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Putting supply chains on the climate agenda

by Helen Burley

Supply chains don’t feature heavily on the agenda at the UN Framework Convention on Climate Change talks taking place in Bonn (COP23). But if the global community is going to achieve the ambition set in the Paris Agreement, the deforestation risks around the trade in agricultural commodities from tropical forest zones must be addressed.

The climate risks from deforestation are widely recognised. Tropical forest loss and forest degradation contribute 16-19% of gross global greenhouse gas emissions. And these numbers are set to increase with forest loss in the last year hitting record highs.

The need to conserve forests is recognised in Article 5 of the Paris Agreement (pdf). But the practicalities of action in the places where forests are being lost is a major challenge.

A global problem

Forests are one of the frontlines of sustainable development. They are generally cleared to make way for economic development – whether that is cattle ranching, a palm oil plantation, a mine or to build a highway. The commodities produced are traded around the world – providing timber for the building industry, or soy for animal feed.

These supply chains make tropical deforestation a global problem – which needs governments and companies to work together to find solutions – across continents and across jurisdictions.

The scale of this challenge and the need for action have at least been recognised, with many of the companies and governments involved in these supply chains signing up to the New York Declaration on Forests – making a commitment to work together to eliminate deforestation, focusing on 10 clear goals, including eliminating deforestation from agricultural commodity supply chains.

It is a first step. But the latest New York Declaration on Forests assessment of progress is clear that not enough is being done to make these commitments a reality.

Sustainable investments

Crucially not enough finance is being directed towards deforestation-free commodity production, with an estimated US$200 billion needed – 10 times more than is currently on the table.

Instead billions continue to be invested in those activities that are driving deforestation – with both public and private money flowing into agricultural developments and new infrastructure. The reasons for this are complex – but financial investors need to be looking at their portfolios and identifying where they may be contributing to deforestation risks.

Last year’s Forest 500 ranking assessed 150 financial institutions for their policies on deforestation. Just four banks have a zero-deforestation policy in place, and only 36 had a policy relating to deforestation resulting from a specific commodity. Disappointingly, this year’s results, due to be released in December, look unlikely to show much improvement.

Questions of governance

While the negotiators at COP23 are working on the rulebook for the Paris Agreement, a plethora of events are taking place on the side lines of the conference looking at how to drive the changes needed to realise the ambition of limiting global temperature rise.

Some, including a meeting the Supply Chain Transparency Network convened by Global Canopy and the Stockholm Environment Institute (SEI), have focused on the action needed within supply chains to address deforestation and reduce emissions.

There are a growing number of tools designed to help companies address deforestation risks in their supply chains – increasing supply chain transparency (see for example Trase), but also providing tools to monitor commitments and increase accountability (CDPSupply ChangeForest 500). And a new Accountability Framework initiative (AFi) will provide a set of common definitions, and implementation guidelines to help companies and their suppliers fulfil their commitments .

These civil society initiatives provide tools to support transparency and accountability within supply chains – rather than a formal governance structure. But as we start to make the necessary transition to a low-carbon, deforestation-free economy, they provide a route map for what is needed if companies are to have a social licence to operate.

Forests as part of the solution

Forests have the potential to play a valuable role in climate mitigation, absorbing greenhouse gas emissions – but if they are to fulfil that potential governments and business across soft commodity supply chains need to work together to better understand how and where changes can be made.

Transforming global supply chains is not easy – but it is possible. What is needed now is a drive to ensure it takes place.