December 3, 2021

Green Industry

Why commodity traders may finally get a handle on deforestation


One of the first big announcements coming out of COP 26 was the Glasgow Leaders’ Declaration on Forests and Land Use, signed by 137 countries that cover over 90 percent of the world’s forests. The declaration puts a renewed emphasis on the sustainable use, protection and restoration of forests and other terrestrial ecosystems to meet Paris goals. 

While welcoming it as an essential area for climate action, critics have also pointed out the déjà vu nature of this moment. Back in 2014, the New York Declaration for Forests had already promised to halve deforestation by 2020 and end it by 2030. “Since then, deforestation has only risen, contributing what the U.N. Intergovernmental Panel on Climate Change estimates as 23 percent of total carbon emissions, as forestland is steadily cleared for agriculture, with trees cut for timber and other uses, or burned as wood pellets,” writes Justin Catanoso in Mongabay. 

What has changed since 2014 that would make us believe that the Glasgow declaration will be more successful than its New York predecessor?

One piece of the puzzle might  another deforestation pledge made the same week by 10 major global agricultural commodity traders. This includes companies such as Cargill, JBS, Bunge, Marfrig and Wilmar International — who control leading market shares of commodities with high deforestation risks such as soy, cattle, cocoa and palm oil — and have a combined annual revenue of almost $500 billion. 

Robert Heilmayr, an assistant professor at the University of California-Santa Barbara who studies deforestation in agricultural supply chains, made two observations about the pledge that give him cause for optimism. One, the pledge is signed by the companies’ CEOs and not sustainability leaders, signaling that the issue receives attention at the highest levels. Two, it is made by commodity traders, showcasing that deforestation pressure is slowly trickling down from retailers and food manufacturers to their suppliers. 

These companies have pledged to eliminate deforestation many times before while doing the opposite.

The CEOs of these companies want to work with “governments, farmers, and other key stakeholders in [their] supply chains, to accelerate sector-wide action and to identify opportunities for public-private collaboration to catalyze further progress on eliminating commodity driven deforestation.” By COP 27, they plan to lay out a shared roadmap that would align their supply chain emissions with a 1.5 degrees Celsius goal. 

Now, this could obviously be called another déjà vu moment. These companies have pledged to eliminate deforestation many times before while doing the opposite. They bear major responsibility for the climate and extinction crises we are living through. 

Still, we shouldn’t dismiss it as a greenwashing effort from the get-go. A few signs indicate that this pledge may actually be transformative — especially in combination with the renewed governmental focus on deforestation: 

  • Global presence: It’s a truly global group of companies, covering key deforestation regions in Latin America and Asia as well as major consumer markets in the Global North. The wider reaching a commitment is, the lower the chance that deforestation will be displaced from on region to another.
  • Cross-cutting commodities: The inclusion of the major deforestation commodities — soy, cattle, palm oil and cocoa — is equally important to avoid deforestation shifts. In the past, collaborations have mostly focused on one commodity. This allowed deforestation to, for example, shift from soy to cocoa within a region when soy practices were improved. 
  • Supply chain focus: The companies recognize the need to bring in their direct and indirect suppliers. This is key as most deforestation occurs several stops downstream from traders. 
  • Public private partnerships: No one stakeholder can tackle this challenge in isolation. Government action is essential to enforce policies and make reliable data for monitoring and traceability available, which the companies acknowledge. 
  • Technological advancements: A lot of powerful technologies have been developed over the past years assisting with detailed monitoring of forests and supply chain traceability. These companies have the means to deploy such valuable tools. 

[Want to know what is happening at COP26? Follow our full coverage.]

Having said that, a lot of hard work needs to be done by these companies to take advantage of the favorable situation and achieve real results. “The pledge is very short on detail,” said Jeff Milder, director of global policy and coalitions at the Rainforest Alliance. “We need to know a lot more to judge whether the pledge will be transformative.”

To demonstrate a genuine commitment, the companies need to address major issues when working on their shared roadmap over the next year: 

  • Defining deforestation: The devil is in the details when it comes to deforestation pledges. What do the companies mean by “eliminating deforestation”? The industry uses several definitions. Will they aim for zero “gross” deforestation (the real deal), zero “illegal” deforestation (continuing to allow deforestation in line with national policies) or zero “net” deforestation (forests can be cleared or converted in one area as long as an equal area is reforested elsewhere)? The latter is problematic as reforestation often takes the form of monoculture plantations which don’t have the same ecological value as old-growth forests.
  • Avoiding the conversion of other ecosystems: It’s equally important to avoid the conversion of other ecosystems (savannas and shrublands in Brazil and Argentina). Will the companies ensure that their bad practices don’t move to these ecosystems
  • Deciding on a bold time horizon: Will the signatory companies be able to agree on a cutoff date in the near future? We can’t afford to allow deforestation for another decade as negative impacts are already manifesting today. A 2030 commitment will be too late. 
  • Respecting indigenous groups and other human rights: The pledge does not mention the collaboration with indigenous groups who are essential stakeholders in this issue. They also don’t mention upholding human rights agreements, a major shortcoming. 
  • Committing to transparency and traceability: Like other sustainability commitments, deforestation pledges need to be implemented in collaboration with third parties. Progress needs to be disclosed and monitored in a transparent manner with respected groups such as the Accountability Framework Initiative and the High Carbon Stock Approach

I’d also like to challenge the 10 traders to rethink their product portfolio altogether, in addition to doing the outlined work. For example, should the companies continue to invest in soy (77 percent of which is used as animal feed) and cattle when these are inefficient ways of feeding the global population? Or would they be better off investing in foods with fundamentally lower ecological footprints? All of this goes to say that making the pledge has likely been the easiest part of their deforestation-free journey. 

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