November 15, 2018
The Intergovernmental Panel on Climate Change released a special report last month with alarming findings: the world has barely a decade to dramatically cut greenhouse gas emissions. Corporations, especially those sourcing or producing commodities, will be instrumental in reducing emissions to meet this global goal.
This is especially true of corporations sourcing or producing commodities from regions like Southeast Asia and Latin America; commodities (e.g. cattle, palm oil, soy) are the leading driver of permanent tree cover loss globally, according to last month’s study by the World Resources Institute (WRI).
The link between commodities, deforestation and climate change is something that many companies are aware of and acknowledge. Supply Change has identified nearly 500 companies that have made commitments to address deforestation in their supply chains. Over one-third (174) of these companies have also committed to reduce greenhouse gas emissions at the site of production, for example by converting waste products into fuel.
A disproportionate number of these companies make commitments to reduce GHG emissions in tandem with palm commitments, instead of with cattle, soy or timber. In the past month alone, companies like Unilever, Nestlé, Wilmar International, and others have ramped up their efforts to reduce deforestation in their palm supply chains, and are pledging to increase monitoring and transparency and working with certification programs like the Roundtable for Sustainable Palm Oil (RSPO). These activities predate the IPCC report, but Unilever and Wilmar have specifically pledged to reduce emissions from existing plantations, and Nestlé has identified deforestation-free palm oil as a component of its larger emissions-reduction strategy. While Unilever’s actions appear to be proactive, both Nestlé’s and Wilmar’s are in response to recent bad publicity (check out the Recent News section below for more details).
Purchasing certified goods is one way that companies can verify the emissions and deforestation associated with the production of the goods. This is the most popular aspiration that companies mention in their commitments, particularly for companies purchasing palm oil. In fact, Supply Change found that 86% of company commitments have targets to produce or purchase certified goods – such as those certified by the RSPO, Forest Stewardship Council (FSC), or Roundtable on Responsible Soy (RTRS). Purchasing certified goods can also reduce a company’s supply chain GHG emissions; the RSPO, for example, offers a PalmGHG calculator that allows producers to calculate the GHG emissions from their operations and identify ways to make reductions.
Certification schemes also allow companies to demonstrate quantifiable progress, and these commitments have had a market impact: a new report – featured in our Recent News section below – found that both the volume and production area for certified goods has increased in recent years. There have also been additional benefits for small-scale producers: producing certified goods enables them to increase operating efficiency, sell to more lucrative, international markets that only buy certified goods, and resolve land tenure issues.
Deforestation is harmful for a variety of reasons, but its contribution to climate change is particularly noteworthy in the wake of the most recent IPCC report. Given how much of permanent tree cover loss is caused by the production of commodities, companies that source palm oil, soy, timber, and/or cattle are well-positioned to take action to prevent deforestation.
But there is more work to be done. Of the so-called “big four” commodities we track (cattle, palm, soy, and timber), palm is the most common commodity to be the target of commitments. However, beef production is actually responsible for twice as much deforestation as palm oil, soy, and timber cultivation combined – and Supply Change has only tracked 53 (of which 23 aim to reduce emissions) commitments made around cattle, compared to 283 palm commitments (of which 102 aim to reduce emissions).
More stories about changing supply chains are summarized below, so keep reading!
- The Supply Change team
Voluntary sustainability standards gain ground
The International Trade Centre released a new report, State of Sustainable Markets 2018: Statistics and Emerging Trends, which found that production volumes and areas certified by voluntary sustainability standards have grown significantly throughout the world. Between 2011 and 2016, production areas tripled and doubled for certified cocoa and palm oil, respectively. The RTRS saw largest increase in certified production area for any individual standard, with a seven-fold increase between 2011 and 2016. Over one million hectares – roughly the same area as Lebanon – of soy cultivation are RTRS-certified.
Learn more from International Trade Centre
Joining forces: Unilever joins efforts to get statewide RSPO certification for Sabah
Unilever is committing $2.5 million to help palm oil plantations in the Malaysian state of Sabah become certified by the RSPO. Sabah intends to achieve jurisdictional certification for its palm oil production by 2025, but only 24% of palm oil plantations in state are currently RSPO certified. While typical RSPO certifications are granted to mills and plantations, jurisdictional certification also includes certification of the production and processing of palm oil. This approach is especially attractive to farmers and small palm oil companies because it shifts some of the financial and logistical burden of monitoring, permitting and compliance to the government and larger companies. Other companies and non-governmental organizations, including the Tropical Forest Alliance, United Nations Environment Programme, AAK, and HSBC Bank, are also working with Sabah to help it achieve the certification.
Learn more from The Star
Watch and learn: Nestlé revamps palm oil supply chain strategy
Several months on from its disagreement with the RSPO, Nestlé is taking steps to increase transparency in its palm oil supply chain. Nestlé announced plans to monitor their palm oil suppliers using the Starling satellite monitoring service, and the information obtained will be published on the company website in 2019. Nestlé has also promised to blacklist suppliers that violate Nestlé’s zero deforestation policy and has already removed ten suppliers from their supply chain at the end of September. Reactions to Nestlé’s plans have been mixed: some organizations (e.g., The Forest Trust) have praised their initiative, while others (e.g., Greenpeace) remain unimpressed.
Learn more from SWI Swissinfo.ch
Wilmar’s deforestation commitment gets a thumbs-down from Greenpeace
Wilmar is attempting to improve the transparency of its palm oil supply chain and taking steps to ensure its suppliers are not clearing rainforests in response to protests by Greenpeace. Wilmar has tried to improve the transparency and sustainability of its palm oil supply chain since 2013. Recently, the company announced a new time-bound plan to achieve its no deforestation and no peat, no exploitation commitment by 2020. Greenpeace remains unsatisfied with Wilmar’s new efforts, however, since the company does not require their suppliers to provide maps of their concessions.
Learn more from Eco-Business
SPOTT assessment gives most palm oil commitments the side-eye
The Sustainability Policy Transparency Toolkit (SPOTT) assessed of 70 of the world’s most significant palm oil producers and traders. The results are not encouraging: the report found that most of these companies are not doing enough to effectively address deforestation in their palm oil supply chains. This is despite the presence of zero deforestation commitments – SPOTT judged that most commitments did not provide evidence of monitoring activities or require buy-in from all suppliers.
Learn more from SPOTT