Supply chain risks from deforestation are daunting and finding the right solutions is a major challenge. Brendan May answers some of the questions companies need to ask.
Are there really many supply chains at risk from deforestation impacts?
Yes, a frighteningly large number of sectors need to be very careful. All supply chains with exposure to agricultural commodities are at risk – palm oil, cocoa, and coffee for example. Beef (ranching), and products derived from cattle such as leather, are one of the biggest drivers of deforestation. So too is the global pulp and paper industry. Soy driven deforestation is largely under control in Brazil, but this may change with the expiry of the soy moratorium in January 2015. The extractives industry is also responsible for significant forest loss.
OK, but how can I check if this affects my supply chain?
The first step to finding out what deforestation risks exist in any supply chain is to understand the supply chain better. Many companies simply haven’t a clue where their products come from – particularly large companies with thousands of complex supply chains. So start by mapping out your supply chain. Then look at the associated risks and opportunities, and develop a strategy to minimise and/or maximise them. Develop and implement a no-deforestation policy if relevant.
If you need help, ask a relevant NGO – such as The Forest Trust or Greenpeace. The World Resources Institute also has improving satellite monitoring software in the form of Global Forest Watch and is able to identify areas potentially at risk from deforestation. The Rainforest Alliance has years of experience in mapping supply chains and verifying forestry management practices.
Pick your partners carefully though – they all adopt differing approaches and there is plenty of debate about the best ones.
So I’ve started to identify the risks from deforestation. I need to get my suppliers to go down the certification route, right? What are my other options?
Certification was the obvious way to go when the whole movement started several decades ago. Sadly, though, certification has not stopped global deforestation, partly because markets for certified forest products have not achieved significant scale.
The value of certification as a tool is not in eco-labels, which few consumers understand or recognise. It’s in putting in place management systems for better practices, and tracking progress through independent auditing. But experience shows there are no fail-safe solutions – certification included.
The perceived failure of certification systems has led to the emergence of “no deforestation” systems and approaches. My personal view is that we have to move to a clear no deforestation system among all major buying business – largely brand owners.
The regulatory landscape seems to be shifting towards tighter rules, building on voluntary agreements already in place. How will this help?
With all public policy there are unintended consequences, and often compromises in order to reach some sort of a deal. Nevertheless, it is better that rules exist than not. Certainly the EUTR has made quite a few forest based businesses in the tropics sit up, take note, and work out if they are compliant. Often, government regulation has played catch up to existing public-private initiatives between civil society and big business. That is often the way.
If I’m looking for good examples to follow, which are the companies that impress you in their approach to robustly dealing with their deforestation risks?
Nestlé stands out – interestingly it has gone from laggard in the supply chain sustainability stakes, to leader, and in particular on deforestation. On the supply side I am impressed with the way Asia Pulp and Paper have grasped a particularly thorny issue. Its shift to completely banning natural forest clearance, sticking to it, sorting out reliance on plantations and then committing to protect and conserve one million hectares of rainforest, is impressive. I have an interest in that my company advises them – but we have been more than clear that we don’t advise businesses we believe are half hearted!