Zerodeforestationinitiativesandtheirimpactsoncommoditysupplychains

Discussionpaperpreparedforthe57thSessionoftheFAOAdvisoryCommitteeonSustainableForest-basedIndustries

Zerodeforestationinitiativesandtheirimpactsoncommoditysupplychains

Discussionpaperpreparedforthe57thSessionoftheFAOAdvisoryCommitteeonSustainableForest-basedIndustries,22June2016

byTillNeeffandThaísLinhares-Juvenal

FoodandAgricultureOrganizationoftheUnitedNations

Rome,2017

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Contents

Acknowledgments..................................................................................................................................v

Acronyms...............................................................................................................................................vi

1 Introduction....................................................................................................................................1

2 Definitionsandtheirimplicationsforthefeasibilityandstringencyofzero-deforestationcommitments..................................................................................................................................4

3 Certification:acommonproxyforeliminatingdeforestation.........................................................8

4 Supply-chainintegrationinzero-deforestationefforts.................................................................13

5 Commoditiesandcompanies........................................................................................................17

6 Ensuringlong-termpositiveimpacts.............................................................................................22

7 Fromthesupplychaintothelandscapelevel...............................................................................24

8 Conclusions...................................................................................................................................27

9 Implicationsofzero-deforestationinitiativesforforestproductvaluechains.............................29

10 Literature.......................................................................................................................................31

Annex1:Majorcertificationschemesandtheirprincipleswithrelevancetodeforestation.............37

Annex2:Chain-of-custodyapproachesforpalmoil...........................................................................39

Figures1 Azero-deforestationtimeline........................................................................................................32 Overviewofdefinitionalissuesinseveralzero-deforestationinitiatives.......................................53 Voluntarycertificationschemesforforest-riskcommoditiesanddeforestation..........................84 Supplyofcertifiedforest-riskcommoditiesversusproxyofdemandfrommajorcompanieswith

zero-deforestationcommitments................................................................................................105 Simplifiedresultshierarchyofzero-deforestationinitiatives,includingindicatorsattheoutput

andoutcomelevels......................................................................................................................116 Idealizedsupplychainandotheractorsinzero-deforestationinitiatives...................................137 Actorsdirectlyorindirectlyinvolvedinzero-deforestationinitiativesalongsupplychainsfor

agriculturalandforestryproducts................................................................................................158 Growthratesofforest-riskcommoditiesinmajorproducercountriesin2000–2015(5-year

movingaverage)...........................................................................................................................179 Productiontimeseriesofforest-riskcommoditiesinmajortropicalproducercountries...........1810 Estimatesofthecontributionofsmallproducerstotheproductionofforest-risk

commodities.................................................................................................................................2311 Contributionsandbenefitsofproducers,commoditybuyers,financialinstitutionsandlocal

governmentfromjurisdictionalzero-deforestationinitiatives....................................................2512 Breakdownofregularproducers,certifiedproducersandproducersinlow-riskjurisdictionsto

regulatoryagencies,commoditybuyersandfinanceinstitutions...............................................26Tables1 Parametersintheforestdefinitionsusedinseveralinternationalcontexts.................................62 Forest-riskcommoditiesandthezero-deforestationmovement................................................19

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v

Acknowledgments

Thevaluablecontributionstothispaperbythefollowingpersonsaregratefullyacknowledged:themembersoftheSteeringCommitteeoftheAdvisoryCommitteeonSustainableForest-basedIndustries,ChrisElliott(ClimateandLandUseAlliance),DanielZarin(ClimateandLandUseAlliance),EricSwanson(ForestTrends),FrancescoTubiello(FAO),GaryDunning(TheForestsDialogue),HansSmit(SNV),HeinervonLüpke(GIZ),JukkaTissari(FAO),MarcoBoscolo(FAO),MaríaJoséSánzSanchez(FAO),MatthewReddy(WorldBusinessCouncilforSustainableDevelopment),MorizVohrer(GoldStandard),RichardMcNally(SNV),RodneyTaylor(WWF),SusanBraatz(FAO),ThaísLinhares-Juvenal(FAO)andUtaJungermann(WorldBusinessCouncilforSustainableDevelopment).

vi

Acronyms

ACSFI AdvisoryCommitteeonSustainableForest-basedIndustriesEU EuropeanUnionFAO FoodandAgricultureOrganizationoftheUnitedNationsFLEGT ForestLawEnforcement,GovernanceandTradeFSC ForestStewardshipCouncilGEF GlobalEnvironmentFundGRSB GlobalRoundtableforSustainableBeefINDC IntendednationallydeterminedcontributionNGO non-governmentalorganizationPEFC ProgrammefortheEndorsementofForestCertificationREDD+ ReducingEmissionsfromDeforestationandForestDegradationRSPO RoundtableonSustainablePalmOilRTRS RoundTableonResponsibleSoyUS UnitedStatesofAmerica

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1 Introduction

Inviewofthestillalarminglyhighratesofdeforestationinmanypartsoftheworld,theglobalcommunityisincreasinglytakingactiontoreducethelossofforests.The2014NewYorkDeclarationonForestsaimstohalvenaturalforestlossgloballyby2020andreachzeronaturalforestlossby2030[1].Sincethen,theinternationalcommunityhasmadeavailablesignificantfundsforworkonzerodeforestation,especiallythroughtheGlobalEnvironmentFund(GEF)[3].Themostsignificantcommitment,however,istheSustainableDevelopmentGoals,adoptedin2015,inwhichcountriescommit,amongotherthings,tohaltingdeforestationby2020.OtherimportantrelevantprocessesincludeForestLawEnforcement,GovernanceandTrade(FLEGT),theprocessesaroundtheConventiononBiologicalDiversityandtheUnitedNationsFrameworkConventiononClimateChange,includingREDD+(amechanismforreducingemissionsfromdeforestationandforestdegradation)andtheintendednationallydeterminedcontributions(INDCs)oftheParisAgreementonclimatechange.Alltheseinitiatives,inonewayoranother,setgoalsandtargetsforgovernmentstoreducedeforestation.

Inaddition,anincreasingnumberofprivatecompaniesarevoluntarilycommittingtoeliminatingdeforestationfromtheirsupplychains.Companieshavelongbeenworkingtointegratesupplychains,notonlywithaviewtoimprovingprocurementefficiencybutalsotoenhanceenvironmentalandsocialimpacts,forexamplethroughresponsiblesourcingandgreensupplychains[4].Similarly,companieshavelongbeenengagedinvoluntarycertificationschemes,suchasthoseoftheForestStewardshipCouncil(FSC),theRoundtableonSustainablePalmOil(RSPO),Naturland,andRainforestAllianceCertifiedCoffeeFarms(seeAnnex1);thezero-deforestationmovementleansinasimilardirection[5].Certificationandprocurementstandardsareakeystrategyforcompaniestoeliminatedeforestationfromtheirsupplychains,particularlyfordownstreamcompanies,whichaccountformostzero-deforestationpledges[6].

Companiesactbecausefiercecampaigningbynon-governmentalorganizations(NGOs)hascreatedreputationalrisksinbeingassociatedwithdeforestation[7–10].Moreover,thereareregulatoryrisksinworkingwithlandusesbecausethepolicyenvironmentispronetointerferencefromgovernmentsaimingtoimplementnationalorinternationaltargets[7,8,10,11].Inaddition,usingnaturalresourcessustainablymayreducetheoperationalriskofeventuallydepletingtheproductionbase[7,8,10,12].

Government-ledmomentumaroundINDCsandREDD+providesacontextforcompanies’zero-deforestationwork.Definitions,standardsandmechanismsfortarget-settingareimportantissuesforeffortstoreducedeforestation,bothatthenationalscaleandforsupplychains[13].CompanyactiontoreducedeforestationultimatelycontributestogovernmenttargetsunderINDCsandREDD+.Bythesametoken,somegovernmentalpoliciesandmeasurestoreducedeforestationmaypromptchangestosupplychains.Inmostplaces,however,theprivateandpublicsectorscontinuetoworkindependently,andalostopportunityforbringingzerodeforestationtoscalehasbeenwidelydiagnosed[11,14–16].Thispaperchieflylooksintocompanies’approachestoeliminatingdeforestationfromtheirsupplychains.

Zero-deforestationpledgeshavereachedanimpressivescale.TheNewYorkDeclarationonForestswasendorsedby36nationalgovernments,53companiesand54civil-societyorganizations.TheConsumerGoodsForumrepresents400companiesacross70countries,whichcollectivelyemploynearly10millionpeopleandhavesalesofmorethanUS$3trillion.ItsTropicalForestAlliance2020includesmanyofthesamecompanies,aswellasgovernmentsandcivil-societyorganizations.The

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SoftCommoditiesCompact(betweentheBankingandEnvironmentInitiative,WWFandtheConsumerGoodsForum)accountsforapproximately50%ofglobaltradefinance.

Despitemuchearlyaction,however,itremainstobeseenwhethercompaniescanmeettheirpledgesandwhetherzerodeforestationcancreateimpactontheground.Muchmomentumhasbeenbuilt,andhundredsofcompanieshavemadepledges(Figure1).Nevertheless,thereislittleinformationonwhichtojudgeprogressbecausemanypledgesreferto2020or2030onlyandmanycompanieshavenotyetreportedpubliclyonprogress[2,6,20].Evenifcompaniescomplywiththeircommitments,large-scaleimpactonthegroundmayrequiretheengagementofgovernmentstosafeguardandmainstreamprogress[8].Todate,positiveexamplesofeffectivecollaborationbetweencompaniesandgovernmentsarefew(andlargelylimitedtoonecountry–Brazil)[11,15].Thedownsidetothetremendousmomentumaroundzerodeforestationistheriskofawfulfuturedisappointmentifthemovementfailstodeliverprogress.

Forthezero-deforestationmovementtosucceed,clarityisneededonthezero-deforestationconceptandthebestwaytooperationalizepledgesandbringzerodeforestationtoscale.Thisreportaimstoprovideinsightintothecurrentmomentumaroundzero-deforestationinitiativesanditsimplicationsfortheforestindustries.Itfollowsuponarecommendationfromthe56thsessionoftheAdvisoryCommitteeonSustainableForest-basedIndustries(ACSFI)requestingFAOto“helpfacilitateunderstandingandagreementondefinitionof‘deforestation-free’andimplicationsforforestproductsvaluechains”[21].

Chapter2ofthereportshowsthatthereisconfusiononthedefinitionsthatunderliezero-deforestationcommitments.Chapter3explainsthatprocuringcertifiedcommoditiesisthecommonproxyforeliminatingdeforestationfromsupplychains,despiteconcernsaboutitsadequacy.Chapter4discusseshowzerodeforestationaffectscompaniesacrossthesupplychains,andhowprivate-sectorplayersnonethelessdonotalwayscoordinateeffectively.Chapter5setsouthowthezero-deforestationmovementhasfocusedoncertaincommoditiesandgeographiesoverothers.Chapter6describeshowcomprehensivesupply-chainmanagementmakeszerodeforestationfeasibleandsafeguardsitsbenefits.Chapter7discussesthepotentialcontributionofgovernmentsinbringingzerodeforestationtothelandscapescale,andChapter8drawsconclusionsandChapter9describestheimplicationsofzero-deforestationinitiativesforforestproductvaluechains.

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Figure1:Azero-deforestationtimeline

40mhectaresFSCcertified

RoundTableonSustainablePalmOil

KyotoProtocolentersintoforce

"EatingUptheAmazon"

BrazilianSoyMoratorium

RoundTableonResponsibleSoy

200mhectaresPEFCcertified

"CookingtheClimate"

WWF'scallforzeronetdeforestation

UN-REDDandFCPFoperational

FirstRSPOcertification

"AHoradaConta"

"Slaughtering theAmazon"

BrazilianCattleAgreement

"CaughtRedHanded"

Nestlé

EquatorPrinciples

"PulpingthePlanet"

Walmart

ConsumerGoodsForumDeforestationResolution

GoldenAgriResources

FirstRTRSCertification

"ToyingwithExtinction"

"Don'tFlushTigerForests"

"TheRAMINPaperTrail"

"JunkingtheJungle"

"CombateàDevastaçãoAmbientaleTrabalhoEscravonaProduçãodoFerroe

doAço"

"FryingtheForests"

GlobalRoundtableforSustainableBeef

APP

FAO'sZeroDeforestationChallenge

TropicalForestAlliance2020

SoftCommoditiesCompact

Wilmar

Unilever

L'Oréal

"LicencetoLaunder"

Danone

Cargill

NewYorkDeclarationonForests

April

CountriessubmitINDCsforParisconference

03 04 05 06 07 08 09 10 11 12 13 14 15 16

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2 Definitionsandtheirimplicationsforthefeasibilityandstringencyofzero-deforestationcommitments

‘Deforestationfree’,‘zerodeforestation,’‘zerogrossdeforestation’and‘zeronetdeforestation’arerelatedbutdistinctterms,andtheyareoftenusedinterchangeably[22].Imprecisedefinitionscreateconfusionbetweenthosewhocommittopledgesandthosewhoaimtoassessorimplementthem.Theterminology,therefore,hasmassiveimplicationsforthestringencyandfeasibilityofpledges[22,23].Ultimately,alackofclear,agreeddefinitionscompromisesthezero-deforestationmovement[11,14,22].

‘Deforestationfree’and‘zerodeforestation’areinherentlyambiguousterms.Theyimplyamodifiertotheworddeforestation,andcontextisneededtounderstandwhethertheyreferto‘gross,’‘net,’both,orsomethingelse[13].

‘Zerogrossdeforestation’meansanendtotheconversionofallexistingforestlandandthereforegivesnoweighttocompensatorygainsinforestcovermadeelsewhere.Thisdefinitionstillrequiresclarificationonwhat‘forest’isintermsofitsreferencetimeframe,referencearea,origin,legality,morphology,structure,ecosystemvalueandothercharacteristics.Nonetheless,TheForestsDialoguecalledit“theleastambiguousterm”andinterpretedseveralcompanycommitmentstorefertogrossdeforestation[13].BenchmarkdataonAmazondeforestationarebasedmostlyoninformationfromBrazil’sNationalInstituteforSpaceResearch,whichpublishesestimatesofgrossdeforestation[22].

‘Zeronetdeforestation’meansnochangetothetotalforestedarea,andthereforenewforestscompensateforconvertedforests.Inunderstanding‘zeronetdeforestation’,thedefinitionof‘forests’isanimportantparameterthatneedsspecification.Thecruxofthedefinitionisthekindsofnewforeststhataregoodenoughtocompensateforlostforestareaand,hence,whatis‘acceptabledeforestation’.Forexample,plantationsreplacingnaturalforestsmightormightnotcountbecausetheyarelessbiodiverseandstorelesscarbon.Deforestationthatoccurredalongtimeagomightormightnotbepermissible.Thesefinerpointsareimportantforsecuringtheenvironmentalbenefitsofzeronetdeforestation;inadditiontoWWF,theBankingandEnvironmentInitiativeandtheConsumerGoodsForumusethisconcept[19].GlobalbenchmarkdataonforesttrendsarebasedmostlyonFAO’sGlobalForestResourcesAssessment,whichusesnetdeforestationasakeyvariable[24].

Bothzerogrossdeforestationandzeronetdeforestationhavereceivedsubstantialcriticism.Criticismofzerogrossdeforestationispremisedonthefactthatitdoesnotallowflexibilityinland-useplanning[13].Forestswouldneedtoremain,irrespectiveofdevelopmentneeds,whichareoftengreatestamongforest-dwellingindigenouspeoplesandlocalcommunities.Economicimperativesmighttrumpinflexiblezerogrossdeforestationcommitments[11].Critiquesofzeronetdeforestationfocusonthefactthatreplacementforestsareoftennotequivalenttoclearedvegetationintermsoftheirconservationvalue,carbonstockorotherecosystemservices[11,13].

Zeronetdeforestationenjoysmostmomentumamongrecentpledges,anditisanestablishedconcept.FAO’sForestResourcesAssessmenttakesintoaccountgainsinforestcoverfromtimberplantationsincalculatingnetdeforestation[24].TheConsumerGoodsForum,itsTropicalForestAlliance2020,andtheSoftCommoditiesCompactallformulatetheirtargetsintermsofzeronetdeforestation.TheForestsDialogueconcludesthat“theeconomicheftofthe[ConsumerGoodsForum](whosemembercompanieshavecombinedsalesofover$3.3trillion),WWF’ssizeand

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reputation,andthesupportof67countriesplustheEuropeanCommissionmakeastrongcasethatzeronetdeforestationisthevariationwiththemostbacking.”[13]

Althoughthedistinctionbetweennetandgrossdeforestationhasreceivedmuchattention,otherdefinitionalaspectsmaybeequallyimportant(Figure2).Mostofthezerodeforestationpledgestreatedinthispaperrefertosupplychains,butexpectedengagementfromgovernmentsreferstothelandscapelevel(seechapter7).Althoughfullyeliminatingalldeforestationisclosetoimpossible,inpractice,verificationschemesprovidedetailsonwhatis‘acceptabledeforestation’.

Figure2:Overviewofdefinitionalissuesinseveralzero-deforestationinitiatives

Thezero-deforestationpledgesofcompanieslargelyrefertoindividualcommoditieswithintheirsupplychains,nottobroaderlandscapes.WWF’soriginalproposalforzeronetdeforestationreferstoalandscapelevel[25].ThroughtheConsumerGoodsForum,companieshavealignedthemselveswithWWFbut,crucially,theirpledgesareoperationalizedatadifferentreferencescale,namelysupplychains[17,26–28].TheBrazilianCattleAgreement,theBrazilianSoyMoratoriumandtheIndonesiaPalmOilPledgestandoutbecausetheirbroadparticipationalmostequatestofullcoverage[12].Mostly,however,companiespickindividualforest-riskcommoditiestotackle[8,29,30].Dependingonthereferencescale,pledgescanhaveverydifferentimplicationsforthepotentialtoshiftpressuretodifferentgeographicalareas,differentcompaniesanddifferentcommodities[11,12].Therehavebeenfrequentcallsforzero-deforestationinitiativestoworkwithgovernmentsandatthelandscapelevel[5,8,15,31].

WWF

ConsumerGoodsForum

BrazilianCafleAgreement,Brazilian

SoyMoratorium

NewYorkDeclarahononForests

HighCarbonStockApproach

Netdeforestahonversusgross

deforestahon?

Netdeforestahon

Netdeforestahon

Grossdeforestahon

Netdeforestahon

Grossdeforestahon

Supplychainorjurisdichonallevel?

Originallyjurisdichonal,butinterestedinsupply

chainstoo

Supplychains

Supplychains,withverybroadcoverage

Jurisdichonallevel

Supplychains

Whatis‘acceptabledeforestahon’?

Forestsshouldmaintain“thenet

quanhty,qualityandcarbondensity”

Determinedbyprocurement

guidelines,drawingoncerhficahon

Vegetahonwithcertaintreecovercharacterishcsisoff

limits

Regenerahonwouldcompensateformatureforestloss

Vegetahonabovecertaincarbonstockthresholdisofflimits

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AccordingtoWWF,newforestsshouldonlybecountedwheretheymaintain“thenetquantity,qualityandcarbondensity”oftheconvertedforests[33].Cut-offdates(forwhenlandwasoriginallyforested)determinewhenitispermissibletoincludespecificlandsasnewforests[34].Whetherplantedforestsarealsotobecountedasforestsdetermineswhethercuttingdownprimaryforesttoestablishplantationsispermissible[18].TimberlegalityisakeyissueinUnitedStatesofAmerica(US)andEuropeanUnion(EU)timberimportregulations,andtherearededicatedcertificationstandards[18].Foreststructureanditscarbonstoragehasreceivedattentionasausefulproxyandbasisfornew‘highcarbonstock’standardsdevelopedspecificallyforzerodeforestation[11,35–37].Broadagreementseemstoexistthatforestswithhighconservationvalueareoff-limitsforconversionunderzero-deforestationinitiatives[38–40].

Technically,muchoftheconfusionrelatestothedefinitionof‘forest’,aswellastothereferencetimeframe,referencearea,origin,legality,structure,andconservationvalue.Theuseofdifferentforestdefinitionsaccordingtocontextiscommonplace(Table1);the‘right’definitionforzerodeforestationisunderdiscussion.Itsorigin,legality,structureandconservationvaluedetermines‘acceptabledeforestation’.Muchattentionisdedicatedtowhetherpledgesrefertocompanyareasortobroaderlandscapesinwhichcompaniesoperatebecausetherecouldotherwisebeopportunitiestocherry-pickareas[11].Similarly,thetimepointofconversionisakeyparameterinmostcertificationstandardsandmaydeterminewhethertheproductionbaseofindividualcompaniescanorcannotcomply[34].Theseandotherhighlytechnicalissuesallhaveabearingonwhatzerodeforestationmeans.

Table1:Parametersintheforestdefinitionsusedinseveralinternationalcontexts

Parameter UnitedNationsFrameworkConventiononClimateChange

ConventiononBiologicalDiversity

FAO’sForestResourcesAssessment

Minimumarea 0.05-1.0ha 0.5ha 0.5haMinimumheight 2–5m 5m 5mMinimumcrowncover

10–30% 10% 10%

Minimumtimesinceconversion

Notavailable Notavailable ~10years

Minimumstripwidth

Notavailable Notavailable 20m

Otherparameterscoveredindefinition

Youngstands,temporarilyunstockedareas

Youngstands,non-forestlanduses

Youngstands,non-forestlanduses,temporarilyunstockedareas,agroforestry

Source:basedon[41]

Procuringcertifiedgoodsisaconvenientwayformanufacturersandretailersfarfromproductionsystemstoimplementzero-deforestationpledges[2,6].Insuchcases,thedefinitionsunderlyingcertificationschemesindirectlyformthebasisforcompanies’zero-deforestationpledges.Somezero-deforestationpledgesarealsobasedonbespokeperformanceindicatorsdirectlyreflectingdeforestationprocesses,particularlyifproducersorprocessorstakeonpledgesthemselves.

Contentiousdefinitionsrevealthat‘zerodeforestation’meansdifferentthingstodifferentactors.WWFapproacheszerodeforestationbylooking,quitebroadly,atthenetquantity,qualityandcarbondensityofforests,recognizingthattheconversionofforestsatonesitemaycontributetothesustainabledevelopmentandconservationofthewiderlandscape[33].Greenpeaceisdevelopingitsownapproachtoverifyingzero-deforestationcommitments,usinghighcarbonstock

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incombinationwithseveralotherindicators[35,42].ForbothWWFandGreenpeace,theprotectionofbiodiversityisakeyconcern,asiseffectivecollaborationwithlocalcommunities.TheConsumerGoodsForumhasdrawnupprocurementguidelinesthateffectivelyequatezerodeforestationwiththeprocurementofcertifiedproducts[26–28].Infact,ForestTrendsdiagnoses,while“companiesmightbeinfluencedbythesamecampaignsandstakeholders,notwocommitmentsarealike”[6].

Althoughitisconceptuallyappealing,asingleuniversaldefinitionofdeforestationmaybeimpractical.Withregardstosustainableforestmanagement,FAOhascalledagloballyagreeddefinition“impracticalbeyondaverygenerallevelbecauseofthehugediversityofforesttypes,conditionsandsocioeconomiccontextsworldwide”;onlylimitedagreementcouldbereachedintheNon-legallyBindingInstrumentonAllTypesofForestsoftheUnitedNationsForumonForests[43,44].Althoughagreementonuniversaldefinitionsmaynotbedesirable,moretransparentanddetaileddefinitionscouldaddclaritytozero-deforestationpledges.

Keypoints

• Thereisconfusionondefinitions,withmajorimplicationsforthefeasibilityandstringencyofzero-deforestationcommitments.

• Pledgesrefertonetorgrossdeforestation,tosupplychainsorlandscapes,andtosomelevelof‘acceptabledeforestation’.

• Companies’zero-deforestationinitiativesusuallyrefertotheirsupplychains,whilegovernmentsoftenlookatthelandscapelevel.

• Mostmomentumisaroundzeronetdeforestation,whichmeansnochangetothetotalforestedarea,withnewforestscompensatingforconvertedforests.

• Operationalizingzeronetdeforestationrequiresdefining‘acceptabledeforestation’–thatis,whattypesofstandingforestsareoff-limitsforconversion,andwhattypesofnewforestscancompensateforconvertedforests.

• Toverifyzero-deforestationcommitments,companypledgesoftenrefertostandardagriculturalandforestcertificationschemes,whichimplydefinitionsof‘acceptabledeforestation’.

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3 Certification:acommonproxyforeliminatingdeforestation

Certificationisimportantevidencefortheverificationofzero-deforestationpledges,withForestTrendsfindingthatfourinfivepledgesrelyoncertification[6].TheConsumerGoodsForumpublishedprocurementguidelinesforsoy,pulp,paperandpacking,andpalmoil,whichidentifyseveralcertificationschemesassufficienttoverifyalowriskofcontributingtodeforestationandthereforewhichhelp“toachievezeronetdeforestation”[26–28].

Voluntarycertificationschemesforforest-riskcommoditiesaddressdeforestation(Figure3).AreviewofeightmajoragriculturecertificationschemesbytheRainforestAlliancefoundthatallschemesincludedcriteriaprohibitingforestclearance[5,34],thekeydifferencesrelatingtothetypesofforestsaffected,thecut-offdatefornon-conversion,andtherequirementsaroundremedialmeasures.TheForestsDialoguelookedatthreemajorforestcertificationschemesaspossibleevidenceofno-deforestationandconcludedthatallthestandardsspoketotheissueoftimberfromforestlandconvertedtoothervegetation[13].

Figure3:Voluntarycertificationschemesforforest-riskcommoditiesanddeforestation

TheFSC’sForestManagementCertificationprohibitsforestconversioninallbutexceptionalcases.Itprohibitstheconversionofnaturalforeststoplantationsandofnaturalforestsorplantationstootherlanduses.Thereareexceptionsiftheactivityaffectsaverylimitedportionofthearea,willproduceclearlong-termconservationbenefits,anddoesnotdirectlyorindirectlycompromisehighconservationvaluesError!Referencesourcenotfound.[38].

TheProgrammefortheEndorsementofForestCertification(PEFC)endorsesnationalstandardsthatregulateforestconversion.Itdoesnotprohibittheconversionofnaturalforeststoplantationsbutrequiresconversiontotakeplaceonlyunder“justifiedcircumstances”,includinglegalcompliance,theabsenceofnegativeenvironmentalimpacts,smallscale,andpositivesocioeconomicimpacts.Forestplantationscreatedbefore2011areeligibleregardlessofsuchcircumstances.ThePEFCisameta-standardthatsetsoutrequirementsfornationalcertificationschemes,whichmayindividuallygobeyondtheminimumrequirements.AmongseveralnationalcertificationschemesinNorthAmericaandEurope,thePEFCalsoendorsestheBrazilianForestCertificationProgramme,theIndonesianForestryCertificationCooperationandotherdeveloping-countryschemes[45].

RSPO• prohibitsconversionofprimaryforestsbutnotofotherforesttypes

RTRS• prohibitstheconversionofbothprimaryandsecondaryforests,usinganarrowdefinihonofforests

FSC• prohibitsforestconversioninallbutexcephonalcases

PEFC• endorsesnahonalstandardsthatregulateforestconversion

GRSB• callsfortheprotechonofnahveforestsbutdoesnotissuecerhficates

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RSPOcertificationprohibitstheconversionofprimaryforestsbutnotofotherforesttypes.Plantationscannotbeestablishedonlandswithprimaryforests,butsecondaryordegradedforestscanbeconvertedtoplantationsaslongasplantingsleaveouthigh-conservation-valueareasandavoidpeatlands[39].

CertificationbytheRoundTableonResponsibleSoy(RTRS)prohibitstheconversionofbothprimaryandsecondaryforests,usinganarrowdefinitionofforests.Theschemeexcludestheconversionof‘native’forests,includingbothprimaryforestanddisturbedandsecondaryvegetation.Anyvegetationlessthan10metresinheightcanbeconvertedaslongasareaswithhighconservationvalueareavoided[40].Mostcountrieshavemuchlowerthresholdsfortheheightof‘forests’;thehighthresholdhereensuresthatsoycanbegrownwithlittlerestrictioninwoodlands(e.g.theBraziliancerradowoodlands).

TheGlobalRoundtableforSustainableBeef(GRSB)’sprinciplesandcriteriacallfortheprotectionofnativeforests.Theschemedoesnotincludeindicatorsormeansofverification,whichwouldberequiredtounderliecertification.Rather,theintentionisthatsuchindicatorsandrelatedpracticeswouldbedevelopedthroughregionallybasedprocesses.

Aprerequisitefortradingcertifiedproductsisthetraceabilityofthechainofcustody.TheFSC,PEFC,RSPOandRTRSstandardsallcomewithseparatechain-of-custodycertificationstandards,drawingontypicalapproachesfortracingproductsthroughcomplexsupplychains,suchasbook-and-claim,massbalance,segregated,andidentitypreserved(Annex2).

Notallcertificationstandardsareequallyrelevanttozerodeforestation.TheguidelinesoftheConsumerGoodsForumpointtothemajorcertificationstandards(FSC,PEFC,RSPO,etc.)andlesser-knownstandardsalikeassufficientmeansofverificationasiftheyallhadlargelysimilarrequirements.Theuseofavarietyofcertificatesdefeatstheideaofauniversallyapplicableproductionstandard,however.Eventhewell-knownPEFChasattractedsubstantialcriticismfromNGOsbyendorsingtheIndonesianForestCertificationCooperation.WWFquestionedthedecisionandraisedconcernsinanopenletter[46].Morebluntly,Greenpeacestatedthat“anysustainabilityclaimsbasedonthesecertificationschemesisindustry‘greenwash’”[47].Notdiscriminatingbetweendifferentcertificationstandardsforforest-riskcommoditiesultimatelyunderminesthecredibilityofzerodeforestationasawhole.

Companiesusethreecommonoptionsforimplementingzerodeforestation:certifiedprocurement,directareamonitoring,andprocurementfromlow-riskjurisdictions.Certifiedprocurementisconceptuallysimple,andmostcompaniesconsidercertificationasgoodevidenceofzerodeforestation.Procurementfromlow-riskjurisdictionsmayprovidelessassuranceofzerodeforestation,butithasrecentlygainedmomentumasameansofverifyingcompliancewithzerodeforestation.Directareamonitoringoffersmostcontrolovertheimpactsofproductiononforestcover.

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Figure4:Supplyofcertifiedforest-riskcommoditiesversusproxyofdemandfrommajorcompanieswithzero-deforestationcommitments

SeeTable2(page23)fordetailsoncalculationsandsources.

Procurementfromlow-riskjurisdictionsallowscompaniestoearmarkproductsaszero-deforestationcompliantbasedonorigin.Clearly,thelevelofzero-deforestationassuranceislowerthanwhenrelyingonindividualcompany-levelcertification.Nevertheless,subnationaljurisdictionsareincreasinglyengagedinpursuingenvironmentaltargets,includingzerodeforestation,andsomeNGOsprovideschemestoverifysuchperformance,akintocertificates[48–50].Suchpreferentialsourcingfromlow-riskjurisdictionscloselylinkswithgovernmentalzero-deforestationaction.ItisconceptuallysimilartoNorthAmericanandEuropeangovernmentalactiontoregulatetropicaltimberimportsundertheEUFLEGTActionPlan,theEUTimberRegulationandtheUSLaceyAct[51–53].

Somezero-deforestationinitiativesmonitorproductionareasdirectly.TheIndonesiaPalmOilPledge,forexample,committedagroupofcompaniestoavoidinghigh-carbon-stockareasfornewplantations[54].Althoughdetailsoftheverificationschemeareunderelaboration,theyarelikelytorelyonareamonitoring.Similarly,agroupofmanufacturersandtheirbusinessassociationssetuptheBrazilianSoyMoratoriumandtheBrazilianCattleAgreement[55,56].ParticipantsagreedtoonlypurchasefromproducerswhodidnotdeforestlandsinAmazonia,andthepurpose-designedverificationschemereliedonthecollectionofremotesensingdata.Usingjustoneperformanceindicator–theeligibilityoflandsasperdefinedcut-offdates–madeverificationmuchsimpler,moreunambiguousandmoreencompassingthanrelyingoncertificationschemes.Arguably,itwasalsomuchcruderandsidesteppedtheneedtoimprovethebusinesspracticesofproducers.

ApilotinitiativebyGoldenAgriResources,GreenpeaceandTheForestTrusthasproposedtheconceptofhigh-carbon-stockforeststodeterminewhereforestsmustbepreservedorcangivewaytoplantations[35,37,42].High-carbon-stockforestreferstovegetationwithcarbonstorageaboveacertainthreshold(e.g.35metrictonnesperhectare)[37].TheSustainablePalmOilManifestoandtheIndonesiaPalmOilPledgehavebothtakenupthebasicconcept,committingtheirsignatoriestoprotectinghigh-carbon-stockforests[36,57.]Arguably,monitoringhigh-carbon-stockforesttrackstheoutcomesofcompanies’activitiesmoreimmediatelythancouldbedonebyrelyingoncertificationorotheroutputsofzero-deforestationpledges(Figure5).

15%1%

28%

59% 20% 62% 26%

68% 24% 11%

35% 51% 35%

Palmoil Soya Timber,pulp&paper

Beef

Supply:shareofglobalproductionwithmajorcerti fication

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ni l

ni lSupply:shareofglobalproductionwithdirectmonitoring

Supply:shareofglobalproductioninlowriskjurisdictions

ni l

11

Agriculturalandforestmanagementcertificationstandardsarenotinallcasesconsideredsufficientlystricttoeffectivelyprohibitdeforestation[11,13,58].Ratherthanbypassingexistingstandards,though,thereseemstobemomentumtobuildonexistingstandards,suchasthroughtheadditionofcomponentsaddressingzerodeforestation[32].Commontraceabilitysystemsinvolvingchain-of-custodycertificationarenotalwaysconsideredsufficientlyrobust[5].Mostimportantly,somefeelthatachievingpositiveoutcomesandsecuringlong-termsocietalimpactsrequiresapproachesgoingbeyondthecompanylevel[5,16,31].Workisongoingtodrawupnewschemesforascertainingzerodeforestationatthelandscapelevel[48,49].

Zero-deforestationinitiativesgenerateresultsasoutputs,outcomesandimpacts[12].Compliancewithcertificationstandardsisinitselfausefuloutputofzero-deforestationefforts.Conceptually,however,sucheffortstargetimprovementstocompanybusinesspracticesasthezero-deforestationoutcome.Evenbeyondthebusinesspracticesofparticipatingcompanies,zero-deforestationinitiativesshouldachievelong-termsocietalimpacts.NGOsoffersupportwithcertificationandperformanceindicators,notleastbyparticipatingintheroundtablesthatdesignthestandards[38–40].NGOsalsoproposetoolsandapproachesforcompanieswishingtoimprovebusinesspractices,suchaswithrespecttoimprovedtraceability[5],directmonitoring[35],legality[59,60]andeventheprovisionofincentivepayments[61].LeadingNGOshighlighttheneedtoengagesmallproducers[5,14,16]andgovernments[7,14,16],andworkingatthelandscapelevel[5,31]inordertosafeguardthepositiveimpactsofzero-deforestation(Figure5).

Figure5:Simplifiedresultshierarchyofzero-deforestationinitiatives,includingindicatorsattheoutputandoutcomelevels

Regardlessofthespecificsofindividualperformanceindicators,companiestakeonpledgestheycanactuallyfulfil,andtheytendtoavoiddisruptingtheirbusinesspractices.Forexample,theRTRSprohibitstheconversionof‘forest’vegetationwithaheightofmorethan10metres,althoughmostforestdefinitionsusemuchlowerheightthresholds(around5metres)[24,40].SoyfarmingoccursfrequentlyintheBraziliancerradowoodlands,whichmightbelargelyoff-limitsundertypicalforestdefinitions.TheConsumerGoodsForum’sprocurementguidelinesforpulp,paperandpackagingforpalmoilandsoyrelylargelyonthird-partycertificationtoverifycompliancewithzero-deforestationtargets[26–28].TheuseofmajorstandardssuchasFSC,PEFC,RSPOandRTRSforzerodeforestationhasbeenportrayedasquestionable[5,13,34,58],buttheConsumerGoodsForum’spalmoilguidelinesalsopermit“anyothercredibleindependentthird-partymechanismsthatverifylowriskofsourcesthatareunsustainableorcontributetodeforestation”[28].

Activities:NGOcampaigns,multistakeholderinitiativesandcompanies’workto

improvebusinesspractices

Output:compliancewithstandardsandcertified

procurement

Outcome:improvedbusinesspracticesof

companies

Impact:long-termsocietalbenefits

Indicator:Managementcertification

Safeguardsforcommunities Indicator

:

Traceability

Indicator:Legality

Indicator:Highcarbon

stocks

Indicator:Directareamonitoring

Indicator:to

beassessed

inhindsight

Upscalethrough

governments

Safeguardsatlandscape

scale

12

Zero-deforestationinitiativesareoftensignpostsofcompanyactionwithoutalwaysdrivingit.FortheNewYorkDeclarationonForestsitwasascertainedthatcompaniesusuallysettargetsbeforeendorsingpledges[2].TheTropicalForestsDialoguehasdescribedthewidelyvisiblezero-deforestationinitiativesas“attention-grabbing”,highlightinghowthey“makeforgreatheadlines”[11].Regardlessofsuchcriticism,theGlobalCanopyProgrammehasfoundperformanceagainstsustainabilityindicatorstobemuchbetteramongcompaniesthataremembersoftheConsumerGoodsForumthanamongotherwisecomparablecompanies,“suggestingsignificantprogressisbeingmade”[29].

Companiesneedtodeviseandcommittoprogrammesforachievingcompliancethroughoutthesupplychaintomakezerodeforestationfeasibleandsafeguarditsbenefits.Smallerproducersfacehighbarrierstoobtainingcertificationbecauseofthecostsinvolvedinimprovingbusinesspracticesandbecauseofthehighcostofthecertificationprocessitself[5].Localcommunitiesworkingwithproducers(e.g.asout-growers)arevulnerabletobeingleftbehindwhenshiftingtheirproductionsystemstocomplywiththeprocurementguidelinesofinternationaltradersbecauseprocessorsandtradersmayturnelsewhere[5,8,16].Bythesametoken,producersthatareunableorunwillingtocomplywithcertificationstandardsmayselltheirproduceintoother,less-demandingmarketsandthussidestepattemptstopromotesustainableproduction[11].Insummary,toguaranteeenvironmentalintegrityandsocialinclusion,zero-deforestationinitiativesmustnotonlyuseappropriatedefinitions,theyalsoneedtocomewithwell-designedprogrammestosafeguardenvironmentalintegrityandsocialinclusion[12].

Keypoints

• Procuringcertifiedcommoditiesisacommonproxyforeliminatingdeforestationfromsupplychains,despiteconcernsaboutitsadequacy.

• Companiescommonlyuseoneofthreeapproachesforimplementingzerodeforestation:certifiedprocurement,directareamonitoring,orprocurementfromlow-riskjurisdictions.

• Procurementfromlow-riskjurisdictionsallowscompaniestoearmarkproductsaszero-deforestationcompliant,basedonorigin.

• Somezero-deforestationinitiativesdirectlymonitorproductionareas,includingforconversiontimepointsand‘highcarbonstock’toidentify‘acceptabledeforestation’.

• Mostly,companiesconsidercertificationundertheleadingschemes,inparticularRSPO,FSC,PEFCandRTRS,asgoodevidenceofzerodeforestation,whichmayalsoincludecommoditiesoriginatingfromconvertedsecondaryforests,degradedforests,orforestswithlowheight.

• Anyoftheseimplementationapproachestozero-deforestationcommitmentsaffectsactorsalongthesupplychain.

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4 Supply-chainintegrationinzero-deforestationefforts

Companieshavelongworkedtointegratetheirsupplychains,withtheobjective(amongothers)ofenhancingenvironmentalandsocialsustainabilityinthesourcingandprocessingofrawmaterials.Supply-chainmanagementtraditionallyfocusesontheefficiencyofsourcinginputs,aswellasoftheprocessing,manufactureanddeliveryofproducts,butheightenedconsumerawarenesshasledtodemandsthatfirmsensuresustainabilitythroughoutthesupplychain[4].Environmentalandsocialsustainabilityindicatorscanrelatetoforestsanddeforestation.TheCarbonDisclosureProjecthighlightedthatthree-quartersofreportingcompaniesrecognizedatleastonedeforestation-linkedsupply-chainrisk[10].

Mostlyitismanufacturersorretailerswhomakezero-deforestationpledges,butthishasimplicationsacrossthesupplychainfortraders,processorsandupstreamproducers[6,29],andmostoftheburdenforcomplyingwithpledgesisfoistedonproducers[11].Inafewcases,processors[55,56]andproducers[37]havemadezero-deforestationpledges.Manycompaniesareverticallyintegratedandcoverseveralsupply-chainsegments,andthesehavealsomadezero-deforestationpledges[15,29].Positioninthesupplychaindetermineshowcompaniesparticipateinthezero-deforestationmovement(Figure6,Figure7).

Manufacturersandretailerssellconsumergoodsandmakezero-deforestationpledgestominimizebusinessriskanddistinguishfromcompetitors.Thesecompanieshavemuchexposuretoconsumers,andbeingassociatedwithsustainabilityconcernsbyNGOsisthereforeamajorriskfactor[7,8].ManufacturersandretailerscollaboratewithNGOsthroughmultistakeholderplatformstoreducethisrisk.Typically,manufacturersandretailersaredownstreamfromproducersandthereforeneedtorelyontheprocurementofcertifiedproductstoimplementzero-deforestationpledges[6].

Figure6:Idealizedsupplychainandotheractorsinzero-deforestationinitiatives

Consumer-facingcompaniesdownstreaminthesupplychainstakeonmostofthepledges:accordingtoForestTrends,consumergoodsandservicesaccountfor79%ofcompanieswith

Information

ProcessorsProducers Traders Manufacturers Retailers Consumers

Governments

Production,environmentandlocalcommunities

Financialsector

Multistakeholderplatforms

Procurement

NGOs

14

pledges[6].Clearly,itispressurefromconsumersandtheirconsumptionpreferencesthatdrivesthezero-deforestationmovement.

Producersandprocessorsneedtoimprovebusinesspracticesandobtaincertificationtocomplywiththeprocurementguidelinesofdownstreamtradersandmanufacturers.ThesecompaniesdonottypicallyhaveexposuretoconsumersandarethuslessvulnerabletoNGOcriticism.Producers,however,controlthemeansofproductionandthereforecanchangethewayforestsaretreated[6].

Banksprovideoperatingcapitaltoproducers,manufacturersandretailers.Theydirectlyfinanceproducersandprocessorsandprovidetradefinanceandcorporatefinancetomanufacturersandretailers[19].Beingimplicatedwithunsustainableproductionanddeforestationisareputationalriskfactorforretailbanksbecausetheyhaveconsumerexposure;banksthereforeassessbusinesspracticesandavailablecertificationstandardswhenlending[10].Thefinancialsectorhaslongbeenconsideredakeyentrypointfortheintroductionofsustainabilitystandardsintobusinesspractices[62].

Consumersattheendofthesupplychainmaypreferlabelledproductsandavoidcompaniesassociatedwithdeforestation.Visibleproductlabelsenablethemtodistinguishbetweenretailproducts,andtheyalsoreceiveinformationfromNGOsaboutthemeansofproductioninthesupplychainsofretailersandmanufacturers.

NGOstakemultiplerolesas‘activists’,‘advisers’and‘verifiers’onzerodeforestation[15].Asactivists,NGOspressurecompanieswithunsustainablebusinesspracticesbycampaigningandkeepingconsumersinformed.OrganizationslikeGreenpeaceandWWFhavesingledoutindividualcompaniesorgroupsofcompanies,andtheircampaignshaveultimatelyledtopledges[63–68].Asadvisers,NGOshaveinitiatedandparticipatedinmultistakeholderinitiativesalongsidecompaniestodevelopzero-deforestationcommitments.NGOsupportisimportantforinitiativessuchastheConsumerGoodsForum’sTropicalForestAlliance2020andtheCarbonDisclosureProject[7,69];theyprovidetechnicalsupportandlendtheircredibilitytothezero-deforestationpledges.Asverifiers,NGOsdevelopcertificationstandardssuchasthoseoftheFSC,thePEFC,theRSPOandtheRTRS(oftentogetherwithcompanies),certifyindividualcompanies,andcollectinformationonindustrytrends[38–40,70].

Governmentshaveamandatetoprotecttheenvironmentandtheinterestsoflocalcommunities,andtheydefinetheregulatoryframeworkforcompanies.Wherethegovernanceenvironmentallowsit,therefore,governmentscouldtakeanactiveroleincoordinatinganddirectingthesustainabilityeffortsofcompanies.Regulationisalsorelevantbecausecertificationstandardsdrawamplyonlegalcompliance.Governmentsalsopursuetargetsrelatedtodeforestationunderinternationalcommitments.TheyfundsomeoftheNGOsandmultistakeholderinitiativesworkingoncertificationandzerodeforestation.

Localcommunitiesareconnectedtosupplychains,eitherdirectlyasdependentorindependentsmallproducers,orindirectlyasneighboursofandlabourforlargeproducers.Whencompaniesupdatetheirbusinesspractices,localcommunitiescouldeasilybecutoutbecausedirectcollaborationinvolvesmuchmanagementeffort.Certificationstandardshaveprovisionsforlocalcommunities,andNGOsalsomonitorthesocialimpactsofproduction.

15

Figure7:Actorsdirectlyorindirectlyinvolvedinzero-deforestationinitiativesalongsupplychainsforagriculturalandforestryproducts

Thenatureofthezero-deforestationpledgedependsonwherecompaniesareinthesupplychain.Producersandprocessors(orverticallyintegratedcompanies)controlproductionoratleasthavedirectrelationshipswithproducers.Theycanthereforeverifycompliancewithzero-deforestationpledgesusingbespokeperformanceindicatorsinsteadofuniversallyrelyingoncertification.Thehigh-carbon-stockapproach,theIndonesiaPalmOilPledge,theSustainablePalmOilManifesto,theCattleAgreementandtheBrazilianSoyMoratoriumwereall(co-)proposedbyproducers,processorsorverticallyintegratedcompanies[37,55–57].

TheprocurementguidelinesoftheConsumerGoodsForum(mainlycomposedofmanufacturersandretailers)proposeacombinationofcertificationstandardsassufficientevidenceofcompliancewithitszero-deforestationprinciples[26,27],andtheprocurementguidelinesofindividualcompaniesareoftenstructuredsimilarly[71–73].Suchdownstreamcompaniescannotdevisenewperformanceindicatorsforzerodeforestationbecausetheyarefarremovedfromproductionsystemsandoftenhavelittleinformationontheirupstreamsuppliers.Theymustthereforerelyonresponsibleprocurementandtheuseofcertification.

Zero-deforestationmultistakeholderplatformshelpcompaniessetcommonbenchmarkswiththecompetition.Accordingtoonecount,96%oftheglobaltradeinpalmoiliscoveredbyzero-

Producersandprocessors• Striveforsustainablebusinessprachcesandobtaincerhficahon• Selltheirproducetotradersormanufacturers• Complywiththeprocurementguidelinesoftradersandmanufacturers,includingthroughcerhficahon

Traders,manufacturersandretailers• Settheirzero-deforestahonpledgesandparhcipateinmulhstakeholderinihahves• Purchasetheirrawmaterialsfromproducers• Sellconsumergoodstoconsumers

Financialsector• Financestheachvihesofproducers,processors,traders,manufacturersandretailers• Assessesbusinessprachcesofcompaniestotakefinancingdecisions• Hasexposuretoconsumersthroughretailbankingnetworks

Consumers• Purchaseconsumergoods• Mayprefercerhfiedproducts• MayavoidcompaniestaintedbyNGOs• FundNGOsthroughdonahons

NGOs• Pressurecompanieswithunsustainablebusinessprachces• Parhcipateinmulhstakeholderinihahvesalongsidecompaniestodevelopzero-deforestahoncommitments• Informconsumersaboutcompanies’businessprachces

Governments• Definetheregulatoryframeworkforcompanies• FundNGOstodotheirwork• Pursuetargetsrelatedtodeforestahonunderinternahonalcommitments• Promotesustainableruraldevelopmentforlocalcommunihes

Smallholdersandlocalcommunihes• Collaboratewithproducersthroughcontractfarmingagreements• Collaboratewithprocessorsthroughotakeagreements• Providelabourforlarge-scaleproducers

16

deforestationpledges[74].Accordingtoanothercount,62%and59%ofmajorcompanieswithsupplychainscoveringtimberandpalmoil,respectively,havedeforestationcommitments[29].Only20%and26%,respectively,ofcompanieswithsoyandbeefsupplychainshavesuchcommitments[29],but,atthelevelofproducersandprocessors,one-thirdoftheSouthAmericanbeefmarketiscoveredbytheBrazilianCattleAgreement,andthevastmajorityofsoyproducersarecoveredundertheBrazilianSoyMoratorium[29,75].Thelargestcompaniesinthesesectorsjointlyparticipateinthezero-deforestationmovement,thuseffectivelycreatingalevelplayingfieldandeliminatingconsiderationsofcompetitiveadvantage.

Aswellaspromotingsustainability,participationinmultistakeholderplatformshelpspre-emptpublicityassaultsbyNGOs.TheNewYorkDeclarationonForestshasadiversesetofsignatories,includinggovernments,companiesandcivil-societyorganizations.TheConsumerGoodsForumiscomposedentirelyofcompanies,butmajorNGOsparticipateinitsTropicalForestAlliance2020andCarbonDisclosureProject.Arguably,theseareforumsinwhichNGOsnotonly“stimulatecompaniestomakecommitmentsthroughcampaigns”butalso“providesolutionstoensurecommitmentsaresuccessfullyimplemented”[8].

NGOcampaignshaveledmanycompaniestovowbettermentandtakeonzero-deforestationpledges,withNGOscelebratingsuccess[47,64,67,68,76–80].CompanieswithtarnishedreputationshavemuchtogainfromjoiningmultistakeholderinitiativesandworkingtogetherwiththeNGOs.Moreover,companiesthathavealreadysecuredproductionareashavelessneedtoacquireadditionalproductionareas.

Keypoints

• Zerodeforestationaffectsactorsalongsupplychains,whicharenotalwayseffectivelycoordinated.

• Companiesmaycompeteforbusinessthroughsustainabilityindicatorsofsupplychains,andworkingtowardszerodeforestationcanreducetheriskofcriticismfromactivistNGOs.

• Producersandprocessorsaremostlyindirectparticipantsinthezero-deforestationinitiativesofdownstreamofftakersthatprocurezero-deforestationproducts.Nonetheless,itisproducerswhocarrymostoftheburdenforcomplyingwithzero-deforestationpledges.

• Thereisariskofexcludingsmallproducerswhensupplychainsreorienttocomplywithdownstreamzero-deforestationpledges.

• Tosafeguardpositiveimpacts,companiesneedtoruncomplianceprogrammesacrosstheirsupplychainsthatinvolvesmallproducers,localcommunitiesandotherstakeholders.

17

5 Commoditiesandcompanies

Thedistributionofcompaniestakingondeforestationpledgesisskewed.ForestTrendsdiagnosed,forexample,thatendorsersoftheNewYorkDeclarationonForestsareusually“headquarteredinEuropeandNorthAmerica–worldsawayfromtheplanet’stropicaldeforestation”[2].AccordingtoForestTrends,approximately80%ofcompaniesendorsingtheNewYorkDeclarationonForestswereheadquarteredthere,whileonlyapproximately20%werefromSoutheastAsia,wheremostdeforestationoccurs[2].Theenvironmentalandsocialawarenessofconsumersmaybegreatestinthewesternworld[8,11].

Ontheotherhand,althoughEuropeanorNorthAmericancompanies,NGOsandconsumerstogetherdrivemuchofthezero-deforestationmovement,itstopicofconcernistropicaldeforestationindevelopingcountries.Inparticular,deforestationintheAmazonandSoutheastAsiahasreceivedmuchattention.

Insomeregions,plateauinggrowthinforest-riskcommoditieshasreducedtheneedtoexpandproductionareaandmakeszerodeforestationattainable.InBrazil,IndonesiaandMalaysia,productiongrowthratesforoilpalm,beefandsoyhavefallenfromtheirhighpointsof10–15yearsago(productiongrowthratesforforestproductsfollownoclearpatternineitherBrazilorIndonesia,Figure9).TheClimateandLandUseAlliancehasobservedadecouplingofcommodityproductionfromdeforestationintheBrazilianAmazon[81].GrowthratesofoilpalmhavebeenfallinginIndonesiaandMalaysia,andgrowthratesofsoyandbeefproductionhavedeclinedinBrazil(Figure8).Theindustriesfocusedonforest-riskcommoditiesinthesecountriesmayalreadybedevelopedandrequirefewernewplantations.Dependingonconversioncut-offdates,zerodeforestationisattainableforoilpalminIndonesiaandMalaysiaandforsoyandbeefinBrazil.Therearealsonewmarketentrants,however,suchasseveralAfricancountriesthatareaimingtoincreasetheirproductionareas[81,82].Compliancewithzero-deforestationpledgesmaybedifficultincountriestryingtodevelopnewindustriesaroundpalmoilandotherforest-riskcommodities.

Figure8:Growthratesofforest-riskcommoditiesinmajorproducercountriesin2000–2015(5-yearmovingaverage)(source:FAOSTAT)

Brazilstandsoutamongtropicalforestcountries.Itisaproducerofglobalsignificanceformostoftheforest-riskcommodities(Table2),butitalsohasstrongNGOs,whichhaveconductedimportantcampaignsaddressedtotheBrazilianpublic[83,84].Brazilianproducersandprocessorshavetakenonzero-deforestationpledges[55,56].

0%

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6%

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2000 2005 2010 2015

Growth(%) Oi l palmIndonesia

BeefBrazil

Oi l palmMalaysia

SoyaBrazil

18

Zero-deforestationinitiativesrevolvearoundfourmajorforest-riskcommodities:palmoil,soy,timber,pulpandpaper,andbeef,andNGOcampaignshavefocusedonthesecommodities(seeelsewhereinthisreport).Muchanalyticalworkhasalsousedthisbreakdown(seeelsewhereinthisreport),althoughsometimespulpandpaperhasbeenseparatedfromtimber,packaginghasbeenmadeexplicit,biofuelshavebeentreatedseparately,andbeefandleatherhavebeengroupedtogether[8,9,29,85].SomeNGOcampaignsandzero-deforestationpledgeshavealsorelatedtoothercommodities,suchassteel[77,83].

OilpalmIndonesia OilpalmMalaysia

CattleBrazil SoyBrazil

RoundwoodBrazil RoundwoodIndonesia

Figure9:Productiontimeseriesofforest-riskcommoditiesinmajortropicalproducercountries(Source:FAOSTAT)

Deforestationoftenresultsfromcomplexinteractionsbetweentheproductionsystemsofseveralforest-riskcommodities.Forestsaretypicallyloggedbeforeconversiontoplantations(forexamplefortimber,pulpandpaper,orpalmoil)[86].Soyandbeefproductionareconnected,because

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19

formerpasturesareoftenconvertedtosoybeanfieldsandbecausemanycroplandsproducefodder[86].Attributingdeforestationtoindividualforest-riskcommoditiesisrarelystraightforward.

Oftheforest-riskcommodities,palmoilarguablyreceivesmostattentioninthezero-deforestationmovement.Palm-oilexportsfromtropicalcountriesamountedtoUS$40.1billionin2011,withfurthergrowthprojected[86].Thescaleofdeforestationismassive,withmostoil-palmexpansionoccurringaftertheplanneddeforestationoflowlandtropicalforests.Suchforestsareoftenloggedfirstand,asadriverofdeforestation,palmoilisconnectedtotimberandpulpandpaper[86].IndonesiaandMalaysiaaccountfor87%ofglobaloil-palmproductionandexports[75].Greenpeacehascampaignedagainstpalm-oilproducers[67,79,87,88],whohavereactedbyengagingincertificationandmakingzero-deforestationpledgesthat,accordingtoonecount,cover96%ofglobaltrade[74].TheindustrycreatedtheRSPOin2005,andasignificantpartofglobalproductioniscertified[39](Table2).

Table2:Forest-riskcommoditiesandthezero-deforestationmovement Palmoil Soy Timber,pulpandpaper BeefTop-threeglobalproducers[75]

Indonesia(48%),Malaysia(39%),Thailand(3%)

USA(35%),Brazil(27%),Argentina(19%)

EU27(22%),USA(20%),Russia(9%)

USA(21%),Brazil(16%),EU27(14%)

Exportvaluefromtropicalcountriesin2011[86]

US$40.1m US$48.9m US$34.6m US$10.8m(beefandleather)

Keytropicalforestcountries[86]

Indonesia,Malaysia

Brazil,Paraguay,Bolivia

Indonesia,Brazil,Cameroon,Ghana

Brazil,Paraguay,Argentina,Nicaragua,Colombia

Certification RoundtableonSustainablePalmOil

RoundtableonResponsibleSoy

ForestStewardshipCouncil/ProgrammefortheEndorsementofForestCertification

GlobalRoundtableforSustainableBeef(notforcertification)

Shareofglobalproductionwithdirectmonitoring[81,86,90,91]

68%(globalmarketshare=59%IndonesiaPalmOilPledge+9%SustainablePalmOilManifesto)

24%(globalmarketshareofBrazilianSoyMoratorium=90%nationalmarketcoveragex27%Brazilianmarketshare)

Approachnotavailable

11%(globalmarketshareofBrazilianCattleAgreement=70%shareofnationalexportsx16%Brazilianmarketshare)

Shareofglobalproductionwithmajorcertification[92]

15%

<1% 28%(industrialroundwood)

Certificationnotavailable

Shareofglobalproductioninlow-riskjurisdictions[75]

Notavailable 35%(globalmarketshareofEuropeandNorthAmerica)

29%(globalmarketshareofEuropeandNorthAmerica)

21%(globalmarketshareofEuropeandNorthAmerica)

CompanieswithdedicatedsourcingpolicyinForest500[89]

59% <20% 62%(timber)

26%(beefandleather)

20

Thezero-deforestationmovementhasneglectedsoy.TotalexportsfromtropicalcountriesamountedtoUS$48.9billionin2011,justslightlylessfromthannon-tropicalcountries[86].Soyproductionhasledtothedeforestationandconversionofvastareasofcerradowoodlands,particularlyinBrazil’sarcofdeforestation,whereitaccountedforclosetoone-fifthofAmazoniandeforestation[75].Soyisconnectedtocattleproduction,becauseformerpasturesareoftenconvertedtosoybeanfields[86].Greenpeaceandothershavecampaignedagainstinternationalcompanies[78]and,inresponse,majorproducersagreedin2006tohaltdeforestationforsoy.TheresultantBrazilianSoyMoratoriumhascontributedgreatlytoreducingtheconversionofforeststosoybeanfields[56,93].Alsofoundedin2006,theRTRSpromotessustainablesoyproductionandbacksacertificationscheme[40];sofarithasattractedonlyanegligiblemarketshare,however,andanoverrelianceontheBrazilianSoyMoratoriumhasbeenidentifiedasapossiblebarrier[20].Thezero-deforestationpushforsoyhasbeenportrayedaslaggingbehindthatofotherforest-riskcommodities[6,29,91].

Timberandpulpandpapermostlyoriginateindevelopedcountries,andimportsfromdevelopingcountriesarehighlyregulated;zero-deforestationcorporateactionislesscritical,therefore,inthissector.Incontrasttootherforest-riskcommodities,tropicalcountrieshaveonlyasmallmarketshareoftimberandpulpandpaper[86],withexportsamountingtoUS$34.6billionin2011(pulpandpaperaccountingformorethanhalfthetotal).Nevertheless,recentactionagainstwell-knownbrandsfocusedonfibrefromtropicalrainforests,notablyinIndonesia[66,68,76,80,86].TheFSCwasestablishedin1993,andcertificationschemesforforestmanagementarenowrelativematurecomparedwiththoseforotherforest-riskcommodities;nevertheless,only2%oftropicalforestsarecertified[94].Inadditiontocertification,thereisstronggovernmentalactioninNorthAmericaandEuropetoregulatetropicaltimberimportsundertheEUFLEGTinitiative,theEUTimberRegulationandtheUSLaceyAct[51–53].

OnlyafractionofbeefconsumedinEuropeandNorthAmericaoriginatesfromdevelopingcountries,butthezero-deforestationmovementhasfocusednonethelessonbeef.Despiterecentshifts,therearestillalmostasmanycattleinnon-tropicalcountriesasthereareintropicalcountries,andrelatedexportsfromtropicalcountriesamountedtoUS$10.8billionin2011,withstronggrowthprojected[86].Thezero-deforestationmovementfocusesontheAmazon,whereupto75%ofdeforestationislinkedtocattleproduction[75].Anotherfactorinbeefproductionasadriverofdeforestationisthatmanycroplandsareusedtoproducefodderandbecauseformerpasturescanbecomecroplands,andviceversa[86].Environmentalistsexposedthelinkbetweenbeefasaglobalcommodityandtropicaldeforestationasearlyasinthe1980s[95].Morerecently,campaignsbytheFriendsoftheEarthandGreenpeacehaveledtotheBrazilianCattleAgreement,avoluntaryprocurementstandardofthefourmajorBrazilianmeatpackers,whichhasshownsuccessinreducingdeforestation[55,64,84,96].Someinternationalfast-foodcompanieshavealsotakenactioninthecontextofthezero-deforestationmovement[1,97].TheindustrycreatedtheGRSB,which,however,doesnotaimtocertifyproductionsystems[98],andaglobalcertificationstandardremainsunavailable.

Zero-deforestationpledgeshavereachedanimpressivescale,accountingforlargepartsofinternationaltradeandthesupplychainsofmajorcompanies[6,20,74].Suchcommitmentswilltranslateintomuchdemandforcertifiedcommodities,butthesupplyofcertifiedcommoditieshasgrownmuchmoreslowly.Forexample,only15%ofglobalpalm-oilproductioniscertifiedassustainable,but59%ofmajorcompanieshavededicatedsourcingpolicies.Thisdoesnotnecessarilymeananimbalanceinsupplyanddemandbecausemajorcompaniesaccountforonlypartofinternationaltrade,andsomeofthosecompaniesmayrelyonindicatorsofzerodeforestationother

21

thanmajorcertificationschemes.Nonetheless,thesenumberspointtoariskthatsustainablepalmoilmaybeinshortsupply.Forotherforest-riskcommodities,supplyanddemandproxiesshowsimilarandmoreseveremismatches;theCarbonDisclosureProjecthasflaggedthathalfofthecompanieswithcommitmentstosourcecertifiedsoyareyettogetanyintotheirsupplychains[10].Companypledgesoftenuse2020asareferencedate,andonlythenwilltheirabilitytomeetpledgesbecomeclear.

Keypoints

• Thezerodeforestationmovementhasfocusedoncertaincommoditiesandgeographiesoverothers.

• Mostofthezero-deforestationpledgesarebyconsumer-facingcompaniesinEuropeandNorthAmericaandarerelevantfortheirsuppliers.

• Zero-deforestationinitiativeshavefocusedonpalmoilandhavehadsometractionfortimber,pulpandpaper;theywerelessrelevantforbeefandhaveneglectedsoya.

• Thesupplyofcertifiedforest-riskcommoditiesdoesnotcurrentlyappeartomatchpotentialdemandfromcompaniesaimingtocomplywithzero-deforestationpledges.

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6 Ensuringlong-termpositiveimpacts

Tohavepositivelong-termimpacts,zero-deforestationpledgesneedtobeaccompaniedbyprogrammesthatensuretransparency,includelocalcommunities,andsafeguardenvironmentalimpacts[8,14,32,81].AccordingtotheRainforestAlliance,“thegoalissustainability,notjusthaltingdeforestation”[14].

Zero-deforestationinitiativeswillonlysucceediftheyengageproducersasallies[11,14,58].Carefulcollaborationbetweenconsumer-facingcompanieswithzero-deforestationpledgesandtheirupstreamsuppliershasbeenreportednotonlytobeeffectivebutalsotoreducecostsandbusinessrisks[15];nonetheless,fourofthemajorinitiativeshavebeencharacterizedaslackingdetaileddiscussionsofcomplexityandthecostsandbenefitsforfarmers[12].Notsecuringbuy-infromproducersmaycompromisetheenvironmentalintegrityofzero-deforestationpledgesasproducersturnelsewhereasawayofsidesteppingattemptstopromotesustainableproduction[8,11].

Environmentalrequirements,includingforzerodeforestation,placeaheavyburdenonproducers.Thefragmentednatureofthezero-deforestationmovementimpliesthatproducersfaceenvironmentalrequirementsnotonlyfromgovernmentsbutincreasinglyalsofromfinancialinstitutionsandcommoditybuyers.FarmersinMatoGrosso,Brazil,forexample,aresaidtofaceenvironmentalrequirementsinatleasteightcontexts(theAgriculturaBassoCarbonoloanprogrammeofCadastroAmbientalRural,theBrazilianSoyMoratorium,theBrazilianCattleAgreement,theMunicipalityBlackList,theRTRS,theBrazilianForestCode,REDD+andtheinitiativesoftheConsumerGoodsForum)[99].Governmentsimposeregulationsaroundlicensing,andcommoditybuyersandfinancialinstitutionsarekeentoreducereputationalrisks[100].Workingatalandscapelevelthroughpreferentialsourcingarrangementshasbeenproposedasawayofreducingthenumberofrequirementsforproducers[49,100].

Zerodeforestationisoftenbasedonnegativepledges:consumer-facingcompaniesvowtocutcertain(zero-deforestationnon-compliant)partsfromtheirsupplychains,andproducersareconsequentlyforcedtocomplywithshiftingprocurementstandardsortolookforalternativeofftakers.Shiftingprocurementstandardsareintendedtohaveknock-oneffectsinproductionsystems,buttheydonottypicallyinvolvesupport,withproducershavingtomakethenecessaryinvestmentstoimprovebusinesspracticesandobtaincertification.Apositivevaluepropositionforproducersiscurrentlynotavailablebutwouldgoalongwaytowardsabroadersustainabilitysolution,particularlyifitcoversbothlargeandsmallproducers[14,32,100].

Theproliferationofzero-deforestationpledgescreatesuncertaintyforbothsmallandlargeproducers.Theymayloseclientsasdownstreamcompaniesassumezero-deforestationpledges[8,11].Ifcertainlandsbecomeineligibleduetoshiftsinstandards,theproductionbasemayreduce[7].Producersmayalsohavedifficultyinattractingfinancing,dependingontheenvironmentalstandardsoffinanciers.Thesituationisexacerbatedbyineffectivesupply-chaincoordinationandthevariabilityofdefinitionsandstandards[11,12].

Smallproducersandlocalcommunitiesmaybeleastabletomanagesuchrisksanduncertainties[8].Theyareoftenconnectedtosupplychainseitherdirectlyassmalldependentorindependentproducersorindirectlyasneighboursorthelaboursupplyoflargeproducers.Thecontributionofsuchsmallproducerstothesupplyofforest-riskcommoditiesissignificantincertainlocalitiesandforcertaincommodities(Figure10).Largeproducershaveachievedmuchofthesuccessinreducingdeforestation,however.InBrazil,forexample,smallproducershavenotyetbeenpartofthepushforlowerdeforestation[101].Localcommunitiesarevulnerabletobeingcutoutoftheproduction

23

systemwhensupplychainsreorienttocomplywiththeprocurementguidelinesofinternationaltraders.Smallproducersalsofacehighbarrierstoobtainingcertificationbecauseofthecostsinvolvedinimprovingbusinesspracticesandofthecertificationprocessitself[5,8,16].

Figure10:Estimatesofthecontributionofsmallproducerstotheproductionofforest-riskcommodities(Source:[102–105])

Governmentsmayhavearoleinunifyingstandards,coordinatingworkatthelandscapelevel,andsafeguardingsocialandenvironmentalimpacts.Workingatalandscapelevelthroughgovernmentalland-useplanningwouldaddressseveralconcernsaboutenvironmentalintegritybecauseproductionwouldnolongereasilyshiftelsewhere.Governmentsarealsoinapositiontoregulatesocialandenvironmentalstandardsaswellaslandtenureandcouldthereforeprotectsmallproducersandlocalcommunities[5,8,14].

Keypoints

• Comprehensivesupply-chainmanagementforsocialandenvironmentalimpactsmakeszerodeforestationfeasibleandsafeguardsitsbenefits.

• Environmentalrequirements,includingforzerodeforestation,placeaheavyburdenontheproducersofforest-riskcommodities.

• Thezero-deforestationmovementintroducesuncertaintiesintothebusinessenvironmentofproducersofforest-riskcommodities.

• Zero-deforestationinitiativescanbestsucceediftheyengageproducers,becausecollaborationwillenhanceeffectivenessandreducerisksinvolvedinreorientingsupplychains.

• Tosafeguardpositiveimpactsandmakezerodeforestationfeasible,comprehensiveapproachestosupply-chainmanagementareneeded.

0% 20% 40% 60% 80% 100%

OilpalmIndonesia(2003areafarms<50ha)

OilpalmMalaysia(2003areafarms<50ha)

SoyaBrazil(2006familyfarmingproduction)

BeefBrazil(2006familyfarmingproduction)

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7 Fromthesupplychaintothelandscapelevel

Thereisacallforgovernmentengagementtosafeguardprogressandtocreatewide-rangingandlong-lastingimpacts.Governmentscouldprotecttherightsofsmallholdersthatareotherwiseindangerofbeingcutoutwhensupplychainsreorient[11],andtheycouldclarifylandtenure[8,11].Governmentscouldnegotiateagreementswithconsumermarketstoensurepreferentialaccesstozero-deforestationproducts[8],andtheycouldmonitorjurisdictionalprogresstowardszerodeforestation[48,49].

Governmentaldevelopmentplansaimtoreconcileenvironmentalambitionswithotherdevelopmentobjectivesandarenotalwaysfullycompatiblewithzerodeforestation.Althoughtrendsandcausalitydependoncontext,deforestation,economicdevelopmentandpovertyreductionareinterlinked[106].Rulingoutdeforestationwouldseverelyconstraineconomicdevelopmentoptions,particularlyincountrieswithhighforestcover[107].

Manyjurisdictionshavezerodeforestationtargetsoftheirown:asmanyas56nationalandsubnationalgovernments,forexample,aresignatoriestotheNewDeclarationonForests[1].Closeto100INDCsincludereferencestotheforestsector[108],andemergingREDD+schemesoftentargetsubnationaljurisdictionsforemissionreductionprogrammes[70].Zerodeforestationtargetsbygovernmentsandcompaniesoverlap–andyetareoftenisolatedfromeachother[11].

Governmentsandcompanies,therefore,couldcollaboratemore.Agenerallackofalignmenthasbeendiagnosedbetweengovernmentalandcompanypledges,evenwhentheyoverlap[11].Insomecases,companyinitiativesmaycounteractgovernmentaltargets.Forexample,theGovernmentofIndonesiahasstronglycriticizedtheIndonesianPalmOilPledge,citingconcernsabouteconomicgrowthandpossibleadverseimpacts,suchassmallholderslosingmarketaccess[109].

Conversely,private-sectorengagementwasacornerstoneoftheGovernmentofBrazil’sstrategytoreducedeforestation,includingthroughtheBrazilianSoyMoratorium[110,111].Public–privatepartnershipsforzerodeforestationweresuccessfulinreducingAmazoniandeforestationby70%[100].RecentresearchhasshownthatthetransitiontoworkingatalandscapelevelwasinstrumentalinreducingdeforestationintheBrazilianAmazon.Although,inanearlyphase,supply-chain-basedinitiativessuchastheBrazilianCattleAgreementandtheBrazilianSoyMoratoriumwereparamount,thegeographicalunitofinterventioneventuallybecamethecountyratherthantheindividualfarm,withcollaborationbetweentheCentralBank,theMinistryoftheEnvironment,localgovernmentsandtheprivatesector[100,111].

Preferentialsourcingfromlow-riskjurisdictionsintegratesgovernmentactionwiththezero-deforestationambitionsofcompanies.TheEnvironmentalDefenseFundhasadvocatedsettingupzero-deforestationzones,andtheEarthInnovationInstituteproposesterritorialperformancesystems[31,49,100].Theconceptforeseesthatthepublicandprivatesectorsenterintobroadagreementstoworktowardsreducingdeforestationwithinlow-riskjurisdictions,includingwiththedefinitionofperformancemetricsandfinancing.Inatypicalroleallocation,producerswouldworktocomplywithregulationsandreducedeforestation;commoditybuyerswouldpreferentiallysourceforest-riskcommoditiesfromproducerswithinthejurisdiction;financialinstitutionswouldprovidepreferentialaccesstocreditbasedonthelowerreputationalriskprofilesofproducers;andthelocalgovernmentwouldmonitorperformanceatthejurisdictionallevelandworktoeaselicensingschemes.Producersthatengagewouldenjoymanyofthesamebenefitsascertifiedproducersintermsofaccesstomarketsandfinancing;commoditybuyerswouldhaveaccesstoforestrisk

25

commodities;financialinstitutionswouldbeabletoplaceloanswithlowerriskprofiles;andthelocalgovernmentswouldworktowardstheirenvironmentaltargets[31,49,100](Figure11,Figure12).

Figure11:Contributionsandbenefitsofproducers,commoditybuyers,financialinstitutionsandlocalgovernmentfromjurisdictionalzero-deforestationinitiatives

Insomelocations,thepublicsectorandcompaniesalreadyjointlyworktocreatelow-riskjurisdictionsforthepreferentialsourcingofforestriskcommodities,givingrisetopositiveexperiencesthatarebeingcollected[81,99,100].SeveralNGOsprovidetechnicalsupportformonitoringjurisdictionalperformanceagainstenvironmentaltargets,usuallyputtingreduceddeforestationatthecore[48–50].TheConsumerGoodsForum’ssourcingguidelinesreferexplicitlytojurisdictionsfortimberandpulpandpaper;forpalmoiltheyrelyonarisk-basedverificationmechanismthatcouldalsobemetbyjurisdictions[27,28].Somelargecompanieshavecommittedrecentlyto‘Produce–Protect’–thepreferentialsourcingofforest-riskcommoditiesfromjurisdictionswithambitiousenvironmentalandsustainabledevelopmenttargets,combinedwithappropriatemonitoring[112].

Atthelandscapelevel,zerodeforestationcannotsensiblyaimtoreduceforestconversiontozero,aiminginsteadtointroducebetterproductionstandards.Doubtsmaythereforeberaisedaboutpreferentialsourcingfromlow-riskjurisdictionsasameanstoachieve‘zero’deforestation[100].Nonethelessitisaneffectivewayinwhichgovernmentsandcompaniescanusefullycollaborateandmainstreambetterbusinesspracticesacrossentirelandscapes.Inthis,zerodeforestationmaybematuringfromabuzzwordtoaconceptthatcanguidecorporateandgovernmentaldecision-making.

Producers• Worktocomplywithregulahonsandreducedeforestahon• Enjoyaccesstomarketsandfinancing

Commoditybuyers• Preferenhallysourceforest-riskcommodihesfromjurisdichon• Accessforest-riskcommodihesatlowriskprofile

Financialinshtuhons• Providepreferenhalaccesstocredit• Placeloanswithlow-riskprofiles

Localgovernment• Monitorsperformanceandworkstoeaselicensing• Achievesenvironmentaltargets

26

Regularproducers Certifiedproducers Producersinlow-riskjurisdiction

Regulatoryagencies

Oftenhavedifficultiesincomplyingwithrulesof

regulatoryagencies(orcertification

Standards)Licenseproducerstooperatewithonerousrulesandprocedures

Complywithrulesofregulatoryagenciesandcertification

standardsLicenseproducerstooperatewithonerousrulesandprocedures

Mostlycomplywithrulesofregulatoryagencies,

self-controlLicenseproducerstooperatewithsimplifiedrulesandprocedures,jurisdictionalmonitoringforpreferentialsourcing

Commod

itybuyers

Supplycommoditieswithsignificantreputational

risktobuyersOfftakecommodities,restrictingtermsonpayments,legalityandmanagement

Supplycommoditieswithlowreputationalrisk

Offtakecommoditiesofferingbetterterms

Supplycommoditieswithlowreputationalrisks

OfftakeCommoditiesofferingbettertermsunderpreferentialsourcingagreements

Fina

nceinstitu

tions

Repayloanswithreputationalrisks

ordefaultProvideloans,restrictingtermsonrepayment,legalityandmanagement

Repayloanswithlowreputationalandrepaymentrisk

Provideloansunderbetterterms

Repayloanswithlowreputationalandrepaymentrisk

Provideloansunderbetterterms

Figure12:Breakdownofregularproducers,certifiedproducersandproducersinlow-riskjurisdictionstoregulatoryagencies,commoditybuyersandfinanceinstitutions

Keypoints

• Collaboratinggovernmentsandcompaniescancreateimpactsatscale.• Governmentengagementinzerodeforestationatalandscapelevelcouldsafeguardprogresson

zerodeforestationandcreatewide-rangingandlong-lastingimpacts.• Manygovernmentshavezero-deforestationtargetsoftheirown,largelyaimingtoimprove

governanceandpromotehigherproductionstandards.• Despitethesharedobjectiveofreducingdeforestation,therearefewpositiveexamplesof

effectivecollaborationbetweengovernmentsandcompanies.• Collaborationbetweenthepublicandprivatesectorstowardszero-deforestationtargetsmay

improvethebusinessenvironmentfortheproductionofforest-riskcommodities.

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8 Conclusions

Definitionshavebigimplicationsforthefeasibilityandstringencyofzero-deforestationcommitments.Pledgesrefertonetorgrossdeforestation,tosupplychainsorlandscapes,andtosomelevelof‘acceptabledeforestation’.Thezero-deforestationinitiativesofcompaniesusuallyrefertotheirsupplychains,whilegovernmentsoftenlookatthelandscapelevel.Mostmomentumisaroundzeronetdeforestation,whichmeansnochangeinthetotalforestedarea,andnewforestscancompensateforconvertedforests.Operationalizingzeronetdeforestationrequiresdefining‘acceptabledeforestation’–thatis,thetypesofstandingforeststhatareoff-limitstoconversion,andwhattypesofnewforestscancompensateforclearedforests.Fortheverificationofzero-deforestationcommitments,companypledgesoftenrefertostandardagriculturalandforestcertification,whichimpliesdefinitionsof‘acceptabledeforestation’.

Procuringcertifiedcommoditiesisacommonproxyforeliminatingdeforestationfromsupplychains,despiteconcernsabouttheadequacyofthismeasure.Companiesusethreecommonapproachestoimplementingzero-deforestationpledges:1)certifiedprocurement;2)directareamonitoring;and3)procurementfromlow-riskjurisdictions.Thelatterallowscompaniestoearmarkproductsaszero-deforestation-compliant,basedonorigin.Somezero-deforestationinitiativesdirectlymonitorproductionareas,includingforconversiontimepointsand‘highcarbonstock’toidentify‘acceptabledeforestation’.Mostly,however,companiesconsidercertificationundertheleadingschemes,inparticularRSPO,FSC,PEFCandRTRS,asgoodevidenceofzerodeforestation,whichmayincludecommoditiesoriginatingfromconvertedsecondaryforests,degradedforests,orforestswithlowheight.Alltheseimplementationapproachesforzero-deforestationcommitmentshaveimplicationsforactorsalongthesupplychain.

Zerodeforestationaffectsactorsalongthesupplychains,whicharenotalwayscoordinatedeffectively.Companiesmaycompeteforbusinessthroughthesustainabilityindicatorsusedbysupplychains,andworkingtowardszerodeforestationcanreducetheriskofcriticismfromactivistNGOs.Producersandprocessorsaremostlyindirectparticipantsinthezero-deforestationinitiativesoftheirdownstreamofftakers,whichinvolveprocuringzero-deforestationproducts.Nonetheless,itisproducerswhocarrymostoftheburdenforcomplyingwithzero-deforestationpledges.Thereisariskofexcludingsmallproducerswhensupplychainsreorienttocomplywithdownstreamzero-deforestationpledges.Tosafeguardthepositiveimpactsoftheirzero-deforestationinitiatives,companiesshouldruncomplianceprogrammesacrosstheirsupplychainsinvolvingsmallproducers,localcommunitiesandotherstakeholders.

Thezero-deforestationmovementhasfocusedoncertaincommoditiesandlocationsoverothers.Mostzero-deforestationpledgesarebyconsumer-facingcompaniesinEuropeandNorthAmerica.Zero-deforestationinitiativeshavefocusedonpalmoilandhavealsohadsometractionfortimberandpulpandpaper;theyhavebeenlessrelevantforbeef,andsoyhasbeenneglected.Thecurrentsupplyofcertifiedforest-riskcommoditiesdoesnotappeartomatchthepotentialdemandfromcompaniesaimingtocomplywithzero-deforestationpledges.

Comprehensivesupply-chainmanagementforsocialandenvironmentalimpactsmakeszerodeforestationfeasibleandsafeguardsitsbenefits.Thezero-deforestationmovementplaceaheavyburdenontheproducersofforest-riskcommoditiesandintroducesuncertaintiesintotheirbusinessenvironments.Zero-deforestationinitiativesaremostlikelytosucceediftheyengageproducers,becausecollaborationwillenhanceeffectivenessandreducetherisksinvolvedinreorientingsupply

28

chains.Tosafeguardpositiveimpactsandmakezerodeforestationfeasible,comprehensiveapproachestosupply-chainmanagementareneeded.

Collaboratinggovernmentsandcompaniescancreateimpactsatscale.Governmentalengagementinzerodeforestationatthelandscapelevelcouldsafeguardtheprogressmadetowardszerodeforestationandcreatewide-rangingandlong-lastingimpacts.Manygovernmentshavezero-deforestationtargetsoftheirown,largelyaimingtoimprovegovernanceandpromotehigherproductionstandards.Despitethesharedobjectiveofreducingdeforestation,therearefewpositiveexamplesofeffectivecollaborationbetweengovernmentsandcompanies.Collaborationbetweenthepublicandprivatesectorsonzero-deforestationtargetsmayimprovethebusinessenvironmentfortheproductionofforest-riskcommodities.

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9 Implicationsofzero-deforestationinitiativesforforestproductvaluechains

Althoughforestproductsareomnipresentinglobalsupplychains,palmoil–nottimberandpulpandpaper–hasbeenthefocusofzero-deforestationinitiatives.MuchNGOcampaigninghasfocusedonpalmoilasaforest-riskcommodity,andseveralcompanyzero-deforestationpledgesreceivingattentionalsofocusonpalmoil[81].Pulpandpaperisomnipresentinglobalsupplychainsthroughitsuseinpackaging,includingforconsumergoods.Somecampaignshavetargetedpulpandpaper,andtimberhasreceivedlessattention.

Althoughtimberandpulpandpaperareforest-riskcommodities,significantpartsoftheirglobalmarketsareshieldedfromdeforestationrisk.MostofthetimberandpulpandpaperconsumedinEuropeandNorthAmericaoriginatefromlow-riskjurisdictionsindevelopedcountries.Tropicalcountrieshaveasmallershareofglobalmarketsthanforotherforest-riskcommodities,notablypalmoil[86].TimberimportsfromdevelopingcountriestoNorthAmericaandEuropearehighlyregulatedundertheEUTimberRegulationandtheUSLaceyAct[51,53].

Intheforestsector,zero-deforestationcampaignsandrelatedcorporateactionfocusonpulpandpaper,nottimber.Recentadvocacyactionagainstwell-knownbrandshasfocusedontropicalpulpandpaper,notablyinIndonesia[66,68,76,80,86].Onereasonforthisistheomnipresenceofpulpandpaperinthesupplychainsofconsumer-goodscompanies(becauseofitsuseinpackaging),makingitaneasiertargetforenvironmentalcampaigning.Anotherreasonisthataportionoftheglobalsupplyoftropicaltimberoriginatesfromnaturalforestmanagementandisnotadirectcauseofdeforestation(asopposedtopulpandpaper,whichismostlyderivedfromplantationsthatcouldhavereplacednaturalforests).Fornaturalforestmanagement,theriskofdeforestationislessacutethantheriskofunsustainablelogging,whichisbeyondthescopeofmostzero-deforestationaction.Third,timbermarketsaregenerallymorefragmentedthanthoseforpulpandpaperandotherforest-riskcommodities,hamperingsupplychain-basedaction[86].

Theenvironmentalimpactsofforestmanagementandtheforest-basedindustryreceivedattentionlongbeforetheconceptofzerodeforestationemerged.Fordecades,debateonforestshasfocusedonprogresstowardssustainableforestmanagement,whichwassetoutintheForestPrinciplesoftheUnitedNationsConferenceonEnvironmentandDevelopmentasearlyas1992[113].TheFSCwasestablishedin1993,andforestmanagementcertificationschemesarenowrelativematurecomparedwiththoseofotherforest-riskcommodities,suchastheRTRSandtheRSPO,whichwereestablished10–20yearslater.WithsuchalonghistoryofattentiononforestmanagementfrompolicymakersandNGOs,environmentalconcernsandsustainablemanagementpracticeshavealreadybeenmainstreaminlargepartsoftheforest-basedindustry.Thismayexplainwhymostmajorcompaniesinvolvedintheglobaltimberandpulpandpapersupplychainshavesustainablesourcingpoliciesinplace[20].

Althoughtimberandpulpandpaperhavenotbeenthefocusofzero-deforestationcampaigns,thereremainsmuchpotentialforenhancingsustainability.Despitethesuccessesofforestmanagementcertification,onlyabout2%oftropicalforestsarecertified[94].Naturalforestmanagementdoesnottypicallyleadtodeforestation,butunsustainableloggingpracticescanleadtodestructiveforestdegradation.Tropicalplantationforestryfortheproductionofpulpandpapercandrivedeforestationinasimilarwaytootherforest-riskcommodities.ThisiswhytimberandpulpandpaperareincludedbyNGOscampaigningforzerodeforestationandinthezero-deforestationpledgesofcompanies.

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Decadesofexperienceinthesustainableproductionoftimberandpulpandpapercanprovideimportantlessonsforotherforest-riskcommodities.Somecompaniesintheforest-basedindustryhavelearnedimportantlessonstheycouldsharewiththeirpeersinvolvedinthesupplychainsforotherforest-riskcommodities.Insomecountries,theforest-basedindustryhastakenaleadershiproleincross-sectoralprocessesforenhancedenvironmentalgovernance[114].

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Annex1:Majorcertificationschemesandtheirprincipleswithrelevancetodeforestation

FSCPrinciple6.9withrelevancetodeforestation[38]TheOrganizationshallnotconvertnaturalforesttoplantations,nornaturalforestsorplantationsonsitesdirectlyconvertedfromnaturalforesttonon-forestlanduse,exceptwhentheconversion:a)affectsaverylimitedportionoftheareaoftheManagementUnit,andb)willproduceclear,substantial,additional,securelong-termconservationbenefitsintheManagementUnit,andc)doesnotdamageorthreatenHighConservationValues,noranysitesorresourcesnecessarytomaintainorenhancethoseHighConservationValues.Naturalforest:Aforestareawithmanyoftheprincipalcharacteristicsandkeyelementsofnativeecosystems,suchascomplexity,structureandbiologicaldiversity,includingsoilcharacteristics,floraandfauna,inwhichalloralmostallthetreesarenativespecies,notclassifiedasplantations.‘Naturalforest’includesthefollowingcategories:•Forestaffectedbyharvestingorotherdisturbances,inwhichtreesarebeingorhavebeenregeneratedbyacombinationofnaturalandartificialregenerationwithspeciestypicalofnaturalforestsinthatsite,andwheremanyoftheabove-groundandbelow-groundcharacteristicsofthenaturalforestarestillpresent.Inborealandnorthtemperateforestswhicharenaturallycomposedofonlyoneorfewtreespecies,acombinationofnaturalandartificialregenerationtoregenerateforestofthesamenativespecies,withmostoftheprincipalcharacteristicsandkeyelementsofnativeecosystemsofthatsite,isnotbyitselfconsideredasconversiontoplantations.•Naturalforestswhicharemaintainedbytraditionalsilviculturalpracticesincludingnaturalorassistednaturalregeneration.•Well-developedsecondaryorcolonizingforestofnativespecieswhichhasregeneratedinnon-forestareas.•Thedefinitionof‘naturalforest’mayincludeareasdescribedaswoodedecosystems,woodlandandsavanna.[furtherdetailsfollow]Plantation:Aforestareaestablishedbyplantingorsowingwithusingeitheralienornativespecies,oftenwithoneorfewspecies,regularspacingandevenages,andwhichlacksmostoftheprincipalcharacteristicsandkeyelementsofnaturalforests.ThedescriptionofplantationsmaybefurtherdefinedinFSCForestStewardshipStandards,withappropriatedescriptionsorexamples,suchas:•Areaswhichwouldinitiallyhavecompliedwiththisdefinitionof‘plantation’butwhich,afterthepassageofyears,containmanyormostoftheprincipalcharacteristicsandkeyelementsofnativeecosystems,maybeclassifiedasnaturalforests.•Plantationsmanagedtorestoreandenhancebiologicalandhabitatdiversity,structuralcomplexityandecosystemfunctionalitymay,afterthepassageofyears,beclassifiedasnaturalforests.•Borealandnorthtemperateforestswhicharenaturallycomposedofonlyoneorfewtreespecies,inwhichacombinationofnaturalandartificialregenerationisusedtoregenerateforestofthesamenativespecies,withmostoftheprincipalcharacteristicsandkeyelementsofnativeecosystemsofthatsite,maybeconsideredasnaturalforest,andthisregenerationisnotbyitselfconsideredasconversiontoplantations.PEFCCriterion1,item5.1.11withrelevancetodeforestation[45]Conversionofforeststoothertypesoflanduse,includingconversionofprimaryforeststoforestplantations,shallnotoccurunlessinjustifiedcircumstanceswheretheconversion:a)isincompliancewithnationalandregionalpolicyandlegislationrelevantforlanduseandforestmanagementandisaresultofnationalorregionalland-useplanninggovernedbyagovernmentalorotherofficialauthorityincludingconsultationwithmateriallyanddirectlyinterestedpersonsandorganisations;and

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b)entailsasmallproportionofforesttype;andc)doesnothavenegativeimpactsonthreatened(includingvulnerable,rareorendangered)forestecosystems,culturallyandsociallysignificantareas,importanthabitatsofthreatenedspeciesorotherprotectedareas;andd)makesacontributiontolong-termconservation,economic,andsocialbenefits.Therequirementforthe“conversionofforeststoothertypesoflanduse,includingconversionofprimaryforeststoforestplantations”meansthatforestplantationsestablishedbyaforestconversionafter31December2010inotherthan“justifiedcircumstances”donotmeettherequirementandarenoteligibleforcertification.RSPOPrinciple7.3withrelevancetodeforestation[39]NewplantingssinceNovember2005havenotreplacedprimaryforestoranyarearequiredtomaintainorenhanceoneormoreHighConservationValues.PrimaryForest:Aprimaryforestisaforestthathasneverbeenloggedandhasdevelopedfollowingnaturaldisturbancesandundernaturalprocesses,regardlessofitsage.Alsoincludedasprimary,areforeststhatareusedinconsequentiallybyindigenousandlocalcommunitieslivingtraditionallifestylesrelevantfortheconservationandsustainableuseofbiologicaldiversity.Thepresentcoverisnormallyrelativelyclosetothenaturalcompositionandhasarisen(predominantly)throughnaturalregeneration[41].RTRSPrinciple4,Criterion4.4,Indicator4.4.1withrelevancetodeforestation[40]AfterMay2009expansionforsoycultivationhasnottakenplaceonlandclearedofnativehabitatexceptunderthefollowingconditions:ItisinlinewithanRTRS-approvedmapandsystem(seeAnnex4.)orWherenoRTRS-approvedmapandsystemisavailable:a)AnyareaalreadyclearedforagricultureorpasturebeforeMay2009andusedforagricultureorpasturewithinthepast12yearscanbeusedforsoyexpansion,unlessregeneratedvegetationhasreachedthedefinitionofnativeforest(seeglossary).b)Thereisnoexpansioninnativeforests(seeglossary)c)Inareasthatarenotnativeforest(seeglossary),expansionintonativehabitatonlyoccursaccordingtooneofthefollowingtwooptions:Option1.Officialland-usemapssuchasecological-economiczoningareusedandexpansiononlyoccursinareasdesignatedforexpansionbythezoning.IftherearenoofficiallandusemapsthenmapsproducedbythegovernmentundertheConventiononBiologicalDiversityareused,andexpansiononlyoccursoutsidepriorityareasforconservationshownonthesemaps.Option2.AHighConservationValueArea(HCVA)assessmentisundertakenpriortoclearingandthereisnoconversionofHighConservationValueAreas.Thereisnoconversionoflandwherethereisanunresolvedlanduseclaimbytraditionallandusersunderlitigation,withouttheagreementofbothparties.Nativeforest:Areasofnativevegetationof1haormorewithcanopycoverofmorethan35%andwheresometrees(atleast10treesperhectare)reach10minheight(orareabletoreachthesethresholdsinsitu(ie.inthatsoil/climatecombination)).

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Annex2:Chain-of-custodyapproachesforpalmoil

BookandclaimCertificatetrading,or“bookandclaim”,istechnicallynotachain-of-custodymethodbecausebeyondthecrudepalm-oilmillthecertifiedproductisnotseparatedfromthephysicalsupplychainandtheendproductdoesnotnecessarilycontaincertifiedpalmoil.Forthepalm-oilindustry,thisoptionisalsoknownasGreenPalmcertificates(afterthenameofthecompanymanagingthesystemfortheRSPO).Itisacertificatetradingsystemseparatefromthephysicaltradeinpalmoil.Ifthemill,forexample,produces100tonnesofcertifiedCrudePalmOil,thenitissuesvolumecertificatesforthatsameamount,whichgoesintotheglobalsupplychain.ThebenefitofCertificateTradingisthatnopapertrailorphysicalseparationofoilalongthesupplychainisneeded,andthereforeitisamuchcheaperthatotheroptionsrequiringphysicalseparation.ItalsomeansthatcompaniesusingderivativesofpalmoilthatarenotyetavailableastraceableCertifiedSustainablePalmOilcanstillbuycertificatestosupporttheproductionofCertifiedSustainablePalmOil.ThedownsideisthatcompaniesthatbuycertificatestoclaimcertifiedCrudePalmOilcouldcontinuesourcingfromproducerswhoarenotactingresponsibly.Duetothelowcostsandeasyaccess,downstreamfirmsstilllargelyadoptCertificateTrading,whichonlycostsanextra0.3%comparedwithconventionalpalmoilsoldontheinternationalmarket.EventhoughGreenPalmisconsideredanimportantsteptowardstraceablecrudepalmoil,thequestionarisesastowhethersuchatransitionislikelytooccur.MassbalanceMassbalanceallowsthemixingofcertifiedandnon-certifiedoilderivativesinanystepoftheprocess;therefore,palmoilpresentinendproductscannotbetracedbacktotheplantationoreventothecrudepalmoilmill.Thismethodbalancesthevolumeofcertifiedproductthatgoesintotheprocessingchainwiththevolumeofendproductlabelledascertified.Itistheleast-expensivechain-of-custodymethod,andthemostcommonlyused.Theadvantageofmassbalanceisthatitcanaccommodateatransitiontofullytraceableproductsatvastindustrialscalesthatwouldbenearlyimpossibletodowithmorestringentmethods,suchassegregationoridentitypreserved.Simpleimprovementsinrecordkeepingcanprovideincreasedtraceability.SegregatedThismethodtreatscertifiedandnon-certifiedpalmoilasseparateproductsanddoesnotallowthemixingofthetwoatanystageofprocessing,althoughthemixingcertifiedoilfromdifferentmillsisallowed.Costsarehigherthanformassbalancebecauseshippingcontainersandstoragetanksneedtobesegregatedforcertifiedproduct.Althoughamillcouldchoosetofacilitatethesegregationofcertifiedandnon-certifiedpalmoilduringprocessing(byrunningcertifiedbatchesatacertaintime,orhavingseparateprocessinglines),economiesofscalewouldmostlikelydictatethatthemillwouldneeditsentiresupplysourcetobecertified.IdentitypreservedIdentitypreservedgoesastepfurtherthansegregationinthatitdoesnotallowthemixingofcertifiedoilderivativesfromdifferentmills;therefore,certifiedpalmoilcanbetracedbacktothemill,evenattheendproductstage.Validatingwhetherdeforestationoccurredasaresultofplantationestablishmentorexpansioncouldbedoneontheentireareaofthe‘supplyshed’.Ofallthechain-of-custodymethods,identifypreservedisthemostcostly;giventheeconomiesofscalethatgoverncommodities,thismethodislikelytobepossibleonlyifamill’sentiresupplysourceiscertified.Source:[34]

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