The objective

The objective is to harness the opportunities offered by this new transparency to help governments acquire the information and market intelligence needed to support existing and new policies promoting legal, sustainable, and deforestation-free production and trade. This ‘Trase for governance’ workstream needs to work for both consumer and producer governments, helping them to develop their own ‘forest-risk market intelligence’, for those who wish to make that transition towards more competitive and sustainable trade. 

For the Trase initiative, the vision for 2020 is to provide the public supply-chain information for companies, governments, investors and other actors seeking to transition towards more sustainable production, trade and consumption for the world´s major forest-risk agricultural commodities. Over the next 5 years Trase aims to cover over 70% of the total traded volume in major forest risk commodities, including soy, beef, palm oil, timber, pulp and paper, coffee, and cocoa.

The initiative sets out to do this by using data to reveal the links between environmental and social impacts in production areas with supply-chain actors such as producers, traders, manufacturers and importers in consumer countries. Trase also addresses other land-use risks and opportunities beyond deforestation.

By making information on the risks of deforestation associated with supply chains available, Trase aims to provide supply-chain operators and producing jurisdictions with a strong incentive to improve business practices. Improving the transparency of supply chains is necessary to meet ambitious private and public zero-deforestation commitment targets and to achieve sustainable commodity production. Trase also aims to help companies reduce the risks of deforestation associated with their supply chains and investments, and identify business opportunities.

The long term goal is to ensure that the supply chains of commodities from areas where agriculture is expanding and intensifying across the tropics are sustainable. Greater transparency can play a critical role in catalysing improvements in production practices, procurement and investment policies, third-party monitoring schemes and government strategic development planning.

Palm oil harvesting

Indonesia

Source: Golden Agri Resources

The challenge

Deforestation has a significant impact on local livelihoods, destroys habitats and ecosystem services underpinning water, food and energy security, and is responsible for 15% of global carbon emissions. Agricultural expansion to produce a few commodities including soya, beef, leather, palm oil, pulp and paper and timber, has driven over 70% of tropical deforestation in the last decade.

Several hundred companies with a combined market value of over EUR 3.5 trillion and motivated by reputational, policy and operational interests to take action, have committed to eliminating risks of deforestation linked to their supply chains. In carrying out their commitments, the challenge for companies and private institutions is to identify and reduce the deforestation risks and impacts associated with their procurement policies and supply chains.

Reliable information on complex global supply chains is limited. This lack of information is a serious barrier to effective decision-making on deforestation risks in the public and private sectors, and to transformational change.

The approach

The approach of Trase is to harness, through an online platform, large datasets of untapped production, trade and customs data in order to uncover the supply-chain pathways of internationally traded forest-risk commodities. These connections span from the local places of production to consumer countries through exporters, traders and ports. Trase processes comprehensive datasets and make this information available on the online platform, including detailed information on shipping transactions and individual operators.

Data that can be accessed on the online platform does not rely on voluntary initiatives nor on regulatory approaches, as these can encounter problems with participation and enforcement. Instead, the platform makes available concrete, reliable data from a wide range of sources. As transparency improves, supply-chain actors have a greater incentive to work together to address environmental and societal problems in producer regions.

The Facility’s contribution to the Trase initiative builds on a feasibility study for an International Forest Risk Model (INFORM). The study involved calculating probabilities and developing criteria to assess deforestation risks using a range of data, including earth observation, customs and trade data.

Trase can help governments at both ends of commodity supply chains to turn policy aspirations into the concrete measures necessary to decouple deforestation from trade in major agricultural commodities. The range of public policy measures that could be deployed to tackle deforestation associated with commodity trading is wide. These include deforestation- free public procurement policies, policies that provide preferential market access for legal and sustainable products, and realigning aid and investment policies to sectors and regions that encourage the supply of deforestation-free commodities.

The European Forest Institute’s EU REDD Facility is working to develop platform applications tailored to the needs of governments, trade and customs authorities so that they can use Trase to monitor forest-related risks and identify opportunities in commodity production and trade. 

Key pillars for transparent, deforestation-free policies on commodity trade

• Building strategic coalitions and public-private partnerships that work towards common standards in commodity production and trade
• Analysing scenarios to inform designs and plans for procurement and investment policies
• Scanning risks to sharpen monitoring and control functions, and to strengthen the implementation of existing policy instruments such as the Forest Law Enforcement, Governance and Trade (FLEGT) scheme to tackle illegal logging
• Monitoring policy effectiveness and reporting progress towards political targets

Stakeholder engagement and mediation are essential in implementing deforestation-free commitments at jurisdictional level. Tools such as Trase can be important as a way to engage stakeholders in clarifying and harmonising definitions and methodologies. Going forward, there is a need to build a community of stakeholders committed to developing transparency in forest-risk supply chains. Such transparency can inform deforestation-free policies in a way that satisfies the wide variety of trade partners across producer and consumer countries. The emergence of transparency tools such as Trase is an opportunity to nourish constructive dialogue to speed up the implementation of commitments.

The EU REDD Facility strategy combines REDD+ jurisdictional approaches and supply-chain incentives to address the drivers of deforestation. This approach enables stakeholders at the jurisdictional level to benefit from REDD+ initiatives and climate finance while gaining better access to forest-friendly commodity markets.

Going forward, Trase will undertake case studies of supply chains for three major forest-risk commodities: soy, timber and palm oil.

The EU REDD Facility and its are currently investigating five thematic issues that will feed into the TRASE platform. The five thematic areas are:

• Linking the Trase platform with jurisdictional monitoring systems
• Integrating data on actor performance beyond deforestation rates, including criteria such as legality and land-use governance
• Assessing the potential to provide data on smallholders and assessing progress towards deforestation-free standards
• Analysing the Trase approach to timber and how it can connect to other approaches, including FLEGT
• Researching the links between financial flows and supply chains

Work with Trase complements the ongoing work of the Facility on national information systems for legal, forest-friendly supply chains in over 15 tropical countries. 

Truck transporting harvested oil palms, Sabah, Malaysia

Source: CIFOR

Results and impact

Results

• The Stockholm Environment Institute and Global Canopy Programme, with support from the EU REDD Facility and a number of other partners, successfully launched the public version of Trase at COP22 in November 2016.
• Supply chain actors and EU policy makers started to debate the implications triggered by global supply chain transparency in support of ongoing efforts to remove deforestation in commodity trade.
• At a workshop in September 2016 at EFI, researchers and a group of transparency initiatives from the Supply Chain Transparency Network explored common approaches to attribute deforestation risks to specific commodity production and trade.
  

Impact

• Trase is the first initiative to take an actor-driven, sector-wide, jurisdictional approach to supply-chain governance. It harnesses technological innovation and new partnerships to make international supply-chain data publicly accessible on one online platform. The data will cover at least 70% of the global trade in forest-risk commodities within the next five years.

Greater transparency is playing an important role in improving production practices, procurement and investment policies, third-party monitoring schemes and public development planning. These improvements, in turn, are helping supply-chain actors to assess their progress towards zero-deforestation goals and to fulfil other sustainability and legality commitments.

Soya plantations

Brazil

Source: Leonardo F. Freitas