More than 450 companies in the food and agriculture sector have made commitments to stop deforesting and respect human rights. But it has become increasingly clear that these companies cannot achieve this goal on their own.
A systematic analysis of 250 companies, 150 financial institutions and 50 national and subnational jurisdictions revealed that the rate of progress by most companies falls far below what would be required to meet the European Union’s (EU) international commitment to halt deforestation by 2020. What’s more: there is no evidence that these commitments are having the intended impact.
There are many reasons for this:
(1) Most influential companies have not made commitments. The companies that have made forest-related supply-chain commitments are generally not among the 250 most influential companies as identified by the Global Canopy Programme’s Forest 500 initiative. Only about one-fifth of this group made zero-or zero-net deforestation commitments.
The cattle industry is a particularly striking example: in terms of commodities, it is the largest driver of deforestation, but only 16 per cent of companies in the cattle supply chain have policies to address deforestation. Even where companies do have policies they are often weak, and very few companies are developing new commitments.
(2) Commitments are ambiguous and not easily enforceable/accountable. Commitments differ widely - their diversity and lack of clarity make it difficult to assess and compare company ambitions or to hold companies accountable.
Until commitments follow harmonised definitions, efforts to monitor them can only provide a limited picture of progress made. Often, companies’ efforts do not extend to the entirety of their operations, or companies undermine their commitments by the use of shadow companies, as recently documented in the case of Wilmar and Asia Pulp and Paper (APP).
(3) Decreasing deforestation in one region or country can easily increase deforestation in another (leakage). It is estimated that between nine and 42 per cent of forest clearance reductions in one country will be offset by increases in another. For example, there are clear indications that the reduction in Brazilian deforestation from 2005 onwards — thanks to stringent national policies - may have increased deforestation in neighbouring countries such as Paraguay and Peru.
Shifting the deforestation problem to other places, commodities, or ecosystems presents a risk that could nullify commitment-based efforts to tackle deforestation.
Displacement between regions and countries happens if legislative frameworks or levels of enforcement vary, inviting producers to move towards regions with weaker regulation.
There is also the risk of leakage between commodities (i.e. soy and beef), where both commodities compete for land but are regulated with different levels of stringency.
(4) Lack of good governance. Companies often operate in countries lacking good governance and law enforcement. This makes it difficult for them to comply with national and international laws, and to acquire and manage legal concessions without paying bribes.
A study by PriceWaterhouseCoopers (PWC) for the Dutch consultancy IDH (the sustainable trade initiative) shows that forest certification in a country with poor governance and law enforcement is too difficult and costly. Certification cannot end deforestation on its own, legislation is also required.
(5) Lack of clarity on land rights. Although many countries have adopted constitutions or land laws recognising community tenure, there is still a lot of ambiguity, leaving many communities in legal limbo. Globally, an estimated 2.5 to 3 billion rural dwellers own more than 6 billion hectares of land under customary law, but much of this is not acknowledged as their property. This leads to frequent conflicts and human rights abuses when land customarily owned by communities or Indigenous Peoples is leased to companies for logging or agricultural concessions without their consent.
For more information, read Fern’s report Company Promises
EU policies could provide a level playing-field between sustainability leaders and laggards, bolster private sector initiatives and ensure that all companies address deforestation in their supply chains . Read our policy recommendations.