CALL TO ACTION
|As deforestation and conversion continue to surge, the private sector must demonstrate much greater leadership in tackling the problem and reversing the trend.. Reasons for the limited impact of business’ voluntary commitments are multiple. For one, buyers have not sufficiently invested in the reporting capacity and the traceability and transparency systems to appropriately manage their supply chains in a way that meets their commitments. For another, they rely too heavily on certifications, unilateral approaches and commodity-specific initiatives to achieve success at scale. Equally producers lack incentives, technical support and sound governance to transition to deforestation and conversion-free production. Finally, fragmentation in the upstream part of the supply chain makes any approach highly complex, with businesses tending to limit their focus on their direct suppliers. |
The failings of this approach highlight the need for enhanced private-sector actions across the board, with more ambitious commitments, implementation and transparent reporting and verification. In fact, businesses at every level of the supply chain have much more to do. And their roles are critical, not only in making their individual supply chains sustainable and ensuring their suppliers are sustainable too, but also in engaging public and financial institutions on the journey. They should therefore accelerate the pace of their individual actions and demonstrate greater leadership in the collective effort to create verifiable deforestation- and conversion-free supply chains.
The private sector needs to advocate for and contribute towards, holistic, integrated approaches where corporate action on zero deforestation and conversion is nested within appropriate legislative and policy frameworks and trade standards in producing and consuming countries, along with strong governance, and supporting financial instruments, incentives to to enable a just transition to sustainable agricultural production. With the ever increasing urgency to tackle the climate and nature crises, much greater leadership from the private sector is necessary, playing a proactive role in convening and working alongside other private sector stakeholders, governments and the finance sector.
This should be done through direct advocacy toward supply- and demand-side governments, for example in the EU, UK and China where there is strong momentum to build more ambitious legislation. There is a direct opportunity to do this now as part of the UK and Indonesia led Forest, Agriculture and Commodity Trade (FACT) Dialogue and its upcoming business platform. Through other multi-stakeholder opportunities, sectoral or landscape/jurisdictional approaches can deliver an impact at scale and at pace, following the example of the Soy Moratorium, in which civil society and the private sector worked together to rapidly scale their efforts.
Financial institutions especially have immense opportunity to help reduce deforestation and conversion, by being proactive in the commodity supply chain. They can have a direct impact on activities that are linked to environmental degradation, by developing and supporting viable economic models for smallholders at scale.
Through stronger collaboration and looking beyond their direct operations these actors together have an important role to play in supporting local communities that need land and food security, and incentivizing smaller actors to adopt sustainable models, receive financial guarantees through funding or benefit sharing, and get access to tools, technology and quality goods.
Three priority intervention areas to turn commitments into action
SUPPLY CHAIN ACTORS
Producers should take the following steps to eliminate deforested and converted land from their operations:
Produce and expand production exclusively on lands that were deforested or converted prior to any agreed cut-off date
- Producers should take the following steps to eliminate deforested and converted land from their operations:
- Produce and expand production exclusively on lands that were deforested or converted prior to any agreed cut-off date
- Rehabilitate degraded land and preserve ecosystem services through responsible production practices on already converted land
- Reduce the need of expansion into natural ecosystems by improving smallholders’ yields through the implementation of more sustainable and efficient agricultural practices
- Report individually on compliance – or progress toward compliance – with deforestation and conversion policies and requirements from buyers
To date, just 56% to 66% of the relevant companies have made commitments regarding deforestation and conversion, with only 4% including the conversion of all natural ecosystems.
Following the Accountability Framework’s key principles, buyers should elevate their commitments’ stated ambitions, publicly declaring clear targets and time-bound milestones that reflect the urgency of addressing the deforestation and conversion issue. These commitments should be based on standardised definitions.
Additionally, buyers should take the following actions:
- Commit to “green supplies” through group-level corporate policies that enforce the elimination of deforestation and conversion from the company’s entire supply chain.
- Commit to “green suppliers” by cascading these policies and their implementation to all suppliers, ensuring they also produce and sell only deforestation- and conversion-free commodities within their global footprint, independent of who the final customer may be.
To date, companies voluntarily reporting their progress toward achieving their commitments indicate average progress of only 55%. To fill this implementation gap, buyers should establish systems and processes that will promote and facilitate the implementation of their commitments in an effective manner.
We recommend that buyers take the following actions:
- Provide suppliers with the tools and technical support they need to become fully compliant with company standards.
- Include contractual clauses with explicit cut-off dates in all purchasing contracts with direct suppliers.
- Implement a measurement and verification system with direct suppliers as well as policies to ensure that direct suppliers develop such processes with indirect suppliers.
- Require the traceability of commodity volumes sourced from direct and indirect suppliers, including identifying the geographic origin of imported commodities.
- Enforce a policy that identifies and engages all non-compliant suppliers in requiring and monitoring the enactment of efficient corrective and remedial actions; any recurrent non-compliers should be removed from the supply base.
At present, just 41% to 46% of large companies are reporting their progress on commitments. Buyers should follow the Accountability Framework to publicly report their progress and outcomes on a regular basis.
They should base this reporting on routine monitoring conducted relative to the time-bound targets associated with each commitment and assessed through credible, rigorous and independent practices.
Buyers should also report on individual and group actions using credible and accepted reporting standards or indicators.
We need a strong and vocal collective business voice to stop deforestation and conversion that will be impossible for policymakers and business leaders to ignore. Businesses need to:
- Call on governments for ambitious regulatory measures to increase supply chain transparency and traceability.
- Work together with governments to achieve deforestation and conversion free supply chains.
- Back their policy asks with credible action on the ground through implementation of jurisdictional/landscape approaches and sectoral collaboration models.
Consumer countries should demonstrate leadership in tackling deforestation and conversion by taking several steps.
- Adopt or support ambitious and binding national and regional legislation to eliminate deforestation and the conversion of natural ecosystems from commodity supply chains.
- Adopt complementary rules, policies, incentives and technical support that facilitate the practical application of deforestation- and conversion-free commitments and requirements.
- Engage in a dialogue with producer countries to mobilise financial and technical cooperation and support, especially for smallholders.
- Integrate explicit requirements for zero deforestation, zero conversion and the prevention of human rights violations into trade and other bilateral and multilateral agreements.
- Adopt long-term policies and incentives to eliminate overall demand for commodity production that results in deforestation, conversion or human rights abuses.
Countries in which production takes place should work with businesses to halt deforestation and conversion in the following ways.
- Establish a technical base and policies for competitive, conversion-free economic alternatives and incentives for conversion-free production in the short-term.
- Establish legislation that aligns with a common set of standards across geographies to avoid spill over effects at subnational, national and international levels.
- Design and implement land-use planning to ensure that expansion of commodity production takes place on already converted or degraded land and to prevent leakage.
- Implement concrete financial support, such as affordable credit and technical incentives for producers.
- Promote and implement policies for conversion-free, nature-based development pathways in regions with high risks of deforestation, conversion and human rights abuses.
- Support agricultural development to improve yields and smallholder performance.
- Develop policies to reduce or eliminate informal market networks and land-speculation schemes.
- Implement subsidies for sustainable production.
- Develop and disburse incentives to support producers to overcome financial and technical barriers to d/c-free production
Financial institutions should eliminate deforestation and conversion of all natural ecosystems from their investments and portfolios. In this purpose, finance actors should
- Assess deforestation and conversion risk in their portfolio, explicitly using common definitions, criteria and indicators aligned with the Accountability Framework
- Engage all invested companies to mainstream deforestation- and conversion-free supply chains
- Adopt clear zero deforestation and conversion criteria in trade financing requirements
- Engage traders and buyers to adopt comprehensive deforestation- and conversion-free sourcing policies
- Develop individual or precompetitive investments frameworks insuring zero deforestation and conversion
They should also support the transition of producers to sustainable supply chains and systemic approaches, especially smallholders with limited means.
- Design and offer financial products to incentivise deforestation- and conversion-free production, trade and sourcing (e.g., loans, green bonds)
- Provide micro-loans to support producers transition to sustainable practices
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