June 21, 2017

Dear Colleagues,

Today kicks off Innovation Forum’s two-day conference in London, “How business can measure the impact - and ROI - of corporate sustainability.” Forest Trends’ Supply Change Senior Advisor, Stephen Donofrio, is moderating panels with representatives from London Stock Exchange Group, Hermes Investment Management, United Nations Principles for Responsible Investment, University of Cambridge Institute for Sustainability Leadership, Hilton Worldwide, and United Nations Environmental Program, World Conservation Monitoring Center on investor perspectives of social and environmental data and sustainability data collection and frequency. More information is available here.

This topic is timely as governments and investors increasingly seek to quantify and mitigate their exposure to companies involved in commodity-driven deforestation. In a landmark decision, Norway’s parliament adopted a resolution prohibiting public procurement of biofuel made with palm oil or palm oil derivatives just two months after the European Union parliament passed their own resolution urging member countries to tighten import requirements for commodities associated with deforestation (read more in April newsletter). Mounting evidence shows that palm oil-based biodiesel is actually worse for the climate than traditional fossil fuel sources, according to recent research commissioned by the Rainforest Foundation Norway. Total greenhouse gas (GHG) emissions figures for palm oil-based biodiesel are higher than those of fossil fuels, when indirect greenhouse gas emissions from land use change are accounted for (e.g., conversion of peatlands and rainforests into palm oil plantations).

Western buyers are demanding increased transparency and monitoring of impacts, prompting action in the palm oil industry. Supply Change finds that 63% of palm oil producers with commitments aim to reduce gas emissions at the location of production and 31% of manufacturers and retailers with commitments have the same aspiration for the producers of the palm oil they supply for their products.

To address GHG concerns, producers certified under the Roundtable on Sustainable Palm Oil (RSPO) standard are required, as of the beginning of 2017, to use the PALM GHG Calculator tool to quantify total emissions from their palm oil production. The latest version of the tool includes indirect GHG emissions from land use change, which were not accounted for in previous versions of the tool. In addition, the RSPO and the World Resources Institute jointly published an interactive map, GeoRSPO, that includes the locations of certified mills and concessions and tracks real-time tree cover loss and fire alerts nearby. The increased measurement of land use impacts could be an important shift for the RSPO, especially as this green certification group has attracted more members than ever before and now certifies 21% of palm oil supply.

Looking ahead many groups are exploring an array of different financial carrots as well as sticks for promoting sustainable commodity production. The recent launch of the Access and eXchange for Impact Investment and Sustainability project, for example, connects impact investors with small and medium enterprises engaging in sustainable agriculture and forestry. At the same time, green groups are finding new angles in which to pressure financial institutions to establish stronger forest safeguards for commodity lending. New research by the Rainforest Foundation Norway highlights how Nordic banks are indirectly bankrolling deforestation through their support of smaller regional banks, which directly fund palm oil producers engaging in deforestation.

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

-The Supply Change team



Upcoming Events

How business can measure the impact - and return on investment - of corporate sustainability
London, United Kingdom, 21-22 June 2017

This two-day business conference will focus on how organizations such as BASF, Cargill, Danone, HSBC, Olam, and Sime Darby measure their sustainability impacts and return on investment.

Learn more about the event here.



Recent News

Sustainability Storytelling
The well-known UK-based retailer Marks & Spencer (M&S) continues to refine its sustainability messaging with the rollout of a new phase in its sustainability plan – “Plan A; because there is no Plan B.” The latest phase looks to engage customers directly through a narrative that they call “Plan A attributes.” M&S has pledged that half of its products sold will market at least one sustainability attribute; as of now 56% of its products do. However, it can be challenging to inform consumers about product sustainability, which is why M&S added a consumer-facing tagline: “Doing the right thing.” By repackaging its corporate social responsibility targets into consumer friendly attributes, M&S hopes to stoke a consumer culture that values sustainability along the whole supply chain.
Read more from Ecosystem Marketplace



Cracking the jurisdictional juggernaut

Several green groups released the Sustainable Landscapes Rating Tool, designed to help investors and other actors rapidly evaluate how well political jurisdictions can support sustainable landscapes, which balance agriculture and environmental protection. This diagnostic tool provides a framework for rating jurisdictions based on policies, monitoring systems, community engagement, and producer norms around sustainable land use and land tenure. When used in combination with other evaluation tools, companies have a concrete method for comparing land use change risks between different agricultural producing jurisdictions. The tool creators seek to empower companies to make preferential commodity sourcing from farmers operating in jurisdictions with stronger safeguards for sustainable commodity production and to empower investors to make preferential investments in those same farmers.   
Read more at The Climate, Community & Biodiversity Alliance



Two cups of tea

Earlier this month, Rainforest Alliance and UTZ Certified announced the merger of their two agricultural sustainability certifications—covering at least 182,000 of the same cocoa, coffee, and tea farmers—which will be joined under the well-known Rainforest Alliance brand. After the certification consolidation, businesses will no longer have duplicative administrative burdens for meeting two separate standards. The union should “combine the best of both the organizations and will incorporate the best of what we currently know and will help farmers be certified more efficiently” Han de Groot, Rainforest Alliance’s new chief executive told in an interview.



Monthly Insights from the Supply Change Desk

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.


Stellar performance

Many apparel companies have come under fire recently for social and environmental problems within their supply chain. Yet, many textile companies still overlook the deforestation risks associated with wood-based fabrics and cattle leather. Not Stella McCartney. From the start, the UK designer committed her company not to use any leather in any of its products. The luxury brand does not mark-up/pass on any additional costs associated with vegan leather (non-animal based) production, which can cost up to 70% more than leather production for other brands (depending on the style). Also, Stella McCartney was able to trace its full supply chain. This allowed the company to achieve its commitment only to source cellulose fibers from sustainably managed forests and not from ancient or endangered forests.
Read more at Innovation Forum


Consistency is key

Supply Change finds around 45 companies that manufacture and/or retail products with soy have commitments to procure responsibly produced soy. Yet buyers often struggle to secure physically certified soy given that less than one percent is certified. Through its Adeco Agropecuaria soy operations in Argentina, Adecoagro remains one of the world’s top five producers of Round Table on Responsible Soy (RTRS) certified soy. Despite having a loosely defined commitment, this agro-industrial company has consistently reported certified volumes and hectares of soy production over the last five years, making it among the longest reporting companies with RTRS certificates. Also in an unusual twist, Adecoagro published its other commitment, not to operate in heavily wooded areas and wetlands, in an often overlooked medium - its report to the US Securities and Exchange Commission.
Read more at Adecoagro’s profile.

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