If you saw the news that there was a UN Climate Summit this week, but haven’t followed it closely, you might well assume that nothing substantive happened. You can certainly be forgiven for thinking so – there was a lot of pomp and lofty talk (this is the UN after all), and no global treaty was signed (although none was expected). Below the surface, however, quiet momentum for key policy actions was built. And even quieter, but yet potentially more exciting, commitments were made. Chief among these was news that global agriculture giant Cargill committed to ending deforestation across all commodities in its supply chain as part of the New York Declaration on Forests.
This is a big deal.
Why? Forests – and especially tropical forests – are vital to life on this planet and to the stability of the climate. More than 70 percent of the world’s species live in forests, making them critical bulwarks against biodiversity loss. Equally important, the loss of forests is responsible for 12 percent of total global greenhouse gas (GHG) emissions, not to mention the impacts on livelihoods and cultural legacies, as millions of indigenous peoples call the forests home. The production of commodity agriculture is the largest driver of global deforestation, responsible for 85 percent of total forest loss. Palm oil, beef, and soy bear the lion’s share of the responsibility. Cargill has a significant interest in all three of these commodities, plus several others with non-negligible impacts on forests like cocoa.
This is not a secret to the companies in global supply chains for these products. But, commitments and actions so far have been mostly limited to the public-facing brands and retailers. In 2010, the Consumer Goods Forum (CGF), a network of more than 400 companies with $3.1 trillion in revenues committed to achieving deforestation-free supply chains by 2020. As economically powerful as these companies are, they need the support and cooperation of the major commodity traders and producers who are closer to the action. ADM, Bunge, Cargill, and Louis Dreyfus (the so-called “ABCD” companies) control an estimated 90% of the global soft commodity trade, with emerging market competitors such as Wilmar and Olam establishing a growing footprint.
And indeed, Cargill and other companies have been engaged on the issue of deforestation through participation in Brazil’s Soy Moratorium and focused efforts to end deforestation attributed to palm oil production. But, this new commitment represents a big new step. It covers all commodities in all locations around the world. It is also timely – as the Soy Moratorium, which has contributed to Brazil’s tremendous progress in slowing deforestation in the Amazon, is set to expire at the end of the year.
Commitments are only the first step. The remaining task is translating such commitments into concrete action. EDF believes that in order to end deforestation, we must create a durable, at-scale model that meets the demand for agricultural commodities while protecting forests. We envision a scenario where supply of agricultural commodities is produced in Zero Deforestation Zones (ZDZs)—nations, states and territories that are able to demonstrate reductions in deforestation within their borders.
Sourcing agricultural commodities such as palm oil, beef, and soy from ZDZs creates a range of benefits:
- Simplified traceability and attribution – All products coming from a designated ZDZ will meet the criterion of “deforestation-free”. While not replacing good supply chain governance, this reduces both the cost of tracking commodities to a specific parcel of land and the complex challenge of attributing deforestation to the production of particular commodities.
- Level playing field— All crops and companies under the same rules, including those bound for markets without high sustainability concerns.
- Reduced reputational risk — ZDZ sourcing offers better overall performance with fewer opportunities for supply chain violations to occur.
- Reduced threats to market access — Legal frameworks such as U.S.’s Lacey Act and Europe’s Forest Law Enforcement, Governance and Trade (FLEGT), have strengthened enforcement against illegal deforestation, pressuring businesses to improve supply chain standards.
- Opportunities for revenue generation for governments — Such revenue could come from international financial mechanisms such as REDD+, which could be directed to increase subsidies for low carbon agriculture, certification costs, or extension services that in turn encourage farmers to comply with existing regulations such as Brazil’s Forest Code.
- Benefits for local communities — Including indigenous peoples, who depend on forests and agricultural products by offering technical assistance to improve yields and maintain the vital ecosystem services and livelihoods the forests provide.
Cargill’s commitment is important on its own, but it may also represent a tipping point in this vital segment of the supply chain. In the coming months and years, EDF, alongside its partners in the environmental community, will be working hard to ensure that these commitments become reality. We will also encourage the other large players such as ADM, Bunge, and Louis Dreyfus to follow suit.
While the private sector cannot drive the creation of ZDZs on its own, it can be a major catalyst. By choosing to source agricultural commodities such as palm oil, beef, and soy from Zero Deforestation Zones, companies can meet their commitments and strengthen the impetus for critical policy reforms necessary to ensure our forests remain standing.
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