Time for change: delivering deforestation free supply chains

In the last five years 10 million hectares have been lost, roughly the area of Bulgaria every year. The loss of primary forests, particularly in tropical areas, continues at an alarming rate, with a huge long term impact on the Earth’s climate, biodiversity and people who live in the forests.
If deforestation was compared to a country in terms of emissions, it would be the third one in the world after the United States and China. Since 1960 around half of tropical forests have been lost, with strong evidence that demand for agricultural commodities and agricultural expansion are the main drivers

A recent study published in Science has confirmed  that agricultural expansion is the dominant cause of tropical deforestation. Pasture expansion is the most dominant driver by far, accounting  for around half  of the deforestation, resulting in agricultural  production across the tropics. Palm oil and soy cultivation together account  for at least a fifth, and six other crops – rubber, cocoa, coffee, rice, maize and cassava likely account  for most of the remainder, with large regional variations and degree of uncertainties.

Supply chain and demand side measures must be designed  in a way that addresses the underlying and indirect ways  in which agriculture is linked to deforestation. These side measures need to drive improvements in sustainable rural development, otherwise deforestation rates will remain stubbornly  high in many places.

More comforting news comes from recent studies indicating that nature and land use solutions can contribute up to 37% or 11.3 Gt CO2 of the climate mitigation required  by 2030 and limit warming to within a 2C increase. Of this important contribution, almost two thirds can be achieved through forest conservation and restoration and improved management of tropical forests, mangrove and peatlands. To implement them, systemic action is needed to redirect investment and funds and reduce deforestation.

Local impacts, global drivers

Globally, the main drivers  of deforestation and forest degradation are linked to a handful of agricultural commodities that cause land use change such as  palm oil and soy, coffee, cocoa,  meat and  maize  followed by other products like rubber, leather, timber, as well as  infrastructures like  roads, dams, oilpipes and not least mining.

In tropical forests, at the heart of the problem lies  agricultural expansion  driven by the demand of agricultural commodities, but also more complex causes like market pressure, food preferences, lifestyles,  inefficiency in some agricultural practices and food waste.

In European temperate, North-American and Russian boreal forests, the main cause of deforestation and forest degradation is  timber demand ( 83%) followed by forest fires  (12.7%) and urban sprawl (2.2%).

Why is Europe part of the problem?

EU consumption accounts for about 10% of global deforestation.  This might not sound a lot, nonetheless Europe has a leading position on environmental and climate policies worldwide and is able to influence global  trade. Data and studies show that Europe is one of  the biggest importer of commodities linked to deforestation or Forest Risk Commodities ( FRCs) as shown in the pie chart.

For some commodities like cocoa, the EU is the world’s largest importer of cocoa beans, responsible for over 60 per cent of global imports. Although only some cocoa  imports are linked to deforestation,r the main producing countries, Ivory Coast and Ghana, have faced high deforestation rates in the last 20 years.

The impact of EU consumption on deforestation is so relevant  that in 2021 the EU Commission, at the request of  the EU Parliament, presented a Proposal for a Regulation on deforestation free products.

The  responsibility  of EU countries  depends on the mix of FRC imports and their consumption.Nine EU countries are more exposed to deforestation and overall are responsible for 70%  of FRCs.

A critical issue in the identification of responsibilities in the consumption of FRCs is that importing  countries do not account  related emissions to deforestation, which  are instead attributed to producing countries in their national GHG  inventories.

Multilateral actions, targets still to be met

Without a binding international agreement, European and national Regulations to track the impacts of FRCs along the supply chain, the private sector, NGOs, research institutions and  governments are working to improve not only the monitoring of the supply chains, but also to reduce the risks. To this end, nine European countries have set up the Amsterdam Declaration Partnership, to work with key supply stakeholders and  encourage them to reduce and minimize the impact.

Monitoring deforestation and forest degradation has  remarkably improved recently, with satellite data  available on Copernicus and Nasa platforms. The platform  Global Forest Watch relies  primarily on freely available medium-resolution imagery (10-30 meter pixels) from NASA’s Landsat or the European Space Agency’s Sentinel  and  it allows tracking of deforestation in exposed countries.

New and innovative open tools have been developed to track deforestation. Among them, Trase Earth is a revolutionary data – driven transparency initiative, developed by the Stockholm Environment Institute and  The Global Canopy, that is able to monitor the trade and financing of commodities driving deforestation worldwide. It maps supply chains combining self-disclosed data from companies with customs, shipping, tax and logistics linking consumer countries to traders and places of production.  It shows how commodity  exports are linked to environmental and social harms in the places where they are produced. Trase’s freely available tools enable companies, financial institutions, governments and citizens to take practical steps to address  deforestation. It already covers over half the global trade in forest-risk commodities and continues to expand coverage to new commodities. It maps supply chains and financing of key commodities from entire countries and regions, such as Brazilian soy or Indonesian palm oil exports, providing a wall-to-wall map of the central stages of a supply chain.

At  the forefront of commodity certification and sustainable production,  long running schemes such as FairTrade and  RainForest Alliance, have joined forces with the aim of better visualizing  and assessing  deforestation risks in locations where there are certified producer organizations.  For some  highly traded and risky commodities such as palm oil and soya, specific certification standards  have been developed, permanent round tables    with  NGOs, market players and  government set ups.

The private sector and multinational companies have often developed their own standards to track and improve the impacts of their commodities in the value chains  .In the last years  there has been an increase of  hybrid forms of sustainable governance within big industries and multinationals.  Nespresso has launched  the AAA Sustainable Quality Program  to improve sustainability standards  in coffee plantations.

In parallel, alliances and coalitions between multiple players in  the supply chain including producers, buyers, government intermediaries, civil societies and governments to face issues such as minimum wage, deforestation and minimum price for producers.  Global Coffee Platform, Cocoa&Forests Initiative and Soft Commodities Forum  are examples of coalitions set up by global food giants and Consumers Goods Forum.

Several independent supply platforms, developed  by high profile  non profit organisations, are now available  for the private sector to track supply chains  at high risk of  land use change. One of the best and most accurate  is  Global Forest Watch Pro, which  provides  maps and tools to private entities to identify land risks linked to the supply of some commodities.

If tracking impacts is improving at the same rate l as corporate initiatives,then why does deforestation continue at such an alarming rate? First of all, not all deforestation is driven  by high risk commodities.  In the African continent practices such as slash and burn and shifting agriculture  to increase  agricultural land for self consumption and local food demand, are widespread.

At the forefront of global consumption patterns, some companies are committed to reducing deforestation in their supply chains, others accept “zero net deforestation”, offset  by reforestation  plans. Also  for the majority of companies committed to  reducing deforestation, their pledges   include a 2020  cut off date, not updated to 2030.

According  to Forest 500, an ambitious and important  project, supported by the Global Canopy, to monitor and assess pledges of companies and financial institutions exposed to  deforestation in their activities, key findings  in the evaluation of their results suggest the following outcomes:

• three quarters of 350 monitored companies don’t have pledges on all activities and supply chains;  117 of the  350 companies  don’t have any  commitment  
• several companies committed to reducing  deforestation   don’t provide evidence on how  they will implement  targets, in particular for soya, meat  and leather supply  chains
• companies assessed by Forest 500  don’t have an  adopted  ethical Code of Conduct  to show respect of human rights  toward  local people and ignore the human costs of deforestation

Forest500 initiative  and transparency platform has increased not only transparency  in companies commitments  but also those  of financial  institutions,  whose impacts are more opaque  and  are less accountable through  financial ramifications.

The EU Regulation on deforestation, adopted on May 2023,  could represent a game changer. A key  requirement of the Regulation is a  binding due diligence  by  operatorsand importers of products linked to deforestation, to prove  that imported commodities are risk free.  Another  innovative element is a benchmark evaluation of exporting countries,  based  on their deforestation rates since implementation.

The Regulation could be improved,  as proposed by a Green Peace Report  and from  the NGO Fern in an opinion paper. Nonetheless the adoption represents  a radical change toward deforestation, where  European importers in the food and agriculture sectors are called to address.

Link: Global forest monitoring