SUPPLY CHANGE

 

November 23, 2016

Dear Colleagues,

While much of the world was processing the results of the US election, climate leaders were meeting at the UNFCCC COP22 in Marrakesh, Morocco to move participating governments toward meeting the goals of last year's Paris Agreement. A crucial part of limiting global temperature rise to less than 2°C (or 1.5°C) is protecting the world's forests. Forests currently capture 25-30% of greenhouse gas emissions from the atmosphere. Protecting forests means halting tropical deforestation, which is nearly 10 million hectares annually. More than a third of that loss comes from the production of the agricultural commodities palm, soy, timber & pulp, and cattle (the "big four"). The New York Declaration on Forests (NYDF) – endorsed by 190 governments, companies, indigenous peoples' communities, and civil society organizations in September 2014 – aims to end the loss of natural forests by 2030 and to end deforestation from these key agricultural commodities by 2020, among 10 total goals. The NYDF 2016 Progress Assessment Report – released earlier this month and highlighted at the Forest Action Day in Marrakesh – updates our understanding of progress that has been made thus far toward those goals.

The report draws on data from Supply Change and 11 other initiatives engaged in monitoring forest commitments. It also incorporates insights from original interviews with corporate sustainability officers to provide the most comprehensive assessment of corporate supply chain commitments to date. Progress on all goals was reported and special focus was given to Goal 2 on ending commodity deforestation by 2020.

The number of corporations committing to reduce deforestation from their supply chains continues to grow. This report tracks 415 companies that have made 701 commitments, compared with 243 companies which had made 307 commitments in last year's report. The overarching trends of commitments and the companies making them echo the findings from previous Supply Change reports – most of the tracked companies are headquartered in the global north and are more likely to have a commitment toward palm or timber & pulp than toward soy or cattle.

New analysis in the report finds that over 90% of the tracked companies produce in, or procure from, one of four major deforestation hotspots: Brazil, Indonesia, Malaysia, or Paraguay. This finding, along with company interview responses, point to risk mitigation as the major incentive for companies to make supply chain deforestation reduction pledges. But making a pledge is just the first step. Companies need to implement policies and practices in order to affect change in the forest.

“It’s difficult to make the connection between the commitment by the company and the actual reduction of deforestation on the ground,” says Marco Albani, the Director of Tropical Forest Alliance (TFA) 2020, an umbrella organization uniting the efforts of companies, NGOs, and governments to end deforestation tied to forest risk commodities.

New efforts launched in Marrakesh are trying to bridge that information gap and monitor impacts. A new deforestation atlas from the Center for International Forestry Research (CIFOR) uses satellite-based tracking along with data from the Indonesian government to identify which palm and timber & pulp producers engage in deforestation on the island of Borneo. Another new project, Trase (Transparency for Sustainable Economies), uses customs declarations and other data sources to track commodities from specific producer municipalities, through brokers, to the consuming country’s port of entry. Trase is currently in beta and covers soy from Brazil, but the tool developers, Global Canopy Programme and Stockholm Environment Institute, plan to expand it to cover all forest risk commodities.

These tracking efforts assist watchdog organizations to enforce company policies and committed companies themselves to track their progress. The concept and convention of a commodity has been for uniform quality regardless of source; traceability to ensure freedom from harmful practices is a relatively recent requisite. “It’s not surprising that people don’t know where things come from. That’s not the point of a commodity. You just buy it,” Albani explained. “But now we’re asking the commodity markets to change and start to care about where things come from, and it’s changing how companies do business.”

The report shows that significant progress has been made, especially by NYDF endorsing companies and TFA 2020 members. However, there is much more work to be done in the next four years to meet the NYDF goal. The report concludes that more companies need to make deforestation commitments, and those that already have need to implement their policies and practices. Once monitoring efforts such as CIFOR's deforestation atlas and Trase come fully online we will be able to see just how well we've done in protecting forests.

More stories about changing supply chains are summarized below, so keep reading!

-The Supply Change team

 

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Recent News

Corporate ambition — without measure

Companies have publicly reported progress on less than half of the 703 sustainable commodity pledges tracked by Supply Change. In an attempt to discover the root cause of this low reporting rate, a comparison was made between the progress reporting of Dutch retailers Albert Heijn and Jumbo. Albert Heijn has publicly reported progress on three of its four commitments while Jumbo has not publicly reported progress on any of its three commitments. A possible explanation for the dearth of public information available on commitment progress for Jumbo and others is that companies delay reporting results until they have a strategy to deliver results, explains Katie McCoy, the Forests program lead at CDP. She further stresses the importance of transparent communication during all stages of the commitment process.
Read more on Ecosystem Marketplace

If you can count it, you can manage it

We know that greenhouse gases (GHGs) are a major contributor to climate change. We also know that forests act as sinks that store carbon, a major GHG. What we don’t know is how to quantify the GHG impacts of deforestation. While this might sound unimportant, it’s crucial for any corporation looking to purchase offsets, meet GHG targets, or measure their carbon footprint. Thankfully, a new coalition of governments, universities, NGOs, and corporations – including Barry Callebaut, Ferrero, General Mills, Lenzing, Mars, and LVMH – has been formed to calculate the emissions of deforestation. Once a credible guide has been created, the intent is to integrate it with existing GHG accounting and to set science-based emissions reduction targets. The methodological guide is set to be released in April of 2017.
Read more from Edie

I’ll Take No-Deforestation for 200

The definition of what constitutes “no deforestation” has managed to avoid a consensus; until now. A group called the High Carbon Stock (HCS) Conversion group has managed to build an industry-approved compromise between the two major competing HCS methodologies, and to move forward with a well delineated set of rules for “no deforestation” commitments to abide by. In addition to nailing down what constitutes an HCS area, a High Conservation Value (HCV) area, and a peatland area, the methodology also leaves room for ongoing improvements in a number of tangential topics such as: developing systems to ensure high-quality assessments, independent verification, and means of redress for communities whose rights are infringed upon.
Read more at Mongabay.com

Pushing buttons

Did you know that there are trees in your T-shirt and jeans? It’s true, they contain a fiber called viscose (or rayon) which is derived from tree pulp and frequently sourced from ancient or endangered forests. In the interest of preserving these forests, an NGO called Canopy has taken the lead by engaging with corporations and assessing their viscose supply chains. In their most recent report: The Hot Button Issue, Canopy scores the procurement practices of the top ten viscose producers. The results are concerning, with only two of ten companies earning acceptable scores; those leaders being Lenzing and Aditya Birla. The remaining eight companies are all headquartered in China and have plenty of work to do if they’re considering decoupling their operations from the destruction of ancient or endangered forests.
Read more Canopy

Sharing the table

According to a new discussion paper by the World Wildlife Fund (WWF), jurisdictional scale approaches have emerged in at least 25 distinct geographies around the world and seek to meet zero deforestation commitments (JA-ZDC). These efforts include governments, businesses, and civil society groups. They vary widely in their stages of development, level of stakeholder participation, and capacity for monitoring. WWF also found that companies saw JA-ZDCs as opportunities for simplifying commodity traceability and certification as well as for lowering zero deforestation commitment implementation costs through efficiencies of scale. JA-ZDCs have the potential for stakeholders to develop shared goals and bring producers that are vital to the outcome to the negotiating table.
Read more at the Global Landscapes Forum

Should I stay or should I go?

Palm Oil Investigations (POI) recently withdrew its membership from the Roundtable on Sustainable Palm Oil (RSPO) after losing trust in the certification body’s integrity. The RSPO’s reinstatement of the Malaysian palm oil giant, IOI, was seen by the Australian watchdog as premature and as evidence of its unwillingness to enforce its own sustainability standards. POI is known for using consumer-driven campaigns to compel companies such as Snack Brands Australia and Arnott’s to switch to RSPO-certified palm oil. Most recently, POI joined other green groups in calling for a boycott of IOI for its environmental transgressions. RSPO communications lead, Stefano Savi, expressed dismay at POI’s departure, and emphasized that it would be more effective to seek reform from within the RSPO than to work in opposition to it.
Read more at Mongabay.com

 

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Monthly Insights from the Supply Change Desk

Each month, the Supply Change team reviews hundreds of corporate commitments to reduce deforestation in their commodity supply chains. Sometimes we come across unique strategies which are worth sharing. Our monthly insights offer examples of recently reviewed companies that have caught the attention of the Supply Change team because of their diligence or innovation at crafting, implementing, or reporting on their commodity sourcing commitments.

Bel Group

Many food manufacturing companies seek to manage the deforestation risk associated with their animal feed. However, few companies further along in the food chain are able to parse out this feed and trace it back to deforestation-free origins. Bel Group, a major French cheese manufacturer, has been able to get partially there by reporting how many hectares of land its soy meal suppliers in Mato Grosso, Brazil have under protection and certification. Bel Group's overall goal is to cover all of the soy meal in its animal feed by using Roundtable on Responsible Soy (RTRS) credits by 2016 and physically certify all of its palm kernel meal (PKE) by 2025. Its multi-year support for suppliers to meet the RTRS standards made this reporting possible. The company has similar plans so that it can achieve its goals for PKE.
Read more on the Supply Change profile

Colruyt Group

Which pathway leads to sustainability? Some companies engage in credit trading to offset the damage of their sourcing. Others engage farmer cooperatives and transform them into pioneers of sustainable production. The Colruyt Group has tried every strategy short of the kitchen sink. Their diverse soy sustainability toolkit includes: reducing use, sourcing locally, pioneering alternatives, buying offset credits, supporting farmers, and linking their efforts to the Sustainable Development Goals. This is despite the fact that they never purchase, touch, or see soy. They sell meat and dairy which are fed on soy; this is known as “indirect exposure”. Reaching backwards along the supply chain and taking responsibility for a product’s entire lifecycle is crucial to the success of soft commodity sustainability.
Read more on the Supply Change profile.

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