December 20, 2016
Recent reporting by the Global Canopy Programme (GCP)’s Forest 500 project concludes that the companies, investors, and countries most responsible for deforestation have a long way to go if global climate targets are to be reached. Forest 500 finds that a majority of key agricultural-producing countries and subnational jurisdictions have policies to address forest loss. Colombia, the Democratic Republic of Congo, the Ivory Coast and Liberia, for example, all have made commitments to end agriculture-driven destruction of key forests. In contrast, large commodity-importing countries have typically only provided financing for sustainable agriculture, and have not established governmental policies addressing commodity-driven deforestation. Only Germany and the Netherlands have made commitments to source sustainable palm oil.
Forest 500 also finds that companies will need to make significant improvements to meet deforestation commitments associated with commercial cattle, soy, palm oil, and timber supply chains by 2020. Their latest findings show that the majority of companies have either weak policies addressing commodity-driven deforestation or do not have them at all. Even when a commitment exists, many corporate cattle and soy commitments focus on specific geographies, limiting their potential impact. Forest 500 found that the majority of the largest investors with exposure to deforestation did not pressure companies (in which they invested) to reduce their commodity-driven deforestation. Only 36 out of the 150 investors evaluated by Forest 500 have made commodity policies that address one of the big four commodities, while three out of four of those with policies have made at least one loan to a company without a forest commodity policy in the past year. This highlights a need for greater corporate disclosure and monitoring and enforcement from investors.
On the same day as the Forest 500 released their report, the CDP (formerly Carbon Disclosure Project), graded over 200 companies for their management of deforestation risks associated with the aforementioned four commodities. CDP is a non-profit organization whose annual company survey and grading supports its 365 investment firm members – with a total of US$22 trillion in assets – in finding and investing in the highest-performing companies. On average, almost a quarter of annual revenues for companies disclosing to CDP is dependent on at least one of the big four commodities, leaving an estimated US$906 billion in annual revenues for publicly traded companies at risk from deforestation. While a majority of companies report access to secure and sustainable commodity supplies, over 81% of agricultural producers reported significant changes to operations, revenue, or expenditures from deforestation in the last five years.
The top three risks identified by companies who disclose to CDP were: insufficient traceability systems, poor enforcement of governmental forest policies, and limited availability of affordable, certified commodities. To address these challenges, CDP suggests companies consider establishing board-level oversight for managing deforestation risk. Research showed that companies with similar protocols were almost 20% more likely to see sustainable production and sourcing opportunities than those without them. Other recommendations include direct engagement with suppliers, with CDP showing that manufacturers and retailers are almost 60% more likely to see opportunities to address these challenges through such direct engagement. CDP further identifies ways companies can engage their suppliers. These include determining whether or not they conduct audits, engaging in joint projects and providing workshops, trainings, and technical support. For example, the Norwegian consumer goods group Orkla seeks palm oil suppliers who train farmers and support mill management.
Looking forward to 2017, corporate leadership will be needed more than ever.
More stories about changing supply chains are summarized below, so keep reading!
-The Supply Change team
How business can tackle deforestation
Washington D.C., 3-4 April 2017
Innovation Forum is hosting a conference on how business can tackle deforestation. The conference will discuss how companies can best apply their sustainability strategies to preserve forests in an impactful manner and manage deforestation risks in the supply chain. Organizations currently confirmed include Domtar, Bunge, Asia Pulp & Paper, 3M, Kimberly-Clark Corporation, Dunkin' Brands, Greenpeace, Rainforest Alliance, Supply Change, International Paper, Sime Darby, Forest Peoples Programme, Rainforest Action Network, to name a few.
You can see the more details on the event, including current agenda and speakers, here.
The Supply Change network gets a 15% discount on passes to the event. Please use the code ‘IF15’ to redeem the discount when registering here.
Linen, leather, and lace
The holiday shopping season is drawing to a close, and for all those who have not yet bought presents, this article provides context for how to green your shopping. Around 85% of the 26 clothing and footwear companies tracked by Supply Change have committed to reduce the environmental impacts from the leather and/or wood-based fibers used in their products. This article maps out how companies like Coach, H&M and Puma develop, implement, and report on their ambitions. Supply Change data suggests that only a quarter of these companies have commitments to reduce deforestation risks from wood-based fiber in clothing, while nearly half have pledged to procure leather audited to the Leather Working Group certification standards.
Read more on Ecosystem Marketplace
Commodity buyers and sellers now have access to the new online Produce and Protect platform for exchanging sustainable commodities by jurisdiction (states, provinces, and districts). The Earth Innovation Institute launched the beta version of this global sustainable commodity exchange during the latest climate conference in Marrakesh, Morocco. Though many companies have made international pledges to reduce deforestation within their own supply chains, these efforts often do not address forest conversion in surrounding areas. This tool is intended to facilitate a more collaborative approach in sustainable sourcing by providing companies with access to comparable statistics on land use and social data associated with all potential commodity-producing jurisdictions. This allows commodity purchasers to work with governments, producers, and civil society to set and meet shared sustainability targets.
Read more at the Earth Innovation Institute.
Shining a light in dark places
The recent launch of the free online trase (Transparency for Sustainable Economies) tool allows users to track soy from more than 2,000 soy-producing municipalities in Brazil through to brokers, exporters, and importers in other countries. Another key feature of trase allows users to compare environmental conditions across municipalities of origin, which can help soy traders to filter out threats and opportunities for sourcing from different municipalities. The GCP, Stockholm Environment Institute, and European Forest Institute created the website by drawing from harvesting and transport documentation for soybeans, and they plan to expand to other commodities. This is a welcome relief for companies like Mars, which has been calling on the data community for tools to help improve supply chain traceability.
Read more at Ecosystem Marketplace
No hazing allowed
In a recent landmark ruling, the Indonesian Supreme Court demanded that the pulp & paper company PT Merbau Pelalwan Lestari pay US$1.19 billion for illegal forest clearance. This is the highest fine levied for environmental destruction in Indonesian history, and may be substantial enough to deter illegal clearance. Previous fines have been an order of magnitude smaller, such as Sampoerna Agro’s fine for US$81 million. Every year, illegal forest and peatland clearings for commercial plantations in Indonesia generate smog which spreads atop the neighboring Malay Peninsula during the dry season, creating dangerous health conditions. A lack of Indonesian enforcement of regulatory penalties on violators has allowed these practices to persist, but this may have just changed.
Read more from Jakarta Post
GRASPing for sustainable African palm
African governments must prohibit palm oil development in high priority ape habitat and reserve adjacent areas for “certified” sustainable plantations to ensure palm oil expansion does not jeopardize long-term protection of apes in Africa, concluded the authors of a recently published two-year study. The United Nations Environment Programme’s GRASP (Great Apes Survival Partnership) produced the report, on behalf of 151 civil society and public and private sector members, to learn how palm oil development has impacted ape populations in Southeast Asia and to find strategies to prevent African ape populations from similar threats caused by palm oil expansion in Africa. The authors also recommended that communities institute “no kill” policies for areas with high priority ape populations and that companies establish environmental teams for monitoring and protection.
Read more at UNEP
Palm Oil heads home
Seven palm oil-producing African nations - Central African Republic, Côte d’Ivoire, Democratic Republic of Congo, Ghana, Liberia, the Republic of Congo, and Sierra Leone - signed the Marrakesh Declaration for the Sustainable Development of the Oil Palm Sector in Africa during the latest global climate talks. This decision comes as a relief to the environmental community, which fears that the poor environmental practices prevalent in Indonesia and Malaysia, such as slash and burn agriculture, will spread to palm oil plantations in Africa. Instead, the multi-stakeholder group TFA2020 (Tropical Forest Alliance 2020), which coordinated the initiative, hopes the declaration will help establish regional markets for sustainable palm oil, boosting smallholder income and forest protection.
Read more from Mongabay.com
The palm fruits of our labor
A new set of labor standards for palm oil workers was recently released by a leading environmental multi-stakeholder initiative, the Palm Oil Innovation Group (POIG). The standards provide indicators for strengthening social auditing and grievance mechanisms to supplement existing ones established by the dominant environmental certification scheme, the Roundtable on Sustainable Palm Oil (RSPO). Several POIG members that are producers, namely, Agropalma, DAABON, and Musim Mas, are piloting these standards. If successful, they could be incorporated into the principles and criteria of the RSPO, serving to substantially strengthen the certification scheme.
Read more from the Palm Oil Innovation Group (POIG)
Bucking the trend
Amazonian deforestation is up 29% from last year according to new research by Brazil’ National Institute for Space Research. This finding is concerning to the environmental community, as it represents a reversal of the reduced deforestation trend that the region has experienced since 2005. Also, the reversal will make it more difficult for Brazil to meet its goal to eliminate all illegal deforestation by 2030 as part of its public pledge under the Paris Climate Agreement. The main theory behind this uptick is that Brazil’s economic recession has reduced funding for pricey federal and municipal enforcement agencies whose law enforcement efforts are critical for suppressing illegal deforestation.
Read more from the Washington Post
Monthly Insights from the Supply Change Desk
Each month, the Supply Change team reviews hundreds of corporate commitments to reduce deforestation in corporate 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 our attention because of their diligence or innovation at crafting, implementing, or reporting on their commodity sourcing commitments.
Couro Do Norte Ltda, from hide to farm
A growing number of manufacturers and retailers are pressuring their suppliers to be more transparent about their commodity production and sourcing in order to prove compliance with their sustainable commodity commitments. According to Supply Change research, few leather suppliers have made pledges to reduce deforestation. One that has is Couro Do Norte, which committed not to source any cattle from areas associated with deforestation in Brazil. Though the Brazilian leather tannery has not yet reported any quantitative progress on this goal, it has been awarded a gold rating under the Leather Working Group for following the certification’s environmental and social standards. The tannery publishes a monthly list of all its farm suppliers, which it compares against government lists of farms engaging in deforestation.
Read more on the Supply Change profile
Clariant SPOTS progress
One of the major challenges with ensuring sustainable commodity production is the complexity of the supply chain. Historically, companies only considered the segments which they dealt with directly. The Clariant company is working to change that approach with a new initiative called SPOTS (Sustainable Palm Oil and Traceability) with small producers in Sabah, Malaysia. The initiative spans the whole supply chain, and includes partners such as agri-trader Wilmar and cosmetics manufacturer L’Oreal. With the help of the local social enterprise Wild Asia, the partnership seeks to certify 500 smallholders in Sabah under the RSPO scheme and promote the sale of their palm oil. Such holistic approaches are rare and hold promise for streamlining sustainability reforms between different levels of the value chain.
Learn more from Clariant