Addressing Deforestation in Supply Chains

At this year’s COP27 summit, leaders from 26 countries and the European Union (EU) launched the Forests and Climate Leaders’ Partnership (FCLP) to fulfill the pledge made at COP26 in Glasgow to halt and reverse forest loss and land degradation by 2030. 

The FCLP will offer a way to enhance cooperation on delivery of pledges made in Glasgow, to scale ambition, and to find innovative solutions to ongoing problems. Public donors have already spent $2.67 billion of the $12 billion that governments pledged over a 5-year period to protect, restore and sustainably manage forests. At COP27, public and private donors pledged $4.5 billion to advance these efforts. 

Supply chain transparency and traceability are essential to halting and reversing deforestation, and they hold untapped potential for businesses to achieve their sustainability goals. 

Businesses are well-positioned to be the driving force behind anti-deforestation efforts, including a wider array of stakeholders into their strategies. But to sustain the impact, such efforts have to be complemented by regulatory action and continued investment.

Compliance Challenges

On February 17, 2021, the European Commission (EC) submitted a proposal for regulating products that contribute to deforestation. The regulation itself will require distributors to establish and maintain due diligence requirements. Products imported from countries considered a high-risk of deforestation must ensure that their products are not fueling further environmental degradation. The commission proposes a system to assess countries as high or low-risk. Imports from low-risk countries and SMEs (small and medium enterprises) would have similar but simplified obligations.

Since the beginning of October, the EU Parliament, the EU Council and the EC are having interinstitutional negotiations during which the three bodies come to an agreement. It is expected that by the beginning of 2023, an agreement will be reached and the final regulation will enter into force.

Smallholders Support

Smallholder suppliers often dominate forest-related supply chains, but may lack the necessary finances and resources to implement stringent sustainability policies. A localized approach is imperative for driving meaningful change on deforestation, with the participation and support of the indigenous communities and smallholders inhabiting these areas. Knowing who and where these smallholders are is crucial for backing claims and certifications, and driving improvement.

Supply Chain Mapping is Essential

Creating end-to-end visibility with supply chains is the first step to deforestation reduction efforts. To properly identify and address deforestation risk, brands need the ability to trace products in forest supply chains down to the source.

“Companies need to implement and monitor zero-deforestation policies by mapping their supply chains to gain assurance that their operations are not contributing to ongoing deforestation,” said Marissa Brock, director of policy at Sourcemap, a leader in supply chain due diligence.  

Businesses can lead the way by engaging their forest-related supply chains to acknowledge responsibility in contributing to this movement’s continued success, and play its part in helping tackle the climate crisis.

To hear how some of the world’s top cocoa brands are thinking about sustainability issues such as deforestation, watch this webinar from our 2022 Supply Chain Transparency Conference.