19 October 2015 | Our economy is built on commodities like palm oil, soy, timber, and cattle; but growers around the world have been chopping forest to meet the demand – so much so that, since 1990 alone, we’ve lost enough forest to cover almost the entire country of South Africa, and that loss has pumped 2.5 gigatonnes of carbon dioxide into the atmosphere, accelerating climate change. Indeed, agriculture and forestry combined generate roughly 30% of all greenhouse gas emission.
Fortunately, hundreds of companies – from “A” (Archer Daniels Midland) to “Y” (Yum! Brands) – have promised to change their ways and make sure their products aren’t coming at the expense of the world’s forests. Unfortunately, most of them haven’t offered much insight into how they expect to achieve their results, and a recent Supply-Change.org analysis of the more than 50 multinational companies that endorsed last year’s New York Declaration on Forests found that just over half have publicly reported progress toward their commitments. But this, of course is only what companies themselves report – because there is no reliable verification framework.
To be fair, it isn’t always clear where to begin – which is why Innovation Forum is hosting How business can tackle deforestation in London on November 2nd-3rd. The event will be the fourth in a series looking at the role of business in combating deforestation. The previous discussions in London, Washington DC, and Singapore have brought together companies and campaigners in the same room to produce insights and drive development of solutions. This edition will explore the challenges to implementing sustainable commodity policies, the limits of sustainable certification and prospects of going beyond them, and legal and reputational risks to companies.
So how are companies planning to meet their commitments?
One approach is to source commodities that have been certified as sustainable by standard-setting bodies such as the Forest Stewardship Council, the Programme for the Endorsement of Forest Certification, and the Roundtable on Sustainable Palm Oil (RSPO). But so far, only about 20% of global production for these commodities is certified – and they’re the most prevalent. For soy and cattle, it’s less than 1%. And even if all commodity production was sustainably certified, many experts wonder if it is enough to save the forests.
Earlier this year institutional investors and major brands called for RSPO to strengthen its standards to prohibit deforestation and peatland clearance for certified palm oil production, something it hasn’t explicitly done. Still others, notably TFT (formerly The Forest Trust), are advocating to forgo certified commodities altogether in favor of following best practices in-line with the values held by a company’s leaders with the hope of accelerating innovation on the ground.
And what if companies don’t meet their commitment targets? They certainly face reputational risks – it was public advocacy campaigns like the one against Kellogg that prompted adoption of many sustainability commitments initially – but what about the legal risk? Companies may be subject to laws that prohibit sourcing of illegal products, but sustainable commodity commitments are effectively voluntary and therefore without any foreseeable consequences from regulators. Public companies do answer to their shareholders, but activist shareholders have had mixed success to keep companies accountable. One example of success was a shareholder resolution at ConAgra driving change, while a resolution with Bunge came up short last spring.
The pace of change is fast, and that is a good thing for forests. Supply Change will be providing coverage from the Innovation Forum event in London next month, and cross-posting on Ecosystem Marketplace.