Editor's Note—We're proud to make two, new introductions this month: Katie Anderson joins our Supply Chain team as a Project Manager with a focus on deforestation, and "The Business of Food" is born as a new category dedicated to exploring how the growing, processing, distributing, purchasing, consuming and disposing of food impacts our communities, our economy and our planet.
A month out from the election, we know that the global community faces significant uncertainty about what President-elect Trump and his administration will mean for climate outcomes. But with the 24-hour news cycle making it clear just how “transitional” this presidential transition period is, I think it’s worth shining a light on three recent events that I’m going label has hopeful, tragic and confounding:
- Hopeful: as part of its 2025 sustainability goals, Walmart announced a target reduction of 1 gigaton of greenhouse gases from its supply chain;
- Tragic: Brazil’s National Institute for Space Research (INPE) announced a 29% increase in deforestation over the past year;
- Confounding: thinking he was going to have a climate change chat with Ivanka Trump, Al Gore made a trip to Manhattan—and ended up sitting down with the President-elect as well.
Let’s take the second part first and talk about deforestation. Tropical deforestation contributes about 15% of the world’s greenhouse gas emissions, making forests an incredibly valuable part of the climate conversation.
Alongside the climate benefits, forests also provide habitat for 70% of the world’s species, allow for improved water quality and support livelihoods for indigenous communities. So INPE’s announcement is absolutely tragic—especially when you consider that the amount of tropical forest lost in just one year equals the size of the state of Delaware.
So let’s move on to the hopeful part: Walmart’s goal. Just how much, exactly, is 1 gigaton of greenhouse gas? Most often it’s held up as being equal to the annual emissions of Germany (the world’s 4th largest economy). But just so you can appreciate the scale of both Walmart’s audacious ambitions and the problem we’re facing in our rainforests, Walmart’s goal is equivalent to only ¼ the annual GHG emissions caused by global deforestation!
Which means we’ve got a long way to go.
On to the confounding part: kudos to Ivanka Trump for inviting Al Gore for a talk on climate change. Sadly, it seems her dream position of being the “Climate Czar” will be ceremonial at best, because whatever was discussed at their Manhattan meeting was likely rendered moot by her father’s nomination of Scott Pruitt to be head of the Environmental Protection Agency (EPA). I’m guessing we’ll never really know what was said, but if Donald and Ivanka are even half the business geniuses they claim to be, they should have listened to Gore, particularly if he brought up deforestation. Here’s why:
Sustainable sourcing drives business value
Creating deforestation-free supply chains provides value to corporate bottom lines. Effective work on reducing deforestation in supply chains reduces reputational risk, builds trust and transparency with consumers, and drives investor value. Just two examples include:
- Malaysia’s IOI Group saw a 10% decrease in stock values after the Roundtable on Sustainable Palm suspended the company’s engagement.
- The Carbon Disclosure Project found that investors managing $19 trillion in assets are asking companies to report on deforestation risk.
In other words, customers and shareholders around the world are waking up, and business leaders are responding accordingly. Given that agriculture drives 70% of global deforestation, corporate actors who source our everyday products now realize they have big role to play in finding a solution.
Walmart is a perfect example: the need to expand the sourcing of commodities produced with zero net deforestation was cited as an essential component of meeting the 1 gigaton goal. And Walmart is by no means alone: to date, 366 companies have made public commitments to reduce deforestation in their supply chains—for the simple reason that they’re becoming aware of the major risks of not engaging in deforestation-free sourcing.
Unfortunately, public information on if/how companies are achieving these goals is only available for one-third of these commitments, but it appears that, while they’re a good start, commitments alone not enough.
Given all that, what’s a forward-thinking CEO to do regarding deforestation?
Landscape-scale approaches are critical to hitting targets
An emerging opportunity is in engaging landscapes, or jurisdictions, in reducing deforestation across the entire area. Rather than going farm-by-farm to achieve certifications—which is likely to lead to islands of “green” in a sea of deforestation—a jurisdictional approach allows whole regions to be categorized as reducing deforestation.
This is valuable for many reasons:
- the costs of monitoring compliance are shared among governments, corporate actors, and other stakeholders;
- it avoids leakage—a problem where one farm may reduce deforestation but will push deforestation into a different farm;
- it works across all commodities that drive deforestation rather than solely through certain supply chains;
- it protects the rights of landholders and indigenous communities.
Now, more than ever, business needs to lead
President-elect Trump often cites business as “the solution” to what’s ailing our country. In terms of climate change, this is one area where he and I agree.
In these uncertain (read: hopeful, tragic, confounding) times, it is incredibly important for corporations to publicly lead on how they work within their operations and their supply chains to reach climate balance. This means setting bigger goals, digging more deeply into the weeds to understand the impacts of their supply chains, and reaching beyond their walls to find the solutions that are most likely to bring the change we need.