SUPPLY CHANGE

Companies around the world are tripping over each other to make “zero deforestation” pledges in recent years, but that won’t mean much if financial institutions bankroll deforestation. Two initiatives are working to establish best practices for banks and investors and some are already taking action. Norway's sovereign wealth fund recently pulled its investments worth $222 million in four Asian companies citing environmental destruction related to palm oil production. This follows action by the same fund to divest from 23 companies over the last several years.

In July, Standard Charter became the tenth major bank to adopt the Banking Environment Initiative’s and Consumer Goods Forum’s (CGF) 'Soft Commodities' Compact, first launched in December 2013. Adopters now account for 20% of the global agricultural commodity market. The Compact aims to help their corporate clients achieve zero net deforestation by 2020 and covers palm oil, soy, timber products, and beef. Compact banks are currently developing key performance indicators to monitor and report on progress toward raising industry-wide banking standards.

More than 40 financial institutions have signed onto the Natural Capital Declaration (NCD) that commits them to the integration of natural capital considerations – the range of goods and services provided by ecosystems – into financial products such as loans, bonds and equities. Last month the NCD and the United Nations Environment Programme released the “Soft Commodity Forest-Risk Assessment”, a set of guidelines that banks and other financial institutions can use to measure and reduce the impact their clients have on deforestation.

In the companion report, “Bank and Investor Risk Policies for Soft Commodities”, 30 international financial institutions were evaluated based on the scope, strength and implementation of their policies related to soft commodities. They found that although almost half of the institutions have policy statements on soft commodities, only 13% have developed financial products and services specifically promoting sustainable production and trade.

Supply Change will be tracking these emerging policies and practices among the financial sector starting in the second phase of the project's development coming in 2016. Until then, more stories on sustainable agricultural commodities are summarized below, so keep reading!

-The Supply Change team

 

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Recent News

The new guidelines on the block

The CGF this month published its Sustainable Palm Oil Sourcing Guidelines, which are designed to assist companies across sectors to establish policies in line with the goal of zero net deforestation by 2020. CGF recommends that companies follow a stepwise approach, first identifying where palm oil is used in their products, next seeking certification through the Roundtable on Sustainable Palm Oil (RSPO), then engaging with ‘first importers’ of palm oil as they work towards an entirely deforestation-free supply chain. The guidelines were formulated by CGF in collaboration with CGF members, NGOs, and standards setting organizations.

Read more at Environmental Leader

A fresh spin on a classic

RSPO has announced plans to create “RSPO Next” – an update on its original guidelines, first released in 2004. The new guidelines would be a voluntary ‘add-on’ to the original and are set to include requirements on burning, peatland protection, human rights, greenhouse gas emissions, and transparency. While Unilever and others have praised the new initiative, GreenPeace has called attention to the lack of a definition of “forests” in the draft criteria, which they say will undermine the efficacy of the guidelines.

Read more at BusinessGreen

Plantations go into early retirement

Building on their 2013 commitment to halt new plantations on natural forests and peatlands, Asia Pulp and Paper (APP) announced that it will set aside 7,000 hectares of commercial plantation areas in Riau and South Sumatra, Indonesia for conservation to protect threatened carbon-rich peatlands. The research institute Deltares said the areas, currently acacia plantations, required immediate rehabilitation. Deltares will also partner with APP to conduct large-scale mapping using LiDAR remote sensing technology over 4.5 million hectares. Analysis of that data will help APP with conservation efforts going forward.

APP press release

Dueling carbon stock standards

A team of 50 scientists commissioned by a group of Asian palm oil producers, Cargill, and Unilever has proposed a new method for evaluating which land should be used for new palm oil plantations. The “High Carbon Stock Study” establishes a system of colored “zones” where palm oil cultivation is and isn’t allowed based on the presence of peat land, old-growth forests, selectively logged forests and native forests, and benefits to communities. However, another carbon stock-focused approach, known confusingly as the “High Carbon Stock Approach Group” and which shares Cargill and Unilever as members, is more stringent. Unilever’s Biswaranjan Sen acknowledges differences in the two approaches, but says "Either of them implemented would raise the bar from where we are today."

More from Reuters

This season’s hottest fashion: Sustainable pulp

“Every year, tens of millions of trees are turned into clothing,” says Brihannala Morgan, senior forest campaigner at Rainforest Action Network (RAN). In its new report, Lessons from the Incense Forest, RAN documents the destruction of forests by pulp production companies who are supplying clothing manufacturers with forest fabrics like rayon and viscose. However, vast and complicated supply chains lacking transparency and traceability make it difficult for companies to know whether purchased pulp was produced sustainably. RAN has called on fashion brands Ralph Lauren, Guess, Under Armour, and 12 others to adopt comprehensive sourcing policies that eliminate fiber and suppliers contributing to deforestation or human and labor rights abuses.

More from Supply Management

Pump up the volume: Sustainable palm oil for 1.2 billion

India consumes approximately 15% of globally produced palm oil, with the vast majority imported from abroad. However, with 21% of India’s population below the poverty line, the tide of rising consumer awareness that has hit the U.S. and Europe has not yet reached India. “Can you tell the Indian vegetable oil consumer who’s buying only in the cheap shops that it’s bad for the environment in southeast Asia?” asked Ms. Sringanesh, head of sourcing at Galaxy Surfactants Ltd, an Indian refinery that it RSPO certified. “They won’t know what that means.” Still, some multinational companies with operations in India – notably Hindustan Unilever –, are switching to sustainable palm oil, potentially creating demand for Indian companies to certify in order to meet multinational’s procurement policies.

More from The Guardian

 

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Commitment Updates

Avon calling – leave a number

Avon, the world's fifth largest cosmetics and personal care products manufacturer, announced an update to its "Palm Oil Promise." The new policy commits the company to sourcing "100% deforestation-and conflict-free palm oil, palm kernel oil and derivatives", a significantly more stringent target than its previous promise to purchase GreenPalm certificates for its palm oil usage. Avon has given itself until February 2016 to develop an implementation plan and assign time-bound targets to the new policy. Separately, Avon has a deforestation policy for its paper products that commits to sourcing all of its paper using certified and/or post-consumer recycled content by 2020.

More from Mongabay

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