One of the most complicated supply chain issues for companies is deforestation. Why? Because deforestation may take place in areas distant from company headquarters in countries that may not have the strongest government regulations.
This is a problem for companies, because many agricultural supply chains rely on soy, beef or other goods from areas prone to deforestation, such as Brazil. Corporations are increasingly making commitments to reduce greenhouse gas emissions and to ensure that their products don’t contribute to deforestation. But bad governance and weak governmental support are jeopardizing the ability of companies to meet their deforestation and greenhouse gas emission-reduction goals.
These issues add up to major risks for companies, as Brazil’s rollback of environmental leadership will seriously compromise the ability of the private sector to meet its goals.
To counter weak local governance, corporate action on deforestation often focuses on global certification schemes. However, certification schemes, while an important first step, cannot solve the whole problem. Why? Because market penetration of certification is still low, so non-certified growers can easily access other markets to sell products associated with poor environmental or social qualities. This creates islands of green in a sea of deforestation – not the intended effect.
So how can companies drive improvement in a way that helps them meet their goals and protect vital tropical rainforests? Here are three things companies can do:
1. Champion jurisdictional approaches.
Rather than resolving deforestation on a farm-by-farm basis, a jurisdictional approach focuses on reducing deforestation throughout an entire landscape. This approach pairs local government with corporations and civil society to solve governance challenges head-on. Jurisdictional approaches are valuable not only because the players involved share the cost of monitoring compliance, but also because this strategy works across all commodities that drive deforestation, rather than just one. This not only saves costs for companies, but increases the likelihood of meaningful progress towards their goals.
2. Create positive incentives to strengthen the economic case for sustainable development.
Companies can invest in jurisdictions that are excelling at improving productivity and reducing deforestation by connecting suppliers to positive incentives and financing for restoration and forest conservation; providing technical assistance to aid farmers in improving productivity; or strategically placing new sourcing facilities in regions that are lower-risk for deforestation. By investing in these regions, companies can send clear signals that a deforestation-free policy is the new norm in the global marketplace.
3. Participate in existing dialogues to help scale up successful projects and solutions.
Many critical programs exist in Brazil and Indonesia that drive toward supply chain goals — but they require corporate involvement to maintain momentum and scale. For example, Mato Grosso, a gigantic agricultural state in Brazil, has created an ambitious strategy called Produce, Conserve, Include, designed to help meet its ambitious goal of removing 6 gigatons of emissions from its economy by reducing illegal deforestation and increasing productivity. The state is now implementing this strategy and needs private sector partners who are willing to push for innovative solutions, encourage action, and assist with on-the-ground projects. Supporting this initiative will galvanize state leadership, even in the face of federal cut-backs. Companies can also support other successful programs such as Brazil’s Amazon Sustainable Cattle initiative or the Central Kalimantan jurisdictional palm oil partnership in Indonesia.