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A pragmatic approach to deforestation-free supply chains: spotlight on Brazilian soy exports to France

By Thomas Sembres and André Vasconcelos


Vast swathes of the Brazilian Amazon and the Cerrado went up in smoke last year. And the fire season may be worse this year as deforestation is on the rise again to make way for cattle pasture and soy fields. Brazil is the main source of soy imports to Europe, with the Netherlands, Spain and France among the biggest importers. In fact imported soy, primarily used for animal feed, is responsible for half of the European Union’s (EU) tropical forest footprint.

Facing up to the global climate and biodiversity challenges, companies and governments have committed to reduce their deforestation footprints. 

Ongoing deforestation in Brazil and elsewhere undermines their efforts, damaging the reputation of entire sectors. But how can the deforestation-free soy be sorted from the rest?
 

Identifying the hotspots 

Surprising as it may seem, few buyers are likely to know where their soy imports have come from. Commodity supply chains are complex, with soy from different areas bulked for shipping. This means that even relatively small quantities of soy associated with deforestation can contaminate the whole supply chain. 

The latest review of commodity deforestation by Trase shows that more than half the soy deforestation risk linked to Brazilian exports is concentrated in 1% of the municipalities producing soy.

Focusing on Brazilian soy exports, we know that soy-related deforestation is highly concentrated in the region known as Matopiba, covering parts of the vulnerable Amazon and Cerrado biomes. Nearly 90% of the recent deforestation risk associated with Brazil’s soy exports is found in this region. 

For European importers, just 7% of the EU’s soy imports from Brazil in 2018 came from this high-risk region. Yet these imports accounted for 61% of the EU’s exposure to soy deforestation risk. How can governments and buyers best make use of this kind of information to tackle the deforestation risk linked to their supplies?  


Illegal deforestation (ha) on soy farms per municipality in Mato Grosso, Brazil. Half of France’s risk is concentrated in the three municipalities highlighted by Trase
 

A need for focus

Recent stakeholder discussions on the implementation of the national strategy to address imported deforestation in France have highlighted the need for a pragmatic approach. Traceability and engagement in the areas known to have the biggest problem with deforestation are prioritised – going down to farm level where possible.

For French buyers, this would mean that traceability and more transparency in just 12% of the soy-producing municipalities in Brazil would allow them to see what was happening on the farms in the areas where 90% of the deforestation for soy occurs. 

Some of the biggest soy traders have been taking a similar approach through the work of the Soft Commodities Forum. They are working towards full farm-level traceability in 25 high-risk municipalities in Brazil, but the actual disclosure of this information for independent verification is yet to be seen.
 

Identifying the source of the problem

A recent study by Trase, Imaflora, and ICV shows the potential for conducting farm-level assessments of deforestation at scale with publicly accessible data. The authors used official data on deforestation licences to identify where deforestation had taken place without a licence and so was illegal. 

In Mato Grosso, the leading Brazilian state for soy production, 95% of the deforestation on soy farms was found to be illegal and 80% of this illegal deforestation was on just 400 farms ─ 2% of all the soy farms in the state. 

France is one of the countries in Europe that is most exposed to soy associated with illegal deforestation. Almost a quarter (23%) of France’s soy imports from Mato Grosso in 2018 were likely to have come from farms where illegal deforestation had taken place. 

But the source of this risk can be pinpointed more precisely - with just three municipalities (Paranatinga, Gaúcha do Norte, and Porto Alegre do Norte) accounting for 50% of that risk. When assessing trading patterns from these municipalities, the study found that a handful of companies dominated the soy exports trade.
 

Opportunities for action

Because deforestation associated with soy is highly concentrated in particular places and among specific suppliers, targeting action in those areas can have a relatively high impact.

Governments in consumer countries are sitting on untapped opportunities to trigger a wider transformation of the sector, built on greater transparency and collaboration. To make a real difference, this would require far greater transparency from suppliers on the origin of exports, and governments and companies would need to work together to identify and monitor the priority, high-risk areas within global supply chains. 

This would level the playing field for buyers, allowing them to much better manage deforestation risks in their business. 

By pulling these levers, governments and companies could make far greater progress towards a deforestation-free economy.

 


Thomas Sembres

Supply chain transparency and land-use planning

EU REDD Facility

 


André Vasconcelos

Research associate

Trase/Global Canopy

 

Mapping climate finance to influence policy, plan investments, and measure progress

By Adeline Dontenville and Angela Falconer


As climate change impacts grow ever more apparent, it becomes more urgent to stop carbon flowing into the atmosphere and increase resilience to rising threats. Much will depend on how and where finance flows. Countries are enacting plans for adapting to and mitigating climate change, so they need to know what money is available and — crucially — if any flows of finance are working against their climate objectives.

Monitoring past, present, and future spending and investment patterns is therefore essential. Such information can help countries to measure progress, identify gaps, and align flows and instruments for maximum impact and scale. It can optimize the deployment of public resources in a way that can effectively and efficiently unlock private investment at the transformational scales needed.

To discuss how best to do this, the EU REDD Facility, Climate Policy Initiative (CPI) and the United Nations Development Programme (UNDP) gathered experts from governments, donor agencies, and organisations that are engaged in tracking domestic climate finance during the COP25 climate change conference.


Sankey diagrams are a useful and effective resource to provide an overall picture of the land-use finance mapping results by EU REDD Facility
 

Varied approaches

Different approaches and tools are already used by countries to map and track domestic climate finance. These include: climate budget tagging; land-use finance mapping; climate public expenditure and institutional reviews; private sector climate expenditure and institutional reviews; and investment and financial flows assessments. Countries like Nepal and Kenya have been at the forefront of developing such national systems and are now joined by many countries around the world following similar approaches.

There is also something called the ‘climate finance landscape approach,’ which CPI developed with partners in 2011. It tracks the life cycle of climate finance flows – from provider of finance, through intermediaries, instruments and disbursement channels to end uses. This approach has been key in helping policymakers understand who finances what, and the extent to which finance is aligned with policy objectives.

It also identifies barriers to investment, potential incentive mechanisms, and provides a baseline for monitoring progress in mobilising resources. CPI and the EU REDD Facility have since developed an open source tool that makes this methodology available to countries. Côte d’Ivoire is among the countries to have used it to map investments related to their climate and forests objectives.

During the event, a panel of country representatives, practitioners, and partners shared their experiences of monitoring and planning domestic climate and land-use finance. They gave examples of positive outcomes, but also raised a number of challenges. These ranged from the methodological —such as a lack of data gaps and a lack of clarity about definitions of climate finance in the national context — to the institutional, such as a lack of capacity and poor inter-ministerial coordination.
 

Taking it to the next level

Given the challenges, it is clear that simply quantifying financial flows is itself a big step. The next level is using those estimates to influence policy, plan investments and measure progress. Critically, mapping finance can also help to mobilize new money and redirect old towards climate objectives. So how do we move from producing nice reports to bringing systemic changes to budgeting and spending patterns at domestic level?

Participants spoke of a need to simplify information and present it visually to facilitate dialogue among stakeholders and garner support for proposals. They also raised the need for more transparency, better sharing of data and a greater understanding of best practices based on what has worked in different countries. To support this, governments would also need to improve coordination among ministries and ensure their staff have adequate capacity through training.

Summing up the event, Dr. Barbara Buchner, Global Managing Director at CPI, highlighted the need for improved coordination among technical partners to develop and share methodologies, tools and potentially data. One suggestion was that continued and regular exchanges among the participants and other interested parties would help start to create an informal community of practice enabling us to share experiences and best practices. With this in mind, CPI and the EU REDD Facility are planning to organise a follow-up and virtual half-day workshop at the end of 2020. If you want to know more about climate finance tracking and mapping, or if you have experiences to share, we hope to see you there.


Read the report summarizing the event:

 


Adeline Dontenville

Land-use finance and Côte d'Ivoire

EU REDD Facility

 

- Dr. Angela Falconer, Associate Director in Climate Policy Initiative’s climate finance division, is also an author of this blog post.
- The workshop was funded by the EU REDD Facility and International Climate Initiative (IKI) of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU).
- This blog post was originally published on 14 February 2020.

 

Bringing our voices to the land-use governance dialogue

By Christophe van Orshoven


A key contributor to climate change, species loss, and threat to the livelihoods of the 1.6 billion people who depend on forests for food and livelihoods: deforestation ranks among the great challenges of this century.

Since our inception in 2010, the EU REDD Facility has learnt that combining climate, aid and trade-related interventions has great potential to address drivers of deforestation. We’ve also found that protecting forests and incentivising sustainable land use are only possible if governments, private sectors, and civil societies of tropical forest regions partner to generate change.
 

Momentum for sustainable land use and supply chains 

As a Facility, we’re focused on finding opportunities for contributing to progress in climate change mitigation and sustainable land use and supply chains. There’s good momentum for us to build on.

Countries are starting to act on their commitments under the Paris Agreement on climate change. More companies are committing to eliminating deforestation from supply chains. And the EU has set out a new plan to protect and restore the world’s forests and is exploring options to strengthen implementation of its action plan on illegal logging.
 


Aerial views of Buluq Sen village, East Kalimantan, Indonesia by Nanang Sujana, CIFOR
 

What we’ll be blogging

I’m pleased to introduce this new EU REDD Facility blog, where our experts will share their thoughts about and experiences with working with our partners in tropical forest countries in Africa, Asia and South America on:

This will be a space for free thought, where we’ll push the boundaries of our institutional agenda. But always within sight will be our mission to support tropical forest countries find innovative approaches and solutions to their land-use governance and sustainable development goals. 

In all of our work and through the tools and approaches we develop, we promote dialogue among people with varied interests in forests - from policy-makers and business leaders to civil society and community representatives. This blog will complement and further that ongoing discourse. We hope it will also bring additional knowledge and understanding to policy-makers in Europe as they move ahead with new policies to promote sustainable land use and investment.

The challenges ahead can sometimes seem insurmountable. But with joint, creative action, we can affect real and lasting change. We look forward to sharing our ideas and collaborating with you to find creative solutions to the complex drivers of deforestation.
 


Christophe van Orshoven

Team leader

EU REDD Facility

 

Disclaimer

The views and opinions expressed in this blog are solely those of the original authors and other contributors. These views and opinions do not necessarily represent those of the EU REDD Facility, or other contributors to this site.