SUPPLY CHANGE

 

April 20, 2017

Dear Colleagues,

The European Union (EU) Parliament caused a stir last week in the palm oil community when it overwhelmingly passed a resolution for EU member states to pursue stricter import requirements for commodities (in particular, palm oil) known to cause deforestation. In fact, the resolution encouraged the EU to phase out imports of vegetable oils associated with deforestation for use in biofuels altogether by 2020. Also, the authors suggested the EU establish a single commodity certification import standard with special sustainability criteria for palm oil imported for other purposes (read more in the Recent News section below).

Many in the environmental community have hoped that extending EU sustainability-focused import restrictions beyond wood to cover agricultural commodities could shift market signals and incentivize corporate reforms in production and procurement. Corporate incentives for reducing deforestation were recently featured in a report by environmental non-profit Fern based on interviews of sustainability leaders from 15 key companies; Fern explicitly asked them why their businesses pledged commitments to end commodity-driven deforestation and what implementation challenges and opportunities remained. A number of corporate representatives explained that these commitments were made to establish themselves as trendsetters -- responsive to critiques and watchdog campaigns reviewing their brands. The growing number of companies with commitments (the Supply Change Initiative already tracks 447 companies with commitments) prompted the remaining company respondents to adopt commitments to avoid being undercut by competitors that already had them.

Companies will need all the help they can get to make and implement zero deforestation commitments called for under the resolution.  Only a minority of companies tracked by Supply Change have commitments to “zero deforestation.” Some companies have been deterred from making zero deforestation commitments because of the lack of precision about what that means and how it should be measured. Instead, many companies have turned to the more popular certification-based commitments (56% of Supply Change company commitments) probably because of the ease to which companies can report progress. Yet, as evidence included in the EU’s recent resolution suggests, certifications have thus far been unable to assure no deforestation from commodity production. When asked about certification, many Fern respondents lamented the high overhead costs and limitations in impact, but acknowledged that it provided a good starting point for identifying lower risk suppliers even as Fern respondents moved beyond certification.

With this backdrop of mounting pressure from governments and media campaigns for companies to report on progress, Supply Change finds that around half of companies have disclosed progress toward their low/no deforestation commitments, representing a 57% jump in less than a year. This is particularly encouraging because many corporate respondents in the Fern study found it difficult and expensive to develop systems for capturing and reporting data needed to demonstrate progress, especially when coordinating a group-wide commitment covering multiple group companies with different monitoring systems.

Companies interviewed for the report concluded that it was in their best interest to invest in the sustainable growth of the landscapes and communities in which they operate. This involves investing in smallholder support (22% of corporate commitments tracked by Supply Change have this requirement), community institutions, and other livelihoods that don’t involve deforestation.

More stories about changing supply chains are summarized below, so keep reading!
-The Supply Change team

 

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Upcoming Events

12th Round Table on Responsible Soy Annual Conference (RT12): Zero deforestation- Transparency and Scale
Lille, France, 31 May - 1 June 2017

RT12 aims to encourage participants to share ideas and solutions for achieving continuous improvement in the soy sector. In particular, discussions will focus on mapping deforestation risks in supply chains, tools for improving transparency, pathways for scaling up sustainable production, and collaboration among different soy certification schemes.

Learn more about the RT12 here.

 

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Recent News

Veteran Wisdom

When Marks & Spencer (M&S)’s former sustainability lead, Stuart Rose, launched their “Plan A” sustainability initiative in 2006, corporate social responsibility reporting wasn’t commonplace. Plan A initially drew resistance from investors and the board of directors, mainly for its £200M price tag. However, Rose was vindicated when auditors found a savings of £50M in 2010 alone. The first phase of Plan A was all about reductions: less emissions, less materials, etc. in what their current sustainability lead Mike Barry, describes as “making M&S less bad.” After three years of reducing its negatives, M&S launched phase two: inject sustainability into the DNA of all products and publicize results on every product label. This pushes beyond direct impacts and examines the supply chain to address issues like commodity-driven deforestation.
Read more on Ecosystem Marketplace

 

Turning off the tap

Last week, members of the European Union (EU) Parliament overwhelmingly voted to approve a resolution to stop importing vegetable oils associated with deforestation by 2020. The accompanying research presented to the EU highlighted that palm oil production caused large amounts of deforestation and greenhouse gas emissions, which are incompatible with many EU environmental commitments. In particular, the resolution authors argued that the EU should set import requirements for all palm oil to safeguard forests and consider phasing out use of all vegetable oils (like palm oil), which drive deforestation, in biofuels by 2020. Following the vote, the governments of the world’s two largest palm oil producers, Indonesia and Malaysia, agreed to send a joint delegation to discourage EU officials from implementing the resolution.
Read more from Foodingredientsfirst.com

 

Budget cuts & deforestation climbs

Brazil’s federal government is cutting 51% of the budget for its environmental agency (IBAMA) in an attempt to reduce the deficit. These deep cuts to the agency responsible for enforcing the country’s Forest Code has raised concerns among environmental groups about IBAMA’s ability to crack down on deforestation. For example, the agency monitors deforestation using satellite imagery for lands in the Amazon to develop lists of embargoes properties, which many companies tracked by Supply Change use to monitor compliance to their commitments. Reports suggest that the agricultural lobby is gaining influence over national environmental policy, just as recent satellite data shows a 29% increase in the national deforestation rate.
Read more at Climate Change News

 

It’s a Cow-tastrophy

Last month, IBAMA raided two JBS facilities for allegedly purchasing cattle from lands embargoed by the Brazilian government.  Brazil’s largest meat packer rebuffed the claims. This scandal broke the same week as federal investigators charged JBS and several other meatpackers with bribing officials to allow meat products that were non-compliant with sanitary standards to be sold in over 60 countries. Companies struggling to manage environment, social, and governance issues like these may present material financial risks to their investors. Therefore, achieving 100% traceability in supply chains can help companies and investors anticipate commodity deforestation risk; the TRAnsparency for Sustainable Economies (TRASE) initiative is developing a tool using trade data to more thoroughly trace commodity supply chains.
Read more at Ecosystem Marketplace

 

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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 commodity supply chains. Monthly Insights shines a spotlight on companies that deserve recognition for their diligence or innovation at crafting, implementing, or reporting upon their commitments.

 

You missed a spot

In scrubbing their supply chains of commodities associated with deforestation, many companies focus their attention on palm oil, timber & pulp, and soy while overlooking cattle products. Out of the 13% of exposed companies that have commitments covering cattle products, the American personal care giant, Colgate Palmolive, is the only one to have developed a commitment targeting tallow. Colgate Palmolive’s commitment focuses on cleansing deforestation risk from its tallow supply originating from the Brazilian Amazon, mandating all tallow sources meet existing standards on deforestation for which the largest Brazilian cattle suppliers have already committed. Under these standards no cattle supply may come from embargoed lands.  Colgate Palmolive’s commitment highlights an opportunity for other companies that use this cattle byproduct in soaps, animal feeds, fuels, etc.
Read more on Colgate Palmolive

 

Positively Growing

The US paper manufacturer Verso is one of the only companies in the Supply Change database that commits to sourcing exclusively from forests with a positive growth ratio – a pledge made even more powerful by its extensive use of certification schemes and its emphasis on recycled fiber. A positive growth ratio is a simple concept: only harvest as much timber as can be regenerated by the forest. In theory, applying a sustainable growth ratio could allow harvesting to continue indefinitely. Of course, this basic equation doesn’t consider important factors such as the damage to biodiversity caused by monocrop plantations. Nevertheless, it’s a valuable metric, especially for smallholders who may not be able to afford certification audits.
Read more at Verso’s profile

Supply-Change.org
 

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