Leading sustainable market transformation: NKG BLOOM & sustainable coffee sourcing

Leading sustainable market transformation: NKG BLOOM is transforming sustainable coffee sourcing

NKG BLOOM is pioneering the sustainable transformation of the coffee sector, by designing and implementing a series of mechanisms that will drive systemic change to sustainability issues in different production origins. We, at NewForesight, are excited to support the journey of Neuman Kaffee Gruppe (NKG), in taking this bold new step within their sustainability strategy. We believe that the creation and global implementation of NKG BLOOM will be a crucial milestone for NKG and the sector as a whole.

NewForesight started its engagement with NKG from a collaboration with IDH, The Sustainable Trade Initiative, supporting Service Delivery Model studies in three NKG origins, resulting in the development of impact measurement systems for each region. It did not take long to realize that NewForesight and NKG see the importance of aiming for greater sustainability impact by fostering a new way of doing business and decided to partner on creating a holistic cross-company sustainability initiative.

Why are we excited about this?

Figure 1: S-curve of Market Transformation

Long-term engagement with the key players of the coffee sector has provided us with insights about the maturity and dynamics of the sector. Applying our Market Transformation thinking , as summarized in the ‘S-Curve’ in figure 1, gives us insight into the actions required to drive the transition of the sector towards responsible production & consumption.

Currently, the coffee sector is progressing from the second phase of ‘First movers’, where first movers are realizing the competitive advantage of sustainability products through standards, as well as the importance of farmer livelihoods within the definition of a sustainable supply chain, to the third phase of ‘Critical mass’, where responsible production is increasingly recognized as a shared interest of all stakeholders.

This tells us a number of things about the situation in the coffee sector:

  • Demand for sustainable products is increasing, but the market still considers these products as specialty or niche;
  • Companies and donors are the main drivers of the commitment to sustainability, yet their initiatives are undertaken in silos;
  • The lack of a sector-wide understanding of what a sustainable sector looks like means efforts do not tackle root causes of irresponsible behavior;
  • Sustainability interventions are mostly about compliance to standards and certifications, not about continuous improvement.  NKG BLOOM is the first global take at expanding the definition of sustainable coffee beyond compliance, which is in great part why we are so excited to partner with NKG on it;
  • Most sustainability initiatives do not consider the business case for producers and value-chain actors

To cement the sector’s transition into the Critical mass phase, at least three things are necessary: 1) A clear understanding of the root causes underpinning social, environmental, and economic sustainability challenges; 2) A shared perspective on how to tackle these root causes, with roles & responsibilities based on equitable sharing of costs and benefits throughout the sector; and 3) A system that provides credibility on the progress achieved throughout the work.

How is NKG driving the transition towards the next phase?

NKG has identified that livelihoods, meaning a profitable farmer business model, as the fundamental issue that connects to other sustainability issues such as deforestation, illegal and child labor, climate resilience, and many other issues. Thus, the company has decided to start at the core: enable farmers by providing access to the right combination of services, enabling them to reach their full economic potential. To ensure success, NKG is going one step further, rather than relying on others to provide finance, they will provide it themselves. It is being made available through the creation of a Coffee Smallholder Livelihoods Facility, showing NKG’s ultimate commitment to partner with farmers and place ‘skin in the game’, along with their partners USAID, IDH, ABN Amro, Rabobank and BNP Paribas.  The Coffee Smallholder Livelihoods Facility is a financing structure designed to distribute up to 25 million dollars to smallholder farmers, that are a part of the value chains of Neumann Kaffee Gruppe[i].

Quoted from the recent press release of NKG: “NKG BLOOM is a unique combination of field-based educational efforts, real-time mobile technology and the industry’s first impact banking–backed initiative for coffee production”.  The BLOOM program shows a tangible commitment by NKG to driving the systemic change that the sector needs. NKG and NewForesight believe that tackling broad sustainability issues come from changing the way business is done and without a doubt, NKG BLOOM will transform the way that sustainable coffee is sourced.

How is NewForesight contributing to this effort?

Naturally, NKG BLOOM requires careful consideration on strategy and its implementation, as it will adapt and evolve. NewForesight has engaged with NKG BLOOM to provide advice on the strategy and to set it up for success as a credible program that transforms over the lifespan of the undertaking. As experts in sustainability strategy and market transformation, NewForesight is ensuring that the strategy is designed based on the systemic practices that we have developed over the past decade.

Furthermore, NKG BLOOM has set an ambitious goal of reaching at least 300,000 coffee families in at least 10 coffee-producing countries by 2030. In the process, as impacts are realized and higher sustainability goals and targets are defined, continuous refinement of the strategy will be necessary. Both NewForesight and NKG BLOOM acknowledge that this requires a long-term and iterative thinking process. That is why, NewForesight and NKG BLOOM foresee a long-term partnership to drive the sustainable transformation of the coffee sector.

Finally, it is exciting to witness and support NKG BLOOM in taking on the challenges and pioneering the movement. Several things still need to be done, yet, we believe that together, we can ‘walk the talk’.

Interested to know more about how we can help refining your sustainability strategy? Talk to our domain lead Strategic Data Analytics Daniel Viviers-Rasmussen.

[i] The origins that will be benefited from the SLF in the upcoming years are Mexico, Uganda, Colombia and Kenya.

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