Reducing Supply Chain Deforestation

Transcription

1 Tropical Forest Alliance 2020 Reducing Supply Chain Deforestation Civil Society Backgrounder and Inventory Prepared by Contact Michael Wolosin

2 Contents Introduction... 1 Deforestation Background and Trends... 2 Box A: The Role of Managed Forests... 5 Success Stories... 6 The Brazilian Soy Moratorium: Monitoring Progress and Enforcing Policy... 6 Sustainable Palm Oil Commitments in Indonesia... 7 Box B: Agricultural Yields and Deforestation... 8 Import- country Forest Product Legality... 9 Voluntary Certification Public- Private Partnerships at the Base of the Supply Chain Conclusion/Synthesis: What Roles and Elements are Required for Success? Box C: Public Communication Campaigns Emerging Strategies and Trends Degraded Land: A Win- Win Opportunity? Box D: Land Grabs and Community Rights Transparency: Linking Monitoring to Supply Chains Multi- Stakeholder Roundtables Investment and Lending Government and Other Logging and Deforestation Moratoria Government Policies and Country- Wide Commitments Growing Recognition of Land Rights REDD+ and Climate Finance Links Landscape and Jurisdictional Approaches Appendices Appendix A: Quick Reference Guide of CSO Actions and Resources Appendix B: Acknowledgements Appendix C: Citations Civil Society Backgrounder and Inventory ii

3 Introduction The Tropical Forest Alliance 2020 is a public- private partnership whose aim is to reduce tropical deforestation associated with the production, processing, sourcing, and ultimate use of commodities. It will include governments, companies, and civil society organizations in an effort to align objectives, resources and activities to increase the sum of the parts, while also seeking to forge new partnerships by coordinating and mobilizing organizations committed to this goal. Its founding members, the United States Government and the Consumer Goods Forum, recognize that there is much work to be done but also acknowledge the many ongoing efforts that aim to reduce commodity- based drivers of deforestation. In this regard, the Alliance does not seek to duplicate efforts, but to capitalize on those already ongoing and to learn from past success. This paper is designed to provide a brief overview of the many civil society organizations involved, and their efforts to support deforestation- free supply chains. Links to additional information are provided throughout the text, in several boxes, and in the appendices. The contents are neither comprehensive nor in- depth, but seek to provide an initial scoping of key trends in deforestation, several success stories from which lessons can be extracted, a number of encouraging strategies that organizations are pursuing, and a brief inventory of NGO actions and resources. There is a notable bias towards highlighting the actions of U.S.- based and international NGOs and experts, leaving a gap that will need to be filled as the TFA 2020 expands to additional countries, companies, and organizations. This paper was developed with input from civil society organizations through a series of interviews held in January Over twenty experts were interviewed from a broad range of research, analytic, advocacy and implementing organizations (see Appendix B). Subsequent reviews widened the circle to gather input from additional stakeholders. Tropical Forest Alliance 2020 Rio+20 USAID press release Video of Rio+20 Event Civil Society Backgrounder and Inventory 1

4 Deforestation Background and Trends Large- scale change in forest area is not a new phenomenon. Forest loss is a complex process with a range of direct and underlying causes closely associated with economic development. Many nations have experienced significant forest loss during periods of rapid agriculture and settlement expansion, often reaching a nadir and then rebounding. The United States, Europe, and many other wealthy regions reached the low point of this so- called forest transition curve more than a hundred years ago, and have experienced increasing forest cover and density since. A wide variety of phenomena are considered causes, or drivers of deforestation from local decisions of individuals seeking to maximize income from their land; to lack of legal customary or ancestral collective land rights; to regional settlement and growth patterns influenced by new infrastructure and government policies; to increasingly interwoven global commodities markets and population growth; to dietary shifts towards more proteins and processed foods. Most of the time, economic drivers are at the heart of forest loss as forests are cleared to make way for agricultural production (Boucher et al 2011). The last decade has seen an increased understanding of the extent and drivers of forest loss, but gaps remain. Leaps in satellite technology and statistical methodology have yielded a rich and complex array of new data along dimensions of spatial scale (local to global), time scale (days to decades), and focal process (e.g. land use change, forest clearing, forest degradation). However, there remain technical challenges. For example, higher resolution raw imagery requires significant processing time to yield useful information, especially for large areas while lower resolution data can be processed in near real- time for the entire tropical region, but can only capture very large- scale land clearing. Remote sensing of forest degradation (loss of density and complexity) is still challenging. And making forest monitoring accessible to policy makers is complicated. Even with these remaining challenges, the overall picture of large- scale forest loss and many of the regional and local patterns is clear. Tropical forests were cleared on a massive scale during the 1990s and the first half of the last decade, with severe losses in Brazil and Indonesia. Between 2000 and 2005, around 5.5 million hectares of tropical forest was lost annually to natural and human- induced causes (2.5% per year), an area the size of Costa Rica (Hansen et al 2010). Another source estimates forest loss in the tropics over this period at 11 million hectares per year, a significant increase over the rate from (FAO & JRC 2012). Estimates of gross carbon emitted by this rapid forest clearing from 2000 to 2005 based on vastly different data sources and methods recently converged to a consensus estimate of about 2.9 gigatons carbon dioxide per year from above- ground biomass loss from 2000 to 2005 (Harris et al. 2012b). Additional tropical forest emissions from soils after clearing, loss of peat, and forest degradation add another 2.3 gigatons or so per year, for a total of about 5.2 gigatons (Harris et al. 2012b). Brazil s forest clearing from 2000 to 2005 accounted for about 35% of tropical forest loss (48% of humid tropical forest loss) significantly exceeding its 25% share of global tropical forest cover (32.5% of humid tropical forest cover; Hansen et al 2010). Indonesia was second behind Brazil for this period, accounting for 13% of humid tropical forest loss from 2000 to 2005 (Hansen et al 2010). Civil Society Backgrounder and Inventory 2

5 Figure 1: Annual Carbon Emissions from Gross Forest Cover Loss, (Harris et al 2012a) At the global scale, deforestation has dropped significantly from 2005 to 2011, again with Brazil and Indonesia leading the change (Figure 2). Because of Brazil s sheer size, its success in reducing national deforestation since 2005 (see below) has driven global declines over this period. Indonesia also decreased its deforestation slightly at the national scale from pre- to post (Wheeler et al 2012), although Indonesian government data shows a larger decrease. While very good news indeed, recent declines in Brazil and Indonesia contrast with increases in other tropical forest countries. In the Amazon region there were significant increases in clearing in Peru and Venezuela, which together account for 8.5% of global humid tropical forests (more than Indonesia). In Southeast Asia, Malaysia and Myanmar are both trending upward in their rate of forest loss, while in Africa, the Republic of Congo is increasing quite rapidly (Wheeler et al 2012). Forest loss in the tropics is driven primarily by large- scale agricultural expansion of globally traded commodities. While it remains difficult to assess the drivers of deforestation from remote sensing data, multiple independent analytical approaches have nonetheless converged on a consensus that international demand for agricultural commodities is the predominant global driver of tropical deforestation (DeFries et al 2010, Rudel et al 2009, Rudel et al 2008). One recent global analysis based in part on expert opinion finds that commercial agriculture is responsible for more than half of deforestation globally (68% in Latin America, ~35% in Asia and Africa); that local and subsistence agriculture is more evenly distributed regionally, adding another 30% of global deforestation to yield an estimate that agriculture is responsible for over 80% of global deforestation (Hosonuma et al 2012, Figure 3). A separate analysis of deforestation emissions (Houghton et al 2012), using a different methodology and categories, estimates that forest conversion for shifting cultivation is the largest global forest emission source (31%), followed by conversion to croplands (27%), draining and burning of peatlands (22%), and conversion to pastures (13%). Industrial wood and fuelwood harvests round out the list, partially offset by forest plantation growth. Global estimates of deforestation by commodity are largely unavailable, but the patterns are well- understood from regional studies. Cattle ranching is the primary driver of deforestation in the Amazon region, while soy drives more conversion in the Cerrado regions. South America is beginning to see land cleared for palm oil plantations, but to date it is quite a small component. Asia experiences significant conversion of natural forests to commercial scale plantations of timber and palm. In Indonesia and Malaysia, at least 55% of the 6.3 million hectares of palm oil plantation expansion from 1990 to 2005 entailed deliberate forest clearing (Koh and Wilcove 2008, Wicke et al 2011). To meet production goals in these two countries, anywhere between 1 million and 33 million hectares of additional land will be needed, depending on yield increases; degraded lands will not be sufficient at the higher end of this Civil Society Backgrounder and Inventory 3

6 range (Wicke et al 2011). These estimates are substantially complicated in some regions by links between different commodity drivers and across a continuum from forest degradation to deforestation. For example, in Southeast Asia a common pattern is continual forest degradation through unsustainable and often illegal timber extraction to the point when the forest stand is no longer economically viable to maintain as forest at which point the forest is converted to cropland. Figure 2: Global Large- Scale Gross Tropical Forest Clearing (Wheeler et al 2012) Area Cleared Per Month (sq km) 7000 Environ. Res. Lett. 7 (2012) Monthly Clearing Moving Average Trend Line Figure 3: Net forest area change by deforestation driver (Hosonuma et al 2012) N Hosonuma et al 0 Jan- 06 Jan- 07 Jan- 08 Jan- 09 Jan- 10 Jan- 11 While at the national scale Brazil and Indonesia may be making progress, there is substantial regional variation closely linked to the dominant agricultural product in each region. For example, Brazil s national- scale success in the past few years appears to be largely driven by substantial decreases in deforestation in much of central and southern Para and throughout Mato Grosso, two of the biggest subnational jurisdictions in the world, both of which had very high baseline deforestation rates. A few smaller states in the Amazon (Rondonia, Acre) have seen small upticks, although from a lower baseline (INPE 2012). Most of the deforestation in the Amazon region has been caused by cattle ranching. Soy has been a primary driver in the Cerrado region, which has also seen reduced deforestation in some of the higher- deforestation Figure 5. Continental-level states estimations as well of as the some relative slight area proportion acceleration (A) and from absolute lower net baseline forest area rates change in (km others. 2 yr 1 ;FAO2010) for the period (B) of deforestation drivers; and of the relative disturbed forest area fraction of degradation drivers (C), based on data Indonesia s deforestation declines are driven by progress in south/central Kalimantan (Borneo) and from 46 tropical and sub-tropical countries. Sumatra, while the northern and western areas of both islands have seen an uptick in deforestation. The drivers of deforestation and degradation in Indonesia are more diverse, including logging of primary forests for timber, expansion of large- scale timber, pulp, rubber, and palm oil plantations as well as for smallholder agriculture. While not yet the largest driver of deforestation in Indonesia, clearing for oil palm plantations is particularly troubling because of its rapid rate of increase. Several countries and regions appear to be on the cusp of accelerating deforestation along the forest transition curve the new and future frontiers of supply- chain driven deforestation. Our expert interviewees voiced concerns about palm oil development in Malaysia, and clearing for timber and pulp in Myanmar; current and future clearing in Ghana, Cameroon, and Liberia; an impending and possibly very large- scale crisis in the Congo basin, where charcoal production is expanding, the timber industry holds very large concessions, and oil palm is rapidly arriving; the Andean Amazon countries including Bolivia, Peru, and Colombia (where oil palm has begun to spread, see Butler and Laurance 2009, Garcia- Ulloa et al 2012); and Eastern Paraguay and Argentina, where high prices and adequate infrastructure are facilitating expansion of soy and beef production. A recent assessment of future palm oil development identified Indonesia nationally, Sarawak state in Malaysia, Thailand, Democratic Republic of Congo, Zambia, and Brazil as areas of future palm expansion (Teoh 2010). In a forthcoming paper the Civil Society Backgrounder and Inventory 4 Figure 6. Forest transition phase estimations of the relative area proportion (A), and absolute net forest area change (km 2 yr 1 ;FAO2010) for the period (B) of deforestation drivers, and of the relative disturbed forest area fraction of degradation drivers (C), based on data from 46 tropical and sub-tropical countries.

7 World Wildlife Fund identifies areas predicted to experience high levels of deforestation in the next two decades based on a combination of modeling and expert opinion, including areas of the Amazon, Cerrado, Chaco- Darien, and Atlantic Forests in South America, and parts of the Congo, Borneo, Sumatra, New Guinea and the Greater Mekong (Dudley 2013). Forest degradation is an additional frontier of forest loss. Forest degradation refers to human- induced changes within a forest that negatively affect the natural structure or function of the site over time, and in particular the total carbon content. Forest degradation is mostly caused by unsustainable timber extraction and logging globally (about 60% total degradation) and particularly in Asia (over 80%), but fuelwood and charcoal dominate in Africa (Hosonuma et al 2012). Estimates of the global carbon emissions from forest degradation vary widely, with no clear scientific consensus. Some studies have estimated emissions from degradation as high as 50% as much as emissions from forest loss in some regions, for example in Madre de Dios, Peru (Griscom 2009); a study of gross emissions from selective logging across the Amazon places this degradation to deforestation ratio lower, at 15-19% (Huang and Asner 2010). One global estimate of net emissions from industrial logging, fuelwood harvest, shifting cultivation, and subsequent regrowth and recovery is also around 20% as much as deforestation emissions (Baccini et al 2012). Because degradation is often caused by unsustainable extraction of forest products from primary or secondary forests, the role of more intensively managed (production) forests comes into play (see Box A). Washington Post article on deforestation in the Andean Amazon Boucher et al The Root of the Problem Box A: The Role of Managed Forests Well- managed forests play an increasingly important role in deterring destructive and illegal logging and outright deforestation. Research shows that managed forests may be as or more effective in reducing deforestation in comparison with protected areas (Porter- Bolland 2011). Managed forests provide carbon benefits together with streams of social, economic, and environmental benefits while being more resistant to fire and resilient to climate change than conventionally logged forests. A significant share of global forest area (30% or 1.2 billion ha) has been designated as production forest or for multiple- use, including production. Currently, only one third of tropical production forests have management plans (130 out of 400 million ha), yet production forests are under increasing pressure. Modeling done in conjunction with IIASA for WWF s Living Forests Report showed that annual wood removals are projected to triple by 2050, while at the same time, an additional million hectares more forest area would need to come under effective management for global deforestation to reach near zero by The world s production forests can meet this growing need for wood, but it will be critical for the industry to practice responsible forestry to ensure their long- term survival. WWF, Living Forests Report Civil Society Backgrounder and Inventory 5

8 Success Stories The following stories are intended to describe successful collaborations between public and private actors that have had a meaningful impact on reducing supply- chain driven deforestation and forest degradation. While reducing deforestation has not been the main policy objective in all cases, each has contributed to more sustainable supply chains. The Brazilian Soy Moratorium: Monitoring Progress and Enforcing Policy The Brazilian soy moratorium is widely cited as one of the most effective success stories in reducing deforestation from conversion of forests to agricultural land. In the late 1990s, soy expansion was a major driver of deforestation in the Cerrado and was beginning to cause an increasing amount of Amazonian deforestation around Santarem and in Mato Grosso. In 2006, civil society groups drew broad attention to the impacts of soy on the Amazon forest through a campaign targeted at McDonald s and other well- known consumer brands and retailers. In response to negative publicity, these companies used their market power to change the procurement policies of major agricultural commodity traders, such as Cargill, that were bringing Amazonian soy to the global market. In 2006, Cargill pledged to only purchase soy from producers in compliance or working towards compliance with the Brazilian Forest Code, and major soy processors and exporters announced a moratorium on deforestation. They would not purchase soy produced on deforested Amazonian land in Brazil after July 24, The moratorium ensured that soy would not continue to be a major driver of Amazon deforestation in Brazil (although it had no impact on ranching, which was and remains a major driver of Amazon deforestation, nor on soy expansion outside the Amazon, such as in the Cerrado). The soy moratorium was the result of several converging movements between civil society, governments, and businesses. Investigative efforts by civil society groups, spearheaded by Greenpeace, formed the basis of the 2006 campaign narrowly targeted at Cargill (described above). This strategic, high- publicity effort coincided with expanded federal action in Brazil and the development and implementation of monitoring systems. The Rural Environmental Registry (CAR), a satellite- based monitoring system based around georeferenced property databases, allowed all actors (especially companies) to track and assess compliance levels of individual soy suppliers for the first time. As a result of building momentum from external pressures, tightened regulations, and ongoing discussion with civil society groups, the Brazilian Association of Vegetable Oil Industries (ABIOVE) and the National Association of Cereal Exporters (ANEC), which include nearly all soy processors and exporters in Brazil, voluntarily agreed not to trade in soy produced on deforested land. Under the new agreement, all soy farmers were required to register their land under CAR, and if satellites detected any deforestation within its boundary, a farm would be blacklisted and prevented from selling soy. The soy moratorium has been renewed annually since Since then, remote sensing and forest monitoring technologies have shown a dramatic reduction in soy planted on recently deforested land (Rudorff et al 2011, Macedo et al. 2012). At the same time, between 2005 and 2009 soy production actually increased by 25%, indicating that productivity can be decoupled from deforestation especially when there are lower- productivity agricultural lands or degraded lands available for expansion. In addition to improved forest monitoring to verify the results of the moratorium, the rich interplay between various actors was key to defining the success of the moratorium. Further, the soy moratorium was a significant political and symbolic milestone that proved that NGOs and companies can negotiate a solution together to pressing environmental problems. In this way, the soy moratorium is a vital precedent for cattle, which is currently the major driver of deforestation in the Amazon. Civil Society Backgrounder and Inventory 6

9 Boucher, D. et al Chapter 4: Soybeans in The Root of the Problem: What s Driving Tropical Deforestation Today? Union of Concerned Scientists Greenpeace, Eating Up the Amazon Assuncao, J. et al Deforestation Slowdown in the Legal Amazon: Prices or Policies? CPI Working Paper Brown- Lima et al An Overview of the Brazil- China Soybean Trade and Its Strategic Implications for Conservation. The Nature Conservancy- Brazil Dan Rather Reports, Peace in the Amazon Transcript: TNC CEO Mark Tercek and Cargill CEO Greg Page discuss soy in the Amazon Sustainable Palm Oil Commitments in Indonesia Business commitments to sustainable sourcing can play a role in untangling commodity supply chains and establishing aligned values between consumers and producers. Palm oil supply chains are particularly problematic. The process of refining palm oil, in which streams of oil from different sources may be mixed, make tracing and segregating sources extremely difficult. Through interactions with various civil society groups, Nestlé, which uses roughly 0.7% of the global palm oil supply, has demonstrated that a commitment to sustainable sourcing can increase transparency, simplify flows, and provide incentives for producers to modify their practices to be more sustainable. The origins of Nestlé s commitment to sustainable palm oil were rooted in public pressure and brand concerns. Greenpeace capitalized on the visibility of the Nestlé brand to connect the company to the destruction of orangutan habitat in Indonesia through its palm oil supply chain. Public pressure caused Nestlé to temporarily stop sourcing from PT SMART (Sinar Mas Agro Resources and Technology) Tbk, one of Indonesia s largest palm oil producers, and adopt a no deforestation commitment for all its products. As a result of these efforts, Golden- Agri Resources (the parent company of PT SMART) developed their own Forest Conservation Policy that included protection of high carbon stock forests. To ensure this protection, PT SMART assessed carbon stocks and sustainability in its plantations throughout Indonesia, based on methodologies developed with Greenpeace and The Forest Trust (TFT), a global environmental organization that helps companies run responsible supply chains. In 2011, TFT helped Golden Agri Resources (GAR) establish a forest conservation policy that excludes conversion of land that has more than 35 tons of carbon (effectively peatlands and rainforests) and requires free, prior, and informed consent (FPIC) in dealing with local communities. The measures immediately moved GAR, which had been the target of a relentlessly effective Greenpeace campaign, to the forefront of environmental policy among Indonesian palm oil companies. These various commitments are supported by extensive on- the- ground evaluation and supply chain mapping, often carried out by civil society. In collaboration with The Forest Trust, Nestlé developed its Responsible Sourcing Guidelines (RSGs). These guidelines were based on RSPO standards but with additional considerations for the protection of peat and High Carbon Stock forests, both of which had previously been identified by civil society and academics as areas for improvement in the RSPO. TFT is helping Nestlé achieve its guidelines by focusing on mapping their palm oil supply chain to gain transparency at the plantation level, and then assessing plantations against the Nestlé RSGs. Through this mapping process, it has become clear that refineries play a key role in establishing sources of responsible palm oil (since they are the point in the supply chain where a great deal of oil mixing occurs and provide more direct market signals to plantations). If responsible sourcing can be established at the Civil Society Backgrounder and Inventory 7

10 refinery level, this would remove many of the costs associated with segregating of sustainable from unsustainable palm oil. Since laying out their guidelines in 2010, Nestlé and TFT have engaged with suppliers responsible for providing 90% of Nestlé s palm oil supply, and Nestlé is projected to achieve 100% certified RSPO palm oil in 2013, two years ahead of their goal. Demand for sustainable production can only be met if there are concurrent efforts to transform practices at the level of the individual plantation and farm, some of which include efforts to increase the productivity and efficiency of producers on existing land (see Box B). Nestlé commitment and sourcing guidelines Greenpeace s Caught Red Handed Report Golden- Agri Resources High Carbon Stock Forest Study Report The Forest Trust - Nestlé Project Mongabay news articles: Breakthrough? Controversial palm oil company signs rainforest pact; Palm oil giant making good on forest commitment in Indonesia Box B: Agricultural Yields and Deforestation Yield increases are necessary to achieve reductions in deforestation. A target of zero deforestation and degradation cannot be achieved without increases in agricultural and forestry productivity on existing production lands (FAO 2009, World Wildlife Fund 2011). Efforts to intensify agricultural production can be coupled with improved land use planning and zoning, better management practices, as well as appropriate governance and enforcement. Such an approach can provide multiple wins: an economic boost for agriculturalists (which can be a key to gaining support for forest conservation measures), reduced forest conversion, and increased production to meet rising global demand. Several of the success stories and emerging trends above such as the case of rehabilitating abandoned or degraded lands are really just special cases of this approach, where increased productivity provides the economic engine for other policies or approaches that protect the forest. On the other hand, extensive research on global land use change has generally shown that increased productivity does not necessarily lead to decreased deforestation (Barretto et al 2013). The failure of the land sparing hypothesis the idea that rising yields will lead to a decrease in cultivated areas and increase the area of natural ecosystems like forests can be explained in a number of ways (Rudel 2008). First, increased production efficiency is often linked to lower prices and thus higher demand. Second, at the local scale, increasing productivity generates more income from a given amount of land. Because global prices don t respond to local changes in productivity, higher incomes increase the incentive to deforest nearby lands if a similarly high level of production can be expected by agriculturalists. Thus, increasing agricultural productivity is not by itself enough to slow deforestation, and can in fact produce the opposite effect (e.g., Gutierrez- Velez 2012). Ken Chomitz: At Loggerheads? Agricultural Expansion, Poverty Reduction, and Environment in the Tropical Forests. Solidaridad case study: Palm oil company supports farmers Civil Society Backgrounder and Inventory 8

11 Import- country Forest Product Legality New legal frameworks preventing the trade of illegal forest products have put pressure on businesses and producer country governments to improve supply chain standards and tracking. Civil society groups have played a prominent role in advocating for the role of legal frameworks to incentivize the legal harvest and trade of forest products and punish illegal operations, which almost always cause negative social and environmental impacts. In 2008, through the concerted efforts of a diverse coalition of environmental, labor, and industry interests, the United States passed an amendment to the century- old Lacey Act, which prohibits the trade of illegally obtained wildlife. The 2008 amendment expanded the Lacey Act to include plant products, which directly addressed the global problem of illegal logging by requiring due care throughout timber supply chains and prohibiting trade in illegal forest products, with significant penalties for violations. In 2010, the European Union followed suit with the EU Timber Regulation, which similarly prohibited illegal timber in the European Union market; Australia passed a similar law in 2012, which will go into effect in These laws require traders along the supply chain to exercise due care by asking the necessary questions and conducting oversight of product streams to avoid obtaining illegally sourced or traded product. Global momentum on improving legality is building, including the Forest Annex of the U.S.- Peru Trade Promotion Agreement as well as more recent efforts to include forest product legality stipulations in trade agreements like the Trans- Pacific Partnership. The Lacey Act is one of the United States most important deforestation reduction policies. According to a Chatham House report, the passage of the Lacey Act amendments has contributed to a minimum 22% decline in illegal logging globally and that was before any widespread enforcement actions occurred (Lawson and MacFaul 2010). These reductions in illegal logging have avoided as much as one billion tons of carbon pollution or more, making the Lacey Act by some estimates more beneficial than the EU- ETS for the climate. Of course, it is critical to note that legality frameworks will alone not be sufficient to eliminate deforestation because much of the tropical world s forest conversion is perfectly legal but ensuring that legal frameworks are strong and enforced are a key first step on the road to sustainability. Following the passage of the amended Lacey Act and a similar forest legality law in the EU, civil society groups continue to play key roles. A number of U.S. NGOs continue to support the full implementation of the Lacey Act amendments through a range of coalitions and actions. These include the continued support of a strong coalition of environmental NGOs, labor, and businesses that championed the amendment in 2008, led by the Environmental Investigation Agency (EIA); educating industry both in the United States and abroad; investigating possible violations of the Lacey Act and bringing this evidence to the attention of the appropriate authorities; and championing full funding by Congress to implement the expanded scope of Lacey (estimated to require only $13.5 million per year spread across three agencies). The Lacey coalition also used the opportunity of the very public investigation into Gibson Guitars to educate industry and the public about the extreme harm caused by illegal logging operations, and specifically led a campaign to highlight the role of the Lacey Act in keeping illegal wood out of musical instruments. In addition, the coalition successfully defended the Lacey Act against bills attempting to weaken its regulations. These laws have prompted cooperation between civil society, businesses, and governments in strengthening rule- of- law and governance capacity. The Forest Legality Alliance, a public- private partnership, helps build capacity and equip forest product producers and suppliers with the tools needed to establish legal, sustainable supply chains. In addition, various developed country governments provide funding to build capacity to deliver legal products in forest rich countries through Civil Society Backgrounder and Inventory 9

12 training and education. For example, USAID has supported the TNC- led Responsible Asia Forestry and Trade (RAFT) program, which aims to improve forest management, policy enforcement, and transparency in key Asian producer countries. During the first 5- year implementation period, the RAFT program was directly responsible for bringing 1.5 million hectares of tropical forest into FSC certification and moving an additional 2 million hectares through the steps for certification. In addition, RAFT helped train more than 1,000 managers from the forest products industry on the specifics of legality, while facilitating direct engagement and interactions between public agencies, private corporations and civil society organizations. Primary funding for the second phase of the RAFT program comes from the Australian government. Continued and [scaled up] funding for the RAFT program is a signal of the growing commitment from governments to invest in generating a steady supply of legal and sustainable timber to meet the increased demand. Environmental Investigation Agency, The U.S. Lacey Act: Changing the Face of Global Wood Trade, Gibson Guitars is Held Accountable Elias, Patricia, Logging and the Law: How the U.S. Lacey Act Helps Reduce Illegal Logging in the Tropics. Union of Concerned Scientists Forest Legality Alliance website Responsible Asia Forestry and Trade Voluntary Certification Certification systems have demonstrated modest success in addressing supply chain deforestation. Many civil society groups involved in such programs suggest they have been helpful in boosting preferential access and sometimes provide price premiums for certain products in certain markets at certain times. Perhaps more importantly they have changed behavior through elevating dialogue on the importance of the social and environmental impacts of commodity production. In addition, certification efforts have reduced operating risk of conflict with adjacent communities due to the requirement to undertake High Conservation Value (HCV) forest assessments which result in alternative management regimes in such areas, often to the benefit of affected communities. Finally, while certification is not an automatic determinant of legality, it can be the most cost- effective way for operators to reduce the perceived or real risk of operating in contravention of national or sub- national laws and regulations. Certifications for specialty crops like cacao, tea, and coffee have generated several supply chain success stories. One example of a certification success story is Rainforest Alliance s experience with banana farms. In the 1990s, Rainforest Alliance (RA) began working with banana farms in the American tropics, where plantations were infamous for social and environmental abuses. RA organized working groups with scientists, farmers, NGOs and community leaders to study the problems and develop principles and criteria for sustainable banana farm management. In 1992, several major South American banana exporters began to bring their farms into compliance with these standards, which include zero deforestation; waste management and recycling; decent wages, hours and conditions for workers; and stricter safety regulations for pesticides. Today, more than 15% of all the bananas in international trade come from RA- Certified farms. Though the initial changes a farm must make to become certified require considerable work and investment, these large companies have learned that many changes end up paying for themselves, particularly on larger farms. The RA Certification has also been expanded to other commodities through the Sustainable Agricultural Network (SAN). The SAN works with industry groups to apply the RA certification to various supply chains, geographies, and farm types. Civil Society Backgrounder and Inventory 10

13 While more research is needed, studies indicate that Forest Stewardship Council (FSC) certification has a positive impact on economic, ecological and social aspects of forest management. An extensive study of Corrective Action Requests (CARs) looking at FSC- certified operations in tropical forests concludes that FSC certification has a positive impact particularly in the areas of: health and safety; management plans; monitoring; use of reduced- impact logging; and protection of rare, threatened species. The study found that the number of CARs given in certification assessments was decreasing over time, suggesting that companies have incorporated management activities that are in line with FSC requirements as standard best practice (Peña- Claros 2009). The Deramakot Forest Reserve (DFR) in Sabah, Borneo covers 55,000 hectares and was originally licensed for logging in In 1989, it was designated as a model site to develop sustainable forest management and all logging activities were suspended. A new management system with reduced impact logging was implemented in 1995 and DFR was FSC certified in Studies comparing DFR with similar conventionally logged forests have shown DFR to be more effective in sustaining biodiversity; it is one of the few areas in Sabah containing all five Bornean wild cat species, including the bay cat one of the world s rarest wild cats (Azlan 2009). DFR is also estimated to have 54 tons more carbon per hectare stocked in the above- ground vegetation than the Tangkulap Forest Reserve, a conventional logging site (Seino 2006). A study from Gabon looking at the quality of wildlife management of forest concessionaires concluded that FSC- certified operations comply significantly better with national legislation and IUCN- recommended best practices compared to non- certified companies (Rayden 2010). In plantation forestry in Brazil, FSC- certified operations performed substantially better on social and environmental aspects than noncertified companies (Noveas 2008). Many groups that have worked on certification also admit that it is not a panacea, and such measures do not work in all geographies or at all scales. For smaller farms, increased cooperation with government can improve the effectiveness of certification systems. For example, many large companies buy specialty crops from small, independent farms. Because smaller farms tend to lack the training and resources necessary to meet certification requirements, international aid has played a vital role in helping smaller farms get certified. For well- established certification schemes, ensuring consistency of a scheme globally can be challenging. Further, the price premium for certified goods has not always materialized, obscuring the business case for change at the farm level. (Many businesses, however, recognize the benefits of increasing productivity, quality, and efficiency at the farm level, rather than the profit of a price premium.) Finally, it is worth noting that certified production still occupies only a small percentage of the tropical commodities market. Rainforest Alliance, The Rainforest Alliance s Banana Certification Program WWF s Global Forest & Trade Network 20th Anniversary Report highlighting the FSC story Rainforest Alliance Certified/ SAN Standard Rainforest Alliance, Impact of FSC Certification on Deforestation and the Incidence of Wildfires on the Maya Biosphere Reserve Rainforest Alliance, Ecosystem Conservation: Our Impacts Civil Society Backgrounder and Inventory 11

14 Public- Private Partnerships at the Base of the Supply Chain When companies see the need for more sustainable sourcing, partnerships with NGOs and governments can help implement new strategies to ensure adequate and consistent supply. Grupo Modelo, the largest beer producer/distributor in Mexico and the second largest buyer of wood pallets, was exposed to legal risk through the Lacey Act because up to 50% of timber in Mexico is illegally harvested. At the same time, Mexico s licensed community forestry collectives, or ejidos, that are legal were not sufficiently reliable at the scale needed by Grupo Modelo. To help ensure that the wood entering its supply chains was legal, sustainable, and reliable, the company partnered with Reforestamos México, A.C. in Reforestamos organized meetings between lumber suppliers, CONAFOR (Mexico s National Forestry Commission), and Grupo Modelo to explore how community forestry operations that supply lumber for pallets could be professionalized and improved. Each actor took complementary steps towards a solution. For its part, Grupo Modelo exhibited leadership and a willingness to improve its buying practices not only in the Corporate Social Responsibility office, but also the executive suite and procurement offices. Reforestamos México provided technical assistance to community forest managers, and also helped to facilitate the creation of an association of ejidos, which was necessary to create the economies of scale to make this more sustainable supply an attractive business choice for the company. Government also had several important roles to play: providing contact with the ejidos through CONAFOR s existing network; supporting goodwill with the companies who did not trust the ejidos; and facilitating funding from the UN to support the ejidos in pursuing FSC certification. This partnership resulted in a reliable supply of sustainable pallets for Groupo Modelo, more sustainable forest management by the communities, and new market potential for FSC certified products. Reforestamos Mexico is now working to execute a similar model of success with Grupo Bimbo, a Mexico- based multinational food processing company and the world s largest baking company. To date, nearly a quarter of Grupo Bimbo s pallets are now FSC certified, and several of its suppliers are working with Reforestamos on stronger chain- of- custody systems. Reforestamos Mexico Blog - Groupo Modelo project (Spanish) Reforestamos Mexico Blog - Groupo Bimbo project (English) Conclusion/Synthesis: What Roles and Elements are Required for Success? Common themes emerge across these success stories, particularly vis- à- vis the roles of governments, companies, and NGOs. Governments are uniquely responsible for creating enabling environments, setting baseline requirements, and investing directly to build capacity when market failures leave gaps. Companies, once moved to act, are the key to transmitting market signals broadly. NGOs are uniquely positioned to serve as activists, advisers, and verifiers (modified from Elliott and Freeman 2003). Many organizations play one or more of these roles in different contexts, but each role is critical for success and is explained in greater depth below: NGO roles The activists are the self- appointed representatives of the forest, climate, disempowered local communities, wildlife, etc. who investigate bad actors, trace the products up the supply chain, and then push on any actor in the supply chain with exposure to public pressure. Often this pressure takes the form of large- scale public communications campaigns that provide the Civil Society Backgrounder and Inventory 12

15 necessary driving force to change practices (see Box C). The campaigners hold the sticks and are willing to use them. Many of these success stories were launched (or moved more quickly) because of the actions of the activists. The advisers are those NGOs who step in to work with governments, lending institutions, companies, farmers, and ranchers to help implement changes when a need and a goal are clearly identified. Some produce and/or make tools and technologies available that can be employed; others work on the ground in farms, factories, and government offices to build understanding and technical and managerial capacity to respond. Organizations often have particular expertise in a region, commodity, tool or strategy. Many are very engaged in joint efforts such as commodity roundtables. Some work on bottom up solutions tailor made to the local context, others on more global solutions. Overall, these groups play an important role in identifying problems, looking for causes, and indicating solutions. Often the work of the advisers is behind- the- scenes, out of the public eye, time- intensive, and hard to finance, but it is absolutely critical for getting solutions into place and actually changing the practices that lead to deforestation. Finally, there are the verifiers. These groups monitor compliance, which for deforestation can happen on the ground at the local level, in a GIS lab working the satellite data, or even in a genetic lab testing samples for species of origin. When they find violations, the verifiers play a critical role in maintaining high standards once established. Beyond these various roles that are often at play in a successful effort to eliminate deforestation in a particular supply chain, a few common programmatic elements appear to be key in many or all of these success stories: Transparency and monitoring. If strong transparency and monitoring are built into the system, accountability is much faster and easier and requires less investment by the NGO verifiers. Setting standards and communicating best practices. Actions include creating certifications and roundtables; carefully defining High Conservation Value forests or High Carbon Stock forests; articulating and socializing certain practices in government programs regulating commodities in tropical forest countries; recognizing land rights and the need for free, prior, and informed consent in resolving land conflict for local communities, etc. Taking action at the local level. The actual farmer or industrial- scale operator on the ground often needs direct assistance to change practices, and needs to be connected to the right market. Making the business case for change. Companies and producers are strongly driven by the bottom line so making the business case for each key actor in the supply chain (e.g. producers, aggregators, buyers) can be key. Creating and aligning incentives. Decision makers at multiple levels of government and in different divisions of a company often face conflicting and/or limited incentives for sustainability. Creating and aligning incentives through the supply chain often requires active engagement as was the case when Grupo Modelo faced a strong incentive (the Lacey Act) to use only legal wood pallets, but had to work with its suppliers, governments, NGOs, and forest communities to transmit the incentive through the supply chain. Civil Society Backgrounder and Inventory 13

16 Box C: Public Communication Campaigns Communication campaigns can be an effective tool to increase incentives for companies to change supply chain practices or at least to make commitments that they will do so in the future. In addition to the Greenpeace campaign that helped lead Nestlé to adopt its Responsible Sourcing Guidelines (see above), another example is the recent global campaign led by WWF, Greenpeace, and Rainforest Action Network targeting Asia Pulp and Paper (APP). APP is one of the world s largest pulp and paper companies and produces around 3 million tons of pulp annually in Indonesia. Instead of developing a sustainable plantation base, it continues to rely on large- scale clearing of natural forest, home to the last refuges for the critically endangered Sumatran elephant and tiger. One dimension of this global campaign was a communications and outreach program aimed at persuading U.S. businesses to stop buying APP paper products. The effort, known as the Don t Flush Tiger Forests, was successful in getting more than 100 companies, including Staples, Dollar General, Disney, Mattel, Office Depot and HarperCollins to break ties with APP. Subsequently, APP announced a new forestry policy that includes an immediate moratorium on all tropical forest clearing in Indonesia until conservation and carbon values can be assessed. Campaigns can lead to commitments but a commitment is only the first step towards sustainability. Major new announcements such as GAR s and APP s should be welcomed. But a declaration of intent be it a corporate commitment or even new legislation by a government is only the first step. Much of the hard work remains including: defining the rules, procedures, and/or regulations to transform the commitment/legislation into something workable; executing the commitment at the level of the field or the shop floor, the business division, or the local jurisdictions; and monitoring compliance. High- profile campaigns can get help get this process rolling, but much more is needed for the process to yield true changes in sustainability, and NGOs have been critical to success each step of the way. World Wildlife Fund, Don t Flush Tiger Forests Campaign The Washington Post, Asian paper giant agrees to stop cutting Indonesia s natural rain forests Rainforest Action Network, Turning the Page on Rainforest Destruction Civil Society Backgrounder and Inventory 14

17 Emerging Strategies and Trends In addition to the success stories above, NGOs, companies, and governments are working together in various combinations to pursue the following emerging strategies to advance deforestation reduction in supply chains. The following sections provide background on the most important of these. Degraded Land: A Win- Win Opportunity? Agricultural expansion onto degraded land is increasingly seen as a way to achieve both economic and environmental gains. Yield intensification alone is unlikely to meet growing demand for commodities expected by 2050 (FAO 2009). In recognition of the need for both economic development and environmental protection, governments, businesses, and civil society have been seeking ways to expand agriculture on degraded land in order to meet the demand for food while protecting forests. Degraded land is typically low in biodiversity value and carbon stocks, and usually requires significant investment in soil restoration or the resolution of land tenure conflict to make agriculture feasible. According to the World Resources Institute (WRI), the amount of degraded forestlands available for agricultural expansion in Indonesia is roughly equal to the predicted expansion of palm oil plantations until WRI has developed a suitability mapper through its Project POTICO program to identify degraded lands in Indonesia appropriate for palm oil expansion using environmental, social, economic, and legal indicators. The Nature Conservancy is similarly working in East Kalimantan, Indonesia to help site oil palm expansion on already degraded land. Unfortunately, land tenure constraints and subsequent legal uncertainty continue to impede efforts to promote land swaps as an attractive business model for palm oil companies despite a viable business proposition in a perfect world. It is important to note, however, that degraded lands are rarely unoccupied, and often there is a constituency for business- as- usual management (see Box D). Efforts to use degraded land for agricultural expansion are also ongoing in Brazil and Colombia. The Brazilian government has taken steps towards building policies that ensure that agricultural expansion in Brazil is restricted to previously deforested or severely degraded lands. According to WWF, over 10 million hectares of degraded land in Brazil have been rehabilitated and repurposed for agriculture. For example, almost all soy is expanding onto land that previously supported low intensity cattle ranching, which prevents additional deforestation if accompanied by the sustainable intensification of cattle ranching. New production paradigms incorporate crop rotation (soy- maize- pasture) and integrated cattle and forestry production systems that will improve both above- and below- ground carbon stocks. In the hilly terrain of the Atlantic Coastal Region, small farmers are rehabilitating their ecologically poor land holdings by applying rotational grazing techniques and investing in cultivated grasses and improved genetic breeds of dairy and beef cattle. They are also restoring stream corridors as part of watershed management projects that incorporate the concept of Payment for Ecosystem Services (PES). The forestry sector is similarly seeking to restore landscapes, as degraded lands are considerably less expensive than planting trees on prime agricultural land, and natural forest lands are now legally off limits to the expansion of corporate plantations. WRI, How to Identify Degraded Land for Sustainable Palm Oil in Indonesia Brazil: Oil Palm Plantations Expand on Degraded Land in Amazon Mongabay, Degraded lands hold promise in feeding 9 billion, while preserving forests Civil Society Backgrounder and Inventory 15

18 Box D: Land Grabs and Community Rights Land for large- scale agricultural expansion is often acquired under unclear land tenure schemes at the cost of community rights. When governments lease land to commercial agriculture producers, they often do so with the assumption that large- scale development will spur the local economy, increase food supply, and provide other benefits. However, governments often fail to consult with or adequately consider the interests or traditional tenure rights of local communities in granting concessions, and thus essentially pull the land out from under existing communities. In the past, these so- called land grabs have severely impacted traditional livelihoods and displaced communities. For example, in recent years palm oil producers Sime Darby and Golden Veroleum have acquired over 600,000 hectares of land in Liberia for palm oil plantations. Investigation by the Forest Peoples Programme showed that in these areas companies were able to resettle locals and conduct business without informing or compensating communities or obtaining their consent. The Rights and Resources Initiative has also analyzed local tenure rights and helped local communities in Liberia negotiate with companies and implement social audits. With the assistance of NGOs, Liberian communities have filed complaints with the RSPO, demonstrating that the plantations violated RSPO criteria, as well as human rights frameworks that Liberia has ratified. Under pressure from the RSPO, Sime Darby suspended operations on its concessions in Liberia and agreed to compensate local communities. Efforts to expand agriculture onto degraded land can face similar issues, and without strong safeguards may be no better than native forest land grabs. Some countries lack clear land tenure laws and definitions of degraded land. For example, India s National Policy on Biofuels, implemented in 2009, sets targets for the amount of biofuels blended into fuel mixes. In an effort to avoid impacts on food security, the policy requires that biofuel crops only be produced on wastelands. However, there is evidence that the classification of wastelands is politicized and may not reflect the importance of the land to local communities nor its ecological value. This lack of definitional clarity, as well as inadequate legal protections for communities, has led to land grabs for biofuel production with negative social and environmental impacts. This example provides a cautionary tale for efforts to divert production away from standing forests towards less productive degraded lands. Rights and Resources press release related to Liberia GVL case Forest Peoples Program E- Newsletter, December 2012, further information on Liberia NY Times Op- Ed: The Global Farmland Rush International Conference on Global Land Grabbing including submitted papers Baka, Jennifer Is there such a Thing as Wasteland? Biofuels and Wasteland Development in Tamil Nadu, India Civil Society Backgrounder and Inventory 16

19 Transparency: Linking Monitoring to Supply Chains Recent improvements in forest monitoring technologies are beginning to link monitoring data to supply chain management. Over the past few decades, rapid advances in remote sensing technologies like satellite imaging have created ways to more accurately monitor forest cover, forest health, and deforestation. Monitoring data can support forest protection by providing data on the efficacy of various programs, policies, certifications, and standards; identifying geographic regions of concern; and aiding supply chain mapping. There are many examples: WRI is preparing to launch Global Forest Watch 2.0, an updated forest monitoring system and network based on a previous platform to promote interactive forest data. Envisioned as Bloomberg for forests, Global Forest Watch 2.0 will use cutting edge technologies and partnerships with data giants like Google to provide governments, businesses, and civil society with near real- time forest data. In the past, Global Forest Watch partnered with the Russian government to map illegal logging in Northern forests, generating high- level political dialogue around the issue. Conservation International, in partnership with the Earth Institute at Columbia University and the Council for Scientific and Industrial Research in South Africa, has developed the Vital Signs program to monitor ecosystem conditions and trends, including changes in forest cover, agricultural production and human well- being in agricultural landscapes. Vital Signs aims to promote sustainable agricultural development globally by providing open- access, real- time data on agricultural production s effects on livelihoods and conservation. Vital Signs is being launched with initial efforts in Tanzania, Ghana, Ethiopia, Mozambique and Uganda. In another monitoring initiative, CI has partnered with Nestlé S.A. to create a series of Deforestation Guides for Commodity Sourcing. These guides provide concise, easy- to- understand information on deforestation rates and drivers both nationally and at sub- national scales, data on agriculture land area and key commodities, and background information on politics and socio- economics that are relevant to deforestation reduction efforts. The Nature Conservancy was a pioneer in implementing Brazil s Rural Environmental Registry, Cadastro Ambiental Rural or CAR, whereby over 90% of private lands in entire political jurisdictions have been mapped and registered in public land registries. This registry allows for strict control of property boundaries, monitoring of deforestation via satellite, and linking deforestation to individual property owners. This effort, now scaling up across the Amazon, has been an important factor in Brazil s successful effort to curb deforestation since The World Wildlife Fund and Eyes on the Forest, a coalition of Indonesian NGOs, have been mapping and tracking the Sumatran landscape. Eyes on the Forest distributes information on deforestation and habitat loss through various mapping tools. In collaboration with Google Maps Engine, these groups developed a catalog of maps with information on carbon stocks, forest cover, biodiversity, and other indicators of forest health in Sumatra. The next step for forest monitoring programs is to effectively connect data with supply chain management. Governments, businesses, and civil society have recognized the importance of forest and supply chain monitoring and transparency in all aspects of forest protection policy and supply chain management. Yet data consistency, timeliness, accuracy, and completeness, and the desire of businesses to keep some supply chain information confidential for competitive reasons, remain challenging for transparently linking forest monitoring to supply chains. Various actors are beginning to work in tandem to share and connect data with ongoing action. Because of competitiveness concerns, Civil Society Backgrounder and Inventory 17

20 businesses may hesitate to share information about suppliers and commodity purchases in great detail, so there may be an important role for third parties who can assess confidential data without making it public and verify that companies have met their commitments. WRI s Global Forest Watch 2.0, the original Global Forest Watch, and the Forest Cover Analyzer A WRI report assessing forest carbon monitoring capacity and gaps in key countries CI s Vital Signs program and Deforestation Guides for Commodity Sourcing The Eyes on the Forest coalition and monitoring tool Multi- Stakeholder Roundtables Since no one sector is able to reduce supply chain- driven deforestation on its own, businesses, civil society, governments, and other stakeholders have convened stable forums to address supply chain- specific issues. Multi- stakeholder roundtables have emerged within the past decade as a way to convene diverse stakeholders in a non- competitive safe space to develop standards and implement them within their supply chains. These roundtables seek to build markets for sustainable products, incentivizing and thus improving sustainable sourcing. For example, the Roundtable on Sustainable Palm Oil (RSPO) emerged out of collaboration between the World Wildlife Fund and major companies involved in the palm oil industry. These companies often individually commit to adopting a given roundtable s standards, and through stakeholder platforms like the roundtables and Consumer Goods Forum push for collective action and the development of sustainable production standards. Furthermore, non- industry groups can use the standards developed by independent forums to green supply chains. For instance, Solidaridad, an international NGO, uses the resources of various roundtables to improve smallholder livelihoods through its Farmer Support Progamme by adapting global standards on palm oil, beef, soy, cotton, and sugar to local conditions. It then links smallholder production to end- buyers who co- invest in the Farmer Support Programme. Similarly, WWF s Global Forest & Trade Network, comprised of nearly 300 companies committed to the responsible forest products trade, provides a platform for generating concerted market signals for certified forest products and for supporting producer certification. Programs like The Borneo Initiative, a partnership between NGOs, foundations, donors, and certifying bodies, can provide an umbrella to financially support certification and connect buyers and sellers of certified products. A global standard is challenging for some commodities. A global standard may be challenging for beef, for example, given the wide variation in production approaches tailored to local context. The FSC may provide a lesson: by first developing globally acceptable principles and criteria, then tailoring the criteria to national standards, FSC maintained relevance broadly without being substantially watered down. Civil society groups play a large role in shaping these roundtables, and in some cases remain divided as to the standards and methodologies they have generated and even the overall approach. Many groups recognize that agricultural production is so varied from region to region that implementing shared standards can be extremely difficult. In some cases, the standards themselves are disputed. For example, some civil society groups feel that RSPO standards do not go far enough in protecting high- carbon peat lands and native wildlife from palm oil expansion. Others feel that strong industry interests sway the efficacy of the roundtables in achieving social and environmental safeguards. Civil society groups work with roundtables to continuously improve standards, evaluate progress, and build markets, from both internal and external roles. Civil Society Backgrounder and Inventory 18