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Supply Chain
The Business Case for Zero Deforestation

The recent announcement by McDonald's, which outlines its approach to combatting deforestation across its main commodity supply chains, is perhaps the most comprehensive environmental commitment of any major restaurant group. It sets an example for all global organisations in how they should be ensuring sustainability throughout their supply chains, and reflects how a Zero Deforestation agenda is becoming the new normal for international business.

It is encouraging that the sustainability agenda is moving from discussion into action. At the United Nations Climate Summit in New York last year, Asia Pulp & Paper Group (APP) joined brands such as Unilever, Nestle and Danone in signing the NY Declaration on Forests with the objective to end natural forest loss by 2030. Although we introduced our zero-deforestation commitment via our Forest Conservation Policy (FCP) in February 2013, it’s important to share the lessons we learnt, and therefore act as a catalyst for others to end natural forest loss in their supply chains. The new agreement is historic not only for the scale of its ambition, but because it marks a shift in emphasis that sees governments, civil society and, crucially, the private sector, agree on a common commitment to tackle deforestation.

However, while there are best-practice examples of businesses developing Zero Deforestation practices, there is still clearly a need for much more to be done. A report from CDP, Deforestation-free supply chains: From commitments to action, identifies how some parts of the supply chain are lagging behind and that further action must be taken.

Although nearly 90 percent of businesses realise a commitment to deforestation-free supply chains is the first step in safeguarding against climate-related risks, almost two-thirds of reporting companies are currently unable to trace the origin of commodities within their supply chains such as timber, palm oil, soy, biofuel or cattle.

This lack of supply chain traceability represents a significant business risk. Not only must businesses understand where accountability lies if the link between commodities, deforestation and climate change is to be broken, but they must ensure sustainable practices are present throughout the supply chain if they are to protect long-term shareholder value.

CDP outlines the steps businesses can take to end deforestation. The process must first start with making a commitment, before conducting risk assessments, identifying targets, and then moving towards implementation. Companies are using a range of methods to approach this final stage, but success stems in most cases from using a blend of certification, supply chain engagement, capacity building and traceability.

Protecting global forests, though, requires more than just the involvement of those operating the land. At every stage of the production journey – from suppliers to brands to consumers – everyone should be involved. Global citizens acknowledge that forest conservation is everybody’s responsibility, which must be realised as active partnerships with their full supply chain.

During a recent trip to Germany to attend the Bonn Challenge, the most comprehensive forest restoration initiative in the world, I called for sustainable, long-term multi-stakeholder partnerships to be implemented in the fight against deforestation and climate change. The reality is that land cannot be conserved or restored in isolation – the sustainability of the entire landscape must be taken into account and all stakeholders must be involved.

The operation of Marfrig Global Foods is a good illustration of how cross-sector collaboration can work in addressing social and environmental challenges within supply chains. The company utilizes satellite data provided by the INPE (Brazil’s National Institute of Spatial Research) and maps this against the Brazilian Environmental Agency’s record of 7,000 blacklisted suppliers in the Amazon region, thereby quickly identifying and responding to new deforestation or encroachment into indigenous lands. At the same time, the business builds capacity through its Marfrig Club Program to try and align social, environmental and animal welfare issues, engage ranchers in Marfrig’s commitments and reward suppliers for good practice.

At APP, we adopt a similar approach to multi-stakeholder involvement. Our FCP is an ambitious initiative to ensure Zero Deforestation throughout our supply chain. Transparency across the supply chain and how we implement our FCP across our operations is key to addressing challenges head on. But the support and commitment of a broad range of stakeholders are required to make it effective.

For example, while law enforcement, concession license issuances, land governance, and overall policy are in the hands of the government, forest communities must be engaged with best-practice land management on the ground, often through the support of local and international NGOs. And at the other end of the supply chain, customers have a major role to play in demanding sustainable supply chain policies that require active participation in restoration and conservation.

Pursuing a multi-stakeholder approach at the landscape level to forest conservation is undoubtedly complex and difficult. However, it is certainly a price worth paying; the viability of forestry businesses depends not only on short-term profitability but also long-term sustainability and the private sector alone cannot shoulder the total cost of forest conservation. Engagement platforms must be developed that involve NGOs, government, private sector, community representatives and academics, to enable these stakeholders to closely work together to find solutions.

We share CDP’s view that while there are certainly challenges ahead in getting businesses to move from commitments to action, there are opportunities, too. Businesses have the opportunity to build stronger supply chains, increase yields, enhance their brand reputations through educating consumers and mitigate the impact of climate change by putting a permanent end to commodity-driven deforestation. At APP, our Zero Deforestation practices are not simply about avoiding natural forest clearance, they are part of a business model to ensure our long-term success, and hopefully encourage other organisations to adopt a similar approach. But again, transparency is the foundation for this approach.


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