Sustainable production and development: Theme 2 Assessment

Global demand for soft commodities like food and timber, and for mined commodities like fossil fuels and mined materials, continues to drive expansion of agriculture, extractive industries, and other land uses into forests. Deforestation is often enabled by the establishment of infrastructure, intentionally or unintentionally opening access to forests. The gravest forest risk comes from so-called megaprojects, which combine multiple types of transportation and energy infrastructure, along with sites of agricultural commodity production, natural resource extraction, and planned urbanization. Such projects are currently underway or planned in all major tropical forest regions.

Forests are under threat not only from global markets, but also from growing demand due to populations in forest areas and urban centers. Billions of people, particularly Indigenous Peoples and local communities (IPs and LCs), rely on forests for their subsistence or pursue small-scale commercial activities that sustain livelihoods. These activities, too, can lead to deforestation or permanent degradation when demand pressure outpaces the rate of regeneration.

Findings

We are not on track to achieve the private sector goal to eliminate deforestation from agricultural supply chains by 2025. Commodity-driven tree cover loss declined by 6 percent in 2021 compared to previous years (2018-20), but deforestation rates are still higher than in any year before 2016 and are far from the trajectory (20% reduction per year) needed to reach the 2025 target (see Figure).

Almost all national governments have adopted ambitious forest goals under the Sustainable Development Agenda 2030 indicating broad alignment with the aim of achieving sustainable production and development. Dozens of developing countries have forest strategies in the context of REDD+ (reducing emissions from deforestation and forest degradation), laying the groundwork for important reforms—and, in some cases, driving important policy changes. In most cases, however, these programs have not yet yielded a reduction in deforestation, and only a handful of countries have received payments for forest emission reductions. 

In most countries, governments have yet to make the bold sectoral reforms needed to protect forests. There is limited transparency on how policymakers integrate forest goals into their decision-making, and how they seek to avoid and mitigate forest risks across economic sectors. Land use policies – such as fiscal incentives, environmental and social impact assessments, and protected area regulations – often fail to integrate forest concerns, have loopholes in their design, or are weakly enforced. Even governments that have adopted “green growth” agendas still struggle to invest in economic growth that is aligned with forest goals.

Figure: Commodity driven deforestation, in million hectares, and the pathway toward 2025

Encouragingly, development interventions such as community forestry, payments for environmental services schemes, and extension services for farmers can address both poverty reduction and deforestation and forest degradation. However, there are very few examples of government-led poverty reduction programs that both prioritize forest impacts and are implemented at scale. An analysis of 23 countries found that most have community or collective forestry schemes in place, but only a few provide robust land tenure or promote economic development.

Similarly, the agriculture sector has not made sufficient progress in reducing deforestation from agricultural commodity production. Since the first NYDF Progress Assessment report in 2016, we have seen little progress removing deforestation from supply chains (NYDF Goal 2), and the transformative potential of voluntary company action has not yet been realized. To date, only a quarter of major global companies in the sector have announced a clear, comprehensive, and ambitious policy to eliminate deforestation from their supply chains; of those, only a few have made significant progress on implementation. Less than 20 percent of companies disclosing to CDP report near complete compliance with their zero deforestation commitments.

Corporate action in the extractives sector also remains limited. In response to investor demand, most mining companies have now adopted some form of corporate social responsibility or environmental, social, and governance approach, but these frameworks rarely include an explicit focus on forests. The pace of implementing responsible mining practices" by leading companies has slowed since 2020 compared to the proceeding years. Few companies have adopted voluntary mining sector sustainability standards that require them to address direct, indirect, and cumulative forest impacts. The mining sector recently made positive strides by adopting policies and standards that address biodiversity impacts, but overall transparency and actions to address forest impacts still lag significantly behind the agriculture sector. IPs and LCs stand at the forefront of grassroots environmentalism despite significant risks. IPs and LCs often work together with civil society organizations, smallholder farmer coalitions, and women’s networks to combat threats to forests from development projects, extractives, or agricultural expansion. These actors employ various forms of social resistance, but with limited success – only 1 in 10 bottom-up mobilizations against environmentally destructive and socially conflictive projects are successful in stopping their target project. These successes come at a cost: 200 land and environmental defenders were killed in 2021, and the mining and extractives sector is consistently ranked as one of the deadliest for defenders.

Recommendations

To ensure that 2025 and 2030 do not pass as 2020 did – with limited progress toward global forest goals – governments, companies, and civil society must collaborate to accelerate forest action, supported by transparency and accountability.

The Forest Declaration Assessment Partners urge the endorsers of the Glasgow Leaders’ Declaration, as well as other pledgers, to ensure full transparency on the implementation of pledges, so that progress can be tracked and pledgers held accountable. Pledgers must all set clear interim milestones and provide publicly accessible reporting.

Public, private, and grassroots actors must prioritize collaboration to leverage relative roles and strengths to meet the 2025 target for commodity-driven deforestation. Where certain geographies and supply chains have achieved reductions, the credit can usually be shared between government mandates, company action, and civil society and grassroots initiatives. All actors should accelerate implementation of multifunctional landscape and jurisdictional programs that take an integrative, inclusive, and collaborative approach to addressing forest risks and impacts while driving sustainable economic growth.

Governments must carefully consider whether voluntary action is a viable foundation to achieve the 2030 forest goals, and how the role of mandatory action, disclosure, and accountability should be increased. Despite the exceptional success of a few privately led initiatives—notably the Amazon Soy Moratorium, which has led to lasting and substantial deforestation reductions—voluntary actions alone have not sufficiently shifted the trajectory of forest loss.

• To meet their own voluntary pledges and targets, governments should adopt and enforce stronger mandates for forest protection and sustainable management. Interventions could include binding due diligence regulations and mandatory disclosure, moratoria, increased regulation of protected areas, and recognition and respect for Indigenous territories including mandatory Free, Prior and Informed Consent (FPIC). These mandates should be robust and science-based, covering all forest-risk commodities, legal and illegal deforestation, and addressing human rights and IPs and LCs’ rights.
• The critical role of global commodity trading companies, which source and trade a disproportionate volume of forest-risk commodities, must be recognized and leveraged to achieve concrete progress at scale. Governments should implement regulations and legislation targeting these actors, complemented by clear conditions for and from financial institutions.
• Governments should apply a forest lens to interventions designed to increase prosperity and reduce poverty; “greening” poverty interventions can increase their effectiveness by maintaining and improving the contribution of forest ecosystem services to rural livelihoods.
• Across the extractive, infrastructure, and agricultural sectors, regulations should mandate that forest risks identified for any development project must be managed by applying the mitigation hierarchy, with the first step – avoidance – applied as much as possible, accounting for other priorities for sustainable development. Governments should also enforce strict “no-go” zones for extractive industries and infrastructure in high-value forest ecosystems.
• For extractive industries, governments should also strengthen the regulatory processes for prospecting, exploration, and licensing mining activities. Environmental and social impact assessments should be required to be conducted early in the mining life cycle and to assess indirect and cumulative project impacts.
• Across all sectors, governments must empower civil society, smallholders, and, in particular, IPs and LCs, who have traditionally been the strongest constituencies for forests. Governments need to ensure meaningful participation in decision-making, design, and implementation processes by affected rights-holders, including ensuring the right to FPIC. Affected rights-holders include those whose customary forest lands and livelihoods are affected and organizations who advocate for the rights of nature.

Companies need to urgently increase the scope and stringency of corporate action, whether voluntary or mandated. Companies who wish to lead the charge toward the 2025 and 2030 forest goals should advocate at local, national, and international levels for holistic approaches to addressing deforestation; approaches where corporate action is enabled and supported by appropriate legislative and policy frameworks, trade standards, and financial instruments and incentive structures.

• Agricultural companies should strive to follow the best available guidance for removing deforestation from their supply chains and should adopt best practices set by sustainability standards.
• Sectoral bodies like trade and commodity associations should expand their efforts to include domestic markets and small- and medium enterprises into the zero-deforestation and zero-conversion supply chain movement to reach a critical share of market coverage for all forest-risk commodities.
• Extractive companies, and those sourcing from them, should adopt biodiversity commitments and policies that explicitly state that forest impacts from company operations at and beyond the mine site, and company-wide, must be addressed using the mitigation hierarchy. They must then embed the necessary processes and mechanisms in their standard operations to realize these commitments, including monitoring and reporting systems.
• Mining sector sustainability schemes should require site operators and downstream purchasers to assess and manage not just the direct forest impacts of extraction, but the indirect and cumulative as well.
• Companies in the extractives supply chain should also consider the opportunities of conducting forest conservation and restoration activities, through a nature-based solutions lens, to mitigate business risks, achieve company climate and biodiversity targets, and provide benefits to affected stakeholders.

Only eight years remain to achieve the twin global goals of halting and reversing deforestation by 2030. Despite encouraging signs, not a single global indicator is on track to meet these 2030 goals of of stopping forest loss and degradation and restoring 350 million hectares of forest landscape.

The 2022 Forest Declaration Assessment sheds a stark light on the state of global forest commitments but offers hope that achieving the 2030 forest goals is possible. The Assessment is presented as series of four reports on Overarching forest goals (Theme 1), Sustainable production and development (Theme 2), Finance for forests (Theme 3), and Forest governance (Theme 4) -- all summarized in an Executive Summary.