Ethical Corporation is now Reuters Events - LEARN MORE
With major companies warning their deforestation commitments are off track, David Cleary of The Nature Conservancy suggests business leaders strive for the humanly possible and work with NGOs to realise their long-term sustainability goals
I’ve often wondered what I’d do if the proverbial boot was on the other foot and, instead of working for a global non-profit, I was instead in a leadership position at a large corporation – perhaps one of the 400-odd companies that committed to zero deforestation by 2020 through responsible sourcing of commodities like soya and palm oil from producers?
My first worry would be that I might get fired soon. Recently, Cargill – one of the world’s biggest agricultural commodities traders – warned that it expects to miss its target to eliminate deforestation from its soy supply chain by 2020. It certainly isn’t alone; it is the latest in a series of confessions by major companies that their deforestation commitments are not on track. This cuts across commodities: European palm oil importers have also admitted they are unlikely to be able to ensure that the products they sell are “deforestation-free” by 2020, according to analysis by the Palm Oil Transparency Coalition.
Failure has consequences. Deforestation and habitat conversion drive biodiversity loss, increase carbon emissions, change weather patterns and compromise the ecosystem services that farmers and urban populations alike depend upon. As a responsible corporate leader, I would acknowledge failure, analyse why it happened, but also look to a future in which we can’t afford to repeat this scenario. We may not have made our 2020 goal, but we can make 2021 or 2022. And there is clear evidence that corporate commitments have had a positive environmental impact, despite the likelihood the 2020 targets will be missed.
Maybe the mistake was to set a global goal instead of more manageable regional targets, focusing attention on specific places and commodities rather than a massively complicated global supply chain? That would enable us to break down the issue into more manageable pieces and focus on “quick win” opportunities to make progress.
For example, in the tropical savanna of the Brazilian Cerrado, which is a key soy-growing region, the scale of opportunity to make a positive impact for climate and biodiversity is enormous. Plenty of land has already been cleared and converted into pasture, but there is a clear win-win within grasp. If ranching can be intensified, which we know how to do with minimal environmental impacts, there is at least 25 million hectares of low-productivity pasture suitable for producing and commercialising crops – enough to accommodate even Chinese levels of demand for more than a generation. As a corporate leader I’d be looking for guidance from NGOs on how to succeed in somewhere like the Cerrado. (See, Green bond to fight deforestation, CSR Cheat Sheet)
NGOs have mobilised in two key areas: tools and transparency. We are all playing our part. One of The Nature Conservancy’s contributions, for example, has been to work with the soy sector in Brazil and Argentina to produce the Agroideal platform, which helps market actors identify already-cleared land that is agronomically suitable for soy expansion, and the associated social and environmental risks in those locations. Now available for use in Argentina’s Chaco, it could help transform some 13 million hectares in Argentina from underproductive pasture into highly productive soy. Alongside the 25 million hectares identified in Brazil, there is a huge opportunity to continue transforming and expanding the agricultural frontiers in these countries in a sustainable and planned way.
We need capital and innovative funding mechanisms to be flowing to farmers and ranchers, as they transition to zero deforestation
The second component is transparency. When companies first made deforestation commitments, they lacked the clarity needed to implement these pledges in a credible way. For example, what definitions should they use for key terms like forests, deforestation and conversion? What are the best monitoring options? What are expectations and standards around transparency, verification and supply chain management? Now the Accountability Framework, launched last week, can fill the information gap and produce such guidance for companies, much of which has already been road-tested with businesses around the world.
Where do we go from here? Both NGOs and companies need to do much more on beef, which alone accounts for half of all deforestation globally. We need to bring emerging market actors, especially China and Indonesia, into the conversation. We need capital and innovative funding mechanisms to be flowing to farmers and ranchers, as they transition to zero deforestation and zero conversion production.
For the most part, the financial sector has been slow to respond. In 2017, international NGO Global Canopy analysed those 150 financial institutions with the largest exposures to forest-risk commodity supply chains and found, at that point, only four of these had made an overarching zero-net deforestation commitment covering all their lending and investments. Yet the risks are very real: there is up to US$941 billion of turnover in publicly-listed companies dependent on commodities linked to deforestation, according to CDP.
Specifically, 87% of companies identify risks from deforestation, and 32% are already experiencing impacts from those risks. Yet only 13% of companies have made a time-bound comprehensive zero (net) deforestation commitment and over a third do not give their boards responsibility for addressing deforestation. With the risk of “stranded assets” looming, financial institutions and the insurance industry should be more concerned than they are with deforestation and land conversion.
So, my corporate alter ego would currently be telling my board to expect growing pressure from campaign organisations. Ultimately, we made a public commitment and failed to deliver; whatever the complexities, we did not live up to our word. Now we’re rightly going to be held accountable for that in the court of public opinion.
Companies show leadership by managing for long term sustainability, and one of the lessons of the last few years of trying to hit the 2020 targets has been that short-term pressures are formidable and there is still significant and entrenched resistance to change.
But I’d also be telling my board that there is a lot of help available and that while NGOs are holding us to account, they also offer valuable tools capable of supporting our sustainability ambitions. So, while our current targets may have been missed, let’s redouble our efforts and focus on where we can really make a difference as close to 2020 as humanly possible.
David Cleary is Director of Global Agriculture at The Nature Conservancy