sectors the other expectations for evidence apply to.

Within the coming years, mandatory climate related reporting requirements will be in force in many trading nations for Australian wine. Most Australian wine businesses will fall under the thresholds for reporting, but the government-controlled liquor authorities and major retailers they sell to will not. Imposing excessive administrative burden on small businesses is not the intent of the legislation, hence their exemption from any direct requirements under these laws, and the permissibility of reporting businesses to use industry averages or estimates for measuring scope 3 supply chain emissions. Although not entirely clear, a concerning expectation is that businesses who are part of the value chain of larger businesses will face demands to supply information relating to their emissions to large corporate businesses they transact with. This also applies within Australia. As of December 2023, ninety-eight percent of Australia’s top companies were providing sustainability reporting. 2 The degree of primary data required and the need for third-party verification of that data remain unclear.

1 Fournier Gabela, J. G., Spiegel, A., Stepanyan, D., Freund, F., Banse, M., Gocht, A., … Matthews, A. (2024). Carbon leakage in agriculture: when can a carbon border adjustment mechanism help? Climate Policy, 24(10), 1410–1425.
https://doi.org/10.1080/14693062.2024.2387237
2 https://kpmg.com/au/en/home/insights/2022/10/sustainability-reporting-survey-2022.html accessed 29th June 2024
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Progress towards a greater value being placed on the use of environmental certification trust marks has been relatively slow compared to what was predicted at the time that the wine industry set up their own sustainability certification program back in 2009. While the pace of change to date has been slower than expected, when it comes to sustainability demands it is not uncommon for wine producers to face demands for ethical or safety related audits or compliance checks. Retailers are also increasingly imposing their own business performance requirements such as through supplier codes of conduct. As the discussion paper suggests, some customers conduct their own audit which is a sense of frustration amongst producers who are burdened with multiple audit requirements. Buyers often select portions of their supply chains for audit, omitting those where labour or human rights abuse are least likely to occur. Australia is fortunate to benefit from a relatively favourable reputation as a nation in this respect.

Qualitative interviews suggested that in terms of consumer preferences, Fairtrade, Fair for Life and some organic certifications drive consumers more than sustainability. As the discussion paper alludes to, markets required more specific evidence at a supplier level than our various frameworks and the lack of consistency between different wine producing nations’ programs was seen as an issue in terms of their understanding of the benefits of any one program, and thus, their ability to formally recognise them.

Retailers believe that their consumers do not recognise nor value sustainability trust marks. Research suggested that where retailers have an interest in sustainability, it is primarily related to the economic benefits that can be accrued internally such as cost savings within their own operations associated with reducing resource emissions use, energy conservation, and greenhouse gas emission reduction. 3 In most cases, if the consumer is not known to be motivated towards sustainable purchasing, it is unlikely that a retailer will impose requirements on their suppliers without a regulatory prompt, as doing so would put them at a competitive disadvantage to other retailers whose purchasing cues are driven purely by consumer preferences. Some liquor retailers (particularly those owned by Government liquor authorities who do not face competition in the liquor retail market) seek to play an active role in shaping consumer preference through what they buy and how they position products.

There are several retailers that incorporate point scores linked to sustainability certifications into their purchasing decisions, albeit this carries a small weighting amongst a myriad of other more important drivers such as price, quality and product safety. Another challenge is that for a wine retailer to require their supply chain to obtain sustainability certifications, it would be in their interest to also acquire certifications on their own private label products which can typically make up one third or more of total sales. Doing so would not only restrict their purchasing flexibility, but in many cases would require certifications in multiple countries; the lack of an international standard to which to be audited being a potential barrier for them.

This situation could change as new corporate reporting mandates come into play, and as retailers are increasingly recognising that their environmental impact is closely linked to the environmental performance of their suppliers.
Indeed, when it comes to the more visible sustainability cues such as product packaging, there is a slight shift towards lighter weight bottles, a reduction of in-store packaging and a move away from unnecessary product adornments. This is driven by a combination of regulatory pressures and the retailers’ own corporate social responsibility goals.

3Naidoo, M., & Gasparatos, A. (2018). Corporate environmental sustainability in the retail sector: Drivers, strategies and performance measurement. Journal of Cleaner Production. https://doi.org/10.1016/J.JCLEPRO.2018.08.253.
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What are the most common forms of evidence being asked for with respect to providing evidence to support sustainability claims? Please include in your response which markets and/or sectors the common forms of evidence apply to.

The following are examples of third-party certifications that are recognised favourably or in some cases, an absolute requirement of some or all suppliers to major international retailers:

Fair Trade Certified: Ensures fair labour practices and sustainable production.

SEDEX Members Ethical Trade Audit (SMETA): Ensures ethical & responsible practices.

British Retail Consortium Global Standard for Food Safety (BRCGS): Food Safety, Packaging Materials, Plant-Based and Ethical Trading.

Hazard Analysis Critical Control Point (HACCP): A systematic approach to food safety.

ISO 9001:2015: Quality Management System, ISO 14001:2015: Environmental Management System, ISO
45001:2018: Occupational Health and Safety Management System.

Organic Certification: Requires that producers limit or avoid certain synthetic fertilizers, pesticides, herbicides, and genetically modified organisms (various programs exist).

There is a growing imperative for the sustainability programs to expand their emphasis on social and ethical risks such as modern slavery. Wine sustainability programs around the world are in the early stages of responding to pressures to address this. Whether doing so will meet the demands of those currently seeking international certifications such as SMETA is not certain. There is also pressure led by the bench-markers of sustainability programs to expand emissions tracing capabilities and to expand beyond the vineyard and winery boundary to encompass more of the supply chain, presumably in preparation for mandatory reporting legislation and the likelihood of growing demands for this information.

At present, wine producers face demands that not only differ in terms of how they must be audited or verified, but in the nature and scope of what they must provide (eg. food safety, ethical, etc). How many supply chain partners this information is collected from also varies between retailers. Some retailers, for example, require supply chain traceability information for the top ten to twenty suppliers (which in the case of liquor tend to constitute high proportions of their sales volumes). Coles will require seventy five percent of its suppliers to set science-based emissions reduction targets by June 2027. 4 Upstream of the supply chain, winemakers have a requirement for eighty-five percent of growers in each product to be certified Sustainable Winegrowing Australia so that the wine can be labelled with the SWA trust mark. Programs such as B Corp do not require certification of supply chain at all thereby exempting the growers who supply to certified wineries.

Wine industry related discussions have revealed broadly consistent opinions with the discussion paper view that
“Supply chain participants indicated that sustainability frameworks provided a positive narrative for the industry that is helpful to them, but they required more specific evidence at a supplier level than frameworks provide.”

4 Coles (2023) https://suppliercentral.coles.com.au/s/gnfr-governance?p=0 accessed 3 March 2025
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What are markets expecting in terms of evidence to support compliance with regulations (e.g.
demonstrating compliance with work related regulations)? Please include in your response which markets and/or sectors the types of supporting evidence apply to.

Various organisations undertake to benchmark the wine industry sustainability programs:

The Sustainable Wine Roundtable (SWR) is a coalition of members which includes the whole value chain. Producers, distributors, retailers, logistics partners and researchers are all eligible for a place at the table.

Intertek SAI Global is employed by the Scandinavian liquor monopolies undertake to benchmark each country’s sustainability program through to ensure its protocols and practices are in line with their expectations.

Contrary to the discussion paper, discussions within the wine industry suggest that compliance with Australian regulation, particularly in relation to modern slavery and other social related topics such as health and safety, is not necessarily going to be sufficient assurance to the major wine buyers. Outside of Australia, there have been cases where certified producers have been found to be non-compliant with their national laws which has eroded trust to some extent. 5 Australian producers might benefit from lobbying to ensure that compliance with regulations is assumed by international market gatekeepers, thereby avoiding a need to provide auditable administrative reports to demonstrate compliance with existing laws.

As an Australian wine sector, we should work more closely with other countries and other sectors to drive a bottom- up approach to dealing with market gatekeeper demands. Forthcoming demands that might be resisted include more specific Product Environmental Footprint (PEF) information or incorporation of ethics into sustainability programs. We should ensure any decision to succumb to such pressures is made with a view to avoid creating unnecessary administrative burdens nor duplication and we must remain focused on managing key sustainability- related risks to the Australian wine industry’s reputation at least cost.

Consultation question 5:
Who (e.g. which organisations/agencies) should play a role in assuring sustainability claims for Australian agriculture? Please include in your response what role each organisation/agency you identify should have

Ideally, Australian agriculture should be proactive in driving the standards to which it operates with a focus on the common outcomes required for the sustainability of the planet rather than practices adopts in order to achieve those outcomes. It should seek ways to reduce the compliance burden on primary industries, including winegrapes.
A key advantage in doing so would be that if trading nations were able to trust that despite issues that have occurred outside of Australia, that Australia’s strong regulatory framework should be acknowledged as alleviating any need to impose any additional burden on producers to demonstrate compliance.

The Australian wine industry uses a third-party certification standard operated and managed by Freshcare, a specialist provider of standards to the Australian agriculture sector. Through having a separate audit body and a fully independent public third-party verification, the governance structures attached to SWA are considered robust.

In a benchmarking report looking at the performance of SWA compared to other programs, the Sustainable Wine
Roundtable (SWR) stated that SWA’s relationship to a separate organisation that provides standards to other

5Nygaard, A., and Silkoset, R. (2022). Sustainable development and greenwashing: how blockchain technology information can empower green consumers. Bus. Strat. Environ. p4 doi: 10.1002/bse.3338
Page |8 agricultural sectors provides it great credibility. Coverage of environmental issues is considered extremely robust, particularly with those relating to water and waste which are considered superior to those relating to biodiversity, emissions and carbon reduction. The SWR benchmark of the program revealed opportunities to strengthen the requirements relating to labour and community issues.

There are various global wine, food and agricultural organisations that have an influence over the scope of what should sit behind sustainability claims and how sustainability is defined. The role of these organisations is outlined below:

Codex Alimentarius is an international body, established by the Food and Agriculture Organization (FAO) of the
United Nations and the World Health Organization (WHO), which maintains a collection of internationally adopted food standards. Their likelihood of having any significant influence over sustainability claims is uncertain. Some
Codex Members would like to expand Codex’s role to consider the sustainability of production more prominently in their standard-setting process. 6

Specific to wine are:

The World Wine Trade Group (WWTG)- a group of government and industry representatives including wine- producing countries of Argentina, Australia, Canada, Chile, Georgia, New Zealand, South Africa, the United States, and Uruguay.

The Federation Internationale des Vins et Spiritueux (FIVS) - an international member-based federation that works for the overall sustainability of the global alcohol beverage sector. FIVS has published guidance on sustainability within the wine sector. Their Global Wine Sustainability Principles provide a common framework for the international wine industry’s approach to sustainability efforts and they are aligned with the United Nations
Sustainable Development Goals (UN SDGs). FIVS is also responsible for the International Wine Greenhouse Gas
Protocol.

The International Organisation of Vine and Wine (OIV) - an international intergovernmental body for the grape and wine sector set up in 2001 to deal with technical and scientific aspects of viticulture and winemaking. The aim of the organisation is to provide international codification on issues such as labelling, definitions of grapes, and key oenological practices.

Participation in these organisations by both Government and industry is seen as critically important for trade and market access and Government investment in this is highly valued.

Although hard to influence, the high likelihood of increased protectionism elevates the benefits of improving collaboration with other wine producing nations on trade related issues such as labelling and how sustainability demands are met. There is a risk that if wine producers do not collaborate, that lack of alignment of wine sustainability programs around the world could see greater market dominance from wine buyers when it comes to how wine producers tackle sustainability challenges. Where possible, industry-led, mutually agreed approaches will lessen the impact of growing protectionism by ensuring harmonisation or mutual acceptance of each other’s processes. This might include developing an agreed position on the role of sustainability programs in tackling emerging demands from the market relating to supply chain risk management or even a very basic and generic

6https://agrifood.net/wp-content/uploads/2023/03/IAFN-Codex-and-Sustainability-in-Food-and-Agricultural-
Production.pdf
Page |9 international wine certification standard. In doing so, a balance should be sought between streamlining the demands upon each nation’s wine industry through standardisation efforts and maintaining the flexibility of a localised approach.

Consultation question 6:
Do you agree that the topics listed in section 3.2 are critical for demonstrating sustainability claims across all markets? Consultation question 6a: What other topics would you consider to be critical for demonstrating sustainability claims? Please include in your response which markets and/or sectors these topics apply to.

Carbon emissions seem to be overshadowing other environmental indicators that were mentioned. Waste, biodiversity and water (probably in that order), followed. With wine, modern slavery and greenhouse gas emissions are the highest priorities of the markets, likely led by emerging global regulations. Labour conditions are of heightened interest following the death of two grape pickers in Champagne in 2023.

Consultation question 7:
Are you aware of any current or emerging approaches to demonstrating evidence-based sustainability claims that should be considered in the next phase of this project (that are within scope)? Consultation question 7a: Please provide details including a link to further information, or the contact details for the entity responsible so we may reach out to them.

Led by Systembolaget in Sweden, several Nordic countries are in the process of undertaking a product climate footprint pilot project which seeks to create a model for determining carbon footprint at a product level based on country emissions factors, transportation methods, distance to market and bottle weight.

Australian Grape & Wine is also working with Japanese company, Asuene, on a proof of concept for its own advanced digital solution tracing full product carbon emissions throughout the supply chain. Part of the project will consider ways to collect data that are easy for growers. The project was supported by investment from both the
South Australian and Federal Governments.

Consultation question 8:
What challenges do Australian agricultural sectors face in providing the necessary evidence to satisfy international market demands? Consultation question 8a: How can these challenges be overcome to ensure market access? 3.5 Verifying sustainability claims with data Part 2 of Phase 1 will also assess key data points or datasets that lend themselves to the verification of sustainability claims or identify where reporting requirements may need to be synthesised into key data points or datasets to address any gaps.

A risk for Australia is that the non-discriminatory nature of global frameworks, fails to encourage focus on the most important pressures facing individual environments. Different pressures on the environment between wine producing nations should influence how performance is managed and judged and the environmental issues that receive the greatest focus. Thus, global frameworks must remain flexible and avoid becoming overly prescriptive in their nature. A risk is that the market leading effect of the EU will mean that the restrictions placed on EU farmers will reflect the pressures being experienced in a European farming context but be unjustified elsewhere. Most buyers are somewhat aware of the trade-offs in countries and the complexity in optimising environmental performance and conscious of not being too prescriptive about issues that they do not fully understand. The qualitative interviews indicated that at present buyers are prepared to collaborate with producers towards ensuring their
P a g e | 10 demands for evidence of sustainability are not counterintuitive nor unnecessarily onerous to the extent that the costs outweigh the benefits. But producers will need to drive this collaboration.

Consultation question 9:
What existing datasets are you aware of that can be used to support sustainability claims?

SWA collects data about vineyard and winemaking practices along with a range of sustainability metrics including:

Vineyard Winery

• Area red grapes (ha) • Winery size
• Area white grapes (ha) • Tonnes crushed (T)
• Total vineyard area (Ha) • Winemaking volumes
• Grapes harvested (T) • Full winemaking (kL)
• First stage winemaking (kL
Water
• Final stage winemaking (kL)
• Total water used (ML)
Water and wastewater
Fertilisers
• Existence of biological wastewater treatment
• Synthetic nitrogen (kg N) onsite?
• Organic nitrogen (kg N) • % methane flared or combusted
• Urea (kg N) • Average outlet COD (mg/L)
• Mulch (ha) • Average inlet COD (mg/L)
• Compost (ha) • Principal treatment type (managed aerobic,
• Manure (ha) anaerobic digestor/reactor, deep anaerobic
lagoon (>2m), shallow anaerobic lagoon
Electricity
(<2m), unmanaged aerobic)
• Electricity from the grid (kWh) • Water used (kL)
• Solar (kWh) • Wastewater generated (kL
• Wind (kWh) • Wastewater recycled (kL)
• Other (kWh)
Solid waste
• Renewable electricity generated and exported • Organic process waste (T)
to the grid (kWh) • Waste to recycling (T)
Fuel use (on site only) • Onsite composting (T)
Electricity
• Petrol (L)
• Electricity from the grid (kWh)
• LPG (L)
• Solar (kWh)
• Diesel (L)
• Wind (kWh)
• Biodiesel (L)
• Renewable energy generated onsite and
exported to the grid (kWh)

Fuel use (onsite only)
• Biodiesel (L)
• Diesel (L)
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• Petrol (L)
• Natural gas (GJ)
• LPG (L)

Other
• Purchased CO2 (T)
• Synthetic refrigerants by type and charge
(excluding ammonia, hydrocarbons, CO2) (kg)

Grape growers also enter their spray applications into a spray diary however the ownership and therefore availability of this data for public consumption will be case by case dependent.

Consultation question 10:
Are there industry-specific datasets that should be prioritised? Consultation question 10a: Which industry- specific datasets should be prioritised?

Data can potentially be derived from sustainability programs, spray diaries and other production management software.

There is a possibility that most emissions data will eventually be linked to accounting software that consolidate data from various sources into a single database for reporting, analytics, and auditing during a traditional financial audit.
It is our understanding that accountants and accountancy programs are building capacity to incorporate core data such as fuel and energy into business reporting and audit. This could potentially enhance the trust in environmental disclosures as they are not only linked to documents such as invoices and consignment notes that are issued by third party entities, but they are already being audited or verified.

Consultation question 11:
In what ways can existing data collection processes be improved to support strong and credible sustainability claims (without adding significant workload to farmers and supply chain actors)?

It is an imperative of the wine industry that, as much as possible, data should be collected once for multiple uses and that efforts should be made to drive down collection costs as close as possible to zero. To achieve this, there is a need for creating a data ecosystem where different systems and businesses can exchange and use data seamlessly in a way that is trusted. Cloud based platforms for data storage and processing can centralise data from various sources. New models are emerging to enhance data security and protect ownership rights whereby the data application and the data itself are kept separate. Interoperability will require common vocabularies, ontologies, and data models to ensure that data elements have the same meaning, even if they are represented differently.

New data technologies and system capabilities are emerging to help solve some of the issues associated with managing sustainability information within the business and across complex supply chains. For example, data platforms exist that allow individual businesses to securely report and/or collect information from their supply chain partners. One example is the Catena-X Automotive Network which has created an interoperable space for data sharing where members advertise data assets, negotiate terms for consuming them, and transfer data between participants whilst retaining control of their data.
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The need for Governments to have a role in the verification of how sustainability data is collected and conveyed to stakeholders is uncertain. In other sectors, the Government has supported programs regulating how environmental performance is measured and reported. One example is the National Australian Built Environment Rating System
(NABARS) scheme which uses trained assessors to rate the environmental performance of buildings. It has a tangible impact on valuation and is recognised and trusted by some stakeholders such as consumers, banks and valuers.
When it comes to green claims on consumer goods, the implications of the EU Green Claims Directive on trade of produce carrying green claims should be investigated in terms of whether trading nations might expect tighter government regulation over green claims in future.

Consultation question 12:
How do international markets assess the credibility and strength of the data provided to support sustainability claims? Consultation question 12a: What benchmarks or standards are used in this evaluation?

Discussions with retailers suggest there remains further work finding means to ensure data credibility. It is likely that methods will evolve in the coming years as demands for more primary data start to filter down the supply chain.

At present, the main strategy is through benchmarking national sustainability programs or demanding international programs known to be robust in their auditing.

Consultation question 13:
What new data collection methods are needed to meet emerging market demands?

Although yet to be adopted by wine industry certification programs, opportunities related to the automation of documentation and reporting using mobile devices, artificial intelligence and sensors already exist and are likely to be a major driver of efficiency in the future of sustainability. The untapped benefits of these technologies could also assist with supply chain collaboration and validation of environmental claims, especially when it comes to reducing the significant costs and emissions associated with auditing through enabling of remote audits.
Collaborative online tools allow for auditing of information and processes to be conducted remotely presenting a much simpler process for achieving certification, driving down the costs to producers, at the same time as reducing emissions associated with auditors travelling long distances to inspect sites. In conjunction with online information sharing, or where online sharing is not possible, remote sensing technologies or drones can be used either for random or routine inspections and site surveys.

Other considerations
The scope of what is expected of businesses with regards to evidence of sustainability is likely to evolve at pace in the coming years, led primarily by government regulations, the impact of those regulations on the supply chain and, to a lesser extent, by consumers. While the focus is currently on greenhouse gas emissions, waste and human rights-based supply chain due diligence, all aspects of sustainability performance are gaining increasing policy focus.

One of the most important factors influencing how wine producers, and the sustainability programs that serve them, will be the increasing scrutiny on green claims. It will not be possible for the Australian wine industry to gain the trust of its stakeholders without evidencing a standard of achievement. An important aspect of this will be to
P a g e | 13 understand and play to the sector’s strengths and opportunities. This requires pre-competitive collective action and investment across agriculture along with public support through business enabling policies.

Despite attempts to monetise sustainability and sustainability data, sustainability remains largely a public good, with limited direct value to businesses who embrace it. Whilst the need for primary producers to tackle its challenges head-on, it is also important that the quest for sustainability evidence does not distract us from the pursuit of quality and value. The value of sustainability claims on products to consumers varies markedly between markets and products. Some evidence suggests that consumers are willing to pay more for sustainability (seven percent on average). 7 However, results vary considerably and there is multiple research that denies any evidence that consumers actually do pay more, a so called “say-do” gap, signalling that consumers are not yet ready to follow through on their own convictions about sustainability. 8 For example, a UK survey cited that sixty percent of British adults are not fully aware of green and ethical issues, and twenty percent state that they are “too busy to care”. A further seventeen percent of adults claim to be suffering “green overload” indicating a need for businesses to present clearer, simpler messages. 9 According to the World Economic Forum, only seven percent of consumers cite sustainability as one of the top three attributes they consider when making a purchase. 10 A large share of consumers do not specifically include sustainability in their purchasing considerations, but they do include sustainability related criteria. For example, as many as forty-three percent of consumers seek beverages that are healthy, high quality, guilt-free, and socially responsible. 11 It has been suggested that by broadening the dialogue to emphasise these related attributes in product design and marketing initiatives, companies can attract consumers to sustainable products even when consumers are not deliberately seeking them. 12 Furthermore, claims need to be locally relevant. 13 This was consistent with one major retailer’s view that “customers were more interested in biodiversity projects that were in their local area than those carried out in the product’s country of origin.”

To entice consumers and customers to pay more for certified products, these programs might find benefit in understanding the consumer better and incorporation and promotion of attributes that are known to be valued such as health benefits, quality, social responsibility or fair and equitable trade commitments. For wine, along with the many other niche product specific sustainability programs around the world, there has been little promotional work to date to educate the market about what environmental issues are covered and what benefits the consumer of that certified product will receive. This is something that could be done collectively across agriculture sectors with support from the Government.

7 Tully, S. M., and Winer, R. S. (2014). The role of the beneficiary in willingness to pay for socially responsible products: a meta-analysis. J. Retail. 90, 255–274.
doi: 10.1016/j.jretai.2014.03.004
8 Boston Consulting Group (2022) Consumers Are the Key to Taking Green Mainstream https://www.bcg.com/publications/2022/consumers-are-the-key-to-taking-sustainable-products-mainstream
9
Fletcher, A. (2007), ‘Ethical food under threat from consumer confusion’, Foodnavigator.com Europe 21/02/07, Decision
News Media SAS
10 World Economic Forum (2022) https://www.weforum.org/stories/2022/10/3-ways-help-consumers-make-more- sustainable-choices
11 Boston Consulting Group (2022) Consumers Are the Key to Taking Green Mainstream https://www.bcg.com/publications/2022/consumers-are-the-key-to-taking-sustainable-products-mainstream accessed 3
November 2024
12 Boston Consulting Group (2022) Consumers Are the Key to Taking Green Mainstream https://www.bcg.com/publications/2022/consumers-are-the-key-to-taking-sustainable-products-mainstream
13 Ibid.
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The proliferation of environmental sustainability programs has been a global trend, however the effectiveness and necessity of having so many programs is the subject of ongoing debate. Consumers are more likely to trust and value a certification logo if they are familiar with it and if they know that other consumers are also familiar with it.
Consumer acceptance is influenced by their awareness, the specific sustainability attributes highlighted, and the effectiveness of communication strategies. Thus, the complexity and the abundance of eco-labels are likely to hamper their efficiency in guiding consumers.

In the case of food safety certifications, it has been reported that certifications from international bodies tend to receive higher confidence levels compared to multiple domestic ones. This same phenomenon was seen in the US when several new programs set up in competition with the original trusted Fairtrade trust mark. The fracturing of trust marks from one to four resulted in a division among different interest groups over which principles should be privileged under the banner of Fairtrade. 14 Broad-reaching programs within nations such as those that cover multiple products in a country or multiple countries and one product, could potentially provide a means to overcome this. For example, Norway’s Nordic Swan, a national mark in use across multiple products, claims that ninety three percent of Nordic consumers know of and trust the label. 15

How Governments can help
As sustainability is a public good, there is strong justification for Governments to provide support for industries.
There are many great examples in the wine industry (and other agriculture sectors) of businesses working together pre-competitively to support environmental outcomes. Collective industry action and collaboration across the supply chain on environmental issues will be crucial for addressing global environmental challenges. A good way to instigate this is through the provision of Government support such as through ongoing support for the Australian
Agriculture Sustainability Framework (AASF) initiative, the various traceability grant programs and in future, consideration could be given to funding individual industries to support uplift of their sustainability programs to embrace new digital technologies. Through support for programs such as the AASF and individual sector-based sustainability programs, the Government can assist through:

• financial support to individual businesses for audit efficiencies,
• coordination and online learning platforms to assist producers to be audit-ready,
• digital uplift of programs to improve efficiency of data collection and to ensure data security and
interoperability with other data collection feeds,
• new and enhanced sustainability reporting for businesses, regions and sectors,
• supporting collaborative cross-commodity promotion of sustainability across Australian agriculture.

Industries have an opportunity to work with their stakeholders to influence the environmental standards that they must adhere to so as to ensure they remain focused on outcomes rather than outputs, and to harmonise the reporting requirements across stakeholders as much as possible. High levels of market concentration in food and wine retail mean that demands on producers are often determined using a top-down approach. Thus, a proliferation of inconsistent stakeholder requirements is a risk to producers. Better leadership and coordination from the bottom up, and in the short-term, is critical in driving consistency and efficiency in the approach to meeting those demands.

14 Jaffee, D., & Howard, P. (2015). Who’s the fairest of them all? The fractured landscape of U.S. fair trade certification.
Agriculture and Human Values, 33, 813 - 826. https://doi.org/10.1007/s10460-015-9663-2.
15 https://www.svanemaerket.dk/en/business/about-nordic-swan-ecolabel/key-figures
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Governments can support industries to establish mechanisms for improving supply chain collaboration and sharing of information to enable them to measure and manage product environmental performance and also compliance with global supply chain due diligence demands such as the management of modern slavery.

There is a lack of publicly available research into the environmentally concerned consumer’s purchase drivers. These may extend beyond sustainability to other co-benefits such as quality or human rights. The success of other trademarks that have caught the attention of consumers such as Fairtrade came from significant investment in promotion that aligned to consumer values. The specific drivers of consumer appeal is an area that warrants further research when it comes to food and beverage products and sustainability. Single agriculture sectors on their own are unlikely to have the resources nor the drive to promote their sustainability programs to the extent that it will be valued by consumers, at least not in the medium term. There warrants consideration as to whether a cross- commodity approach to assessing and rewarding sustainability is more likely to gain traction. Government could play a role in initiating such an approach.

Finally, Australian winegrape producers face a significant threat to their sustainability reputation in that grapes are currently being left on the vine due to over-supply. The sector faces a need to restructure, however, vineyard owners are struggling to fund the cost of vineyard removal. This situation puts its reputation for sustainability at risk. Where vineyards are removed, we seek greater support so that unharvested winegrapes or excess wine need not enter the waste stream and potentially harmful biproducts of vineyard asset disposal such as cooper chrome arsenic (CCA) timber posts are dealt with appropriately. If such posts are disposed of incorrectly, they pose a significant contaminant risk for our soils, along with a fire hazard for communities. Funding is required for both building demand and developing innovative solutions to help those that need to exit the industry to do so in a way that is safe and sustainable. Investment by the Australian Government would complement and leverage existing research being undertaken by Wine Australia and the South Australian Government and provide significant benefits for growers, their community, and the environment, thereby protecting the sustainability reputation of Australian agriculture more broadly.

We would be happy to discuss this submission further if required.

About us
Australian Grape & Wine represents the interests of the more than 2,000 winemakers and 6,000 winegrape growers working across Australia’s 65 wine regions. These businesses support the employment of more than 160,000 people, making a significant contribution to rural and regional Australia, driving economic growth, local manufacturing, regional exports and food and wine tourism. As a sector, we aspire to be recognised as a global leader for quality and innovation and to be at the forefront of sustainable wine production. Our role is to help forge a political, social and regulatory environment - in Australia and overseas - that enables profitable and sustainable Australian grape and wine businesses. To do this, our activities focus upon the objective of providing leadership, strategy, advocacy, and practical support. We represent small, medium and large winemakers and winegrape growers.

Australian Grape & Wine is recognised as a representative organisation for winegrape and wine producers under the Wine Australia Act 2013 and is incorporated under the SA Associations Incorporation Act 1985.
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Lee McLean Anna Hooper
Chief Executive Officer Director Economic & Environmental Policy
Level 1, The Realm, 18 National Circuit, Barton, National Wine Centre, Botanic Road, Adelaide
ACT, 2600 SA 5000 |
Mobile: +61 418 998 749 Mobile: +61 427 685 077
Email: lee@agw.org.au Email: anna@agw.org.au