SUPPLY CHANGE

Dear Colleagues,

One of the most successful regional approaches to reducing deforestation will continue. On May 9th the Brazilian Soy Task Force (GTS) announced that the zero deforestation pact among soy purchasers from the Brazilian Amazon, known as the Soy Moratorium, has been extended. Since its inception in 2006, a growing number of private, public and civil society members have supported the moratorium’s implementation and annual renewal.

The Soy Moratorium commits endorsing companies not to trade or finance soybeans produced from land that is associated with slavery or with deforestation. The moratorium has been effective. Research by the Agrosatelite Geotecnologia Aplicada found that between 2014 and 2015 only 0.8% of deforestation in the Amazon was caused by soy production, despite a doubling in the total area planted. “The soy industry in Brazil is now leading the world in terms of private-sector leadership,” said Holly Gibbs, a University of Wisconsin-Madison professor and expert who has extensively researched the moratorium.

Its success is due, in part, to monitoring of deforestation by the Brazilian government.  Brazil’s CAR (Rural Environmental Registration), which has been systematically collecting geographic coordinates of Amazonian properties’ and reviewing satellite imagery for changes in land cover on each property. The moratorium has been extended until its anticipated replacement with a monitoring system that is based on the CAR and that draws from new legal forest conservation requirements under the revised Forest Code.

Success of the Soy Moratorium is critically important because we know from research featured on the Union of Concerned Scientists (UCS)’s newly released What’s driving deforestation web resource that soy production is one of the top four global deforestation drivers.  Between 2001 and 2009, these commodities contributed to global forest clearance of an area roughly the size of Paraguay —40.9 million hectares (Mha)— with beef (26.5 Mha) accounting for more than twice as much forest clearance as soy (6.4 Mha), timber & pulp (4.2 Mha) and palm oil (4 Mha) combined. In South America alone, cattle production contributes to 71 percent of deforestation. Although cattle production is a large part of the problem, the industry still has the potential to reverse the trend. Despite recent surges in Brazilian deforestation rates, noticeable declines influenced by zero deforestation commitments among the dominant meat packers, specifically to avoid purchasing beef from ranchers associated with deforestation, have made a difference.

Next month’s Supply Change annual findings report will provide insight into the extent of commitments companies are making to reduce deforestation from these commodity supply chains and assess what progress is being made toward meeting them. The report will be launched on June 6th at the Global Landscapes Forum in London.

-The Supply Change team

 

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Recent News

Soybean sustainability from Shenzhen to Shanghai

Last month the China Soybean Industry Association (CSIA), which represents over 700 producers, processors, and traders, signed a memorandum of understanding with two Brazilian industry groups for promoting sustainable soy production through the use of the Soja Plus Program. “We do not want our demand for soy to lead to illegal deforestation in Brazil, and we are asking our suppliers for assurances in that respect” proclaimed CSIA’s Executive Vice President Liu Denggao at the Sino-Brazilian trade Symposium in January. Signatories agreed to develop a ‘Fair Incentive System’ to support landowners who focus on sustainable soy production and to encourage Chinese partners in establishing procurement policies for sustainably produced soy.
Read more in the Brazilian Vegetable Oil Industries Association (ABIOVE) press release.

Not so fast, Asia

Asian consumer firms have weaker sustainability practices than their international competitors according to a report released by the World Wildlife Fund (WWF). The report assesses 26 “Fast Moving Consumer Goods” companies from nine different Asian countries on their procurement of soft commodities, use of packing materials, and water footprint. “Active participation through multi-stakeholder platforms to jointly develop, implement, and promote practicable and acceptable sustainability standards has now become imperative,” said Ben Ridley, Asia Pacific Head of Sustainability Affairs at Credit Suisse. WWF advises financiers to connect access to capital with more sustainable practices and that companies purchasing soft commodities take “the strongest management approach possible: time-bound, quantified procurement targets based on third-party certification standards.”
Read more on Eco-Business.

RSPO’s bite: IOI’s suspension draws blood

On April fourth, the world’s largest multi-stakeholder group promoting responsible palm oil--the Roundtable on Sustainable Palm Oil (RSPO) -- suspended one of its founding members and Malaysia’s largest corporate conglomerate IOI Group. This suspension comes after six years of formal complaints against the group and three of its subsidiaries for breaching RSPO rules against forest clearance, fraudulent reporting, and insufficient permits and action plans. Consequently, IOI plans to pursue legal action against the RSPO, asserting that the suspension has already caused “commercial and reputational losses.” Unilever, Kellogg, Nestle, and a growing number of other large IOI customers (out of 300) have publicly committed to dropping IOI as a supplier. Some environmental campaigners see this as a potential turning point for RSPO toward stricter enforcement.
Read more on Mongabay.

RSPO dropout

The world’s third largest palm oil operator, Felda Global Ventures (FGV), has voluntarily withdrawn sustainability certificates for the majority of its mills (53 out of 71) under the RSPO certification. “Based on the recent developments in the sustainability arena, we foresee some potential risks in our supply chain. Therefore we intend to make some structural changes in our RSPO certification approach and also review certain policies,” explained group president and chief executive officer Zakaria Arshad. The Public Investment Bank suspected that FGV’s withdrawal is in part due to documented RSPO peatlands violations on its plantations. Analysts suspect that this decision could hurt FGV’s market share by as much as $12 million in 2016 revenue.
Read more on the Borneo Post Online.  

Indecent exposure: ‘sustainable’ supply is tainted

Illegally harvested Indonesian palm oil ends up in the supply chain of companies with zero deforestation policies such as Wilmar, Musim Mas, Golden Agri Resources, and Asian Agri. The discovery was documented in a recent investigative report, from Eyes on the Forests, a coalition of environmental nonprofits. Investigators tracked trucks traveling with illegal palm oil, at distances of up to 128 km from the plantation, to 19 mills, several of which are owned by subsidiaries of these companies. Satellite monitoring indicated that illegal production and subsequent fires in National Parks most likely played a key role in the 2015 ‘haze,’ which emitted 1.75 billion metric tons of greenhouse gases, caused half a million respiratory illnesses, and exceeded $16 billion of economic damage in Indonesia alone.
Read more at Eco-business.

Brazilian grocery beefs up beef sustainability

After campaigning by Greenpeace, Brazil’s largest grocery chain, Pão de Açúcar (GPA), recently committed to end all beef purchases associated with deforestation, slave labor, or land grabs. According to Greenpeace spokesperson Adriana Charous, GPA has hired a consulting firm to audit its supply chain and assist suppliers with meeting the new standards, as part of its new corporate purchasing plan. She went on to say that the company would drop any suppliers that remain non-compliant after June 30th, 2016. GPA shifted its policy after thousands of consumers signed petitions and volunteers placed stickers on products associated with Amazon deforestation. GPA’s limited ability to effectively and transparently address deforestation was reflected in Greenpeace Brazil’s scoring of the firm in its 2015 Grilling Away the Amazon report.
Read more from Reuters.

Smothering Indonesian peat fires

Smoke doesn’t stop at borders so the Singaporean and Indonesian governments are increasing efforts to address the transnational haze issue. At this year’s Dialogue on Sustainable World Resources, authorities from Indonesia, where the haze originates, described mitigation activities including the promotion/demotion of village chiefs, the mapping of peatland areas, and a ban on new palm oil concessions. Authorities from Singapore, rolled out their Transboundary Haze Pollution Act (THPA) that imposes stiff fines of up to $2 million SGD on haze-causing companies, including Singaporean-registered subsidiaries.  The act even penalizes non-Singaporean company employees for these transgressions when they visit Singapore. A Singaporean government representative called on companies to implement sustainability policies throughout the entirety of their supply chains, and not just in their direct operations.
Read more on Eco-Business.

SPOTT on

The Sustainable Palm Oil Transparency Toolkit (SPOTT) has doubled in size since 2014, growing from 25 to 50 voluntarily participating companies. In addition to increased participation the toolkit has seen measurable results; 80% of its companies have demonstrated improved transparency since joining. In addition to quantitative improvements, some companies have reached out to the toolkit’s administrator, The Zoological Society of London (ZSL), for advice on how to increase transparency and improve their score. Encouraged by the progress, the ZSL is developing plans to expand SPOTT into other commodities such as timber & pulp.
Read more on Malaysian Palm Oil Council website.

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