World's biggest companies lay out path toward zero-deforestation commodities

June 28, 2013

With a backdrop of fires raging across oil palm and timber plantations in Sumatra, business and political leaders convened in Indonesia to discuss a path forward for producing deforestation-free commodities by 2020.

The gathering in Jakarta was the first meeting of the Tropical Forest Alliance 2020, a public-private push to implement the zero deforestation target proposed by the Consumer Goods Forum — a network of 400 of the world's largest companies whose combined revenues exceed US$3 trillion a year — in 2010. The TFA is initially targeting four commodities — palm oil, paper, soy and beef — that account for more than half of tropical deforestation. Accordingly, the workshop was attended by several major Indonesian commodity producers — Golden Agri Resources, Wilmar, IOI, Musim Mas, Asia Pulp & Paper (APP) and APRIL — as well as major palm oil and pulp and paper buyers in the form of consumer-products giants Unilever, Nestle, Kraft, Mondelez, J&J, Lion, Aeon and Kimberly-Clark.

Officials from the governments of Indonesia and United States also participated.

“I am fully aware that profit is the driver of every business. Yet, I also believe that while making profits, companies could avoid encroachment of natural tropical forests,” said Indonesian President Susilo Bambang Yudhoyono in his address at the event. “While striving for growth is our priority, I have also given particular emphasis on the protection of the environment. I balance the pro-growth strategy with the pro-environment strategy. This is the essence of sustainable development. And it is the development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.”

An excavator creates a canal in Riau Province, Indonesia, despite the heavy smoke caused by the forest fires. © Ulet Ifansasti / Greenpeace

Several participants cited the daunting challenge of protecting forests while simultaneously increasing food production. But Paul Polman, CEO of Unilever, expressed optimism that the 2020 target can be met, citing his company's own targets for palm oil sourcing as an example.

"In 2012 we purchased 100% of all palm oil from certified sustainable sources, three years ahead of our 2015 commitment," he said. "By 2020 our all of our palm oil will not just be certified sustainable but it will be traceable back to the plantation on which it was grown."

Unilever is investing $130 million in a palm kernel oil processing facility in Sumatra to provide fully segregated and traceable palm oil to ensure production isn't driving deforestation.

"Traceability is more and more important to our consumers," he added. "We need to ensure that as the palm oil sector expands, out of South East Asia, into Africa and Latin America the expansion is genuinely sustainable and that we do not repeat there some of the mistakes which have been made elsewhere."

The World Resources Institute (WRI), an NGO that participated in the talks, highlighted three areas where the TFA process can advance zero deforestation in commodity supply chains: better utilization of some hundreds of millions of degraded land worldwide; improved forest monitoring; and adoption of certification mechanisms and legal requirements for production. These mechanisms include legal compliance frameworks like Indonesia’s Sistem Verifikasi Legalitas Kayu (SVLK) for timber and the Lacey Act as well as commodity roundtables and certification schemes, like the RSPO for palm oil, FSC for timber, and RTRS for soy, according to the group.

fate of forest lands deforested between 2007 and 2012 in Riau province in Sumatra
Fate of deforested lands in Riau, 2007-2012. Fires in Riau are driving the haze over Singapore and Malaysia.

Yet while the objectives of the TFA could cause a dramatic shift in how commodities are produced, there remain points of concerns for some environmentalists. For one, many of the companies in attendance have a long record of clearing forests for commodities, making them unlikely but important allies in a shift toward less damaging production. Working with these companies will be difficult for some green groups to swallow. Furthermore, the initiative is strictly voluntary, aiming to establish best practices, rather than push governments for new regulations. According to organizers, TFA will not "regulate purchases or supply chains", "create or endorse specific certification standards or verification services", "create any legally binding obligations", or "seek to create new/additional definitions for deforestation or sustainability". Therefore weak standards or poor law enforcement could still thwart TFA's objective of achieving zero deforestation. Greenpeace highlighted this concern while the meeting was underway.

"The CGF’s action plan on palm oil is about promoting the RSPO, but this so-called sustainability organization still allows its members to clear rainforest and has failed to ban the clearance and drainage of peatland," said Greenpeace's Bustar Maitar, noting that several RSPO members have been linked to the fires blazing in Sumatra. "Rather than giving dirty palm oil producers a green badge, it’s time for the RSPO to implement a complete ban on deforestation and peatland development."

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World's biggest companies lay out path toward zero-deforestation commodities.