Ending deforestation and conversion means drastically accelerating the greening of supply chains
With a new report shining a light on corporate failure to meet deforestation- and conversion-free commitments, drastic action is needed from governments, producers, traders, communities, and investors.
If a company consistently misses its financial targets, there will be serious consequences: falling share prices, restructuring, ultimately even the collapse of the business. A smart company will act decisively to avoid such outcomes, devoting whatever resources are necessary to fixing the problem.
So, if companies miss their targets to eliminate deforestation and habitat conversion from their supply chains, surely that requires equally decisive and determined action, especially since the consequences are far more severe. Food production has long been the leading cause of nature loss. Nature loss and climate change threaten the stability of our food and financial systems, and undermine the foundations upon which our societies and economies are built.
A new report from WWF and BCG, Deforestation- and conversion-free supply chains: A guide for action, lays bare the failure to get a grip on the habitat destruction embedded in commodity production and trade. It also explores what we can all do better to drive action first and foremost from traders, provide incentives to producers, and develop new business models that halt deforestation and conversion.
According to WWF research, a key issue is that traders have not eliminated deforestation and conversion from their offerings. In fact, a $400 billion gap between what companies want to buy and what is being created by traders who do not want transparency and traceability (how and where a product was produced) complicates commodity trade.
It’s been more than ten years since the Consumer Goods Forum, representing many of the world’s best known companies, committed to achieve zero net deforestation in supply chains for cattle, soy, palm oil, and wood products by 2020. Yet deforestation and habitat conversion have continued on a massive scale, most of it driven by these commodities, along with cocoa, coffee and rubber.
More than half of large companies have made zero-deforestation commitments. This is welcome — though it’s shocking that so many still aren’t doing that — but there’s a big gap between aspiration and implementation. Fewer than half of these companies (41–46%) report on progress towards meeting commitments. When they do, average reported progress is just 55%.
Meanwhile, nature-related risk is becoming ever more material for business. Over the last five years, growing consumer concern for nature has triggered an ‘eco-wakening’ with new research showing a staggering 71% increase in online searches for more sustainable goods globally. Investors holding over $10 trillion in assets under management have made the Finance for Biodiversity Pledge. And new EU legislation designed to curb the global environmental impact of European consumption has received backing from some powerful industry players along with similar proposals from the UK.
With the planet heating up and nature in precipitous decline, we cannot wait another decade for companies to meet their commitments. To be able to do that, action is needed now and it begins with traders.
The need for collective action
All companies must address deforestation and conversion in supply chains at a pace commensurate with the ecological crisis we face. The Accountability Framework remains the best guide for how to do this. Responsibility lies with both traders and companies to implement and report against ambitious commitments. This means ensuring transparency and traceability across supply chains, providing producers and other suppliers with the technical and financial support to accelerate the transition to nature-positive supply chains, and avoiding suppliers and traders who continue to support deforestation and habitat conversion, directly or indirectly.
Companies also need to look beyond individual supply chains toward more integrated and collaborative approaches. The Consumer Goods Forum’s Forest Positive strategy recognizes this and promotes multi-stakeholder, integrated land-use initiatives to accelerate change across production landscapes. Corporate action must work alongside public policies, trade standards, financial incentives, and good governance to bring about a just transition to more sustainable agriculture and forestry.
Financial institutions must also rid their portfolios of deforestation and conversion, incentivise and accelerate the switch to more sustainable production and help smallholders who have limited access to finance, markets or other key resources.
The good news is that despite dismal progress to date, there are many opportunities to do better. We are more aware than ever of the challenge; there is increasing consensus about the key issues as well as how to address them; and there is a more strategic focus that has spawned pilots and successful efforts on the ground. In short, solutions are out there, and those companies committed to taking a leadership role and using their voice and influence are making a difference.
The Amazon Soy Moratorium is perhaps the best-known example of business action dramatically reducing deforestation. Pressure from companies, consumers and NGOs led to Brazilian soy traders representing over 80% of the market agreeing not to source soy from recently cleared areas in the Brazilian Amazon — resulting in a huge decline in deforestation of the Amazon rainforest for soy production. Yet soy remains a major driver of conversion in other biomes such as the Cerrado. The Statement of Support for the Cerrado Manifesto, endorsed by more than 160 companies and investors, is a welcome display of intent but needs to be translated into action by the traders that operate in the Cerrado.
We’ve also seen some encouraging signs of direct business advocacy — such as UK and European supermarkets and investors publicly threatening a boycott of products from Brazil over the Bolsonaro regime’s destructive policies. Besides calling out deforestation and habitat conversion, companies must call for positive policies, including more ambitious agreements at the forthcoming UN climate change and biodiversity summits. Another recent positive step was a declaration by 30 key stakeholders from the Swiss agriculture and food industries urging soy traders operating in Brazil to immediately implement their commitment to zero deforestation and conversion in the Cerrado. As the customers of the traders, manufacturers and retailers hold bargaining power to encourage them to adopt zero deforestation and conversion commitments.
Businesses at every stage of the value chain should also join the new Forest, Agriculture and Commodity Trade (FACT) Dialogue — a platform led by the UK and Indonesia for countries and stakeholders to shape a shared agenda for eliminating deforestation and conversion, and achieving more sustainable commodity production systems.
Companies and financial institutions can also commit to protecting nature and natural systems by setting ambitious greenhouse gas emissions reduction targets through the Science-Based Targets initiative, and by joining the Science Based Targets Network, which is helping companies develop and set targets for nature. And the recently launched Taskforce on Nature-related Financial Disclosure (TNFD) presents an opportunity for financial institutions, producers, traders, manufacturers, brands, and retailers to map, disclose, and act on evolving nature-related risks in a consistent and comparable manner, helping redirect global financial flows toward nature-positive outcomes.
With mounting pressure from governments, consumers, and financial markets, failing to tackle deforestation and conversion is an increasing risk for all businesses along food and soft commodity value chains. And as the consequences of nature loss become ever starker — from COVID-19, deadly heatwaves, sea level rise and catastrophic fires — missing targets is no longer an option. We must all do whatever we can to make the food system more sustainable. There is no more time to waste.