Getting to the ‘How’ of Tackling Deforestation
With the deadline fast approaching towards 2020 – the date by which hundreds of companies have committed to reduce tropical deforestation associated with the sourcing of commodities such as palm oil, soy, beef, and paper and pulp – many admit that knowing what must be done and then actually doing it, is a gap.
In response to this gap or at least getting closer to the ‘how’, the Tropical Forest Alliance 2020 has published new insight reports in collaboration with PwC and Climate Focus.
Progress on Corporate Commitments and their Implementation and Impacts of Supply Chain Commitments on the Forest Frontier provide key insights on the state of the supply chain movement.
Where have we got to?
In total, 473 companies have made commitments to eliminate deforestation from their supply chains. And, with 70% of deforestation linked to the production of agricultural commodities, these pledges hold the promise of making a major contribution to the end of tropical deforestation. This raises two questions: what is the current state of these supply chain efforts, and are they having an impact on land-use choices at the forest frontier?
- The majority of the most influential companies in forest-risk commodities have made commitments. However, important actors have yet to join the movement to ensure that collective pledges are achieved and leakage of deforestation to areas not covered by a commitment is avoided.
- Companies’ adoption of new commitments has slowed, perhaps due to the looming 2020 deadline acting as a disincentive. Companies with existing commitments are also reluctant to take on new ones as they struggle to implement existing pledges.
- There is progress in implementation of commitments. However, the effectiveness of relying on individual company pledges to tackle commodity-driven deforestation is limited as existing commitments leave large areas out, often those where smallholder farmers operate. Even where the coverage is regional – the risk of leakage ie moving to new areas remains high, particularly where alternative farming areas are readily available and unprotected.
- Governmental support for supply chain efforts is growing but is not yet evident at scale.
- Commitments are having an impact, largely through encouraging more transparency and accountability among large trading groups in the middle of supply chains.
- They have also led to better management of agricultural areas, and better awareness of the links between commodities and deforestation.
- However, both company commitments and government efforts have not been able to stop deforestation in forest areas not covered by a commitment or policy due to the limited scope of these efforts.
While the rate of new commitments has decreased, existing commitments do send a strong market signal for the better. And, with over half of the most influential global companies with exposure to forest-risk commodities declaring a forest-related commitment – it would seem good sense to both reduce risk to the company and the environment.
The TFA2020 has identified 10 priorities to remove deforestation from supply chains. These are eliminating illegality from supply chains, growing and strengthening palm oil certification, scaling up pilot programmes of sustainable intensification of cattle grazing, increasing smallholder yields in palm oil and cocoa, achieving sustainable soy production, accelerating the implementation of jurisdictional programmes, addressing land conflicts, tenure security and land rights, mobilising demand for deforestation-free commodities in emerging markets, redirecting finance towards deforestation-free supply chains and improving the quality and availability of deforestation and supply chain data.
It’s perhaps no surprise that the private sector faces challenges in the implementation of these commitments, in particular upstream in commodity supply chains. The new analysis, The roadmap to financing deforestation free commodities examines why financial institutions globally are not taking sufficient action, or are finding it more difficult to do so than envisaged, with recommendations for ways forward.
Financial institutions are exposed to the risks associated with deforestation through their investments in and lending to companies involved with soft commodities. However, while a number of financial institutions have made progress in integrating the environmental and social impacts of soft commodities into their risk management frameworks, a larger number are not taking action, with only 30% having public policies on these commodities, according to Global Canopy’s Forest 500 annual report for 2017.
It appears that financial institutions have a compelling need to strengthen the business case concerning forest risk commodities, and to use it to drive robust policies and support companies’ efforts on supply chain sustainability. Governments could reinforce these efforts as part of their commitment to Sustainable Development Goal (SDG) 15, as well as their commitments under the Paris Agreement to reduce GHG emissions.
“With less than 1000 days to go, we must accelerate our efforts to implement these commitments, by concentrating on the most promising pathways,” said Jeff Seabright, Chief Sustainability Officer at Unilever.
“Tropical deforestation is a complex problem tied to sustainable rural development, food security and climate change, but we cannot let this complexity stop us. We must capture the momentum we have, engage the community we have built and redouble our efforts on the sprint to 2020,” he added.