One of the biggest stories of 2020 was the rise of the corporate tree-planting movement, with dozens of multinational businesses from virtually every industry pledging millions of dollars to one of nature’s most effective carbon sequestration solutions.
Now, NGOs and investors are urging consumer goods and food companies and financial institutions to devote more resources to addressing the root cause of shrinking forests, deforestation.
Many companies have promised to address deforestation related to their business activities for years, but few have fully delivered on those plans — and an astonishingly high number of companies don’t have an explicit commitment to ending deforestation.
A confluence of factors as we move deeper into the “Decade of Action” is raising the stakes: deepening global concerns over the loss of species habitat and biodiversity; an environmental justice awakening that has more of us attuned to systemic human rights issues, including encroachment of Indigenous communities, as well as child and slave labor; and a heightened awareness among the investment community about the long-term ecosystem and financial risks associated with deforestation.
As 2021 begins, more companies are seeing their strategies for addressing deforestation deep down into their supply chains scrutinized.
“We need companies to make commitments that are specific to how they are addressing their supply chains,” says Jessye Waxman, shareholder advocate with Green Century Capital Management, which has so far engaged dozens of businesses encouraging them to improve their “no deforestation” policies and practices. Among those it has targeted: food service operator Aramark, meat company Tyson Foods and consumer products maker Procter & Gamble.
Green Century’s latest shareholder proposals related to deforestation were filed in late December with two of the world’s largest grain traders, The Archer-Daniels Midland Company and Bunge. Both companies already have commitments to eliminate deforestation, but the investment firm would like to see them become even more aggressive with members of their soy supply chains. “There is definitely increasing urgency around this issue,” Waxman says.
Many promises, limited followthrough
Here’s what we’re up against. More than 1 million acres of forests have been lost since 1990, leaving the global stock at near 10 million acres, according to a July report by the United Nations Food and Agriculture Organization (FAO). While the rate of annual deforestation slowed to about 25 million acres between 2015 and 2020, the trendlines in several regions — especially countries in Africa and South America — aren’t moving in the right direction. Brazil, for example, recently recorded its highest rate of deforestation since 2008 during the period from August 2019 to July, an increase of 9.5 percent.
The vast majority of that destruction (up to 80 percent) is linked to commodities such as palm oil, soy, beef, leather, timber, and pulp and paper. Cattle-rearing practices in Brazil are of particular concern among multiple NGOs. Yet, many companies hugely reliant on these resources aren’t actively fighting deforestation, according to data from research organizations including CDP and Global Canopy.
What’s more, of the companies that have made commitments, many have failed to deliver or to set deadlines — with some continuously pushing dates into the future or changing the rules by which they judge progress, according to both organizations.
CDP’s recent “Zeroing In on Deforestation Report” urged consumer products and food companies to devote more energy to this issue. It found, for example, that the supply chains for cattle and soy are particularly opaque — the largest meat processor in the world, JBS, fares “very poorly.” Food and consumer products companies that buy meat from organizations such as these need to become far more engaged in tracing the regional origins of the product they’re buying, says Ling Sin Fai Lam, lead analyst on the report. “CPG companies are going to find it harder to meet their own goals if they don’t seek collaboration from people closer to the ground,” she says.
While new forest strategies have been declared in recent months — Tyson Foods published its forest protection standard in November after a lengthy assessment by nonprofit Proforest — the dialogue around deforestation was relatively muted last year, when compared to the tree-planting movement.
“Are there more companies with stated strategies? Generally, yes, we have seen a few more commitments and improvements,” notes Sarah Rogerson, research associate at Global Canopy and lead researcher for its Forest 500 report, which evaluates corporate deforestation strategies. “But not a step change over what we have seen in previous years. There hasn’t been an obvious gearup. We were hoping  would be a big year for forests and nature.” (The next edition of the Forest 500 is due in late January; here’s last year’s coverage.)
Progress takes root
There were some hopeful signs over the past 12 months.
Cargill, which has been evolving its deforestation policy for decades, reported in June that it was on track to “eliminate deforestation in all commercial palm oil concessions in its third-party supply chain by the end of 2020.” After being contacted for an interview for this story, the company provided several written updates about its soy sourcing strategy including these highlights:
- More than 95 percent of the soy it purchased in Brazil for the 2018-2019 crop year was “deforestation- and land-conversion free”
- It had mapped 100 percent of its Brazilian soy supply chain by early 2020
- It continues to develop a certification program in Brazil and Paraguay, in order to provide a “large market” for soybeans grown via verified methods
Aramark was praised by Green Century in mid-November for its “prompt progress” on its no-deforestation policy. Within one year of publishing the strategy in December 2019, the company already has shifted to sourcing 100 percent of its soy and 99 percent of its palm oils from regions with no deforestation risk. So far, 60 percent of the beef it sources is “deforestation-free,” according to Aramark.
In written responses to questions submitted for this story, Aramark Vice President of Sustainability Kathy Cacciola noted that Aramark’s biggest challenge in delivering on the strategy is its position of influence in the value chain for the covered commodities.
“For example, we do not source any raw palm oil, but it is present in tiny amounts of a vast number of products that we purchase, thus our ability to influence producers is limited,” she wrote. “Moreover, although our supplier partners are always willing to provide us with the information we ask for, they do not always have full visibility to where their raw commodities are coming from.”
We’re seeing the end of the commodity era, where materials are sourced from largely unknown origins and bought purely for price on a transactional basis.
Mars also generated plenty of headlines in 2020 with its claim of a “deforestation-free palm oil supply chain,” an initiative related to the Palm Positive Plan it adopted in September 2019. Getting there required a drastic reduction in the number of mills that the company uses to source palm oil — to fewer than 100 this year, compared with 1,500 previously. It plans further reductions by 2022, according to the press release Mars issues to trumpet this achievement.
In written responses to questions submitted for this article, Kevin Rabinovitch, global vice president of sustainability for Mars, said simplifying the company’s supply chain through longer-term contracts and fewer suppliers was crucial for helping it verify that partners are meeting environmental, social and ethical standards and for laying the foundation for collaborative engagement.
“We’re seeing the end of the commodity era, where materials are sourced from largely unknown origins and bought purely for price on a transactional basis,” he wrote. “That model doesn’t address some key elements of the world we want tomorrow. The future will leverage sourcing from known farms, with price, human rights and sustainability impacts evaluated side by side.”
As of this writing, there has been no independent verification of the Mars palm oil claim.
Mars is also part of the new Forest Positive Coalition, launched in September by a group of 17 companies belonging to the Consumer Goods Forum — including Danone, General Mills, Nestle, P&G, PepsiCo, Unilever and Walmart. The group has pledged support of collective, systemic efforts to “remove deforestation, forest degradation and conversion from the key commodity supply chains of palm oil, soy and paper, and paper, pulp and fiber-based packaging.”
Another coalition of companies — including ADM, Bunge and Cargill — is working with the World Business Council for Sustainable Development (WBCSD) to improve the traceability of soybeans grown in Brazil’s Cerrado region, one of the least-protected regions in the country, which is experiencing higher rates of deforestation than the Amazon. So far, the Soft Commodities Forum has engaged with about 121 producers, according to a December update.
“Only by bringing producers to the center of the quest for solutions will we be able to contribute to a world without commodities-driven conversion, balancing environmental outcomes with resilient and prosperous rural communities,” said Tony Siantonas, director of the Scaling Positive Agriculture initiative for WBCSD, in a statement.
Engagement seen as central to effective strategies
That sentiment was echoed by a number of companies that have devoted considerable time and resources to the evolution of their policies for addressing deforestation, including food companies Cargill and Mars, food services firm Aramark, restaurant chain McDonald’s and fashion company Kering.
“I think the headline would be: Don’t work alone,” Yoann Regent, biodiversity and animal welfare specialist with Kering, told me in an interview. “Map your sourcing. You can’t do anything if you don’t know where to do it.”
But the companies interviewed for this article have differing strategies for how to handle suppliers that don’t comply with their mandates. As already mentioned, Mars made the decision to pare down its partners to root out those with possible connections to deforestation. Kering also takes a relatively hardline approach, one that’s sewn into its contracts.
“Any leather suppliers that have a link to deforestation, especially in the Amazon, would be terminated,” Regent says. “There are so many other alternatives.”
Kering uses tools from NGOs, such as the Forest Mapper from Canopy, and certification information from the Forest Stewardship Council to guide decisions. It’s also planning to embrace an emerging resource from Textile Exchange called the Leather Impact Accelerator, which uses benchmarks to trace animal welfare and deforestation/land-conversion issues at the farm level.
Other companies shy away from outright termination and advocate the notion of big companies using their buying power to inspire and demand change deep down into supply chains. Once you sever ties with a supplier, you lose leverage when it comes to convincing them to change business practices, they say.
“Fortunately, all of our suppliers for the relevant commodities are already working on ensuring that deforestation is happening in their respective supply chains,” writes Aramark’s Cacciola. “We focus on continuous improvement, so we engage with our suppliers to make improvements where relevant. We also expect quick and decisive action from suppliers if they do identify issues.”
“We don’t need to boycott, we need to choose the sustainable commodity,” observes Dan Strechay, global outreach and engagement director for the Roundtable on Sustainable Palm Oil, which represents more than 4,000 members of the palm oil supply chain with standards focused on sustainable production. “It’s time for everyone to uphold their sourcing policies. We need to implement the policies and reward the growers that we’ve asked to take these steps.”
And, companies need to act with more urgency, he urges: “Don’t take the policy you missed and kick it five years down the road. Make it count in the next two to three years.”
Traceability transformed through technology
The social distancing requirements related to the COVID-19 pandemic have made the already complicated task of tracing and verifying supply chain claims related to forest degradation more difficult — and underscored the critical role that digital technology can play in supporting successful “no deforestation” strategies.
Kering is looking to solutions such as isotope tracking, genetic mapping and laser markings as a means of verifying that materials meet health and sourcing requirements, Regent says.
McDonald’s is also looking to advanced technologies, notably satellite-mapping, to define its approaches to addressing deforestation. For example, it is working with agtech company AgroTools and Proforest to trace the origin of all Brazilian beef used in McDonald’s restaurants, notes Rachael Sherman, director of global sustainability for McDonald’s, in response to questions submitted for this article.
“After determining risk level based on sourcing location, we use a combination of satellite imagery of the farm area and data analysis to assess whether deforestation has taken place and/or is projected to take place,” Sherman wrote. “This enables our suppliers to implement continuous improvement plans with farms that don’t comply with our policy.”
McDonald’s is expanding this resource to other regions and has shared it with The Tropical Forest Alliance to encourage broader use, according to the company.
Elsewhere, Cargill is increasingly using a combination of GPS information and satellite imagery to pinpoint where forest degradation is taking place, specifically as part of its cocoa sourcing practices in the Cote d’Ivoire and Ghana. Bar-coding technology helps trace cocoa to individual farms.
“All of this tracking, mapping and ranking leads us to the most crucial step for making change: partnering with farmers and farmer organizations,” wrote Cargill’s vice president of global sustainability, Jill Kolling, in a GreenBiz article about the project. “The insights we collect can help Cargill determine precisely where to invest resources and how to tailor its farmer engagement initiatives to prevent new deforestation.”
The integral role of Indigenous communities
Indeed, the companies, NGOs and others contacted for this article echoed a similar conviction: That it will take active, authentic and at-the-ground-level engagement with the communities affected by deforestation — particularly Indigenous peoples — to deliver real progress in eliminating deforestation.
“We’ve seen a big movement in jurisdictional approaches, multi-stakeholder collaborations that include governments, NGOs and smallholder companies,” notes CDP’s Lam.
She points to two programs that might serve as models for other initiatives. The first, the forest management program nurtured by paper company UPM, works with landowners to help diversify their revenue sources by co-locating activities such as cattle raising and agriculture alongside sustainable eucalyptus production. The partnerships currently cover more than 296,000 acres of lands — about 30 percent of the wood requirements for the UPM Fray Bentos pulp mill. UPM commits to timber purchases and helps with technical skills and seedlings.
I think the headline would be: Don’t work alone. Map your sourcing. You can’t do anything if you don’t know where to do it.
The second, focused on the Leuser Ecosystem in Indonesia, is coordinated by the Earthworm Foundation and funded by a who’s-who list of multinationals including The Clorox Company, Colgate-Palmolive, The Hershey Company, Nestlé, Mars and Reckitt Benckiser, among others. It relies on a satellite system to hone which local communities should be priorities for engagement. Within the communities, the focus is on helping local farmers and mill owners secure their economic livelihoods in harmony with conservation practices. “Engagement is very, very important and that is why these multi-stakeholder collaborations are important,” Lam says.
A crucial voice in these initiatives should be Indigenous communities, according to the executives and researchers who contributed insights for this article. “You can’t go in with your idea of what sustainability is. … You can’t bring your own perceptions about what will work,” says RSPO’s Strechay.
In particular, businesses should be more diligent about integrating the concept of “free and prior informed consent” into their supply chain engagement practices, if they want to take meaningful action on fighting deforestation, notes Global Canopy’s Rogerson.
By considering these rights upfront, companies can surface potential development issues at a much earlier stage. This should be a priority for 2021, Rogerson says, but “far fewer companies have policies for this [than for deforestation], even though these issues are intertwined.”
Sustainability teams that feel they are too far removed from those actors to make an impact should engage with organizations that do have those connections, says Kering’s Regent. “Rely on local NGOs, scientific communities,” he says. “They might challenge you, but that is part of the game. Otherwise, you may address the program from the wrong angle.”
Rabinovitch of Mars notes that the most important thing a company can do is grasp the reality of the challenges it will face.
“By fully understanding the scale of your carbon footprint and the systemic issues in your value chains, you’ll be able to set science-based targets to guide strategies leading to transformational, not incremental change,” he said. “It certainly isn’t easy work, and you won’t be able to do it alone, so finding partners who share your values and can help you identify achievable goals means your business can make a measurable, meaningful difference.”