How Credible are Deforestation-Free Commitments? 7 Red Flags to Watch For
- Date: 29 October 2024
- Author: Emily Moberg, WWF
Deforestation is a major contributor to climate change, and 90% of ongoing deforestation is caused by clearing land to graze cattle and grow crops. But progress on deforestation- and conversion-free (DCF) supply chains remains slow and commodity-driven ecosystem loss continues at high rates. Many companies are failing to meet the urgency of the moment and have failed to even set sustainability targets.
Because the agricultural commodity trade is dominated by a small number of companies globally, actions by companies that produce, trade, and source agricultural commodities are a crucial lever to help solve the problem. But defining what “good” targets and progress look like can be complicated. This complexity can make it difficult for a company’s stakeholders – including buyers, investors, and policymakers – to tell whether new corporate commitments are a step forward or a step backward.
To help identify commitments with potentially fatal flaws, we have drawn guidance from the Accountability Framework initiative, as well as WWF’s own recommendations, to codify several key elements of a DCF commitment. If any of the following elements are found in corporate DCF commitments, they render the entire commitment suspect at best and, at worst, counterproductive. Consider these elements red flags: If you see a commitment with any of these flaws, its credibility is in question.
1. Future cut-off date
A cut-off date in the future (that is, later than the date of the commitment’s issuance) means that farmers and landowners can continue to deforest or convert their land for agricultural purposes until a subsequent date. In practice, this accelerates clearing ahead of that date, as farmers and landowners who are unsure of whether they might cultivate that land take the approach of “use it or lose it.” In many geographies, like the Cerrado in South America, we already see this accelerated clearing happening in response to a proliferation of future cut-off dates. Cut-off dates should be no later than the date the commitment was issued. Even better is a cut-off date that is in the past (2020 is often used as an international standard), which both indicates that companies are avoiding areas of ongoing conversion and even investing in restoration to return some production areas to compliance. In addition, in order to be effective, cut-off dates must be linked to procurement and supplier management practices that allow the dates to be enforced through company sourcing and decision-making.
2. Compliance defined at a scale smaller than a farm or production unit
Determination of compliance – that is, whether commodity volumes can be considered DCF or not – should be made at the scale of the production unit (farm, ranch, plantation, forest management unit). Commitments at a level smaller than that of the production unit (such as plots within a farm) allow companies to continue purchasing from producers engaging in ongoing conversion while claiming those volumes are DCF.
3. Does not cover all ecosystems where clearance is occurring
For some commodities, such as soy, cattle, and even wheat, a significant amount of clearance occurs outside of forests — in grasslands, savannahs, and wetlands. Limiting the scope of commitments to exclude these non-forest ecosystems may actually incentivize increased clearing in those non-forest areas. An analysis of the global effects of these policies shows that the intent to avoid deforestation is only half as effective if other ecosystems are unprotected. The most common version of this red flag is when policies prohibit only deforestation, rather than loss of forest and non-forest ecosystems. Other versions of this red flag include commitments that narrow the definitions of deforestation or conversion. This includes commitments that only specify illegal clearing or that only specify clearance of pristine or primary vegetation.
4. Covers only select geographies
When a corporate commitment does not have blanket deforestation- and conversion-free language but instead identifies only specific geographies or attributes, that’s a major red flag.
Similar to coverage of select ecosystems, limiting the scope of commitments to only some geographies incentivizes increased clearing in other geographies. We see this geographical leakage frequently, such as when Brazil-only commitments are enacted, and the clearing then moves to a neighboring country. Similarly, when commitments are only for “high risk” areas, previously low-risk areas can be quickly transformed into conversion fronts. Commitments should cover all geographies even if initial scrutiny and prioritization of action focuses on selected geographies.
5. Covers only direct suppliers or specific forms of the product
Most companies source only a small proportion of their product directly from farmers, buying either raw or processed versions of a product from traders, refiners, or manufacturers. Requirements that only cover products sourced from direct suppliers or specific forms of the product allow ongoing conversion to “hide” through indirect sourcing or processing steps. For most commodities, business-as-usual levels of habitat conversion can easily continue and be concealed through these limited supply-chain commitments.
6. Includes the use of offsets or credits
Ecosystem loss in one location cannot be undone by prevented loss elsewhere. Mechanisms that allow crediting of some loss within a supply chain with some action elsewhere both undercuts the goal of DCF supply chains and enables ongoing conversion to escape detection. Commitments that pledge to use carbon or biodiversity credits are not commitments to DCF supply chains. The use of product certification systems that do not include physical chain of custody, such as book-and-claim systems, similarly do not support DCF claims.
7. Not accompanied by robust methodologies to manage compliance
Many corporate commitments are aspirational but are missing key elements of success: showing how product volumes, suppliers, and sourcing areas will be operationalized. Commitments should therefore be accompanied by publicly available action plans or policies that describe how compliance will be monitored and how non-compliance will be addressed by purchasing decisions and supplier engagement approaches. Public reporting on the results at a regular cadence is also critical to demonstrate progress.
None of these commitments by themselves will be sufficient to guarantee the presence of deforestation- and conversion-free operations. But by avoiding these red flags, companies can take major steps toward ensuring that their operations don’t result in the continued decimation of natural habitat.
Emily Moberg is Director for Scope 3 Carbon Measurement and Mitigation at the WWF Markets Institute.