EDF Talks Global Climate

Deforestation-free supply chains: 4 trends to watch

Trees removed from a forest. iStock

Hundreds of companies have committed to eliminating deforestation from their supply chains by 2020, but the political landscape and market conditions are shifting as the deadline draws nearer. Here are four emerging trends that these companies – as well as the governments and civil society organizations engaging with them to zero out deforestation – should be taking into consideration as 2020 fast approaches.

1. Western companies can’t solve deforestation on their own.

One significantly subscribed-to theory of change for deforestation-free supply chains was that if enough companies set goals and purchase deforestation-free commodities, we will see reductions in deforestation globally. But so far, even with more than 350 companies setting forest-related goals, we are not seeing this transformational change. This is primarily because emerging economies play an increasingly important role in commodity markets. U.S. and European companies do not have enough market leverage to have a widespread impact.

Take beef, for example. Beef accounts for more deforestation annually than all of soy, palm oil, and pulp and paper combined. Western consumers actually eat very little of it. Most beef is consumed domestically in countries like Brazil, while the rest goes to countries where deforestation isn’t a major factor in consumers’ purchasing decisions, like Russia and countries in the Middle East.

Similarly, markets for palm oil, another major driver of deforestation, tend to prioritize price over environmental impact. This is particularly true in China, India and the domestic markets of Indonesia and Malaysia.

Clearly then, a deforestation-free strategy needs to involve non-Western markets and address those supply chains.

2. New approaches that focus on local context and solving governance challenges are gaining traction among supplier companies.

Three new approaches that focus on local context and solving governance challenges are gaining traction among supplier companies. These three initiatives follow what is known as the jurisdictional approach because they focus on engaging actors from the government, private sector, farmer groups, and civil society. With the jurisdictional approach, the private sector works with governments to reduce deforestation and improve productivity in an entire region.

  • Mato Grosso, Brazil’s Produce, Conserve, and Include (PCI) strategy. PCI is one of the pioneering pilots of the jurisdictional approach, and is gaining momentum after finalizing an investment plan and a $54 million commitment to the provincial governments for REDD+. This multi-stakeholder platform aims to work with producer companies to increase production of agriculture and livestock while reducing deforestation, increasing reforestation, and incorporating smallholders and indigenous peoples in low-emission rural development. The PCI is tackling thorny commodities such as the state’s beef and soy production.
  • Olam’s Living Landscape policy. Few upstream plantation companies have agreed to change their plantation development and purchasing strategies, but Olam just did. Their new strategy focuses on collaborating with multiple stakeholders in landscapes and making a holistic positive impact – not just mitigating negative impacts.
  • The World Cocoa Foundation’s Forest and Climate Initiative. As part of this initiative, private sector actors up and down the cocoa supply chain are collaborating through an association to work with the governments of Ghana and Ivory Coast to reduce deforestation in the production of cocoa. This exciting collaborative model allows companies to engage alongside peers and with governments, and has potential which will be watched closely.

3. Certifications are limited in their ability to solve commodity-linked deforestation on a broad scale.

Global certification processes can help companies take short- and medium-term steps toward reducing deforestation in their supply chains. However, corporate leadership on forests needs to incorporate approaches that help resolve the problem on a broader scale and for the long term.

A better approach is a broader process such as the Responsible Sourcing Palm Oil (RSPO) certification system that is now being implemented in a number of jurisdictions. The RSPO helps its members think more broadly about indirect impacts and other supply chain actors – such as government agencies – in places where palm oil is grown and being developed.

4. More complex approaches that include governments are necessary in most contexts and for medium- and long-term success.

Because deforestation is a complex, multi-layered challenge, solving deforestation necessitates a complex approach – one that involves players from the crops and industries causing deforestation, as well as local and national political processes. Inherent in such a complex approach is the need to define complex concepts, including the term “deforestation” itself, and what is “legal” at the state, provincial, and/or national level.

TFA 2020 General Assembly and making progress

The Tropical Forest Alliance (TFA) 2020 initiative is a platform focused on enhancing partnerships between government, private sector, and civil society organizations to eliminate deforestation. Parties at TFA’s upcoming General Assembly will tackle how to achieve the goal of zero net deforestation by 2020 from key commodities, like beef, soy and palm oil.

EDF will promote jurisdictional approaches, including Mato Grosso’s Produce, Conserve, and Include strategy, during a side event geared at increasing the engagement of corporate actors with government, farmers and civil society.

Reducing deforestation remains a significant challenge and becoming more urgent – deforestation rates remain high and have a direct impact on global warming. It will take the actors involved in deforestation to come together to find a solution that works for everyone, and for the planet. Promising solutions, like the jurisdictional approach, are emerging and showing signs that it can be done.

Also posted in Deforestation, Forestry / Leave a comment

A novel approach to reducing deforestation: linking supply chains and REDD+ in “Zero Deforestation Zones”

By Chris MeyerSenior Manager, Amazon Forest Policy and Dana Miller, Research Analyst

Two tropical forest conservation efforts have gained momentum in recent years: zero deforestation commitments from the private sector and the policy framework Reducing Emissions from Deforestation and forest Degradation (REDD+). Both efforts are necessary, but not sufficient in themselves to eliminate global deforestation.

In a recently published paper in the Journal of Sustainable Forestry, we find that linking REDD+ and zero deforestation commitments offers a more efficient and effective solution to stop deforestation, which we call Zero Deforestation Zones (ZDZ).

The current state of private initiatives and REDD+

Deforestation, which is responsible for 15% of global greenhouse gases, is primarily caused by conversion for the production of four commodities in Brazil and Indonesia: beef, soy, palm, and timber products. To address this urgent problem, companies that control more than 90% of soy purchases in the Amazon, around half of cattle slaughter in the Brazilian Amazon, and 96% of palm oil trade globally have committed to stop deforestation.

While these company commitments are promising, many producers that clear forests can still sell commodities to companies that don’t have deforestation commitments, or they can even sell indirectly to the companies that have committed to zero deforestation. In other words, under the current policies even if companies clean up their own supply chains, they could be just creating islands of green in a sea of deforestation. Read More »

Also posted in Agriculture, Brazil, Deforestation, Forestry, News, REDD+ / Leave a comment

Putting Indigenous Producers on the Map

Juanita crop

Cacao grown by indigenous and community cooperatives has supported the growth of the organic ultra-premium chocolate industry.  Photo Credit: Flickr/USAID Development Credit Authority

Across the Amazon, indigenous peoples have long harvested well-known commodities like cacao, coffee, Brazil nuts, and hearts of palm. Indigenous communities rely on such “non-timber” forest products—which also include traditional crops and less well-known natural products such as sacha inchi and camu camu—for the communities’ own consumption and for sale.

Responsible trade in these products can make a significant contribution to indigenous communities working to conserve their forests and generate alternative sources of income. Because indigenous management of Amazon forests is critical to controlling and reducing carbon emissions in the atmosphere, responsible trade also aligns with the growing body of corporate commitments to deforestation-free sourcing.

Indigenous products and community enterprises, however, face practical, commercial and organizational challenges in getting to market, particularly at scale. Overcoming these obstacles requires a combination of financial expertise, technical assistance and strategic commercial relationships. Read More »

Also posted in Agriculture, Brazil, Deforestation, Forestry, Indigenous peoples / Leave a comment

Deforestation in Brazilian Amazon could decrease with “jurisdictional” approach: report

Andrew Hutson

Andrew Hutson is EDF’s Director, Global Value Chain Initiatives.

The world’s attention has been on Brazil lately. With an exciting World Cup this past summer, an election season full of drama (including a plane crash), and the coming Summer Olympics in 2016, it has been easy to overlook the piece of news that has the greatest impact on all of our lives: the remarkable decreases in rates of deforestation in the Amazon. With little fanfare (at least from the general public), deforestation decreased 70% since 2005 and Brazil has become the world leader in reducing greenhouse gas pollution.

But while this progress impressive, it is important to note that we’re still losing over 5,000 square kilometers of forest a year in the Amazon. More importantly, we’ve seen a slight uptick in the rate of deforestation over the past two years, with an increase of 29% from 2012-2013. That number looks likely to increase again this year.

As the number of companies, governments, NGOs, and indigenous peoples who signed the New York Declaration on Forests last month demonstrated, there is an eagerness to address this issue across all sectors of society. Among other goals, signatories to the Declaration seek to halve the rate of loss of forests globally by 2020 and end natural forest loss by 2030. To get there, we need a scalable and systematic approach to meet this ambitious, yet achievable goal. EDF believes one solution is the creation of Zero Deforestation Zones (also referred to as jurisdictional approaches) – nations or states that are able to demonstrate reductions in deforestation within their borders as the most effective way to save forests the scale of entire landscapes, rather than individual parcels of land.

A new report by Datu Research, Deforestation in the Brazilian Beef Value Chain, supports this notion.

The report, commissioned by EDF, finds that progress in decreasing deforestation rates could easily be reversed unless ranchers are offered the right incentives to switch practices on their ranches and the right policy frameworks are adopted by companies and governments. It currently makes far more financial sense for a rancher to clear new forest than to move to sustainable pasture management. As a result, they may be forced to either continue to deforest or switch to other crops such as oil palm, which is expected to more than double by 2020 in Brazil.

Initial production costs of ranchland management: deforestation versus pasture intensification. Source: Datu Research

The initial production costs of ranchland management show clearing forests is currently cheaper than adopting deforestation-free “pasture management.” Source: Datu Research

The report also concludes that jurisdictional approaches have the potential to address many of the root causes of deforestation and

trim administrative costs across the value chain, reduce leakage, and increase retailer and consumer confidence in the veracity of deforestation-free products.

So, ranchers need financial incentives in order to make the necessary investments to drive production intensity increases and meet the requirements for the various certification schemes covering deforestation. Such incentives could come from a number of sources including financial mechanisms such as policies to Reduce Emissions from Deforestation and forest Degradation (REDD+), or bilateral aid from the international community dedicated to ending deforestation. Norway, for example, has pledged to donate $500 million per year and has spent nearly $750 million on the Amazon Fund since 2009. We also should not forget that there are plenty of domestic resources to address these challenges as well. Brazil is a rapidly growing economy with a GDP of over $2 trillion. In addition, one of the strongest incentives can come from the preferences of buyers in supply chains, who may simply refuse to purchase beef associated with deforestation.

But more importantly, public and private sector initiatives to end deforestation need to be more comprehensive. Moving forward, efforts need to move beyond the focus of single crops or supply chains and build on the progress of lessons from certification and commodity roundtables. Important synergies exist between a jurisdictional approach to supply chains, like Zero Deforestation Zones, and public policy. Implementing supply chain commitments at the jurisdictional level reinforces the incentives for governments to put in place policies that reduce deforestation within an entire jurisdiction, and builds off the existing structure for monitoring and verifying reductions in deforestation at a jurisdictional level. The two approaches are mutually reinforcing and can help solve this challenge in an affordable and achievable manner.

For additional reading, see Dom Phillips’s piece in The Washington PostSmall ranchers the key to Amazon deforestationThis post originally appeared on the EDF+Business blog

Also posted in Agriculture, Brazil, Deforestation, REDD+ / 4 Responses

Companies and NGOs collaborating to end deforestation in supply chains

This post by  originally appeared on the EDF+Business blog August 27.

Deforestation can pose significant operational and reputational risks to companies, and we at EDF are seeing companies start to take action in their supply chains. Deforestation accounts for an estimated 12% of overall GHG emissions worldwide–as much global warming pollution to the atmosphere as all the cars and trucks in the world. In addition, deforestation wipes out biodiversity and ravages the livelihoods of people who live in and depend on the forest for survival.

Tropical deforestation in Mato Grosso do Sul, Pantanal, Brazil (Source: BMJ via Shutterstock)

Unfortunately, it’s a hugely complex issue to address. Agricultural commodities like beef, soy, palm oil, paper and pulp—ingredients used in a wide variety of consumer products—drive over 85% of global deforestation. Companies struggle to understand both their role in deforestation, and how to operationalize changes that will have substantive impacts.

When the drivers of deforestation are buried deep in the supply chain, innovative and collaborative solutions are required. In the past several years, we have seen many in this space make big commitments toward solving the problem, but gaining transparency into tracking against these commitments has been almost as difficult as gaining transparency into the supply chains themselves.  For many companies, the hope for making good on their promises may come in the form of powerful partnerships.

Change Starts with Commitments

In 2010, the board of directors of the Consumer Goods Forum (CGF)—a consortium of 400 companies with combined sales of around $3.5 trillion—committed to help achieve zero net deforestation by 2020, mobilizing the resources of the world’s largest companies to achieve their goal. This commitment is focused on the key commodity drivers of deforestation: soy, beef, palm oil, paper and pulp.

In the last four years, to encourage their members to implement this commitment, CGF has published commodity specific sourcing guidelines, created an Activation Toolkit, and launched the Tropical Forest Alliance 2020 in partnership with the U.S. Agency for International Development and the State Department. However, despite making many resources available, there has yet to be a concerted effort to measure or track against the commitment, leaving many in the NGO community skeptical.

Partnerships to Build Transparency

Enter The Sustainability Consortium (TSC®) with its membership of non-profits (including EDF), government agencies, university partners and consumer product companies with combined revenues totaling over $2.4 trillion. The Consortium’s goal is to create systems that accurately measure and report environmental and social impacts associated with particular product categories in order to help retailers–and eventually consumers–make smarter decisions about what goes onto shelves and into shopping bags.

To create common ways to measure and report impacts, TSC membership has developed Product Sustainability Toolkits for 110  product categories (and counting), including all of the major commodity drivers of deforestation. For the last two years, Walmart has been implementing these toolkits through their Sustainability Index. Walmart has been able to extrapolate the toolkits to cover over 700 categories and more than 2,500 suppliers.

While Walmart’s achievements are very exciting for EDF, what’s even more exciting is that what was once only happening in-house at Walmart is now easily implementable by all TSC members and others across the consumer goods industry through the new SAP Product Stewardship Network –an online community that enables companies and their supply chains to efficiently exchange sustainability data.

This marks a major milestone in TSC and a huge opportunity for action.  TSC will deliver an updated version of its TSC Product Sustainability Toolkits, including Key Performance Indicators (KPIs), in October, which will offer even more harmonized and easily comparable metrics across commodities.

A Call to Action

Many companies have taken extensive steps internally to reduce their risk of deforestation, often, though, the efforts are disjointed in relation to supply chain activity and consequently do not easily ladder up to meet an umbrella goal like that of CGF. TSC’s KPIs provide a much-needed solution for this.

Alisha Staggs

TSC has developed broad, globally applicable, outcome-based metrics for tracking land transformation/deforestation. Because these metrics are nonprescriptive, they are compatible with a wide range of strategies. In addition, TSC has included specific KPIs to track the use of certification as way to address issues such as deforestation, including RSPO and FSC, both of which have been endorsed by CGF.

TSC is working to drive adoption of the toolkits within its own membership, which has more than 30 member companies in common with CGF—including Walmart, Ahold, Marks & Spencer, Tesco and Kroger. CGF and TSC officially joined forces in 2012 when they announced a partnership between the two organizations, but we have yet to see this partnership live up to its potential. CGF has recognized that they cannot stop deforestation by themselves and have called on governments around the world to “secure an ambitious and legally binding global climate deal” at the UN Paris Climate Summit in 2015 and to prioritize the implementation of REDD+ (Reducing Emissions from Deforestation and forest Degradation) policies, which will be the focus of our next blog in this series.

Call us optimists, but we see 2015 as the year that their combined efforts of setting industry goals and using key performance indicators to measure progress can take deforestation beyond commitment and towards broad measurement, reporting and progress for this issue.

Look for Alisha and her EDF colleagues at the TSC Member Summit in Berlin, Germany, September 30 to October 2, where they will be leading discussions on commodity-driven deforestation during the sector working groups.

Also posted in Deforestation, REDD+ / 1 Response