SUSTAINABILITY DIFFERENTIAL ANDSUSTAINABILITY INVESTMENT
Hazelnut sector guidanceVersion 1© 2021 Rainforest Alliance. All rights reserved.

Translation Disclaimer
For any question related to the precise meaning of the information contained in thetranslation, please refer to the official English version for clarification. Any discrepancies ordifferences in meaning due to translation are not binding and have no effect for auditing or
certification purposes.

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Document Name:

Document Code:

Version:Sustainability Differential and Sustainability
Investment: Hazelnut Sector GuidanceRA-G-MT-28-V1

1

Date of firstpublication:

Date of revision:

Valid From:

Expires by:June 4, 2021

N/A

N/A

Until further notice

Developed by:Approved by:Rainforest Alliance Department Markets
Transformation

Director of Standards and Assurance

Linked to:
SA-S-SD-1-V1.1 Rainforest Alliance 2020 Sustainable Agriculture Standard, Farm requirements
SA-S-SD- 2- V1.1 Rainforest Alliance 2020 Sustainable Agriculture Standard, Supply Chain
Requirements
SA-S-SD-15-V1.1 Annex S14: Shared Responsibility
RA-S-MT-17-V1.1 Annex S16: Investment Plan
SA-G-SD-8-V1 Guidance Document G: Yield estimation
SA-S-SD-22-V1 Guidance: Use of Sustainability Differential and Sustainability Investments forthe benefit of workers

Replaces:
N/A

Applicable to:
Farm certificate holders and supply chain certificate holders

Country/Region:
All
Crop:

Type of Certification:

Hazelnut

Farm certificate holders and supply chain
certificate holders

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Table of Contents
Executive Summary .............................................................................................................................. 4
Glossary .................................................................................................................................................. 5
1.

Objective of this document ......................................................................................................... 7
1.1 Introduction.................................................................................................................................. 7
1.2 Scope ........................................................................................................................................... 7

2.

The Sustainability Differential and Sustainability Investment in hazelnuts ............................... 7
2.1 Towards a sustainable hazelnut sector..................................................................................... 7
2.2 Introducing the Sustainability Differential and Sustainability Investment ............................. 8

3.

Transitioning from premiums to SD and SI ................................................................................... 9
3.1 Contextualization of the SD and SI ........................................................................................... 9
3.2 Timelines for transitioning to SD and SI .................................................................................... 10

4. Guidance for the SD and SI in Hazelnuts ..................................................................................... 11
4.1 The beneficiary of the SD and the SI ...................................................................................... 11
4.2 Responsibility for payment of the SD and SI – the First Buyer ............................................... 12
4.3 The value of the SD ................................................................................................................... 14
4.4 Payment of the SD .................................................................................................................... 15
4.5 Transparency on the SD and the SI value .............................................................................. 15
5. Guidance for SI in Hazelnuts .......................................................................................................... 16
5.1 The beneficiary of the SI ........................................................................................................... 16
5.2 The Investment Plan .................................................................................................................. 16
5.3. Developing the Investment Plan ............................................................................................ 16
5.4. Guidance for using the Investment Plan template ............................................................. 17
5.5 Value of the SI ............................................................................................................................ 19
6. Reporting the SD and SI ................................................................................................................. 19
6.1 Reporting at transactional level .............................................................................................. 19
6.2 Annual reporting ....................................................................................................................... 19
7. Contracting SD and SI .................................................................................................................... 20
7.1 Including SD and SI when contracting for certified hazelnuts............................................. 20
7.2 Payment by farm CH the two group members ..................................................................... 21
8. Assurance of SD and SI Payments ................................................................................................ 21

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EXECUTIVE SUMMARY
Sustainability Differential and Sustainability Investment•

The Sustainability Differential is a mandatory additional monetary payment made tocertified farm certificate holders on top of the market price of the commodity. In case ofgroup farm certificate holders, the Sustainability Differential is transferred in full to thegroup members.

•

Sustainability Investment is mandatory monetary or in-kind investment from buyers ofRainforest Alliance certified products to farm certificate holders for the specific purposeof helping them comply with the 2020 Sustainable Agriculture Standard.

From UTZ Premiums to Sustainability Differential (SD) and Sustainability Investment (SI)The new Rainforest Alliance 2020 Sustainable Agriculture Standard will transition from the UTZ
premium approach in hazelnut to an SD and SI approach. This transition will require a shift inseveral components of current premium practices:
Premium approach• Only captures monetary paid from thefirst buyer to the farm CH. It does notinclude in-kind investment• Includes both monetary to producers
and monetary to the group
administrator. However, the exact
distribution is not mandated or reported
in the certification platform•

Investments are not guided

SD and SI approach• Will capture the full investments made infarm CHs. This includes both in-kind as
well as monetary investments•

Distinguishes between value to
producers (SD) and value to group/farmmanagement (SI), thereby measuring
what is reaching producers in monetary•

Based on investment needs identified inan Investment Plan. The mandatory
template is provided by the Rainforest
Alliance

Implementation in the hazelnut program:• SD and SI value must be recorded by first buyers in the Rainforest Alliance Certification
Platform from the date volumes certified against the 2020 SAS are transacted on theplatform• The transition period for all farm certificate holders to the 2020 SAS is July1, 2021 to July 1,
2022• The first hazelnuts will be certified against the 2020 SAS during the harvest in
August/September 2020

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GLOSSARY
Term
Certification
Body (CB)
CBA
Certificate
Holder (CH)FarmFirst buyerGroupmanagement

Group members
Management
plan

NonConformities(NC)
Producer

Definition
Entity authorized by Rainforest Alliance to conduct audits and to issue acertificate for the Rainforest Alliance Certification Program.
Collective bargaining agreement.
Any organization that is, was or wants to be certified against any Rainforest
Alliance certification program (UTZ Certification Program, 2017 Rainforest
Alliance Certification Program, Rainforest Alliance 2020 Certification
Program). Certificate holder includes all actors (for example sites, farmers,
intermediaries etc.) falling under the certification scope of the CH.
Farm CHs are organizations with farming in scope and who must comply
with the applicable Farm Requirements of the Rainforest Alliance 2020
Sustainable Agriculture Standard,
Supply Chain CHs are those organizations that do not have farming inscope and therefore comply with the Supply Chain Requirements of the
Rainforest Alliance 2020 Sustainable Agriculture Standard.
All land and facilities used for agricultural production and processing
activities under the geographical scope of farm/group management. A
farm may be composed of several neighboring or geographically separate
farm units within one country provided that they are under a common
management body.
The initial supply chain actor legally owning the certified product after thefarm certificate holder.
The entity that signs the certification agreement with the Rainforest Allianceaccredited certification body and takes responsibility for the development
and implementation of the group’s internal management system and all
member farms’ management systems. The group management is
responsible for assuring member farms’ compliance with the Standard.
Individual producers that are part of group certification
A detailed overview set up by the management, of the goals that are set tobe compliant with the requirements (for both management, workers and/or
group members) and the respective services necessary to meet thesegoals. The services can include training, technical assistance, access to
inputs (e.g., seedling), and awareness-raising activities. The Management
Plan indicates details on the services such as the timeline, the responsible
person for the provision of the services, and the beneficiaries.
Incomplete fulfilment of a requirement in the Rainforest Alliance Sustainable
Agriculture Standard.
A person (either male or female) who owns and/or operates an agricultural
enterprise, either commercially or to sustain him or herself or his/her family.

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Rainforest
Alliance
Certification
Platform
Risk assessment

2020 SAS
Small farms

Sustainability
Differential (SD)
Sustainability
Investment (SI)Workers

The Information Technology system developed by the Rainforest Alliance toreport transactions and activities of certified volumes throughout the supply
chain.
A systematic process to identify the issues that could prevent the producers
from complying with the standard requirements and reaching the expectedsustainability outcomes. The Rainforest Alliance has developed a tool tosupport this analysis – The Farm Risk Assessment Tool.
Rainforest Alliance 2020 Sustainable Agriculture Standard
Small farms primarily rely on family or household labor or workforce
exchange with other members of the community. They might hire
temporary workers for seasonal tasks or even hire (few) permanent workers.
Small farmers are usually organized in a group to be certified and rely on
the Group Management for record development and record keeping.
A mandatory additional monetary payment made to certified farm
certificate holders on top of the market price of the commodity.
Mandatory monetary or in-kind investment from buyers of Rainforest
Alliance certified products to farm certificate holders for the specificpurpose of helping them comply with the 2020 Sustainable AgricultureStandard.
A person who performs labor in return for a monetary amount on a farm.

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1. OBJECTIVE OF THIS DOCUMENT
1.1 Introduction
While the general principles are always applicable, the SD and SI approach warrants
additional implementation guidance depending on the sector. This document explains how
Sustainability Differential (SD) and Sustainability Investment (SI) are implemented in thehazelnut sector. SD and SI guidance for other sectors are published separately.

1.2 Scope
The farm certificate holders (CHs) are central to the SD and the SI approach as thoseorganizations must negotiate the amount and payment terms of the SD with the first buyers.
In the case of group certification, Farm CHs are also responsible to ensure the redistribution of
the full SD amount to their members. Farm CHs are also responsible for identifying theirinvestment needs and prioritizing the use of Sustainability Investment and negotiating theinvestment contributions of the first buyers.
Supply Chain Certificate Holders (first buyers for hazelnut) play an equally critical role in the
SD and SI approach. They are responsible for ensuring that the Sustainability Differential ispaid to the agreed amount and in a timely fashion as agreed with the farm CH. They arealso responsible for making the Sustainability Investment that support the implementation of
the farm CH’s investment plans. First buyers are responsible for accurately recording their SD
and SI contributions in the Rainforest Alliance Platform.
This guidance document is instructive for all stakeholders that play a role with regards to how
SD and SI values are recorded in the Rainforest Alliance Certification Platform, transacted,
and assured, including:• Group members• Management (either as group certification or individual certification)• First buyers• Internal inspectors• Certification bodies• Rainforest Alliance internal stakeholders and trainers• All buyers of Rainforest Alliance certified hazelnuts further downstream, including
retail, or other stakeholders who wish to understand better how the SD and SI
approach is implemented in the hazelnut program

2. THE SUSTAINABILITY DIFFERENTIAL AND SUSTAINABILITYINVESTMENT IN HAZELNUTS
2.1 Towards a sustainable hazelnut sector
A sustainable hazelnut sector is one in which hazelnuts are produced and traded in amanner that allows people and nature to prosper. It is a sector in which producers have theknowledge and resources to produce hazelnuts in a way which is environmentally,
economically and socially sustainable, and who are supported by other supply chain actors
to implement Good Agricultural Practices and improve the living and working conditions of(migrant) workers and their families, so the entire hazelnut sector is more resilient, and risks are
reduced.
A sustainable hazelnut sector is a more balanced sector with farmers, exporters, importers,
manufacturers, brands and retailers sharing risks, responsibilities and value derived fromsustainable production. All buyers of sustainably produced hazelnuts are held accountablefor implementing responsible business practices and focusing investment and support at the7
RA-G-MT-28-V1

farmer level for continuous improvement of sustainability performance. We believe this willallow the sector to address long standing challenges such as addressing the risk of child laborand the lack of decent living and working conditions of migrant workers, or declining
production volumes due to neglected farms and climate change.
The responsibility for sustainable transformation cannot fall on farmers’ shoulders alone. To
drive deep-rooted, systemic change on a global scale, companies and governments needto take a leading role.
The new Rainforest Alliance 2020 Certification Program puts a stronger emphasis on shared
responsibility in this journey. We are building on our strong partnerships and working withsome of the world’s biggest companies to underscore the urgency of investing insustainability––and rewarding farmers who are making progress.
Likewise, we are working to raise awareness among consumers that choosing Rainforest
Alliance products increases demand that, in turn, supports a more responsible sector.

2.2 Introducing the Sustainability Differential and Sustainability
Investment
Why farm CHs need SD/SI
Despite years of investment, the introduction of trainings on Good Agricultural Practices andother initiatives to increase yields and incomes, improve social practices and embedenvironmental sustainability requirements in the standard, there is still a significant gap
between the current status on certified farms and truly sustainable hazelnut production
which is the aspiration of the Rainforest Alliance. To accelerate impact, producers must be
further incentivized to adopt sustainability practices and the farm CHs must have the means
to invest in themselves and their members or workers.
To help realize this vision, our 2020 Sustainable Agriculture Standard (SAS) outlines
requirements around two mechanisms for the producers and buyers of Rainforest Alliancecertified commodities: The Sustainability Differential and the Sustainability Investment.
The Sustainability Differential is a mandatory additional monetary payment made tocertified producers on top of the market price of the commodity. In case of group farm
certificate holders the Sustainability Differential is transferred in full to the group members.
The Sustainability Investments are mandatory cash or in-kind investments from buyers ofRainforest Alliance Certified products to farm certificate holders for the specific purpose ofhelping them reach compliance with the Sustainable Agriculture Standard.

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Sustainability Differential and Sustainability Investments are intended to promote sharing of
the costs and returns of sustainable production across the supply chain in a more equitablemanner. While the SD is distributed as monetary payment to producers as a reward for
applying sustainable production practices, the SI is to be spent in accordance with an
Investment Plan developed by the management/farm CH. In the investment plan the farm
CH identifies the investment needed to ensure compliance with the Rainforest AllianceStandard and enhance their sustainability journey. The farm CH uses the investment plan toagree on the value of the SI with their first buyer.

3. TRANSITIONING FROM PREMIUMS TO SD AND SI
3.1 Contextualization of the SD and SI
The approach for the SD and SI is in principle the same for all crops but the context of trademechanisms, contracts and payment methods differs between crops and countries.
Furthermore, Rainforest Alliance recognizes that the development level and theperformance of producers can vary significantly between, and even within countries. The
2020 SAS aims to contextualize the requirements for higher efficiency while addressing crop,
country, and producer-specific challenges.
Background: Certification premiums in hazelnuts
Paying a premium for certified supply is already a common practice in the hazelnut sector. A
premium has always been mandatory for UTZ certified hazelnuts. We therefore take thepayment of certification premiums as the starting point for the transition from UTZ premiums to
SD and SI.
From premiums to SD and SI
This transition will require a shift in several components of current (UTZ) premium practices asshown in the table below:
UTZ premium approach tomonetary payments
Farm CH level

Group
Certification

Individual
Farm
Certification

Includes bothmonetary to
producers and to
the group
management, but
the exact distribution
is not captured in
the certification
platform.

Producer orWorker Level
Distribution to
producers not
captured incertification
platform.
Specific
benefits toworkers not
required.

SD and SI approach tomonetary payments
Farm CH level
Distinguishes between value
paid to producers (SD) andvalue to group (SI), ensuringthat the farm CH(management) pays the fullamount of SD received bybuyers to producers.
Distinguishes between value
for the producer (SD) fromvalue to be used exclusively
for investment to comply
with 2020 SAS (SI).

Producer level
Farm CHs are
required to transfer
the full SD monetaryamount to member
producers.

N/A

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UTZ premium approach toinvestments
Farm CH levelGroupcertification

Individual
Farm
Certification

Only capturesmonetary value paid
from the first buyer(FB) to certificate
holder (CH).
Does not include inkind investment.

SD and SI approach toinvestments

Producer orworker levelTypes ofinvestments
madeand/orbenefits toworkers not
capturedFarm CH level
Full investment made to CH are
captured. This includes both inkind investment and monetaryinvestment.
The Investment Plan is basedon risk assessment, internal
inspection, self-assessment andmanagement capacity andthereby linked to investments
needed to strengthen thequality of implementation of
the Rainforest AllianceStandard.

Producer levelNot captured but
linked to theInvestment Plan.
Reporting on
categories ofinvestments madein certification
platform (including
benefits toworkers).

Table 1: key differences between the UTZ premium and SD and SI.
This shift is visualized in the diagram below:

Diagram 1: difference between the UTZ premium approach (on the left) and the SD and SI
approach in the 2020 Rainforest Alliance Sustainable Agriculture Standard.

3.2 Timelines for transitioning to SD and SI•••

From July 1, 2021, all Certificate Holders must transition to the 2020 SAS. All farm CHs havea 12- month transition period. Any audit conducted after July 1, 2021 will be against therequirements of the 2020 SAS.
Farm CHs must undergo a Transition Period Audit before July 1, 2022 and obtain atransition certificate before December 31, 2022.
With their Transition Certificate, farm CHs will receive new Rainforest Alliance volumes ascertified volume, equal to the audited estimated harvest for the 1 year covered by thatcertificate.

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•
•

•
•
•

All hazelnut sold to first buyers as certified against the 2020 SAS must include the SD andSI.
The first hazelnuts certified against the 2020 SAS will be produced during the harvest in
August-September 2021. Therefore, the first audits in the hazelnut sector against the 2020
SAS will take place in August-September 2021 and the requirements on SD and SI
become mandatory for this audit already.
Farms are also eligible for SD and SI for their carry-over volume after they obtain aTransition Certificate, as that will be granted as new Rainforest Alliance volumes.
For hazelnuts bought from legacy volumes from the UTZ, bought after July 1, 2021 thebuyers would not have to comply with the SD and SI requirements, but with therequirements of the corresponding certification program.
Supply chain CHs must obtain a transition certificate against the 2020 SAS by the time
their current license expires, and no later than 31 December 2022. They can buy and sell
2020 SAS certified hazelnuts during the period in which they are obtaining their Transition
Certificate, but will have to comply with the requirements for SD and SI payments for all
hazelnuts certified against the 2020 SAS1

4. GUIDANCE FOR THE SD AND SI IN HAZELNUTS
4.1 The beneficiary of the SD and the SI
The SD must benefit producers as reward for implementing more sustainable practices. The
SD must benefit producers as follows:
Certification typeGroup Certification(Requirement 3.2.1
applies)

Action after receipt of the SD by the CH
The SD is paid in full to group members (producers). There is no stipulation
about what to use the SD for; the producers can decide for themselves
how the SD is spent. The farm CH cannot deduct any overhead costs
related to the administration or transfer of the SD from the amount paid tothe producers.

Individual Certification(Requirement 3.2.2
applies)

For individually certified SD must be spent to the benefit of the producer
and/or the workers, in accordance with the Guidance: Use of Sustainability
Differential and Sustainability Investments for the benefit of workers (SA-P-SD-2- V1). If the SD is spent to the benefit of workers, the CH must consult withworkers on the priorities and report on the categories of expenditure.

Table 2: the beneficiary of the SD
In the logic of continuous improvement in the new standard, performance is not static. There
are mandatory improvements and self-selected improvement requirements to comply withover time. Farm CHs will always need investment to continue to improve their sustainability
performance because sustainability is a journey. Also, The Rainforest Alliance believes thatfarm certificate holders should be recognized for working towards increased sustainability,
and the SI is intended to support this.

1 For example, SC CH can purchase hazelnut from farms that comply with the 2020 SAS, but they can only sell thehazelnut as “new” volume if they comply with the 2020 SAS themselves, including payment of SD and SI.

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4.2 Responsibility for payment of the SD and SI – the First Buyer
The first buyer is responsible for SD and SI payments for the volume purchased as Rainforest
Alliance Certified against the 2020 SAS. The first buyer is the initial supply chain actor legallyowning the certified product after the farm certificate holder.
If an organization has farming in scope, they will always be categorized as a farm CH. Farm
CHs must comply with the requirements around the redistribution of the SD to their groupmembers, if applicable.2
In case a farm CH purchases certified product from other farm CHs (and there is change oflegal ownership involved), the farm CH that purchases the product additionally becomes thefirst buyer and must pay the SD and SI to their supplier(s).3
This leads to three typical scenarios in the hazelnut sector:
1. Company with farming, primary processing and exporting activities, all covered under one
certificate
Transfer of SD
according to Farm
Requirement 3.2.1

Farm CH

Farmers

SD and SI
implementationaccording toRequirements
3.2.2 – 3.2.6

Primary
processing

ExportingImporter /trader (SCA)

Manufacturer(SCA)

Brand owner(SCA)

Company withfarming, primaryprocessing andexporting inscope of theircertificate

In this situation the importer is considered the first buyer and shall pay the SD and SI to thefarm CH and record it in the system. The farm certificate holder shall transfer the full SD to thefarmers in monetary and spent and record the SI according to the Investment Plan.

2 Farm Requirements 3.2.1

3 SC Requirements 3.2.3 - 3.2.7, 3.3.4 - 3.3.5, respectively

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2. Company with primary processing and exporting activities in scope of their certificate
purchasing hazelnuts from a farm CH

Transfer of SD
according to Farm
Requirement 3.2.1

Farmers

SD and SI
implementationaccording toRequirements
3.2.2 – 3.2.6

Farm CH

Primary
processing

ExportingImporter /trader (SCA)

Manufacturer(SCA)

Brand owner(SCA)

Company withprimary
processing andexporting inscope of theircertificate

In this situation the company with primary processing and exporting activities covered under
their certificate is considered the first buyer and shall pay the SD and SI to the farm CH andrecords it in the system. The farm CH shall transfer the full SD to the farmers in cash and spentand record the SI according to the Investment Plan.

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3. Company with farming, primary processing and exporting activities in scope of theircertificate, purchasing hazelnuts from another farm CH

Transfer of SD
according to Farm
Requirement 3.2.1

Farmers

SD and SI
implementationaccording toRequirements
3.2.2 – 3.2.6

Farm CH

Farm CH

Primary
processing

ExportingImporter /trader (SCA)

Manufacturer(SCA)

Brand owner(SCA)

Company withfarming, primaryprocessing andexporting in scopeof their certificate
buying fromanother farm CH

In this situation the company with farming, primary processing and exporting activities inscope of their certificate is considered the first buyer and shall pay the SD and SI to the farm
CH and record it in the Rainforest Alliance Certification Platform. The initial farm CH shalltransfer the full SD to the farmers in cash and spent and record the SI according to theInvestment Plan. The payment of the SD and SI to the initial farm CH as well as the transfer of
the SD to the farmers will be verified during the annual audit.

4.3 The value of the SD
The SD amount is fully negotiable between the first buyer and the farm CH and will normally
be decided through supply and demand dynamics as is currently the case. The Rainforest
Alliance does not intervene in this negotiation.
The SD and any other premiums can be paid together with the market price for the hazelnuts
by first buyers. However, the SD must be clearly distinguishable from market price and otherpremiums or differentials in contracting and in reporting in the Rainforest Alliance
Certification Platform.4
The Rainforest Alliance expects the SD and SI to be of at least the same value as the UTZ
premium and will monitor the SD and SI paid over the coming years. If analysis of the datashows a drop of SD and SI paid compared to the UTZ premium, the Rainforest Alliance may
consider the introduction of a minimum or fixed SD based on sector consultations.

4 Other premiums and differentials include quality, crop and/or country specific.

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4.4 Payment of the SD
The SD has to be paid at least six months after the delivery from the farm CH to the first buyer,
but before the start of the next harvest.
The farm CH distributes the SD in cash to the producers at least annually before the start of
the next harvest. The farm CH has to distribute the entire SD to the producers and is notallowed to deduct any costs, such as administration or transaction costs.
The agreement on the SD (and the SI) is documented in a contract between the farm CH
and the first buyer before the delivery of the certified hazelnuts. The contract should stipulate
at least:• The amount of the Sustainability Differential to be paid, by volume, clearly distinguishing
the SD from price, quality premiums• Terms and conditions of payment, meaning:• Definition of the period the SD payments relates to (e.g. annual volume
contracted in 2022, October harvest 2022)• Clear timeframe of payment (e.g. 3 weeks after receipt of certified product,annually at the end of the contract, etc., respecting requirement 3.2.5)• Method of payment (e.g. bank account details to which SD amount will betransferred)• Currency in which SD will be paid

4.5 Transparency on the SD and the SI value
The SD and SI value paid and recorded between first buyer and farm CH will be visible in the
Rainforest Alliance certification platform for SC CHs beyond the first buyer involved in thesame supply chain. These Supply Chain CHs will therefore be able to base their SD/SI
payments on the information provided. Aggregate reports will be available for SC CHs.
Reporting on SD/SI amounts visible in the Rainforest Alliance certification platform andthrough supply chain and sector reports will allow Rainforest Alliance to enable andencourage all actors of the supply chain to provide greater transparency on the SD and SI
paid throughout their supply chains, even if this is not yet required for Supply Chain CHs
beyond those who are responsible for payment of SD and SI.

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5. GUIDANCE FOR SI IN HAZELNUTS
5.1 The beneficiary of the SI
The Sustainability Investment is intended to support farm CHs to comply with the corerequirements of the 2020 SAS and relevant improvement requirements.

5.2 The Investment Plan
The Sustainability Investment will be based on an Investment Plan developed by the farm CH.
The Investment Plan must include a list of prioritized investments for improved performance ofthe farm CH and group members to meet certification requirements faster and more
efficiently.
If the farm CH sources hazelnuts from farmers who employ migrant workers for the harvest of
the hazelnut the Rainforest Alliance recommends that farm CH spend part of the SI received
to improve the living and working conditions of migrant workers on the farms of groupmembers, including on the prevention of child labor. Examples of investments to be made by
the farm certificate holder are for example (not an exhaustive list):• Providing childcare during the harvest to prevent child labor and facilitate children to
close education gaps (so called summer schools)• Improving living condition of migrant workers provided by the group members (ifprovided)• Improving living conditions in tent settlements, e.g., access to drinking water, protection
from floods, providing security.
In the investment plan such interventions should be rated with priority A.

5.3. Developing the Investment Plan
Before the harvest season• The Rainforest Alliance will provide farm CH with a template for the Investment Plan andthe necessary training to draw up the Investment Plan
• Farm CH will develop an initial investment plan, based on the group management plan(including risk and management capacity assessment), previous audit results (ifavailable), results of the internal inspections and self-assessment, audit reports (as of year
two) and other available information which support them to identify non-compliances or
topics that require improvements5 (see section Guidance for using the Investment Plan
Template)• Additionally, based on this initial assessments, individually certified producers and large
farms participating in a group need to consult with workers representatives on prioritizing
the investment needs identified to improve the working conditions for workers• The Investment Plan will stipulate the total monetary value required to implement theplan. The farm CH will estimate the volumes to be sold as Rainforest Alliance Certified,based on expected harvest volumes and expected sales. The monetary value of theirinvestment needs is divided by the expected certified volume sales to determine a
volume-based SI amount• The final SI amount and/or certified volumes to be sold will be agreed between the farm
CH and the first buyer• The CB will verify the existence of the Investment Plan (certification year 1 onward). The
CB will audit the spending against the plan (from year 2 onward)

5 See 5.4 Guidance to using the Investment Plan template. Also, please see Farm Requirements - GuidanceDocument B: Template of Management Plan

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During the harvest season• Since the SI amount is determined before transactions take place, the actual SI amounts
received from different buyers can be recorded by the farm CH and confirmed by the
first buyer in the Rainforest Alliance Certification Platform on transaction level6• The total SI paid by the first buyers will depend on the actual volumes that werepurchased as certified during the season. First buyers who wish to purchase certified
hazelnuts are required to pay the SI. First buyers are free to negotiate associatedcontractual terms for this investment from their customers. Likewise, final buyers andbrand owners should work with their suppliers to realize their ambitions on SI contributions
linked to the farm CH they source from• Total SI due is paid at least once per year7• First buyers can also make in-kind investments. If in-kind investments are made, theyshould also be made at least on an annual basis, and they will be accounted forseparately in addition to the volume-based cash SI contribution.
After the harvest season• After completion of the crop year, the farm CH will have to report, in the Rainforest
Alliance Platform, the allocation of total SI received against the different SI categories,
which are: 1) Administration and management (chapters 1,2, and 3 and audit costs), 2)
Agriculture (chapter 4), 3) Social (chapter 5) and 4) Environmental (chapter 6)• At the end of the season, the farm CH will revise and adjust the Investment Plan
according to the actual SI payments received (payments will be allocated based on
initial prioritization and/or discussion with first buyers). This is the starting point of next
year’s Investment Plan
• The auditor will use the revised/adjusted plan in the audit of the following year as a basis
to check consistency between the received money and the actual expenses madebased on what was received

5.4. Guidance for using the Investment Plan template
In the Investment Plan template, the various investment elements are categorized and linked
to the implementation of the different chapters that form the 2020 SAS.8 In order to properly
define the areas that require investment to comply with the 20202 SAS and to define
priorities, the following tools can be used:
Farm Risk Assessment
Through the results of the Farm Risk Assessment (See Annex S3 of the 2020 SAS), the farm CH
will be able to identify the areas of improvement which will require investment.
Self-assessment, internal inspections and as of year 2 the audit report
Self-assessment and, in the case of group certification internal inspections, also provide aclear and comprehensive overview of which standard requirement require improvement,
and in what way. In group certification internal inspections also provide important insights
into the numbers of producers that require different types of support. In the Investment Plan
template, the farm CH can indicate which investments will be delivered at the level of thegroup management and which at the level of producers, and to how many producers thiswill be provided to.

6 SI amounts received can be recorded by the Farm CH and confirmed by the first buyer on the Rainforest Alliance

traceability platform on transaction level, the same way as the SD. See Chapter 4.
7 Requirement 3.3.4 mandates that “the full amount of the Sustainability Investment is paid at least annually and nolater than payment terms defined for the relevant crop
8 Rainforest Alliance Investment Categories: 1. Management, 2. Farming 3. Social, 4. Environment

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Capacity Assessment Tool
As it is essential that the Farm CH has the competence and capacity to develop andimplement a good plan, the Capacity Assessment Tool shall be used by the Farm CH toassess their own weaknesses which must be prioritized and addressed through early (firstyear) Sustainability Investment.
Please note that, as investment planning is a new requirement in the 2020 SAS, groups will
likely need support to develop the skills to identify investment needs and complete a feasible
costed Investment Plan. Buyers who provide support directly to groups are encouraged toinvest in building their capacity to develop and implement an Investment Plan as part of aneffective Internal Management System. This approach will be further refined in 2021.
Based on the revision of the above documents and tools the guidance, as well as their own
planning documents, Farm CHs can elaborate an Investment Plan.
Investment allocation
Not all investment needs will be able to be addressed in an Investment Plan for a single year.
This means that investment needs must be prioritized. The use of SI is intended to cover themost critical investment needs that will enable the farm CH to comply with the applicablerequirements in the 2020 SAS, as follows:
Core requirements
As required by theStandard

Mandatory improvement
requirements
Once required by theStandard

Self-selected improvement
requirements
If selected

Table 4: the intended use of the SI
Below is a visual of the Investment Plan, with the priority option in the last column.
2 CATEGORY: Agriculture
Category activities
TOTAL CATEGORY BUDGETSpecific training costs for agricultural topics for farmers
Purchase of PPE
Investments for handling empty agrochemical containers
Soil conservation works

Area budget (for Investment Plan) $BUDGET
Year 2017

BUDGET
Year 2018

ACTIVITY BUDGET
Year 2019--

154,630

2,115

Currency

Rupees
48,500 Rupees
21,000 Rupees
18,430 Rupees
35,700 Rupees

CH investment $Investment to be madeHow many farms willat Certified Holder or atreceive investment?
farm level

Certified Holder
Farm
Farm
Farm

54
33
56

1,088

ACTIVITY BUDGET
Year 2019
(US$)

$
$
$
$
$

2,115
663
287
252
488

Farm investment

%

1,028
PRIORITY(A: high
B: intermediate
C: low)

100%
31%

A

14%

B

12%

A

23%

C

Current voluntary investments financed or supported in kind by buyers can be considered SI
as long as they are based on an agreement between farm CH and the first buyer, and theinvestment is aligned with the Investment Plan.
Allocation of in-kind investments
Buyers can decide to make cash SI contributions but also in-kind contributions (e.g., service,training, equipment). Both pieces are to be reported through the Rainforest Alliance Platform
to make it visible to the Rainforest Alliance. Reporting in-kind investments must also be
allocated to categories in the investment plan. In-kind investments should not be included in
the calculation of the SI per unit of hazelnuts, but should be agreed upon on a periodic,
contractual basis between the first buyer and the CH. Only in-kind contributions for which an
agreement has been made should be included. If in-kind Sustainability Investments are
made, the monetary value (as priced in the contract between the farm CH and the firstbuyer) must be assigned to the in-kind investments, and the first buyer reports these in-kindvalues through the traceability platform as “SI (in-kind) confirmed paid.”

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5.5 Value of the SI
In the short term
There is no minimum set for Sustainability Investments. However, it is expected that theinvestment levels do not decrease from pre-SAS 2020 implementation. This will be closely
monitored by the Rainforest Alliance by analyzing UTZ premium and SD and SI data over a
multi-year period. If investment levels do decrease or are below expectations, then the
Rainforest Alliance can take more prescriptive steps.
Long term investments and value
Specific needs in an investment plan may require significant funding, in which case a multiyear investment plan may be suitable. In this case, the SI will be calculated as the averageannual investment for a longer period.
Compliance with the 2020 SAS is based on continuous improvement and therefore may
entail new or additional investments. However, this does not necessarily mean the monetary
value of investments has to increase annually. Higher monetary investments will not always
lead to a higher impact. There must be a focus on impactful investments that result incontinuous improvement and improved quality of implementation.
Indicator data will be collected for many requirements of the farm Standard to track
improvements. This data can potentially be correlated to investments made through theInvestment Plan.

6. REPORTING THE SD AND SI
6.1 Reporting at transactional level
Farm CHs reporting transactions for volumes soldBoth farm and supply CH are responsible for keeping data in the certification platform up to
date. The Rainforest Alliance Certification Platform records transactions that are actually
performed, including transaction details, such as SD and SI paid for certified sales.
Information around SD and SI payment will be collected at two moments in time:1) when the farm CH makes a sales transaction to the first buyer. The transaction details
will include the SD and SI amount both parties have agreed to, the system will ask thefarm CH to enter “SD agreed to be paid” and” SI agreed to be paid.”2) when the first buyer has transacted the actual SD and SI payment to the farm CH, aconfirmation of such payment is entered into the platform. This is done at regularintervals, at the latest 3 months after actual payment was made.
The first buyer has the responsibility of assigning value to in-kind investments. Farm CHs will
allocate in-kind investments according to categories already defined for monetary SI. In-kind
investments are not included in the SI in individual transactions on the digital platform.

6.2 Annual reporting
Farm CHs reporting on SD spent
Farm CHs with group certification are required to distribute the total SD received by theirbuyer on a pro-rata basis to the group members. The Farm CH is required to report that in the
Rainforest Alliance Certification Platform.
Farm CHs reporting on SI spentOnce the SC CH confirms having made SI payments and in preparation of the next audit, thefarm CH is required to report on how the SI received was spent according to the available

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investment categories. The investment plan must be available for auditors, so that they areable to see and assess the expenditure of the SI according to what is recorded in theplatform as well as in the plan.
The diagram below explains the required steps for reporting SD and SI according to the 2020
SAS:

Diagram 3: reporting the SD and SI

7. CONTRACTING SD AND SI
In this chapter, guidance will be provided on the best practices for contracting SD and SI.
Rainforest Alliance does not play any role in contract and/or price negotiations.

7.1 Including SD and SI when contracting for certified hazelnuts
•
•

•
•
•

All contracts between farm CH and first buyer signed for volumes certified under the 2020
SAS must reflect SD and SI
While sourcing certified hazelnuts, brand owners should work with their suppliers tounderstand agreements and commitments on SD and SI between the farm CH and thefirst buyer. The SD and SI must be clearly distinguished from price, quality and otherpremiums as required in the 2020 SAS9
Written agreements must be transparent, should support protection for all parties, andshould be mutually agreed upon. They will include roles, responsibilities, product volume,
terms of payments, duration, and calculation of the SD price and the SI amountInvoices (or other equivalent documents such us purchase orders) must always include
the following order-specific information: date, product volumes, description of certified
product(s), amount of SI and how it was calculated, the SD, and delivery terms
SD and SI payments may influence contracting terms between first buyers and theircustomers. These contractual terms are not captured in the Rainforest Alliance
Certification Platform

Contracting timelines• Any new contract established after July 1, 2021, should explicitly include SD and SI,
according to 2020 SAS requirements 3.2.4 and 3.3.4, and be negotiated accordingly• Existing contracts for hazelnut certified against the UTZ Code of Conduct, including
premiums, will be honored until July 1, 2022. Premiums already negotiated and agreed
upon can therefore be split up between SD and SI within the agreed monetary value

9 See 3.2.4 SC Requirements 3.2.4

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•After July 1, 2022, any contract that has not yet been renewed since July 1, 2021, will
require an amendment which specifies the inclusion of SD and SI in line with the 2020 SAS

Contracted Volume• The volume contracted by the first buyer should be realistically within the maximum
estimated production capacity for certified production of all members of Group
Certification or all farms under Individual Certification as determined by the Rainforest
Alliance yield estimate guidance• The contracted volume for certified hazelnut may not exceed the maximum certified
estimated production volume10• Factors that influence available hazelnuts such as side-selling or low production should beconsidered when contracting volumes
Payment Terms• The total value of SD and/or SI due must be paid within a one-year timeframe, andpayment must be made no later than 6 months after the shipment of certified hazelnut
from the farm CH to the first buyer and before the start of the next harvest11• Record of payment schedule in the agreement (or equivalent document)
Delivery Dates• Multi-year contracts for delivery are encouraged• By the end of the contract period the first buyer should have taken delivery of the fullnumber of certified hazelnuts, paid the full SD and SI on these hazelnuts as per contract,and delivered on all agreed in-kind investments. If the First Buyer has not taken delivery ofa contracted volume of hazelnuts for reasons other than quality defaults, then it isrecommended that the First Buyer still pays the full amount of SD and SI as per contracted
volume and delivers the agreed in-kind investments.

7.2 Payment by farm CH the two group members
In the case of group certification, it is recommended that the full amount of SD received by
the CH from the first buyers is announced to the members on a regular basis and paid to themembers either in monetary or electronic transfers and according to certified volumes
delivered at least once per year and before the start of the new season.

8. ASSURANCE OF SD AND SI PAYMENTS
The assurance around SD and SI payments from first buyer to Farm Certificate Holder isregulated through various mechanisms.
As introduced in chapter 6, the Rainforest Alliance Certification Platform will request both
farm CHs as well as first buyers to report the following figures:
Farm CHs must record:• The SD/SI amounts agreed to be paid (farm CH records)• Annual overview of allocation of SD and SI according to different categories (farmCH records).
First buyers musty record:• The confirmation of the paid SD/SI amounts (first buyer records),• Additional in-kind investments made (first buyer records),
CBs, in preparation for farm CH as well as first buyer audits, will receive reports of those figuresin order to triangulate the information reported on the platform with physical evidence suchas shipping documents and payment receipts.
10 SC Requirements 2.1.6, 2.1.8, 2.1.10 and 2.2.2. See Farm Requirements 2.1.6

11 See Requirement 3.2.5

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In order to allow CBs to compare information recorded by both Farm CH receiving SD/SI and
SC CHs paying SD/SI, CBs auditing farms will also have access to what first buyers report tohave paid. CBs auditing first buyers will equally have access to reports about what farm CHs
report as agreed SD/SI amounts and what they report receiving. This way CBs will havesufficient information available to verify whether the amounts are aligned and are inaccordance with the Standard requirements and with agreements between both parties.
If a CB detects discrepancies between the figures reported in the Rainforest Alliance
Certification Platform and the physical evidence of agreements and actual payments, theCertification and Auditing Rules prescribe the CB to further investigate the causes of suchdiscrepancies. While there can be acceptable reasons for a delayed payment or thepayment of a different amount, absence of payment will lead to sanction of the party that is
responsible for SD/SI payment, the first buyer. If such non-payment is detected during theaudit of a farm CH, the farm CH’s CB notifies the Rainforest Alliance so that further follow up
by the first buyers CB can be arranged for.
Auditing SD
First Buyers: Non-payment of the SD or misreporting on SI will be flagged as a non-conformity.
Rainforest Alliance may decide to immediately cancel the current certificate of companies
and/or decide not to certify the companies if they do not comply with the process of getting
certified/endorsed or refuse to close non-conformities. They will not be able to sell products
as Rainforest Alliance Certified.
This requirement applies to Supply Chain CHs who are identified as first buyers andresponsible for paying SD and SI.12
Producers: In the case of group certification, farm CHs must forward the SD to their members.
The auditor will revise proof of receipt at the farmer/farm group level as part of the farmgroup audit. These will be triangulated with proof of payment and receipt in order tovalidate the amount and authenticity of transactions.
Auditing of the Investment Plan:
The auditor will verify the existence of the Investment Plan and ensure that its content is
consistent with the risk assessment, self-assessment, internal inspection and other relevant
documents that provide the farm CH insights in investment priorities to comply with 2020 SAS,(certification year 1 onward). From year 2 onward, the auditor will also audit the spending
against the investment plan.
The auditor will use the revised/ adjusted plan as a basis to check consistency between themoney received and the actual expenses made based on what was received. The actual
allocation of SI received will be checked against what farm CHs record in the platform toensure that recorded data is accurate.
When there is evidence that there is misuse of the SI, the Farm CH can be suspended or
decertified if they do not rectify the nonconformity.

12 For specifics around non-conformities, please see the Certification and Auditing Rules.

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