Sustainability governance: economic, social and environmental upgrading in the Argentinian biodiesel value chain

Duisburg

Congreso; SASE Annual Meeting; 2021

Universität Duisburg Essen

The concept of sustainability governance refers to the coordination and transmission of economic, social and environmental criteria along a certain value chain. It is assumed that some actors bear the power to establish the sustainability criteria that will be required while others have to accomplish them in order to be considered ?sustainable?. It is expected that this process conducts to an improvement of the economic, social and environmental performance ?or upgrading- in the value chain. The Global Value Chain literature accounts for this phenomenon from two perspectives: while the governance stream focuses on power and mechanisms from the leading actor point of view, the upgrading stream focuses on results or impact over less powerful actors in the chain. Particularly, there is an increasing interest in research on environmental and social upgrading in global value chains, reflecting a concern about the consequences of the dominant economic model on sustainability. However, few works analyze the three sustainability dimensions altogether and there is still a gap in empirical research on the matter, especially from a developing countries point of view. The biofuel sector represents a case of great interest in this field because of the development of several sustainability governance initiatives at the global level, the most relevant of which are the biofuel certifications recognized by the European Union. This set of certifications, together with the supranational norm to which they respond, the Renewable Energy Directive, is referred to as the EU-RED system and constitutes an attempt to reduce the negative social and environmental impacts of this activity. However, the real effect of this governance system on the sustainability of the different biofuel suppliers to the EU remains underexplored.In the global biodiesel industry, six countries account together for about 70% of the world?s production. Among them, Argentina stands out as the main exporter of soybean-based biodiesel, being strongly competitive in every stage of this global value chain. Currently, almost 100% of Argentina?s biodiesel exports are destined to the EU. Nevertheless, literature has pointed at some practices that seem to undermine the sustainability of the chain. The aim of this work is to assess the capacity of EU-RED sustainability certification schemes to actually produce an economic, social and environmental upgrading in the soybean-based biodiesel producing companies operating in Argentina. To do so, a qualitative study among firms in this industrial sector and other key actors is conducted. The main contributions are empirical, providing a systematic assessment of sustainability certifications that encompasses the three-dimensional vision of sustainability in the case of the Argentinian biodiesel value chain.