SUPPLY CHANGE

Dear Colleagues,

As the ball dropped on 2016, more than 100 corporate commitments on deforestation reached their target deadline. Supply Change will spend the next year figuring out whether companies such as Lego, Starbucks, and Wilmar met their goals. Here are other trends we’ll be watching in the New Year:

Finance getting into the zero deforestation game. After hundreds of companies made deforestation commitments, pressure is now moving up to the financial institutions that bankroll big deforesters. But the financial sector isn’t being caught flat footed. The Banking Environment Initiative and Consumer Goods Forum’s (CGF) Soft Commodities Compact recently released new guidance, and 12 banks – including Deutsche Bank, Rabobank, and Westpac – have signed on. BNP Paribas set the benchmark early in 2015 with the banking industry’s first explicit commitment toward zero deforestation. Time will tell whether additional banks will follow their lead.

Governments addressing deforestation. Individual private sector commitments may ensure no deforestation at the plantation level, but governments are beginning to realize that larger-scale impact will require their involvement – and that their action could in turn be recognized by companies. For instance, a corporation could meet its zero deforestation commitment by sourcing exclusively from a “Zero Deforestation Zone” enforced by government policy (see details in news below). Marks & Spencer and Unilever announced in December their intention to do just that by prioritizing commodity sourcing from states or regions implementing landscape-level initiatives to reduce deforestation. At least two governments – Sabah in Malaysia and Central Kalimantan in Indonesia – are taking steps in that direction.

Recognizing the little guy. Smallholders – typically family farms of less than 10 or 50 hectares – are a big part of the equation for achieving sustainability in agriculture. Smallholders manage at least 500 million farms and provide around 80% of food in some countries, particularly Southern Asia and sub-Saharan Africa. The Roundtable on Sustainable Palm Oil (RSPO) estimates that they produce 40% of the world’s palm oil. Many companies will not be able to meet their deforestation commitments without addressing smallholders’ worries, including lower yields than their corporate plantation counterparts, lack of access to finance, and prohibitive certification costs. So, while the Chinese say it’s the Year of the Monkey, we predict that 2016 will be the Year of the Smallholder.

Certification schemes 2.0. RSPO released voluntary standards in 2015 (dubbed RSPO Next) intended to address stakeholder concerns. It’s yet to be seen how many companies will adopt the new reporting measures and if activists will support the new approach. One thing the RSPO has going for it is an increasing market share, currently at 20% of global palm oil. Similarly, the timber certifications Forest Stewardship Council and the Programme for the Endorsement of Forest Certification combined have been steady around 20% uptake for years. (On the other hand, the Round Table on Responsible Soy certifies less than 1% of globally traded soy.) 2016 may be the year to watch whether these certification schemes will break the 20% glass ceiling, and whether development of an industry-backed sustainable cattle standard will round out certification for the Big Four deforestation drivers.

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

-The Supply Change team

 

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Recent News

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Article 5 keeps forests alive

Results-based payments for avoided deforestation received game-changing political affirmation in December when world leaders included strong language for forest protection in the global climate agreement in Paris. Article 5 of the Paris Agreement enshrines support for reducing emissions from deforestation and forest degradation, or REDD+. The private sector has so far only contributed about 10% of the $10 billion in global REDD+ finance, according to Forest Trends’ REDDX initiative, but “the only piece missing from the equation was a strong political signal to reassure both governments and private markets that REDD+ was here to stay,” wrote Gustavo Silva-Chavez, REDDX Manager. Select companies with zero deforestation commitments such as Coca-Cola and Danone also purchase REDD+ offsets.
Read more from Ecosystem Marketplace

 

Legal ire over forest fires

The Indonesian government is investigating over 50 companies for suspected involvement with forest fires, which sent a choking haze across Southeast Asia this fall. By the end of 2015, 23 companies –mostly pulp and paper plantations – had been penalized. Three companies lost their licenses and had to shut down, four others were on probation and the remaining 16 companies have had their licenses suspended, according to the Indonesian Forestry Minister, Siti Nurbaya. The Straits Times claims that three of the companies were suppliers of Asia Pulp and Paper. The Singaporean government plans to take action against the companies responsible for the haze after incurring an estimated $16 billion in economic losses and having to hospitalize many people with respiratory issues.
Read more from Mongabay

 

Where the wild fires are

The RSPO committed to publishing maps for its members’ concessions on the Global Forest Watch website by mid-2016. All concessions, certified and non-certified, will be public except for those in Malaysia, where there is ongoing legal ambiguity. This move comes in response to the rampant forest fires and haze in Southeast Asia last fall. RSPO anticipates that establishing one definitive up-to-date map of plantation ownership should improve monitoring and enforcement of RSPO standards, including restrictions on the use of fire for land clearing. Environmental groups have hailed this as an important step for improving transparency. However, Greenpeace has called on the RSPO to clarify penalties for members not disclosing maps or submitting them in cumbersome non-digital forms.
Read more from Eco-Business

 

Out of stock

Environmental groups expressed concern over the release of the final High Carbon Stock+ (HCS+) Study commissioned by the palm oil industry group, Sustainable Palm Oil Manifesto (SPOM). The methodology does not strive to end all deforestation but rather aims to achieve zero net carbon emissions. The methodology permits “young regenerating forests” to be cut down if equivalent amounts of carbon are sequestered elsewhere. This is in contrast to the existing HCS Approach, supported by Greenpeace, Unilever, Cargill and others, which has been field tested on millions of hectares. Greenpeace believes the HCS+ Study will weaken corporate zero deforestation commitments. The HCS+ approach has only been field tested once in Gabon, but SPOM companies committed to establish HCS+ field trials to compare with HCS Approach results.
Read more from Mongabay

 

In the zone

A new study from the Environmental Defense Fund looks at how companies could reduce deforestation from their supply chains by sourcing commodities from so-called Zero Deforestation Zones (ZDZs). ZDZs would be regions that aim to reach zero net emissions from deforestation across their entire jurisdiction while increasing agricultural production. According to the report authors, land-use emissions in Indonesia could be reduced most cost effectively by preserving portions of all lands according to regional emission reduction opportunities rather than just a subset of lands, such as HCS areas. Provinces with strong legal, monitoring and enforcement systems for no deforestation would be obvious choices for preferential sourcing by companies such as Marks & Spencer and Unilever.
Read more from the Environmental Defense Fund

 

The road to deforestation is paved with good intentions

New research in Landuse & Policy on the Congo Basin indicates that policies requiring sustainable forest management may inadvertently lead to more deforestation than conventional practices. Companies that employed sustainable logging policies were found to have higher and more dependable production and up to twice the rate of deforestation than those without a sustainability plan. The authors concluded that compliance with these standards caused companies to build logging roads over larger areas and farther into the forest interior. Human settlements also tended to grow larger around legal concessions than illegal ones, which increased pressure on remote forest regions. In another study published in Environmental Research Letters, European companies applying approved selective logging plans in the Republic of Congo were found to have higher core and edge deforestation rates than non-compliant Asian companies.
Read more from Phys.org

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