Director Tropical Forest Alliance 2020
World Economic Forum
The last few years have seen an exponential increase in commitments to take action to halt global deforestation by private sector companies in the consumer sector. Through voluntary declarations such the New York Declaration on Forests (NYDF), well over 400 companies active in one or more of the four key commodities have made at least one relevant commitment to help eliminate deforestation from their value chains. The Tropical Forest Alliance 2020 (TFA 2020) was built to accelerate these commitments and support their implementation.
To take stock of progress, this year TFA 2020 has partnered with the NYDF Assessment Partners, an independent group of civil society and research organizations, to prepare the assessment of the progress against the elimination of deforestation from agricultural commodity supply chains, Goal 2 of NYDF. The assessment is a comprehensive evaluation of supply chain efforts taken by private and public actors, drawing on existing work and data from partner organizations and filling in data gaps through company interviews. Its verdict calls for hope, but also for a strong recommitment of effort.
On one hand, clear progress has been made from those early days – in some cases a lot of progress – and a true movement for market transformation is on the way with TFA 2020 partners and NYDF endorsers leading the way across all supply chains. On the other hand, headwinds are strong, and with less than four years to the end of 2020, a lot remains to be done.
More companies need to commit, and many more need to move much faster to implementation. To do this, private sector companies need much more support from governments, civil society, and the financial sector. From forest governance to financial policies and regulation, from smallholder inclusion programs to public procurement pledges, there are encouraging early signs, but overall we need a step change in pace to meet the goal.
We need to build this change of pace on the positive political momentum, encapsulated in the Sustainable Development Goals (SDGs) and the Paris Agreement. There are strong policy signals to push markets towards deforestation-free development and growth plans but the implementation of policy priorities needs strong public-private collaboration and community engagement. Encouragingly, the last year has seen some remarkable examples of public policy leadership by national and sub-national governments in forest countries, on which other stakeholders can build. Notable examples are the promulgation of the peatland moratorium and new green banking regulations in Indonesia, which are important steps towards achieving deforestation-free development. Many subnational governments across tropical forest regions have designed ambitious green growth and sustainable land use plans. A recent report by the World Wide Fund for Nature identified over 25 distinct geographies that are engaging in some form of jurisdictional forest and climate initiatives, of which notable examples are the Produce, Conserve and Include (PCI) strategy of Mato Grosso state in Brazil, and the 10-year jurisdictional program of the Sabah State Government in Malaysia.
In this context, the 2016-2017 TFA 2020 Annual Report provides an opportunity to reflect on the last 12 months of progress by TFA 2020 members and the alliance. The report includes member actions on driving impact while exploring opportunities for TFA 2020 to support emerging solutions. Since last year’s report, TFA 2020 has deepened and broadened its role as a public-private partnership for the implementation of commitments for deforestation-free supply chains. The Alliance now counts over 90 partners with 14 new private-sector partners from consumer, producer and other sectors, seven tropical forest country governments and 10 civil society organizations, and it has set up regional infrastructure, with three full-time regional coordinators now established in Southeast Asia, West and Central Africa, and Latin America.
To showcase progress, we have launched the partner Initiative Mapping, a voluntary collection of information on initiatives implemented by members of the Alliance that aim to halt deforestation from supply chains. Of the many achievements by TFA 2020 partners, two are worth calling out as examples of what public-private collaboration can do. In November 2016, seven West and Central African countries engaged in the Africa Palm Oil Initiative of TFA 2020 signed the Marrakesh Declaration at COP22, pledging to sustainably develop the oil palm sector in the region. Together, the seven countries cover over 250 million hectares of tropical forests, or 13% of the world’s total. A new de-risking facility was announced at the World Economic Forum Annual Meeting 2017 to kick-start investments in deforestation-free agriculture in countries that are working to reduce their forest and peat degradation. The Government of Norway will work in partnership with the Global Environment Facility, UN Environment Programme, Sustainable Trade Initiative (IDH), major food companies and environmental non-governmental organizations to protect over 5 million hectares of forests and peatlands by 2020, equivalent to the size of Costa Rica.
The Alliance is also continuing to contribute to the development of the agenda for deforestation-free development. Tropical forest governments and the financial sector have very important roles to play in the shift to deforestation-free supply chains, which is why this year the TFA 2020 prepared two research reports targeted at those audiences. The first, on the economic development benefits of sustainable supply chains, titled “Better Growth with Forests”, finds that efforts to end commodity-driven deforestation don’t have to come at the expense of local economic growth and that indeed there is emerging evidence that local economic development and forest protection are both compatible and synergistic. The second, “The Role of the Financial Sector in Deforestation-free Supply Chains” published in collaboration with the World Economic Forum, details how the production of forest-risk commodities in tropical forest countries is worth roughly US$ 180 billion annually, and transforming their supply chains to full sustainability is an investment opportunity to the tune of roughly $200 billion a year, an opportunity that the financial sector can embrace by scaling up emerging models of deforestation-free finance. In this annual report, we also share the results of an assessment of the potential that jurisdictional approaches hold for meeting TFA 2020 objectives, and of the role that TFA 2020 and its members can play.
On March 21-22 2017 we will hold the second TFA 2020 General Assembly in Brasilia, an opportunity to discuss progress, best practices and identify scalable solutions that will help us meet our joint objective of halting commodity driven deforestation in the supply chains by 2020. The members of the Tropical Forest Alliance 2020 continue to work to fulfill the important growth and development benefits that decoupling commodity production from deforestation can bring to millions of people around the world. We invite interested governments, private sector companies, civil society organizations and international organizations to join our collective efforts in the coming year.
Director Tropical Forest Alliance 2020
World Economic Forum
TFA 2020 provides a platform for action
Partnership is critical to a successful transition to deforestation-free commodities. Companies need government and civil society support to translate commitments in the boardrooms to sustainable economic development at the forest frontier. Governments and civil society can use collaboration with business and the power of markets to accelerate and leverage up their sustainable development objectives. The TFA 2020 provides the kind of dedicated public-private platform for collaboration that helps achieve a deforestation-free rural economy.
TFA 2020 is a global public-private partnership in which partners take voluntary actions, individually and in combination, to reduce tropical deforestation associated with the sourcing of commodities such as palm oil, soy, beef, and paper and pulp. Ending commodity-driven deforestation will significantly reduce global greenhouse gas emissions, improve the livelihoods of millions of smallholder farmers, conserve natural habitats and protect tropical landscapes for future generations. It is a key aspect of delivering sustainable and inclusive rural economic development in tropical forest countries. TFA 2020 is uniquely positioned to foster cross-sector collaboration based on a common and ever-deepening understanding of the barriers and opportunities linked to deforestation-free supply chains. Its greatest offering is a partnership of champions for deforestation-free global and local economies, making the case for sustainable supply chains as an essential pathway towards a better economy and the achievement of the both the New York Declaration on Forests and, ultimately, the Sustainable Development Goals.
TFA 2020 and its partner countries, companies and civil society organizations work together to:
TFA 2020 was founded in 2012 at Rio+20 after the Consumer Goods Forum (CGF) committed to zero net deforestation by 2020 for palm oil, soy, beef, and pulp and paper supply chains in 2010. The CGF partnered with the US government to create the public private alliance with the mission of mobilizing all actors to collaborate in reducing commodity-driven tropical deforestation. Since June 2015, the TFA 2020 secretariat is hosted at the World Economic Forum offices in Geneva, with financial support from the governments of the Netherlands, Norway and the United Kingdom. The Alliance consists of a diverse group of 90 member organizations, 38 of which are private sector, 14 governments, 36 civil society and 2 multilateral agencies. A full list of partners is available on the TFA 2020 website.
TFA 2020 is an inclusive alliance; criteria for becoming a partner are designed to be simple and attainable by entities that share its mission, goals and objectives, with partners actively involved in programs and initiatives to end commodity-driven tropical deforestation. The governance structure allows the alliance to adapt as TFA 2020 matures and as its membership increases.
TFA 2020 steering committee is comprised by Alliance members that are elected to make management decisions on behalf of TFA 2020 and steer the direction of TFA 2020. The Steering Committee 20 members provide a balanced representation of consumer and forest countries, private sector companies, both producers and consumers, and civil society organizations. They serve rotating two-year terms. The full list of the Steering Committee members is available on the TFA 2020 website.
Since 2015, the Secretariat of the Tropical Forest Alliance 2020 has been hosted at the World Economic Forum offices in Geneva, Switzerland, with financial support from the governments of Norway, the Netherlands and the United Kingdom. The Secretariat is made up of a small core team led by a Director, Marco Albani.
In 2016, the TFA 2020 appointed three regional coordinators to support the activities of the Alliance in Southeast Asia, West and Central Africa, and Latin America. The Regional Coordinators are hosted by the Indonesian Business Council for Sustainable Development, the Palladium Group, and The Nature Conservancy of Brazil.
To support the work of the Regional Coordinators, during the summer of 2016, TFA 2020 steering committee appointed regional committees for the three priority regions for the Alliance: West and Central Africa, Southeast Asia and Latin America. Each regional committee consists of three steering committee members, and three other partner representatives from the region. The regional committees serve as strategic and operational guides for the TFA 2020 regional coordinators.
As an action-oriented and commitment-based alliance, TFA 2020 is driven by the collaboration, engagement and activities of its members. It is the role of the TFA 2020 secretariat to enable and facilitate interaction for the successful implementation of the Alliance’s goals. The secretariat is supporting TFA 2020 partners achieve their objectives through the following six roles:
Co-creation: TFA 2020 takes a collaborative approach to the implementation of commitments made. With the support of the secretariat, TFA 2020 members take an active role in fostering the co-creation of strategic initiatives and solutions that partners need to achieve their goals at both a global and regional level
Convening: High-level and practitioners-level meetings and workshops are a key component of driving progress through the TFA 2020. The secretariat supports the Alliance through the organization of high-impact meetings, leveraging the resources and opportunities provided by the World Economic Forum, as well as other platforms, including at UN meetings, scientific and practitioners’ conferences, among others.
Communication: Communicating and disseminating the activities of the TFA 2020 and its members is a key priority, as it fosters and supports the mobilization of new partnerships and initiatives.
Connection: Enabling effective and targeted collaboration among TFA 2020 partners requires regular interaction through in-person and virtual meetings. The secretariat actively supports TFA 2020 members to enhance connectivity, fostering collaboration opportunities and exchange of information and best practices.
Recruitment: Further expansion of the TFA 2020 membership, including governments of forested countries, private sector companies and small-scale producers, constitutes a core aspect of the increased development of the Alliance’s in-country work. The secretariat is supporting the Alliance in achieving this goal through targeted engagement and recruitment of new members.
Delivery and project management: The secretariat ensures the effective and professional functioning of TFA 2020 governance and the smooth functioning of working groups through logistical support for meetings and teleconferences, and through facilitation and keeping record of discussions.
In late 2015, the TFA 2020 steering committee laid out six strategic initiatives of focus for the work of the Alliance until 2018. Three of the initiatives focus on engagement in tropical forest areas and building the regional platform of TFA 2020 on a regional and national level – Latin America Initiative, West and Central Africa Initiative that includes the signature initiative of Africa Palm Oil and Southeast Asia Initiative.
The three global initiatives of TFA 2020 focus on cross-cutting issues of the alliance, two of the initiatives – Better Growth with Forests and Finance Sector Engagement at are implementation phase and the Emerging Markets demand for deforestation-free commodities initiative is currently being developed.
The objective of the TFA 2020 Latin America Initiative it to support ongoing collaborative efforts taking place in the region that share the goal of eliminating deforestation from key agricultural and forest commodity supply chains (e.g. soy, palm oil, cattle, pulp and paper). To date, the work of TFA 2020 has focused on Brazil and Colombia, while the TFA 2020 platform has also provided light touch communication and connectivity support the ongoing efforts of TFA 2020 partners in other Latin American countries.
TFA 2020 work in Brazil was formulated through stakeholder consultations and discussion, which took place at a regional strategy meeting in Brazil in June 2015. At the time, a number of consumer companies and civil society representatives agreed to support the development of a guide on the implementation of corporate commitments to eliminate deforestation from commodity supply chains in Brazil by building on existing laws, initiatives and incentives.
Since then, TFA 2020 partners have recognized that TFA 2020’s value-add in Brazil is to build relationships between Brazilian stakeholders and the international community. Thus, TFA 2020 is focusing on facilitating relationships between Brazilian producers and international companies and catalysing the efforts of existing national and subnational actors.
In 2016, to help in this effort, TFA 2020, WWF and Proforest published a report outlining the opportunities brought about by supporting legal compliance and zero-deforestation in Brazil, including a mapping of 73 local tools and initiatives to facilitate better partnerships and connections. In addition, the Brazilian Coalition on Climate, Forests and Agriculture and the TFA 2020 Brazil working group formed a joint team to work together to help companies comply with Brazil’s Forest Code and identify how best practices can be better shared and implemented across the country.
The involvement of subnational governments in Brazil has been a component of TFA 2020’s regional work in 2016 – to be continued in 2017. The work in 2016 consisted of initial engagement with leading representatives of the Pará and Mato Grosso subnational governments, identification of TFA 2020 partners consistently working in these jurisdictions, and examination of how TFA 2020 can add value to their efforts. In the second half of the year, TFA 2020 focused on showcasing the progress made at the subnational level by incorporating jurisdictional leaders in a public panel at NYC Climate Week 2016 and conducting a jurisdictional assessment with explicit case studies on Pará and Mato Grosso. The case studies increase the understanding of the subnational governments and the opportunities offered to TFA 2020 partners in the transition to the sustainable production of key forest risk commodities. A recent application from the Government of Mato Grosso to become a member of TFA 2020 exemplifies the commitment of the subnational leadership and the opportunity for the alliance to engage at this level.
In the recent months, the Alliance has increased its ability to engage with government and other domestic stakeholders, communicate TFA 2020 objectives and outline the opportunities for collaboration, thanks to the establishment of the Latin America Regional Coordinator in Sao Paulo. The upcoming TFA 2020 General Assembly taking place in Brasilia from 18-22 March 2017, will see the presence of several Brazilian stakeholders, from government to civil society and indigenous people, and offer the opportunity to sustain and accelerate the momentum of the initiative.
 TFA 2020, WWF and Proforest, Legal compliance and elimination of deforestation from commodity production in Brazil: useful tools and initiatives for value chain companies, 2016.
Building on engagement carried out throughout the last year, in January 2017 Colombia became the first Latin American country to become a member of TFA 2020 and to be represented at the TFA 2020 Steering Committee, and President Santos was the first head of state to attend a TFA 2020 Partners meeting during the 2017 Annual Meeting of the World Economic Forum in Davos. TFA 2020 partners in Colombia are now working to develop a platform for public private cooperation, aimed at meeting Colombia’s deforestation goals.
The Africa Palm Oil Initiative (APOI) is the first signature initiative of TFA 2020, currently engaging 10 West and Central African countries, leading palm oil consumers, trading and producing companies, civil society, and indigenous and local peoples groups. The objective of the initiative is to help transform the regional palm oil sector into a sustainable driver of low-carbon development in a way that is socially beneficial and protects the biodiversity-rich tropical forests of the region. During the year, APOI increased its momentum and engagement, with five additional countries joining the initiative – Cote d’Ivoire joint in the first half of the year and Central Republic of Congo, Democratic Republic of Congo, Republic of Congo and Sierra Leone in the second half of 2016, joining Ghana and Liberia as members of TFA 2020.
The APOI engagement process includes three phases 1) engagement at the national level, 2) development of principles and a national action plan with an established country team and 3) implementation of the national action plans through support of TFA 2020 global platform. Throughout 2016, APOI conducted initial national workshops in each newly affiliated country to begin phase one and two. The national workshops in Côte d’Ivoire, Ghana and Liberia focused on finalizing national action plans and preparing for the implementation phase. In addition, two regional workshops were held, in Accra, Ghana in March 2016 and in Abidjan, Côte d’Ivoire in October 2016, to develop and agree harmonized action for sustainable palm oil production at the regional level. Through this regional process, the countries jointly negotiated the text of the Marrakesh Declaration, a regional pledge by seven African governments to shift towards sustainable palm oil production. The undertaking will simultaneously help improve smallholder incomes and drive greater action on tropical deforestation. By signing this pledge at the UN Climate Change Conference in Marrakesh on 16 November, the African governments endorsed an unprecedented new regional market for sustainable palm oil production across the region. They vowed to work with partners to fully implement national development plans for sustainable oil palm development, guided by the declaration’s underlying principles in favour of sustainability, good governance, transparency, recognition of community and human rights, partnerships, and the equitable sharing of benefits. In addition, the Declaration has been recognized and supported by leaders in the industry with commitment to support its implementation.
In February 2017, global palm oil producers, buyers, financial institutions, multilaterals, donors and country teams of Cote d’Ivoire, Ghana and Liberia came together for the first Implementation Dialogue. This workshop provided an opportunity for multistakeholder engagement in the implementation of the Marrakesh Declaration and identification how public-private collaboration can help realize the shared objective of deforestation-free palm oil development in Cote d’Ivoire, Ghana and Liberia. During the workshop, the country teams presented the state of oil palm production in their respective countries, highlighted priorities of their national action plan and opportunities for partnerships. In response, specific partnerships and support opportunities were identified to help the countries implement their priorities.
The Africa Palm Oil Initiative is coordinated by Proforest on behalf of the Tropical Forest Alliance 2020, thanks to financial support from UK DFID through the Partnership for Forests Program.
TFA 2020 Southeast Asia Initiative aims to support Southeast Asian partners, businesses, non-governmental organizations and governments to build upon the efforts under way in the region to eliminate deforestation from key commodities’ supply chains by 2020. Thus far the initiative’s greatest presence has been in Indonesia, with growing efforts in Malaysia, especially in the Sabah jurisdiction.
In the lead up to TFA 2020 General Assembly 2016, partners identified three main value adds of TFA 2020: (i) smallholder farmer support; (ii) a Better Growth with Forests regional approach; and (iii) green investment and responsible financing for deforestation-free commodity supply chains. During the TFA 2020 General Assembly in Jakarta, Indonesia in March 2016, members of the Indonesia working group and partners reviewed the three focus areas, elaborated on the criteria for success in each area and created work streams under which specific activities in each area could lead to success. An overview of these activities in 2016 follows:
A Smallholder Farmer Task Force was created to exchange best practices on smallholder inclusion in sustainable supply chains and show the positive relationship between the development of sustainable land use models and the economic and social impact on rural populations at the forest frontier.
Chaired by the head of the Indonesia Palm Oil Pledge (IPOP) and the Indonesian head of the IDH, since its establishment the Task Force has held periodic conference calls and in-person working sessions on the topic. It has successfully mapped smallholder work in Indonesia that includes 12 initiatives forming part of cross-learning efforts that is also included in the broader TFA 2020 Partner Initiative Mapping. During the third quarter of 2016, the IPOP was dissolved due to the Government of Indonesia’s increasing efforts to transform the palm oil sector and strengthen the Indonesian Sustainable Palm Oil (ISPO) standard, thus phasing out IPOP as an entity. This change created a temporary pause in the Task Force’s work in the fall of 2016, but the TFA 2020 Southeast Asia Regional Coordinator is planning to continue facilitating and coordinating its work.
Building on the TFA 2020 Better Growth with Forests initiative, TFA 2020’s objective in 2016 was to show factual evidence of the connection between the development of sustainable land use models and the economic and social impact on rural populations at the forest frontier. In the case of the Southeast Asia region, the benefits include peatland restoration and fire prevention, as well as the “produce-protect” approach at the jurisdictional level, which endeavors to increase agricultural production while protecting forests.
The activities included strengthening the engagement of the Government of Indonesia, especially with the Peatland Restoration Agency, as well as of the subnational governments in Indonesia and Malaysia. Efforts involved showcasing the leadership behind progressive jurisdictional approaches to shared understanding of effective ways to realize jurisdictional sustainability in private meetings, and organizing official events, such as the Climate Action and Sustainable Land Use in Forestry and Agriculture session during NYC Climate Week 2016.
A recent study conducted by the TFA 2020 Financial Sector Engagement initiative estimated that sustainable commodity production represents a $200 billion investment opportunity.[i] A Better Growth with Forests approach could unlock this opportunity in Southeast Asia while maintaining and restoring tropical forests. Efforts are under way, such as the new de-risking facility fund announced in January 2017 by the Government of Norway and other partners, with the aim of raising $400 million by 2020, which could lead to over $1.6 billion in deforestation-free agriculture investment.
[i] World Economic Forum and TFA 2020, The Role of the Financial Sector in Deforestation-free Supply Chains, Research Report, 2017.
The Better Growth with Forests initiative is about championing a new narrative for deforestation-free growth and increasing a practical understanding of how private-sector commitments and public-policy goals can be aligned. The initiative first focused on presenting unbiased facts that explain the relationship between the development of sustainable land use models linked to sustainable supply chains and the economic and social impact on rural populations at the forest frontier. The second phase presented in this report under TFA 2020 ‘s role in an evolving landscape of jurisdictional approaches aims to present examples of how this is being done and how it can be scaled.
In early 2016, an analysis of the economic and political benefits of zero-deforestation commitments in producing countries was completed, focusing on investment opportunities and rural development in those countries. The analysis, presented in March 2016 at the TFA 2020 General Assembly, found that sustainable production processes represent a sizeable investment opportunity. An initial estimate suggests investment requirements to adopt a sustainable land use approach in tropical rainforest regions could amount to roughly $160 billion annually. In many cases, attractive investment returns are associated with these sustainable land use opportunities. Indeed, past academic research estimates that roughly 90% of opportunities have an internal rate of return that is greater than 10%. Despite the data challenges, the evidence suggests: (i) the positive relationship between the deployment of sustainable land use models and local economic prosperity is strong (although trade-offs exist in some instances, particularly in the short term); (ii) the local economic impact varies significantly across the different types of levers (e.g. the effect is extremely positive on smallholder yield improvement, but generally weaker on interventions such as alternative livelihood development); and (iii) the economic impact on local growth and prosperity often depends on the specific context of the interventions (i.e. the impact is caused not necessarily by what is done but by how it is done).
A number of subnational governments have developed ambitious programmes to reduce deforestation and carbon emissions. However, the perception is still that reduced deforestation efforts are incompatible with attempts to promote economic growth in forest-rich regions. This perception, combined with many institutional challenges in tropical forest-rich countries, has made progress uneven and slower than hoped.
The second phase of the initiative has focused on addressing these gaps by examining the state of jurisdictional initiatives and the opportunities they offer to TFA 2020 members to support the transition to the sustainable production of the key forest risk commodities (palm oil, soy, cattle, pulp and paper, cocoa and rubber). The assessments of five jurisdictions have been completed and form part of this annual report. They are in-depth examinations of the approaches in Mato Grosso and Pará, Brazil, in Liberia, in Sabah, Malaysia and in East Kalimantan, Indonesia.
The objective of TFA 2020 Financial Sector Engagement initiative is to further improve the ability of financial institutions to help solve prevailing technical financial challenges (e.g. the absence of robust land tenure and technical and credit support that encourage sustainability) by highlighting the opportunities that can successfully drive deforestation-free production at scale. Key components of the engagement include 1) a clear and thorough articulation of the challenges and opportunities offered by the transition to deforestation-free supply chains and 2) offering a platform for broader engagement around practical solutions to increase financing mechanisms.
To present the challenges and opportunities offer by transitioning to deforestation-free supply chains, Secretariat of TFA 2020 commissioned a research report completed by Vivid Economics and TFA 2020 partners. The report states that the production of four major commodities – cattle, soy, palm oil, and pulp and paper – in tropical forest countries is worth approximately $180 billion annually, and transforming their supply chains to full sustainability is an investment opportunity to the tune of roughly $200 billion a year. The financial sector can embrace this opportunity by scaling up emerging models of deforestation-free finance.
At the World Economic Forum Annual Meeting 2017, TFA 2020 hosted a dialogue between producing governments, supply chain companies and investors offering a dialogue on how the investment opportunity in sustainable commodity production can be harnessed. Anchored in concrete country and commodity examples, the discussion focused on how policy and corporate commitments to low-carbon and sustainable growth are creating new investment and financing prospects, and how various public and corporate actions help lower investment barriers for sustainable commodity production at scale.
In addition, the initiative hosted the first Transaction Workshop in September 2016, offering an occasion for broader engagement around practical solutions to increase financing mechanisms, featuring actual financial transactions in the sustainable commodities space. These included the Global Canopy Programme project, Unlocking Forest Finance, in San Martin, Peru, whose focus is on channeling finance towards sustainable landscaping, as a strategy for the environment, the people and the economy and Wilmar’s Financing Sustainable Smallholder Replanting project, which builds the future supply of sustainable palm oil production from smallholders by providing financial support.
This year was an important reflection point for the forest community on progress against commitments and exchange of emerging solutions. This is reflected in the TFA 2020 convened and co-convened meetings and workshops, the list provides a high-level overview of the main events and workshops delivered since March 2016.
In March, Africa Palm Oil Initiative organized the first regional knowledge exchange workshop bringing together six country teams to Accra Ghana. This gave an opportunity for sharing of knowledge and learning across the countries that are at different stages of their national action plans. The participants of the workshop successfully developed the first draft of a regional accord that included a generic set of principles to palm oil development in the region.
Building upon the Africa Palm Oil Initiative and regional workshop held in Ghana earlier in the year, the World Economic Forum hosted a private dinner to discuss the new frontier of deforestation in Africa and the strength of the Tropical Forest Alliance 2020 as a regional and global platform to transform the palm oil sector in the region. Session participants included Ministers, representatives of financial institutions, buyer and producer companies to explore how such partnerships can scale the sustainable investment and benefits for the local communities.
An important piece of the discussion was the work of the Africa Palm Oil initiatives in developing a joint regional accord to transition to sustainable palm oil production.
In June 2016, the World Economic Forum hosted a breakfast with TFA 2020 partners and potential partners focused on how the Better Growth with Forest study conducted by TFA 2020 results can be integrated into the Southeast TFA 2020 work plan. The session was an opportunity to highlight the subnational leadership in Sabah towards deforestation-free supply chains. As a result of the meeting, the Tropical Forest Alliance 2020, undertook the jurisdictional assessment presented in this report.
In June 2016, the World Economic Forum hosted a private session focused on the deforestation-free agenda development in Colombia with Minister Murillo and Vice Minister Pineda Azuero. The session was an opportunity to explore and align the value of the Tropical Forest Alliance 2020 in the context of Colombia and its ambitious plans.
Tropical Forest Alliance 2020 held a session during the Global Landscape Forum: Investment Case with an aim to shed light on some critical, practical questions regarding successful engagement of key financial sector actors (especially private investors and banks) in the emerging market for deforestation-free commodities.
Achieving climate-positive land use in agriculture & forestry session hosted by TFA 2020, showcased how leading private sector are taking action to realize climate-friendly growth through sustainable land use in agriculture and forestry. The important role of collaborative approaches and public-private partnerships to accelerate the transition towards low-carbon growth and development in the land use-based economy was highlighted.
The Finance Sector Engagement Initiative of the Tropical Forest Alliance 2020 provides a platform to design scalable and bankable solutions for sustainable investment. The first Transaction Workshop offered an opportunity for broader engagement around practical solutions for scaling up finance and review of actual financial transactions in the sustainable commodities space.
Through a collaborative partnership effort, TFA 2020 held an official half-day event during the NYC Climate Week focused on climate action and sustainable land use in forestry and agriculture, exploring key questions on jurisdictional programs. Panellist including Helen Clark, Administrator of UNDP, Andrew Steer, President and CEO of World Resource Institute, Governor from South Sumatra, Indonesia, and Mato Grosso, Brazil, Norwegian Minister of Climate and Environment and many more, discussed the role of private sector, communities, and civil society parts in the success of jurisdictional approaches supported by examples of successful jurisdictional approaches.
The second regional workshop of the Africa Palm Oil Initiative brought together regional and national stakeholder representatives engaged in the APOI process to finalize the text of the TFA 2020 Marrakesh Declaration and prepare for the official signing event during COP 22 Marrakesh. In addition, the workshop provided an opportunity for peer-to-peer exchange and creation of a regional alignment on sustainable oil palm development across the countries and stakeholders.
On 14 November, seven of African governments publicly signed the 2020 Marrakesh Declaration for the Sustainable Development of the Oil Palm Sector in Africa. The pledge to place sustainability, good governance, and the recognition of community and human rights at the heart of the expanding palm oil industry in Africa took place at COP22 in Morocco.
Part of the Action Agenda 2020 work a stakeholder consultation meeting was held in Berlin with a group of experts to explore the emerging solutions to scale transformation of the key commodities supply chains. The outcomes have feed into the Agenda 2020 work being further explored during TFA 2020 General Assembly 2017.
Building upon the important progress made in 2016, World Economic Forum hosted a high-level private meeting of TFA 2020 partners and potential partners at the forum Annual Meeting 2017. The meeting convened Ministerial and CEO level partners to discuss the tropical forest country progress on deforestation-free commitments and how the public private partnership continues to play an enabling role for transformational progress. President Santos of Colombia announced the government’s membership in the Alliance and the importance of it to help meet Colombia’s green growth agenda.
The partnership has seen substantive growth over the last year, especially on the producers’ side, having added 6 tropical forest countries and 11 private sector oganizations. As of March 2017, the partnership includes 90 members, with a full and up-to-date list of partners is available on the TFA 2020 website.Partner Initiative Mapping
With partners, the Tropical Forest Alliance 2020 secretariat developed a voluntary stocktaking of TFA 2020 partner initiatives that are contributing to the implementation of deforestation-free supply chain commitments. The ambition is to create a platform that exemplifies leadership and best practices, for knowledge sharing, for connecting opportunities and for identifying gaps that limit our ability to reach shared objectives. Since its launch in November 2016, 41 partner initiatives have been added to the library by over 15 members of the TFA 2020, with the collection expected to grow further in the coming months. Information about the initiatives is collected through the private TFA 2020 digital collaboration platform, where partners have the ability to create, edit, and share their initiatives and explore and collaborate other partners’ initiatives.
To showcase the progress of the partnership, selected information about the initiatives is presented on https://www.tfa2020.org/initiatives on a GFW engine visual map.
If you are having problems viewing our interactive map, please click here.
Below section provides an aggregated view of where available partner initiatives are active, what commodities are of focus, at what stage are their initiatives and at what value chain segment. Included are also examples of on going initiatives of TFA 2020 partner initiatives.
The initiative mapping process is an ongoing project of TFA 2020 and will continue to be populated and updated through the visual map on tfa2020.org/initiatives.
A global commitment to eliminate deforestation from agricultural commodities.
New York Declaration on Forests: In September 2014, the New York Declaration on Forests (NYDF) outlined 10 goals (figure 1) that provide endorsers—including 190 countries, subnational governments, companies, indigenous groups, and NGOs— with ambitious global targets to protect forests and end natural forest loss by 2030, including a 50% reduction by 2020 as a milestone toward its achievement. Goal 2 of the declaration calls for supporting the private sector in eliminating deforestation in the supply chain of major agricultural commodities by 2020, a commitment that is also at the heart of TFA 2020’s long-term objective.
An independent network of expert organizations, the NYDF Assessment Partners annually evaluate progress of the ten NYDF goals until 2020. Given the relevance for its mission, TFA 2020 supported the 2016 assessment report focused on evaluating progress towards goal 2, which seeks to eliminate deforestation from agricultural supply chains. The NYDF Assessment Partners developed a comprehensive assessment framework to measure company progress and support for forest commitments. This framework measures progress of companies in translating their commitments into operational steps and implementing policies to reduce their exposure to forest risks. It allows for a comprehensive evaluation of supply-chain efforts, drawing on existing work and data from partner organizations and filling in data gaps through company interviews. The framework is structured around four criterion:
To complement the NYDF progress assessment TFA 2020 has partnered with Climate Focus, CDP and Supply Change – members of the NYDF Assessment Partners – to assess progress of TFA 2020 member companies towards their deforestation related commitments and to compare their progress with the larger group of companies that have made such commitments. The full 2016 report on the Progress on the New York Declaration on Forests is available online at forestdeclaration.org.
The number of corporate commitments to reduce the deforestation of agricultural commodity supply chains continues to grow. Since 2015’s report, 108 companies have announced 212 new commitments, an increase of 43% over the previous year. Supply Change reports that, in total, more than 400 companies have made more than 700 pledges to reduce their impacts on forests and the rights of forest communities. The variety of deforestation-related commitments makes direct comparisons difficult. Commitments range from signing on to high-level pledges, such as those formulated in the NYDF, to individual targets on the production or sourcing of specific commodities. Very few companies commit to zero (gross) deforestation across their operations; most choose a step-wise approach that sets priorities and deadlines for individual commodities. The majority of the 629 companies assessed by Supply Change that source or produce palm oil (59%) and wood products (53%) have made commodity-specific commitments. For soy and cattle, the proportion of companies with commitments is considerably lower (21% and 12%, respectively). This is a matter of concern, considering that cattle have a deforestation footprint that is nine-times larger than the one associated with palm oil. The numbers correlate with the availability and use of certification as a tool to implement supply-chain pledges. Overall, more than 20% of global palm oil and 11% of timber is certified. Most of the companies that have announced commitments are manufacturers and retailers, nearly 90% of which are headquartered in Europe, North America, or Australia. Companies operating upstream in the supply chain (producers, processers, and traders) and those headquartered in Latin America, Africa, and Asia have been slower to act. This may be starting to change, however. More producer companies, particularly those involved in palm oil in Southeast Asia, are announcing their own pledges. These commitments are particularly important since large producers control a vast portion of the market share and have outsized impacts on land use and conversion. Meat processing companies headquartered in Brazil have also achieved progress in eliminating deforestation from their operations. Over 90% of the assessed companies source or produce in deforestation hotspots (Brazil, Indonesia, Malaysia, and Paraguay). Risk mitigation seems to be a major driver for companies to address deforestation in their supply chains.
The growing number of commitments to reduce impacts on people and forests represents important progress, but more focus is needed on action. Implementation requires translating announcements into practice, and an important first step is adopting commodity-specific, concrete policies and systems, like production standards, procurement rules, operational plans, and key performance metrics. Significant advancement has been reported on deforestation-related risk assessments, a dialogue with suppliers, and the revision of procurement rules. Once these policies are in place, monitoring progress and compliance is the next step for ensuring deforestation impacts are avoided. More work is needed on this step. Strategies on how a company can eliminate deforestation from its supply chains are difficult to compare, as they depend on the targeted commodity, geography, work with suppliers, and the position of a company in the supply chain. There has been a significant effort to implement supply-chain commitments, yet less than half of the assessed companies have time-bound actionable plans (Forest 500), robust monitoring systems are still rare, and only 45% of companies are reporting on compliance to deforestation policies (Supply-Change.org). Tracing commodities to the producer level remains challenging for many companies, and very few can report on the impact of their pledges on deforestation. In particular, soy and palm oil face barriers to traceability to the farm level (CDP). Encouraging new technological developments are expected to move the tracing of commodities further upstream to the level of production and will tie them to local forest impact. The majority of companies opt to limit procurement to certified products rather than defining company product standards. Supply-chain efforts are generally more advanced in commodities with widely recognized certification standards and integrated supply chains, which provide easy and accessible options toward sustainability. In line with our findings on commitments, progress toward increasing certified production and sourcing has been good for wood products and palm oil, but less so for soy and beef. NYDF endorsers and TFA 2020 member companies are more advanced—across all supply chains—in terms of adopting commitments and translating them into actions. Companies that are engaged in these initiatives show significant progress in adopting policies and systems to implement their commitments. Companies producing or sourcing from deforestation hotspots are more advanced in operationalizing their commitments (approximately 10–20% higher) than those with less exposure to these regions. This is encouraging, given their ability to directly and significantly affect deforestation.
Meeting the targets of the NYDF, including Goal 2, will require collective action. Unfortunately, limited improvements have been made to forest governance and public-sector support in recent years, though specific success stories may provide a model for future collaboration and partnerships. Despite increasing civil society pressure, Forest 500 reports that only one-third of 150 assessed financial institutions have deforestation-related commitments in place. The United Nations Environment Programme finds only a small percentage of institutions that monitor compliance with such commitments, and even fewer that offer financial instruments to support the implementation of sustainability measures in supply chains. Weak forest governance presents a major barrier to private-sector efforts. Countries have taken measures to reduce deforestation, and REDD+ has increased the political will to improve forest governance. Companies have, however, experienced little concrete improvement in forest governance and limited public-sector support. Nevertheless, the companies highlighted specific incidents of improved collaboration and listed an increasing number of successful public-private initiatives. A growing number of public-private initiatives support the elimination of deforestation at the supply chain or landscape level. Large-scale public programs backed by private-sector announcements for preferential sourcing from such program areas provide a chance for “produce-and-protect” partnerships. Sectoral agreements and moratoria as piloted in the Brazilian Amazon have also had a major impact on deforestation.
Finally, there are currently no available data that provide global coverage to determine whether cumulative company efforts are translating into measurable reductions in deforestation, though two tools are being refined and developed (Global Forest Watch-Commodities and Trase) that may help provide answers within the next couple of years.
The Assessment found that Alliance members consistently outperformed their peers in both their level of commitment across all commodities and at every step of the supply chain however for all companies assessed a step change in implementation efforts is necessary to meet the 2020 target.  Progress of TFA 2020 members was compared against all companies assessed by the respective datasets. Of the 21 TFA 2020 members with exposure to agricultural commodities and deforestation risks, the 2016 Supply Change data covers 19 and the 2016 CDP data covers 14 companies.
Most TFA 2020 companies have commodity-specific commitments towards eliminating deforestation within their supply chain. The share of TFA 2020 companies that have commitments is consistently higher than for the larger group of companies assessed (62-89% compared to 12-59%, depending on commodity). For soy and cattle, which account for a significant share of global deforestation, the difference between TFA 2020 companies and the larger group assessed is significantly higher. Figure 1. The higher share of companies with commodity-specific commitments in the TFA 2020 is remarkable considering also the higher prevalence of upstream companies in the TFA 2020 company set, a section of the value chain that has been slower to act. Figure 2.
TFA 2020 companies are consistently more advanced than the larger group of companies assessed and almost all have adopted standards for production or procurement of commodities. Interviews conducted for the NYDF Progress Assessment indicate that many supply chain efforts are however at an early or piloting stage, focused on specific geographies or supply chain segments. All TFA 2020 companies have conducted risk assessments and are significantly more advanced than the larger group of companies assessed. However only a small share of TFA 2020 companies (29-40% depending on commodity) considered risks beyond 6 years and more work remains to be done in assessing risks from a long-term perspective. The 14 TFA 2020 member companies in the sample also made significantly more progress in adopting standards to implement their commitments. With the exception of timber (75%), all producers, processors and traders (PPT) have adopted production standards, and all manufacturers and retailers (MR) have adopted procurement standards across commodities. For the larger group of companies assessed, CDP shows that the majority of upstream (53-69% depending on commodity) and downstream companies (62-87% depending on commodity) have adopted production or procurement standards. The difference between TFA 2020 members and other companies’ progress is particularly pronounced for the setting of production standards. Figure 3. Across commodities, almost all TFA 2020 manufacturing and retailing members, and most of the larger group of companies assessed report to work directly with their suppliers. When asked about their specific strategies to engage with suppliers, roughly half of TFA 2020 companies and less than one third of the larger group offer workshops and trainings to their suppliers (26-31% for all companies and 38-67% for TFA 2020 companies). Only a small share of companies implement joint projects with their suppliers (7-18% for all companies and 8-43% for TFA 2020 companies depending on commodity) or offer technical support for suppliers (2-9% for all companies and 0-14% for TFA 2020 companies depending on commodity). Figure 4. CDP data shows that all TFA 2020 production, processing and trading members who were assessed have their own traceability systems in place across the four commodities, compared to lower shares (75-91% depending on commodity) for all companies responding to the questionnaire. TFA 2020 manufacturers and retailers are only slightly more advanced than the larger group of companies, with a range of 80-86% compared to 66-78%. Figure 5.
Jurisdictional sustainability programs aim to reconcile competing social, economic, and environmental objectives at a scale that matches the administrative boundaries of sub-national or national governments. This jurisdictional approach to sustainable sourcing is a promising complement to TFA 2020’s existing focus on supply chains. The jurisdictions currently engaged in sustainable development programs have the potential to provide a material contribution to the sustainable sourcing goals of the Alliance’s corporate partners, with the added benefit of reducing the system leakage risk of supply chain approaches, where the impact of sustainable sourcing on the ground can be undermined by actors who are not part of the sustainable supply chain.
The 34 relevant jurisdictions identified in the research represent a significant share of the total global supply of key commodities of interest to TFA 2020 members. This is particularly true for soy, palm oil, and cocoa, where the full set of 34 jurisdictions represented repectively 41%, 34%, and 21%, of the total global production of key commodities from tropical regions in 2015 (Figure 1). Successful implementation of jursicitional sustainability program in these 34 jurisdition would be then comparable in scale to the success attained by the certification movement, and could represent a material increase in the global supply of sustainable commodities. Figure 1.
In the 34 jurisdictions, over 40% have begun implementing their sustainable development plans (Figure 2). Assessing the precise status of the land use sector’s sustainable development plans in each jurisdiction is a difficult task. However, three stages linked to milestones have been identified:
Approximately 88% of these jurisdictions have two or more TFA 2020 partners active in the region. Interviews with TFA 2020 partners identified both their willingness to explore collaborating with other partners, and the alliance’s potential interest to help bring them together to help accelerate implementation of these approaches. The review of past jurisdictional approaches has identified several preconditions for successful sustainable development. Each of the jurisdictions studied requires additional support to ensure these preconditions are in place. Specifically, the support would consist of:
While many jurisdictional programs are developing, and finalizing plans, there are some emerging lessons. Based on a review of past academic literature and a series of expert interviews, 10 key lessons emerged.
Based on the TFA 2020’s capabilities and experience, several potential opportunities for collaboration emerge to support jurisdictional sustainable development
The sustainable sourcing roadmaps could also help identify gaps in the jurisdictional approach and provide opportunities for TFA 2020 partners to collaborate and/or support filling the gaps. Training for smallholder farmers on sustainable techniques and community engagement could be particularly interesting initiatives for further exploration and collaboration, given the large number of similar initiatives within jurisdictions. Alliance members could also help others understand the investments required to support the transition to sustainable sourcing, and the barriers limiting such investments (including risks that inflate the hurdle rate). The analysis of jurisdictions indicated that estimates of investment requirements varied significantly, in both their amount and components. The TFA 2020 could help formulate a rigorous, consistent and replicable methodology for quantifying requirements and the potential returns needed for sustainable practices across jurisdictions. This would improve confidence among investors and provide them with clarity. The Alliance could also support the development of a business case, and “match make” jurisdictions with potential investors. Such an approach could integrate effectively with other initiatives in this space, such as the Jurisdictional Partnerships for Forests, Climate, and Agriculture of the Governors’ Climate and Forests Fund. The Fund’s programme aims to support investment in public-private partnerships to reduce deforestation associated with producing commodities.
Size: 91 million hectares
Forest area: 54 million hectares
Population: 3.2 million
Economy: Dependent on agriculture – accounting for 48% of GDP; the state is the largest cattle and soybean producer in Brazil
Jurisdictional boundary: A state (1 administrative level below the national level – Brazil has 26 states); it covers 53% of Brazil’s Amazon region
Mato Grosso provides special insight for developing a sustainable approach, which includes cattle intensification, zero-deforestation production and the restoration of degraded land, in a jurisdiction deeply entrenched in global supply chains. The state’s Produce, Conserve and Include (PCI) strategy, presented at the 2015 United Nations Climate Change Conference (COP21), illustrates how economic and production goals can be aligned with those for conservation and social inclusion.
Mato Grosso has made substantial commitments to fight deforestation and develop sustainable supply chains. While some programmes have operated over several years, the recently introduced PCI strategy will better articulate production and conservation goals, and improve the coordination of these programmes:
PCI strategy. Mato Grosso’s governor presented the PCI strategy at COP21 in December 2015. The strategy represents a set of goals to increase agricultural and livestock productivity while committing to reducing deforestation by 90% in forests and 95% in the cerrado (tropical savannah) (Figure 1). Through this approach, projections show that the state can potentially reduce emissions by 6 GTCO2e by 2030. Government agencies and a broad coalition of organizations from the private sector and civil society helped to develop the PCI strategy. Figure 1.
Degradation. Forest degradation is a reduction of tree biomass density due to human or natural causes, such as logging and fire. Degraded land is more prone to ignition and fire damage because of its significantly lower level of moisture and higher amount of combustible materials. Land degradation remains a pressing issue in Mato Grosso. In fact, in 2010 alone, over 1.4 million hectares of land was degraded, which was 16 times the area deforested in the same year. Ranching and the development of logistics infrastructure for the agriculture and livestock sector have largely driven land degradation.
A sustainable development approach could deliver significant benefits to global supply chains, as well as economic, environmental and social outcomes in Mato Grosso (Figure 2): Figure 2.
Sustainable approaches would significantly improve inputs for cattle and soy production in Mato Grosso by 2030: Soy. According to estimates, a sustainable approach to soy production, which includes intensive agricultural practices and efficient use of water, could nearly double output to 53 million tons per year by 2030. This 20% increase in production from a business-as-usual (BAU) approach (Figure 3) could further boost Mato Grosso’s share of global soy supply from today’s 9% to approximately 16% by 2030. Aside from increasing yields, sustainable soy production would help rehabilitate 3 million hectares of degraded pastures. Figure 3. Cattle. As human diets globally become more protein-heavy, demand for cattle production will grow. By properly applying cattle intensification and other green technologies, Mato Grosso could increase its cattle population to approximately 43 million heads in 2030 while producing 67% more meat. Cattle intensification would also prevent the further deforestation of 3 million hectares of degraded pastures. Figure 4.
Mato Grosso’s PCI strategy aims to reduce net carbon emissions by 6 GTCO2e in 2030. Some of the major sustainable environmental benefits identified in Mato Grosso include:
Sustainable approaches and economic growth are intertwined in Mato Grosso. The soy moratorium established in 2006 prevents the proliferation of unsustainably sourced soy. Aside from access to markets, sustainable practices can provide the state’s farmers and ranchers with access to finance. Several funds are being created for this purpose: Brazil’s ABC Program (Low-Carbon Agriculture), led by the State Agriculture Secretariat, and the Amazon Fund provide credit for farmers to recover degraded pastures and improve productivity. Similarly, the IDH and NICFI are working to structure a de-risking fund that combines commercial capital with financing from donors and investors. The fund will support the development of cattle intensification and reforestation practices, which a farmer may deem too financially risky to undertake. Moreover, plans exist to develop a federal-level CAR, which would aggregate the registries of all Brazilian states. Such a system at the federal level would reduce information asymmetry over land size and ownership; this would improve lender confidence as well as opportunities for farmers to get subsidized rural credit from banks.
Sustainable production could increase smallholder access to markets and income. For example, IDH’s soy programme provides technical assistance to support the certification of smallholders according to the Roundtable on Responsible Soy (RTRS) principles. RTRS certification allows farmers to sell their products to international markets and reap a higher profit from their harvest. This is in line with the state’s PCI strategy that aims to improve productivity for 104,000 smallholders.
The state has made significant strides to develop a sustainable jurisdiction. However, several areas require additional support including municipalities in its sustainable municipalities programme, funding for reforestation and conservation, among others –. This support would need to consist of:
Strategic planning. Mato Grosso’s PCI strategy has a well-represented committee to realize the strategy’s goals. The committee includes the PCI secretariat’s executive director and representatives from relevant government agencies for each of the strategy’s parts: Produce – the Economic Development Secretariat (Sedec); Conserve – the Environment Secretariat (Sema); and Include – the Secretariat for Family Agriculture and Land Affairs (Seaf) as well as the Secretariat for Labour and Social Assistance (Setas). These stakeholders, along with those from the private sector and civil society, are involved in developing a PCI secretariat that will monitor and coordinate the state’s activities. Similarly, and to support the programme, the state’s PMS has a management committee, an executive committee and five working groups (land tenure, financial resource, productive sustainable chain, target plan, and training and learning). Measuring, reporting and verification systems. The state is working with several organizations to improve forest control systems, which include the Integrated System for Environmental Licensing and Monitoring, the System for Commercialization and Transportation of Forest Products, and the System for Monitoring Timber Harvesting. Imazon, a non-profit research institution that promotes sustainable development in the Amazon region through studies, public-policy formulation and capacity building, has been helping the state with spatial planning since 2008. The Governors’ Climate and Forests Fund (GCFF) also works with the state’s Secretary of Environment to develop a forest monitoring and carbon measurement platform at the state level. Together with the EII and the state government, the GCF is in the early stages of creating a set of metrics to measure jurisdictional performance on sustainable production for certain commodities; plans are to apply this metric to all GCF member jurisdictions globally. Focus and prioritization. The state’s PCI strategy recently concluded a 2017 action plan, in which the government will work with McKinsey & Company to design a robust monitoring system for the strategy, develop an institution with public and private capital to attract financial resources, structure the strategy’s governance system and create business models to support investment in supply chains. While progress on the PCI strategy remains on track, experts interviewed noted that the state’s PMS had yet to develop clearly defined roadmaps and activities. Alternative livelihood plans. The PCI strategy focuses on engaging, recognizing and rewarding smallholders as they transition from deforestation activities to sustainable agricultural and livestock practices. To this end, the strategy includes projects to increase access to finance and technical assistance for marginalized groups. However, the planning for the strategy is in an early stage, and any alternative livelihood strategies will not show effects until much later.
Size: 124.8 million hectares
Forest area: 88 million hectares
Population: 8.2 million
Economy: Dependent on the service industry and manufacturing – accounting for 56% and 36% of GDP, respectively; agriculture, particularly cattle ranching, accounts for 8% of GDP
Jurisdictional boundary: A state (1 administrative level below the national level – Brazil has 26 states); it covers 25% of Brazil’s Amazon region
Pará has developed a sustainable jurisdictional approach, without specific legislation for climate change or mechanisms (e.g. REDD+) to reduce emissions. The state relies on its voluntary Green Municipalities Programme (PMV), which is rooted in specific legislation, and the State Plan of Prevention, Control and Alternatives to Deforestation to promote sustainable practices, particularly cattle intensification, zero-deforestation production and restoration of degraded land. Many other jurisdictional programmes begin from an environmental agenda and struggle to transition into the government’s mainstream agenda. Pará can provide insights on how conservation and environmental goals can be compatible and incorporated with an economic plan – in this case, Pará 2030. The plan seeks to spur economic growth and social development by developing the state’s agriculture and cattle sector, and improving transport and technology infrastructure while achieving net zero deforestation.
While district-level programmes have been running in Pará since 2004, a state-wide jurisdictional approach (Pará 2030), which includes all municipalities, has only recently been implemented.
Deforestation. Deforestation remains a pressing issue in Pará. Together with Mato Grosso, the two states accounted for almost half the loss of global tropical forest from 2000 to 2005. More recently, deforestation increased by 60% between 2014 and 2016, according to the Brazilian Institute for Space Research. The two main drivers of deforestation in Pará are:
Degradation. Forest degradation is a reduction of tree biomass density due to human or natural causes, such as logging, fire, windthrows (i.e. trees uprooted or broken by wind) and other events. Degraded land is more prone to ignition and fire damage because of its significantly higher levels of combustible material in the soil. Forest degradation is rampant in Pará, but has been insufficiently examined. A recent study by the Woods Hole Research Center and the Carnegie Institute found that forest degradation in Pará is on the same scale as deforestation. Recent estimates suggest that Pará’s degraded land has resulted in a loss of biodiversity equivalent to clearing 9.2 million-11.4 million hectares of primary forest. A range of factors causes degradation in the state, including unsustainable livestock practices, illegal mining, non-sustainable logging techniques and road construction.
A sustainable development approach could deliver significant benefits to global supply chains, as well as economic, environmental and social outcomes in Pará (Figure 1): Figure 1.
Sustainable practices in Pará could increase cattle production and allow the state to further participate in global cattle supply chains. Pará 2030 includes plans to improve cattle production by practising cattle intensification for 50-70% of cattle lands. It is estimated that Pará could exceed its 2030 goal of 26 million heads of cattle (Figure 2) through proper application of cattle intensification and other technologies (improving feed and smart supplements). Aside from increasing cattle stocks, sustainable cattle production could prevent the deforestation of 1.1 million hectares. Figure 2.
Sustainable approaches in cattle management could reduce carbon emissions by approximately 1 GTCO2e between 2016 and 2028, accounting for nearly 30% of Brazil’s total annual abatement opportunity by 2030. Some of the major sustainable development opportunities identified in Pará include:
Like Mato Grosso, sustainable approaches and economic growth are intertwined in Pará. Since 2009, major retail chains such as Walmart, Carrefour and Pão de Açúcar have committed to not buying products obtained through illegal deforestation. Additionally, three of Brazil’s largest meatpackers (JBS, Marfrig and Minerva) have a moratorium that commits them to buy cattle only from environmentally compliant suppliers (with different levels of compliance for direct versus indirect suppliers). Aside from access to markets and profit margins, sustainable practices unlock access to finance for the state’s farmers and ranchers. The PMV supports green-financing systems, such as Brazil’s ABC Program (Low-Carbon Agriculture) led by the State Agriculture Secretariat, and the Amazon Fund. The latter is the first risk capital fund in the Amazon region (worth BRL 20 million [Brazilian real], or $6 million) to develop action for a green economy in Pará. The programme provides loans to recover degraded pastures and improve productivity. A sustainable approach has already proven to be financially lucrative for some municipalities. For example, estimates for São Félix do Xingu show that investing in intensification could more than triple productivity, with real returns on investment of 10-15% over 12 years. It could also increase profit per hectare six fold, from the business-as-usual practice of $39 per hectare to $252 per hectare.
A sustainable development approach would also create significant broad-based benefits for Pará’s population. The state’s smallholder cattle ranchers account for about 7% of its total cattle land. As such, they would not be the main beneficiaries of cattle intensification. However, Pará 2030 includes a plan to expand soy production by up to 3 million hectares by 2030. According to estimates, soy production could increase by 19% annually from 2013 to 2017, and the industry could create more than 18,000 jobs.
Pará has overcome several challenges common to jurisdictional approaches. However, gaps in alternative livelihood plans, financial resourcing and land tenure require additional examination and support, which consist of:
Size: 9.9 million hectares
Forest area: 6.3 million hectares
Population: 3.5 million
Economy: Dependent on the service industry and agriculture sector – accounting for 47% and 40% of GDP, respectively; rubber and palm oil production are primary drivers of agriculture GDP
Jurisdictional boundary: National level
Liberia provides insights on developing and implementing a sustainable jurisdiction-wide approach at the national level. It promotes sustainable palm oil production, a rigorous Free, Prior and Informed Consent (FPIC) approach and alternative livelihoods for forest communities. Despite having experienced a 14-year civil war, Liberia’s drive to conserve the environment has made significant progress since it began in 2008. However, the outbreak of Ebola, coupled with weak government capacity, slowed down implementation. The country conducted its first democratic elections in 2005; the young government requires external assistance in the form of human capital, resources and infrastructure to support its implementation plans. A significant proportion of the country’s emissions reduction and sustainable supply chain programmes are funded by Norway’s International Climate and Forest Initiative (NICFI). In addition, Liberia is a Tropical Forest Alliance 2020 (TFA 2020) member and part of TFA 2020’s Africa Palm Oil Initiative (APOI). The country’s “lighthouse” approach could be replicated in other APOI member countries.
The rate of deforestation remained low during the civil war but has since increased at an alarming rate; the deforestation rate in Liberia jumped by 121% between 2001-2009 and 2010-2014 from X ha/yr to Y ha/yr (if you have it). Between 2000 and 2014, over 500,000 hectares (20% of the country’s tree cover) was lost to deforestation activities.
A sustainable development approach could deliver significant benefits to global supply chains, as well as economic, environmental and social outcomes in Liberia (Figure 1): Figure 1.
While oil palm is indigenous to West Africa, Liberia is one of several pioneer countries on the continent to cultivate it on a large scale using concessions. The production of sustainable palm oil could significantly contribute to the global demand for palm oil, which has been increasing 6% per year on average since 2000. Current yields in Liberia are exceptionally low by global standards. Yields average 2-3 tons of oil palm fruit per hectare (versus a potential of 6-8 tons of oil palm fruit per hectare). The EPO, Sime Darby and GVL have experience cultivating and producing palm oil and are also members of the RSPO. Cultivating sustainable palm oil, according to these principles, while employing improved agricultural techniques (e.g. nurseries, high-yielding seeds, fertilizer) could significantly increase palm oil production while preventing deforestation.
In 2014, the Liberian and Norwegian governments signed a bilateral agreement aimed at protecting the forests by developing zero-deforestation agriculture and agreeing to place 30% of forest estates under protected area status by 2020. Adopting sustainable approaches to palm oil and rubber production and logging would support this endeavour (e.g. committing to zero-deforestation and not cultivating near sensitive areas and water sources).
The development of a sustainable palm oil industry could significantly benefit the economy. In terms of investment, the EPO, Sime Darby and GVL will contribute $6 billion in foreign direct investment to cultivate estates and establish operations. Improvements to palm oil cultivation and production would boost the country’s export of palm oil – potentially making it one of the country’s largest export commodities. This will also help Liberia to diversify away from iron and rubber production at a crucial time, as both commodities have experienced sharp price declines (59% and 38%, respectively) since 2013.
Promoting sustainable palm oil and rubber could confer direct benefits to Liberians. Plans by Sime Darby and GVL include developing over 84,000 hectares of oil palm in collaboration with smallholders as part of an outgrower scheme. Outgrowers will have access to extension services and inputs that could increase their productivity. The production of palm oil also contributes to significant job creation; between 2008 and 2010, approximately 80,000 new jobs were created by the industry. Further expansion could create additional employment opportunities for Liberians. Employment by concessionaires would support poverty alleviation, as salaries in plantations are higher than those for other agricultural activities. For example, the plantation operated by Sime Darby pays its workers $5.57 daily. The salary accrued in a year would be nearly three times higher than Liberia’s GDP per capita between 2013 and 2015.
Liberia has made significant progress since its civil war and the Ebola crisis. However, legislative and governance issues remain potential challenges to implementing a sustainable jurisdiction-wide approach in the country.
Governance issue. Inter-sectoral coordination and policy implementation, especially at the subnational level, remain challenging. In a World Bank workshop in 2013, key state government officials identified the need to improve coordination at the senior level (e.g. ministers, directors) to ensure that policies are consistent, and at the technical level to share information and ideas between teams working on similar issues. Moreover, officials from the justice and environmental departments require additional training in enforcing sanctions for forest offenses, raising awareness of what constitutes forest crimes and developing clear land boundaries.Back to Case Studies
Size: 7.4 million hectares
Forest area: 4.4 million hectares
Population: 3.8 million
Economy: Dependent on the service industry (particularly tourism) and agriculture – accounting for 40% and 30% of GDP, respectively; the state produces 10% of the world’s crude palm oil
Jurisdictional boundary: A state (1 administrative level below the national level – Malaysia has 13 states)
Sabah’s jurisdiction-wide certification of palm oil represents a pre-emptive step to meet global demand for sustainable palm oil. By committing to a sustainable approach to developing its palm oil and forestry sector, Sabah intends to develop clean waterways, limit deforestation, reduce land degradation and support alternative livelihoods for forest communities. Sabah has the potential to become a beacon for sustainable development for other parts of Borneo and other tropical areas undergoing similar development processes.
Sabah’s sustainable jurisdictional approach is already being implemented. Since the late-1990s, the state has made substantial commitments to fight deforestation and develop sustainable supply chains.
Deforestation. Between 2001 and 2013, over 980,000 hectares of Sabah’s territory was affected by land use change brought about by deforestation, logging in reserves and the rotation of palm oil crops in commercial plantations.
Degradation. Forest degradation is a reduction in tree biomass density from human or natural causes such as logging, fires, windthrows and other events. Degraded land is more prone to ignition and fire damage as it has significantly lower levels of moisture content and a higher amount of combustible materials. An academic study found that nearly 2.3 million hectares of land have been degraded in Sabah. Land degradation is caused (in part) by companies that clear forests for palm oil cultivation but subsequently fail to grow oil palms there. This leads to land that is vulnerable to soil erosion during heavy rains.
A sustainable development approach could deliver significant benefits to global supply chains, as well as economic, environmental and social outcomes in Sabah (Figure1):
Global supply chain benefits Sustainable approaches could deliver significant benefits for palm oil production in Sabah by 2030:
The major sustainable environmental benefits identified in Sabah include:
Sustainable approaches and economic growth are intertwined in the state of Sabah. The Sabah Development Corridor is intended to boost ecotourism as well as agriculture. Sabah’s green environment is a major tourism asset, attracting more ecotourists than any other part of South-East Asia. The tourism sector contributed MYR 5.42 billion to the Sabah economy in 2013, equalling 10-15% of the state’s GDP. Tourism is expected to double by 2020 from 2010 levels. The Sabah State Government has also decided to prioritize sustainable forest management practices. An economic impact analysis was conducted based on four scenarios arising from these practices: a 24% reduction in harvested area; a 49% increase in the external cost of timber harvesting; a 47% increase in the cost of internalizing the externalities; and a 20% gain in market access. The results showed that while the equilibrium quantity of timber had decreased, this welfare loss on the timber industry was offset by price gains and improved market access.
The jurisdiction-wide certification plan calls for working with other commercial farmers to improve certification for smallholders. At present, the government is piloting a project to certify and improve alternative livelihoods for smallholders. The pilot is being carried out in Telupid, Tongod, Beluran and Kinabatangan districts and will provide access to good planting material and fertilizers. It is expected to be completed by 2017 and plans are already being made to scale it to the entire state. The RSPO estimates that sustainable practices will increase smallholder productivity by up to 85%. Certification could also provide broad-based benefits, such as increased access to international markets.
Sabah’s jurisdictional approach appears well placed to meet most of the challenges commonly encountered by other jurisdictions:
Size: 13 million hectares
Forest area: 8.5 million hectares
Population: 3.4 million
Economy: Dependent on the coal mining and the oil and gas industry; agriculture and logging account for 6% of GDP
Jurisdictional boundary: A province located on the island of Borneo between Central and North Kalimantan (1 administrative level below the national level – Indonesia has 34 provinces)
East Kalimantan provides insights on how a jurisdiction can operate at multiple scales in parallel – simultaneously driving district-level programmes with an overall province-wide stratagem. East Kalimantan’s jurisdictional approach also demonstrates the effectiveness of sustainable methods, which include “land swaps” (i.e. reallocating production to already degraded or deforested land as opposed to forests), sustainable palm oil certification and community engagement; only approximately 20% of all allocated land has been operationalized for oil palm plantations.
East Kalimantan is in the process of finalizing its jurisdictional plans. Its government passed legislation to reduce carbon emissions from forest loss and land degradation by 15.6% from 2012 to 2020. In June 2016, East Kalimantan’s Emission Reduction Project Idea Note to reduce emissions was accepted by the Forest Carbon Partnership Facility (FCPF) Carbon Fund.
Data from the Ministry of Forestry and Environment show that from 1990 to 2014, the province lost 1.6 million hectares, or 20%, of its total forested area. Several factors can be attributed to this forest loss, including legal and illegal natural forest logging, planned industrial-scale palm and forestry plantation expansion, mining development, small-scale community-driven forest conversion, and widespread fires linked to El Niño events.
A sustainable development approach could deliver significant benefits to global supply chains, as well as economic, environmental and social outcomes in East Kalimantan (Figure 1): Figure 1.
A sustainable development approach in East Kalimantan could deliver substantial benefits to global supply chains; by 2030, oil palm production could increase by 24% from a “business-as-usual” (BAU) approach (Figure 2). This could be achieved by smallholders’ yield improvements (by up to 59% above BAU) and by yield improvements of large-scale farmers (by up to 20% above BAU), based on international evidence. The potential in Indonesia (and East Kalimantan) could be even higher. For example, McKinsey Global Institute estimates that smallholder yields in Indonesia could potentially increase by more than 90% by 2030, or at a rate of about 3% per year. The development of sustainable palm oil could also be coupled with reduced deforestation by shifting pre-allocated oil palm concessions to existing degraded land. Academic evidence suggests that this shift to degraded land could have short-term productivity costs, but that over the longer term (5-10 years), yields are likely to increase and could come close to or reach conventional tillage yields (before further productivity gains are achieved through such mechanisms as farmer training programmes). In total, oil palm production could increase from eight million metric tons in 2013 to over 119 million metric tons by 2030. The increase from using sustainable practices, coupled with the expansion of palm oil concessions, could help develop East Kalimantan into one of Indonesia’s leading palm oil producing provinces.
The potential to demonstrate tangible environmental benefits is high (as highlighted above). By 2030, the province could reduce its emissions by an estimated 197 MTCO2e. Yield improvements in isolation are unlikely to cause a decrease in plantation expansion; in fact, they could encourage expansion as palm oil becomes even more profitable. Therefore, yield improvements must be made in conjunction with strictly planned land use for palm oil, set targets on production and unplanted lands, strengthened protection efforts in conservation and protected forests and, potentially, REDD payments to protect forests that would otherwise be needed for palm oil expansion. The major sustainable development opportunities identified in East Kalimantan include:
On the economic front, the province’s Vision 2030 East Kalimantan strategy intends to reduce its reliance on mining and oil and gas to 17% of GDP (from 48% today), while increasing the agricultural contribution to GDP to 10% (from 4% today), and industrial processing and manufacturing to 42% (from 23% currently). This is borne out of economic necessity given the low current oil prices. Developing the agricultural sector would further benefit farmers and farm workers, who form the bulk of the workforce in the province. Results-based financing will provide an additional incentive to shift away from BAU practices. The potential for economic development could be significant, for both the province’s GDP and employment. For example, a sustainable development pathway was estimated to be able to increase average (real per capita) incomes in neighbouring Central Kalimantan in 2030 by around 13-17% above a BAU approach.
A sustainable development approach could also create significant broad-based benefits for the people of East Kalimantan. For example, enhancing land tenure and improving smallholder productivity could improve the overall yield of smallholders by around 59% by 2030. Developing the agricultural sector would also reduce rural poverty. An academic study shows that agricultural GDP growth in Indonesia is correlated to reduced overall rural poverty rates. In the case of East Kalimantan, adopting sustainable approaches can support the reduction of rural poverty rates by approximately 28% by 2030 – if the province realizes its goal of increasing agricultural contribution to GDP from 4% to 10% growth.
East Kalimantan has set out an ambitious goal to reduce carbon emissions. Although the jurisdiction has made significant strides to develop and implement initiatives to support this endeavour, several technical and capacity gaps require additional public, private and civil society support:
The assessment of progress on Goal 2 of the New York Declaration of Forests points towards the urgent need to sustain and accelerate momentum if the 2020 goal is to be met.
This is why TFA 2020 begun a process of stakeholder consultations to identify a set of priority strategies and actions to pursue over the next three years. While this list is still emerging, it forms the basis of the discussion at our upcoming General Assembly.
With more than 20% of palm oil being certified, certification has reached a certain momentum, which should not be discouraged. Full certification is a goal that is easy to communicate and allows relevant stakeholders to rally behind. It is essential however that the push for certification goes along with efforts to improve the credibility of the standard and provide incentives to smallholders and other producers that fail to see the benefits of engagement. Jurisdictional or landscape certification can help to include smallholders where certification requirements are backed with financial support and sustainable intensification.
Smallholders make up 40% of global palm oil production land but only produce approximately 30% of global crude palm oil. There are both economic and conservation benefits to closing the productivity gap for smallholders and underperforming plantations. The prospect of increasing yields can motivate farmers to participate in sustainability schemes. Intensification also helps to align climate and development goals by reducing the demand for forested lands while increasing smallholder farmer incomes.
Intensification and other sustainability programs (including payments for ecosystem services (PES) for conservation) could become beneficiaries of climate finance where governments include such programs into their climate strategies. They can become a tool to achieve targets set out in Nationally Determined Contributions. Backed by transactions negotiated in the context of Article 6 Paris Agreement, palm oil programs could benefit from cooperative approaches and partnerships between forest and donor countries.
Brazilian States have developed a number of very promising jurisdictional initiatives that are among the most advanced internationally. Counting on comparatively strong legal frameworks, integrated supply chains, an active civil society, and successfully piloted sustainable production methods, supporting Brazilian States in their efforts has the potential to effectively reduce deforestation while showcasing to the world how different governance and implementation elements could complement each other in the context of jurisdictional programs.
Moderate intensification based on improved pasture and herd management, holds significant potential to reduce the land footprint of cattle while increasing productivity. Pilots have successfully been tested in Brazil and are ready to be scaled up. Interventions that include conservation, restoration, and alternative economic use as part of intensification programs have been successfully piloted over the last years and hold great potential for more efficient use of land.
Public-private collaborative efforts, such as the G4 Cattle Agreement have helped to increase transparency in the beef supply chain, but do not go far enough. They would have to be expanded to allow full traceability of animals throughout their lifetime. While the Brazilian reporting and verification efforts need to be deepened, the approach based on company agreements could provide a model for other countries.
The implementation of the Forest Code and limitation to legally produced commodities is an essential first step towards elimination of deforestation from agricultural production. Additional measures such as certification, moratoria and private standards can build on legal compliance and ensure that deforestation is effectively eliminated from agricultural production by 2020.
In combination with an accelerated completion and validation of the information registered in the CAR, a number of other measures could be facilitated and/or implemented to create incentives for further participation of the private sector, including (i) making use climate finance in the context of Article 6 of the Paris Agreement and results-based payments for REDD+ in the Cerrado; (ii) further engaging with jurisdictional approaches as a laboratory for federal action and to stimulate the emergence of public-private platforms for multi-level stakeholder participation; (iii) further assess the potential and assist in the development of a balanced and well regulated market for environmental reserve quotas (“CRAs”) in the Cerrado; and (iv) when possible, adjust and gradually extend the Soy Moratorium to the Cerrado biome.
To effectively address deforestation, existing legal frameworks need to be implemented and enforced. National and local governments have to play a central role in the reduction of commodity-driven deforestation. Lack of law enforcement and corruption indirectly drive deforestation. Whether the Forest Code in Brazil or anti-fire regulations and policies in Indonesia, the implementation of existing laws should take priority across commodities.
Problems related to the traceability of deforestation through complex supply chains have been identified as a major challenge in the palm oil, soy, and beef supply chains. In all three cases it has proven difficult to trace the provenance of a commodity to the producer level. Whether information ends at the mill (palm oil), intermediaries and traders (soy), or the last direct supplier (beef), more needs to be done to increase the transparency within supply chains. Supply chain information informs companies at the processing and retail level to understand where and through which actions their supply chains are linked to deforestation.
Initiatives at jurisdictional scale provide a tool across supply chains to consolidate various sustainability efforts, create a platform for public-private partnerships, and allow monitoring and supply chain management at scale. Cooperation at the jurisdictional level enables embedding of private sector commodity commitments within government programs at the jurisdictional scale that strengthen governance and land planning activities. Such programs can be linked with results-based payments for REDD+ and jurisdictional approaches to certification. Jurisdictional approaches also present opportunities to address displacement of activities (leakage) and replacement of commodities as deforestation drivers.
It is important that essential information on forest loss is communicated quickly to decision makers. Based on this information, public and private stakeholders should collectively decide on measures to be taken to address local deforestation. They should develop annual action plans that would allocate these measures to actors most able to undertake them. The result would be a cooperative partnership at the local level that is able to react quickly to changes in deforestation patterns.
Demand-side measures from importing country governments support sustainable supply chains. Policy and legal action from importing countries include the elimination of illegality from imports, adoption of procurement standards, promotion of transparency and disclosure requirement, leveraging and mainstreaming existing commitments and actions by leading industry players.
Redirecting finance to sustainable production presents one of the greatest opportunities to facilitate the transformational change required to eliminate deforestation from agricultural supply chains. This includes both the divestment from companies producing unsustainably, as well as the more proactive investment in sustainable land use businesses. Presently, progress in mainstreaming sustainable production is significantly hindered by the risk and inferiority of returns compared to conventional production.
This report and the work of Tropical Forest Alliance 2020 is funded with The Dutch Ministry for Foreign Trade and Development Cooperation.
This report and the work of Tropical Forest Alliance 2020 is funded by Norwegian Ministry of the Environment from the Norwegian government.
This report and the work of Tropical Forest Alliance 2020 is funded with UK aid from the UK government (DFID).
The World Economic Forum supports the Tropical Forest Alliance 2020 by leveraging its networks, platforms, and expertise an international organisation for public-private cooperation. The TFA 2020 secretariat is also hosted at the Forum’s headquarters in Geneva, Switzerland.
To view all the footnotes attributed to the TFA 2020 Annual Report, please click the link below.