This impact story was originally posted in TFA Perspectives: Volume 2 here.
Jack Hurd joined the World Economic Forum as the new Executive Director for the Tropical Forest Alliance in September. Jonathan Walter asks him about his priorities, particularly in the run up to COP27 – and to find out more about how governments, the private sector and local communities all need to work together to halt forest loss.
Q: What’s at the top of your in-tray and why?
The most pressing near-term priority is the agriculture sector roadmap to 1.5°C (for soy, palm oil, and cattle) that is being prepared in time for COP27. In Glasgow last November, 13 global trading companies committed to accelerating the elimination of commodity-driven deforestation from their supply chains in line with a 1.5°C pathway. The roadmap spells out the steps these companies need to take – and TFA is the convening body to facilitate the discussions, manage the stakeholder engagement process and help ensure they demonstrate progress. It’s virtually impossible for the world to achieve its climate commitments in the absence of active change in the way that the agricultural companies operate their practices and go about sourcing their goods, so this is incredibly important – if extremely complex and challenging – work.
The most pressing near-term priority is the agriculture sector roadmap to 1.5°C (for soy, palm oil, and cattle) that is being prepared in time for COP27. In Glasgow last November, 13 global trading companies committed to accelerating the elimination of commodity-driven deforestation from their supply chains in line with a 1.5°C pathway. The roadmap spells out the steps these companies need to take – and TFA is the convening body to facilitate the discussions, manage the stakeholder engagement process and help ensure they demonstrate progress. It’s virtually impossible for the world to achieve its climate commitments in the absence of active change in the way that the agricultural companies operate their practices and go about sourcing their goods, so this is incredibly important – if extremely complex and challenging – work.
Q: So is the message getting through to the private sector – that there’s no way to a 1.5°C pathway without stopping deforestation?
Well, I may be biased, but yes, I think increasingly governments and businesses realize that dealing with deforestation and land-use change is enormously important. What I find encouraging is that this conversation has shifted over the past year from the chief sustainability officers to the CEOs. This is now about driving revenues and managing risk: it’s about business rather than an ESG issue. In other words, sustainability has become integral to the process of business decision-making.
What I find encouraging is that this conversation has shifted over the past year from the Chief Sustainability Officers to the CEOs.
Q: These 13 companies represent a huge share of the global commodities market, but can companies do this alone?
The first thing to realize is that these companies are not going to get onto a 1.5°C pathway – and achieve their commitments – unless they figure out their emissions from land-use change. That means driving deforestation and conversion out of their entire supply chains. And by demonstrating it they are showing others that it can be done. That proof of concept is really important. The next thing to realize is that this doesn’t happen just within the corporate sector: these companies are not acting alone. We need to create an enabling environment for them to be successful, and that means getting governments and jurisdictions to put in place the regulatory frameworks required to incentivize action on stopping deforestation. The two COPs at the end of this year – in Egypt for climate and in Canada for biodiversity – offer great opportunities to raise the profile of this specific issue
The first thing to realize is that these companies are not going to get onto a 1.5°C pathway – and achieve their commitments – unless they figure out their emissions from land-use change. That means driving deforestation and conversion out of their entire supply chains. And by demonstrating it they are showing others that it can be done. That proof of concept is really important. The next thing to realize is that this doesn’t happen just within the corporate sector: these companies are not acting alone. We need to create an enabling environment for them to be successful, and that means getting governments and jurisdictions to put in place the regulatory frameworks required to incentivize action on stopping deforestation. The two COPs at the end of this year – in Egypt for climate and in Canada for biodiversity – offer great opportunities to raise the profile of this specific issue.
Q: These 13 companies represent a huge share of the global commodities market, but can companies do this alone?
I can sum it up in three words – all interconnected: trade, policy, finance.
First, trade. We’ve talked about the roadmap that the agricultural commodity traders are developing. It’s really important that this progress is recognized at COP27. Last year, the companies made a pledge; in Egypt, they will provide a detailed set of measures on how they are going to deliver on that pledge. And while this is only 13 companies, they represent a significant market share of these commodities, and it also sends a signal to many other companies in other parts of the world that this is the direction things are moving in.
Second, policy. Without government leadership and intervention, markets alone will not solve the problem. Market-based approaches depend for their effectiveness on domestic laws and policies and enforcement mechanisms. Companies can do a lot towards rooting out deforestation from their supply chains, but they can’t solve problems that are really about resource governance. Businesses are either incentivized or disincentivized by the policies prevalent in the countries they operate in.
And then there is the international financial community, which has already taken meaningful steps. The priority for them is to assess their exposure to companies that are exposed to deforestation risks and actively engage to encourage business models that can help transform the agricultural sector. The financial sector is engaging because of the risks created by climate change, nature loss and food security issues, but primarily because of their fiduciary duty towards their clients.
We need to make sure that the enabling environment is actually enabling positive progress.
Q: You spoke about the role of governments. How important is regulation – especially the new EU regulation on deforestation-free commodities due to come into force next year?
Regulation is absolutely foundational. People talk about market-based instruments, but to think we can do all this without governments putting the right incentives and disincentives in place is short-sighted. I’m talking about policies for set-asides within agricultural concessions, enforcement of regulations, tax breaks to drive good behaviour, swapping harmful subsidies with good subsidies, skills training, agricultural extension services and infrastructure development, and so on. We need to make sure that the enabling environment is actually enabling positive progress. Right now, it’s only enabling the mass production of commodities at the expense of the environment and the climate and in many cases the social welfare of communities. Something has to change.
The EU’s move is really, really important. It sends a strong signal of intent to markets and to the rest of the world that consumers in Europe, and therefore a significant high value market, are very keen to have commodities that are legal and sustainable. We saw this a decade or more ago around timber for example with the EU Timber Regulation and Lacey Act in the US [amended in 2008 to prohibit trade in plant products, including timber and paper, harvested in violation of foreign law]. But it is important that the EU legislation is guided by the framework provided in the Smart Mix of Measures. This calls for the EU to take action in reducing pressures on forests while promoting a balanced and constructive approach within consumer and producer dynamics, for example through producer partnerships – which are a good mechanism for government-to-government dialogue on these issues.
Q: Can governments help the private sector scale up progress on tackling deforestation fast enough to make a difference? I’m thinking of jurisdictional or landscape approaches.
Yes, absolutely. There are two conversations that need to get merged around what’s called the jurisdictional approach – and this is something very near and dear to my heart. The first conversation came into being in 2007, following the Bali COP. The idea was that taking a sub-national-level approach to REDD [reducing emissions from deforestation and forest degradation] could serve as a stepping stone to a national approach, while addressing the risks, often seen in REDD projects around additionality, permanence and leakage.
The second conversation is more recent and comes from agricultural commodity companies that want to find sourcing landscapes that aren’t associated with deforestation. This requires their own efforts to drive deforestation and ecosystem conversion from their supply chains but, as mentioned previously, they cannot act alone and need the active engagement of government and other business sectors operating within the jurisdiction. So you have the concept of a jurisdictional approach coming from two angles – carbon dioxide reduction and the private sector approach to risk management. These two conversations and sets of actors need to join up, to create a jurisdictional approach to tackling the challenge of scale.
Also, while it is important that further enabling regulation is put in place for these efforts, it is equally important that governments implement and monitor the existing regulations. It is well known, for example, that Brazil has a very good Forest Code that has not been implemented in recent years, and this creates risks for the private sector that stop them supporting the necessary transformation.
Q: My last question is about inclusion. How important is it to include not just the companies, governments and private sector players we’ve talked about so far, but also the Indigenous peoples and local communities that are often the guardians of the land on which protection, restoration and reforestation need to happen?
Indigenous peoples and local communities are on the frontline of the issue but have the least amount of opportunities and resources, and frankly, power. They are a really important part of the solution and some members of the TFA are helping them play vital roles in, for example, land-use planning processes, negotiating the terms of trade, monitoring actions on the ground, and informing local and national policies. The process of ‘free, prior and informed consent’ is also key: this must be consistently incorporated into all strategies to tackle deforestation.
It’s also important for Northern governments to provide technical assistance to local communities. For example, smallholders may simply be excluded by the EU’s new deforestation regulation, unless member states help them adjust their farming practices to conform. Or they may lack the tools to play meaningful roles in the work that affects their livelihoods, their culture and their resources.
But I’d like to emphasize the bigger picture around inclusion as well. Reversing tropical deforestation requires the engagement and inclusion of at least five sets of actors. You need governments to take a progressive approach to public policy, especially in land-use planning and forest regulations. Companies then need to align their practices with those policies. You certainly need the active engagement of civil society and local communities in all the processes that determine what will take place and how the envisioned transformation will play out in a landscape or jurisdiction. You require good biophysical and social sciences to understand what’s happening and to measure progress both on the economic front and in terms of CO2 emissions while paying attention to other factors, such as biodiversity, as well. And finally, you need a combination of innovative and traditional financing – from a variety of sources as mentioned above – to provide the resources required to underwrite the transition.
It’s worth noting that the transition we’re talking about is radically new from the way agricultural developments have been for the last 300 years and frankly since the dawn of agriculture. This is not easy and requires a systemic approach to change. The question is, are we up for the challenge? I think that the answer is a resounding `yes´.