Deforestation-free supply chains
Coffee and cocoa for breakfast, palm oil in shampoos and ice cream, soy fed to the sources of our steaks and scrambled eggs, natural rubber in car and bicycle tyres: by consuming all these agricultural raw materials, we contribute to tropical deforestation every day. Around 90% of deforestation in the tropics is due to agriculture. Between 2001 and 2015, deforestation of an area twice the size of Germany was caused by just seven agricultural raw materials: beef, palm oil, soy, cocoa, natural rubber, coffee and plantation wood. A significant proportion of these deforestation-driving agricultural raw materials is traded internationally, including with the EU.
At the same time, forests and other valuable ecosystems are essential to the climate, to biodiversity, to the livelihoods of millions of people, and, at least in the medium term, also to agriculture. That means we simply won’t be able to afford deforestation in the future.
In light of the high deforestation rates related to some agricultural raw materials, corporations in particular have been taking action in recent years. In 2010, the Consumer Goods Forum (CGF), an association of the largest consumer goods producers and retailers worldwide, announced its intention to eliminate deforestation from palm oil, soy, beef and pulp supply chains. As part of this initiative, corporations along the entire supply chain, from large producers through globally operating agricultural traders to retailers, made commitments over the following years to ensure deforestation-free supply chains by 2020.
International treaties supported this process: In the New York Declaration on Forests (NYDF), adopted in 2014, corporations, states and civil society for the first time jointly committed to halving deforestation by 2020 and supporting the private sector’s goal of eliminating deforestation from palm oil, soy, paper and beef supply chains by 2020.
And yet deforestation rates have not fallen in recent years. According to the FAO, between 2015 and 2020 an average of 10 million hectares of forest were cleared every year. Satellite data from the World Resources Institute show that in 2020, around 12 million hectares of forest were lost in the tropics alone – and that figure has been trending upwards over the past five years. Especially severe is the growing and irrecoverable loss of tropical primary forests – an area the size of the Netherlands vanished in 2020 alone. Brazil tops the chart for primary forest loss in the tropics by a wide margin, followed by the Democratic Republic of the Congo, Bolivia, Indonesia, Peru and Colombia.
No corporation has succeeded in fully implementing its self-commitment to deforestation-free supply chains – not least because in many cases this would have meant excluding smallholders from global supply chains. Today it is clear that minimising deforestation will require collaborative efforts, and that policy-makers must create the framework conditions necessary to halt deforestation resulting from the expansion of agricultural land. We also need economic incentives to convince populations and corporations in current deforestation hotspots to refrain from further logging. In order to preserve forests we must create alternative livelihoods for local people by ensuring living incomes and wages, among other measures.
Deforestation and the responsibility of the EU
The EU comes second in the ignominious global ranking of consumption-related forest destroyers – after China as the largest importer of deforestation-driving agricultural raw materials and ahead of India, the USA and Japan. In 2017, the EU was responsible for 16% of tropical deforestation caused by the international trade in agricultural raw materials; China was responsible for 24%, India for 9% and the USA for 7%. Between 2005 and 2017, the EU caused deforestation of around 3.5 million hectares in the tropics – that’s an area about the size of Germany’s federal state of Baden-Württemberg. Soy, palm oil and beef have the largest deforestation footprints of all raw materials imported from the tropics, followed by wood products, cocoa and coffee. The EU “imports” the highest amount of deforestation in the form of agricultural raw materials from Brazil, Indonesia, Argentina and Paraguay.
A new survey by Forest Trends moreover shows that illegal logging for commercial agriculture is on the rise, accounting for around 69% between 2013 and 2019.
But the Paris Climate Agreement will not be achievable without forest preservation: If deforestation were a country, it would be the world’s third-largest emitter of greenhouse gasses after China and the USA. Around 20 to 30 percent of greenhouse gas emissions caused by deforestation are due to international trade in agricultural raw materials.
International treaties such as the Sustainable Development Goals (SDGs), the Paris Climate Agreement, the forthcoming Post-2020 Biodiversity Framework or the New York Declaration on Forests cannot be fulfilled without deforestation-free supply chains. The numerous declarations and initiatives on deforestation-free supply chains in 2021 demonstrate that more and more politicians and corporations are acknowledging the need to stop deforestation:
In the Glasgow Leaders Declaration on Forest and Land Use adopted at the COP 26 climate conference in Glasgow, 141 nations pledged to end deforestation by 2030, calling for comprehensive measures to create deforestation-free supply chains. International financial institutions and agricultural traders also made ambitious declarations at COP26 on stopping deforestation in their financial portfolios and supply chains.
On 17/11/2021, the European Commission presented its draft of an EU regulation on deforestation-free supply chains. Based on due diligence requirements for corporations and benchmarking of production countries, the proposal will be debated by the European Parliament and Council in 2022. Laws on deforestation-free supply chains are also being drafted in the USA and the UK.
In their May 2021 closing statements, the G7 environment and trade ministers announced their intention to decouple agricultural production from deforestation in the future – including through the use of trade instruments provided by the World Trade Organisation (WTO).
In the Amsterdam Declarations Partnership (ADP), initiated in 2015, a total of now nine European countries, namely Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain and the UK, advocate for measures to achieve deforestation-free supply chains. In January 2021, German chancellor Angela Merkel restated Germany’s commitment to supporting measures for deforestation-free supply chains at the EU level.
The German cabinet had adopted the German Federal Government’s Guidelines on the Promotion of Deforestation-free Supply Chains of Agricultural Commodities in 2020, thereby creating a framework for Germany’s efforts towards deforestation-free supply chains on the production and demand sides.
Numerous donor countries on the consumer side, forest countries, major corporations and civil society associations are organised in the Tropical Forest Alliance (TFA), which works to minimise deforestation in supply chains at an international level
Landscape approaches/Jurisdictional approaches
Although sustainability standards help improve the situation in many supply chains, they cannot solve systemic issues such as wide-scale deforestation because their sustainability requirements only apply to the respective certified enterprises. The effectiveness of traditional supply chain instruments is moreover limited, as many of the challenges cannot be solved by one actor alone.
In recent years, holistic approaches known as landscape approaches or jurisdictional approaches, designed to sustainably transform an entire landscape, region or administrative unit across raw materials and in cooperation with interest groups from governments, corporations, civil society and especially smallholders, have therefore become increasingly important.
These concepts have met with significant interest in recent years. For example, 20 companies have joined forces within the Consumer Goods Forum to form the Forest Positive Coalition of Action, which sees jurisdictional or landscape approaches and cooperating with actors even beyond a company’s own supply chains as an important strategy in the fight to prevent deforestation. The Tropical Forest Alliance has moreover set up a platform that provides targeted information to support corporations that want to promote landscape approaches and jurisdictional approaches.
Implementation in partner countries
South America and South East Asia are the regions where the highest amount of woodland is converted into agricultural crop land. Alongside commercial agriculture, subsistence farming and firewood for daily use are significant factors in deforestation in Africa. Locally, mining, infrastructure and urban expansion are also major drivers of deforestation.
Many producer countries have joined the NY Declaration on Forests and the Glasgow Leaders Declaration on Forest and Land Use and agreed to do their part to stop deforestation by 2030.
What challenges and levers exist in production countries?
- Transforming commitments into national objectives and laws, enforcing legal requirements and imposing corresponding sanctions
- Establishing suitable monitoring systems to identify deforestation hotspots
- Effective land use planning to preserve especially protection-worthy areas
- Increased intersectoral coordination to reconcile differing interests and eliminate contradictory incentive systems
- Promoting national and subnational multi-stakeholder initiatives and public-private partnerships that bring together government, civil society organisations, corporations and associations
- Implementing policies and legal regulations to a sufficient degree at subnational levels
- Establishing incentive mechanisms that promote the production of sustainably produced goods
In practice: INA in Colombia
The projects "Sustainable Agricultural Supply Chains in Indonesia (SASCI)" and "Sustainability and Value Creation in Agricultural Supply Chains (SASCI+)" promote deforestation-free supply chains.
The main objective of the projects is to establish sustainable production regions.
More information about the projects can be found under "In practice" on the project page.
In practice: INA in Indonesia
In Colombia, INA is active in the INCAS and INCAS Global + projects.
The projects promote sustainability in international agricultural supply chains - from the shelf to the field.
If you would like to know more about the project, you can find a detailed report here.