Goal 2: Support and help meet the private-sector goal of eliminating deforestation from the production of agricultural commodities such as palm oil, soy, paper, and beef products by no later than 2020, recognizing that many companies have even more ambitious targets
- Deforestation-related pledges have continued to increase since the adoption of the NYDF in 2014, with the number of companies making commitments increasing to 415 from 307 since last year’s report. Since commitments do not follow any commonly accepted definitions, analysis of pledges, both in their scope as well as in their ambition, remains challenging.
- Of the companies active in the four big commodities, the majority of commitments address palm oil (59%) and wood products (53%). Soy and cattle receive significantly less attention (21% and 12%, respectively).
- The comparatively few commitments covering cattle—the single largest driver of deforestation— is a matter of concern, although the lack of commitments does not necessarily equal a lack of action. Reasons for limited commitments around cattle include the lack of an accepted industry standard for certification, a highly mobile commodity, a higher percentage of local consumption, and a limited share of beef that is exported to Europe or North America.
- Most companies are making headway in adopting policies to reduce their exposure to deforestation. They often favor a selective and step-wise approach of piloting the implementation of their commitments with only select commodities or in priority geographies. Despite some progress in the implementation of supply-chain commitments, many companies still cannot report compliance to their deforestation policies, and it cannot be confirmed whether these systems and policies are adequate in reaching the ambition presented in Goal 2 of the New York Declaration.
- Companies experienced little concrete improvement in forest governance and limited public sector support. They highlighted, however, specific incidents of improved collaboration and listed an increasing number of successful public-private initiatives. Jurisdictional and landscape-level programs are particularly promising where they are paired with private-sector action, such as in “produce-and-protect” partnerships.
OVERVIEW OF GOAL AND INDICATORS
Agriculture is the world’s largest driver of forest loss. In particular, beef, soy, palm oil, and wood have a massive impact on forests.(12;13) This goal looks at private sector efforts to halt deforestation, with an emphasis on eliminating deforestation from the supply chains of key commodities.
This year the NYDF Assessment Coalition published a separate focus report on Goal 2 which includes an updated assessment framework that provides a more comprehensive tool for measuring progress towards Goal 2.(14) The indicators from last year simply covered the market share of certified commodities and support for the production of low deforestation, or deforestation-free commodities by companies and governments. The reworked assessment framework now includes four criteria and seven indicators encompassing the supply-chain transformation process, from commitment to enabling environment to impact (Table 2).
This assessment is based on data supplied by four transparency initiatives (Forest Trends’ Supply-Change.org, The Global Canopy Programme’s Forest 500 initiative, CDP’s Forest Program, and The Sustainability Consortium and complemented with information from interviews with NYDF endorsers and companies that are members of the Tropical Forest Alliance 2020 (TFA 2020).
Criterion 1: Commitment to deforestation-free commodities
Indicator 1.1: Deforestation-related commitments by companies
According to Supply-Change.org, 415 (66%) of the 629 researched companies with exposure to deforestation risk have made at least one public commitment to eliminate or reduce deforestation from their supply chains (Supply-Change.org). Since a peak in new announcements in 2014, the numbers have shown a steady, although slightly slowing increase both in first and renewed pledges (Figure 2).i Over the last year, 108 additional companies made 212 new commitments.ii Based on our interviews, almost all (92%) NYDF endorsers and TFA 2020 member companies made public deforestation-related commitments, in addition to signing up to the goals of these initiatives.
According to Supply-Change.org, only 43 (10%) out of the 415 companies with commitments have set company-wide targets that cover all commodities relevant to the company’s portfolio. Similarly, Forest 500 found that in 2016 only 34 (14%) out of 250 “powerbroker”iii companies have made company-wide zero gross or other no deforestation commitments across all forest-risk commodities.iv Most corporate commitments relate to a particular commodity and many relate to a geographic region—for example, excluding sourcing of soy or beef from the Amazon region. Companies adopt and implement deforestation-related commitments selectively in response to reputational, legal, and environmental risk on one hand and to operational feasibility on the other. Our interviews confirm that the availability of standards for a particular commodity, high levels of integration in the local supply chain, costs, and NGO pressure all play into the decision to adopt commitments.
The majority of the 629 companies assessed by Supply-Change.org that depend on palm oil (59%) and wood products (53%) for their operations have made commodity-specific commitments. For soyv and cattle the proportion of companies with commitments is considerably lower (21% and 12%, respectively).vi The comparatively few commitments covering cattle—the single largest driver of deforestation—is a matter of concern, although the lack of commitments does not necessarily equal a lack of action.(12)
Criterion 2: Implementation of private-sector forest commitments
Indicator 2.1: Adoption of deforestation-related policies to implement commitments
Across data sources, almost all companies assessed have begun to operationalize their commitments. According to CDP data, a large majority of companies (84–87%, depending on the commodity) have assessed their deforestation risks and opportunities. The majority of upstream (56–70%) and downstream companies (64–87%) have also taken important steps toward implementation by adopting production or procurement standards.
Indicator 2.2: Monitoring of compliance with deforestation-related policies
Based on CDP data, the majority of companies have traceability systems in place,vii with higher shares for timber and cattle products (88% and 78% for upstream and downstream companies in the timber sector; 64% and 74% in the cattle sector). Few of these systems, however, allow companies to trace commodities back to the local level of production. Out of the manufacturers and retailers that have a traceability system in place, almost half (48%) of companies sourcing cattle products are able to trace origin back to specific farms. For soy, the largest share (52%) can only be traced back to the country level; most palm systems (39%) trace back to the processing facility.
In our interviews, many companies voiced the need for a global and unified traceability system and database. Barriers that were mentioned include high costs and level of resources required for ground-truthing, as well as legal limitations in publishing concession data.
Indicator 2.3: Compliance with deforestation-related policies
Companies use different strategies to measure compliance. Many assess the share of commodities that comply with certification standards or internal standards; others also report on traceability objectives, or on compliance with national legislation.
However, less than half of companies publish quantitative information on compliance with their forest policies (Supply-Change.org). This lack of knowledge or disclosure on progress shows that companies are still struggling to implement and monitor their forest policies. The share of companies volunteering information is particularly low for those with company-wide commitments (14%), which may be due to the lack of quantitative indicators that cover all commodities. Nevertheless, companies that disclose information claim high levels of compliance, with an average of 70% compliance with company policies, ranging from 60% for palm to 82% for cattle.
Criterion 3: Support by non-supply-chain actors
Indicator 3.1: Deforestation-related commitments by financial institutions
Despite increasing NGO pressure, Forest 500 reports that only a third of 150 assessed financial institutions have deforestation-related commitments in place, and they continue to trail consumer goods companies in adopting policies to eliminate deforestation from their portfolios.viii An initial screening by United Nations Environment Programme and partners in 2015 found that very few of the 30 surveyed financial organizations monitor compliance with deforestation-related policies and that only 13% had developed financial products or services supporting sustainable land-use investments.
Indicator 3.2: Policy support and improvements in forest governance
Companies also experienced little concrete improvement in forest governance and limited public sector support; they however highlighted specific incidents of improved collaboration and listed an increasing number of successful public-private initiatives. Jurisdictional and landscape-level programs are particularly promising where they are paired with private sector action, such as in “produce-and-protect” partnerships.
DATA DEVELOPMENTS AND GAPS
The assessment was unable to report progress against Criterion 4 since there are currently no available data that provide global coverage to determine whether cumulative company efforts are translating into measurable reductions in deforestation. However, two initiatives are being refined and developed —Global Forest Watch–Commodities and Transparency for Sustainable Economies (Trase)—that will enable a global impact analysis within the next couple of years.