COP26 & the bid to end deforestation: How will it impact supply chains?

23 March 2022
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The role of commercial agriculture in deforestation

Commercial agriculture drives over 70% of forest destruction in tropical and sub-tropical countries. Commodities most strongly linked to deforestation include palm oil, soy, timber, pulp, and cattle. This is often due to illegal logging and changes in land use.

A growing number of retailers, manufacturers, processors and traders in the food, fuel, and fibre sectors are making public commitments to establish deforestation-free supply chains. The rise of net-zero emissions commitments may provide the strongest impetus yet to eliminate deforestation from commodity production, sourcing, and financing. Such commitments doubled in 2020 alone and have now collectively been issued by companies with combined revenue of more than half the US’s annual GDP.

To tackle agricultural emissions, UK supermarket Tesco has recognized the need to follow its supply chain upstream – to origins in Brazil, Indonesia, and elsewhere – and institute a strong no-deforestation and no-conversion strategy. For instance, the difference between conversion-free sourcing and conversion-intensive sourcing for Tesco’s 500,000-ton annual soy purchases (primarily for animal feed) could be more than 100,000 tons of CO2-equivalent per year, which is equivalent to roughly 20% of the company’s supply chain emissions.

Companies also need to be aware of the potential for reputational damage. Recently some of the UK’s best-known brands such as Cadbury’s Chocolate, Anchor Butter, and Cathedral City Cheddar have been linked to the destruction of Brazilian forest through soya – a protein-rich cattle feed supplement.

What can be done to stop deforestation?

According to a 2015 report by SMART Development Works, three key practices are needed to help shift to deforestation-free supply chains.

Traceability and forest monitoring

It is crucial that production is traced back to the farm and that a system is in place which monitors forest cover. Although systems exist that can achieve this, the main challenge is to deliver this at a low cost to make it work in a smallholder context.

Incentives for smallholders

To ensure that smallholders and the poorest groups are included in supply chains, and to support them in making the transition to sustainability.

Working across the landscape

A landscape approach must be adopted to prevent leakage and to balance the objectives for agricultural production with forest protection. To be able to operate beyond plantation boundaries and have an impact at scale, activities should align with government planning and activities wherever possible.

In this article, we consider what this pledge will mean for the supply chain for forestry and agricultural products. Read more here.

COP26 & the bid to end deforestation: How will it impact supply chains?

23 March 2022

The role of commercial agriculture in deforestation

Commercial agriculture drives over 70% of forest destruction in tropical and sub-tropical countries. Commodities most strongly linked to deforestation include palm oil, soy, timber, pulp, and cattle. This is often due to illegal logging and changes in land use.

A growing number of retailers, manufacturers, processors and traders in the food, fuel, and fibre sectors are making public commitments to establish deforestation-free supply chains. The rise of net-zero emissions commitments may provide the strongest impetus yet to eliminate deforestation from commodity production, sourcing, and financing. Such commitments doubled in 2020 alone and have now collectively been issued by companies with combined revenue of more than half the US’s annual GDP.

To tackle agricultural emissions, UK supermarket Tesco has recognized the need to follow its supply chain upstream – to origins in Brazil, Indonesia, and elsewhere – and institute a strong no-deforestation and no-conversion strategy. For instance, the difference between conversion-free sourcing and conversion-intensive sourcing for Tesco’s 500,000-ton annual soy purchases (primarily for animal feed) could be more than 100,000 tons of CO2-equivalent per year, which is equivalent to roughly 20% of the company’s supply chain emissions.

Companies also need to be aware of the potential for reputational damage. Recently some of the UK’s best-known brands such as Cadbury’s Chocolate, Anchor Butter, and Cathedral City Cheddar have been linked to the destruction of Brazilian forest through soya – a protein-rich cattle feed supplement.

What can be done to stop deforestation?

According to a 2015 report by SMART Development Works, three key practices are needed to help shift to deforestation-free supply chains.

Traceability and forest monitoring

It is crucial that production is traced back to the farm and that a system is in place which monitors forest cover. Although systems exist that can achieve this, the main challenge is to deliver this at a low cost to make it work in a smallholder context.

Incentives for smallholders

To ensure that smallholders and the poorest groups are included in supply chains, and to support them in making the transition to sustainability.

Working across the landscape

A landscape approach must be adopted to prevent leakage and to balance the objectives for agricultural production with forest protection. To be able to operate beyond plantation boundaries and have an impact at scale, activities should align with government planning and activities wherever possible.

In this article, we consider what this pledge will mean for the supply chain for forestry and agricultural products. Read more here.

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