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Frances Seymour was a Senior Fellow at the Center for Global Development based in Washington, DC, where she lead policy research on tropical forests and climate change. In December 2016, CGD published her book, Why Forests? Why Now? The Science, Economics, and Politics of Tropical Forests and Climate Change (co-authored by Jonah Busch), to promote the importance of forests to climate and development objectives, and the potential of results-based finance. Ms. Seymour also served as Senior Adviser to the David and Lucile Packard Foundation, with a focus on halting deforestation and peatland conversion due to expansion of oil palm cultivation in Indonesia.
From 2006 to 2012, Ms. Seymour served as Director General of the Center for International Forestry Research (CIFOR), an international organization headquartered in Indonesia, and was awarded France’s Order of Agricultural Merit for her service there. Previously, she was the founding director of the Institutions and Governance Program at World Resources Institute, and served as Director of Development Assistance Policy at World Wildlife Fund. Early in her career, she spent five years as a Program Officer with the Ford Foundation in Indonesia.
She holds an MPA in Development Studies from Princeton University, and a BS in Zoology from the University of North Carolina at Chapel Hill.
Of course, the world hasn’t stood still since we hit “send” on our manuscript in October 2016. The scientific and economic literature on the importance of forests for climate and development continues to grow. More noticeably, near-term politics have shifted in decidedly unhelpful ways, dominated by the new American presidential administration. However, the fundamental messages of our book remain as important and urgent as ever: tropical forests are an undervalued asset for fighting climate change and promoting development, and payment-for-performance finance holds promise as a way for rich countries to partner with developing countries to reduce deforestation.
If we were to write a second edition to Why Forests? Why Now? today we’d have plenty of new material to add. Chapter by chapter, here’s a roundup of a few of the most significant developments of 2017:
New evidence confirms that tropical deforestation is a big part of the climate problem—and tropical forests are an even bigger part of the solution.
In Chapter 2 we described how carbon dioxide emissions from tropical deforestation are a large share of the climate problem and keeping tropical forests standing can be an even larger share of the potential solution. New research is showing how deforestation warms the planet in more ways than just by releasing carbon dioxide: Natalie Mahawold and her colleagues quantified how tropical deforestation affects the climate through methane and nitrous oxide emissions, while Natalie Schultz and her colleagues quantified the effect of deforestation on local temperatures, with daytime heating exceeding nighttime cooling, especially in the tropics. New studies have affirmed the critical role of forest protection in meeting the goals of the Paris climate agreement: avoiding deforestation and other land-based climate solutions can contribute more than one-third of the abatement needed to meet a 2 ˚C climate goal, according to Bronson Griscom and his colleagues, and one-quarter of the abatement needed to meet a 1.5 ˚C target, according to Stephanie Roe and her colleagues.
Even more links have emerged between tropical forests and development.
Forests are still the best option for carbon capture and storage.
In Chapter 5 we showed how reducing deforestation can make the global response to climate change cheaper, cooler, and faster. We illustrated how forest protection is far more ready than other carbon-capture-and-storage prospects with a comparison to the ill-fated Kemper “clean coal” plant in Mississippi. After years of delays, cost overruns, and corruption allegations, the Kemper CCS project was finally shuttered in June 2017. The pan-tropical modeling by Jonah Busch and Jens Engelmann that underpinned the book’s estimates of how much deforestation could be reduced where and at what cost was published in Environmental Research Letters in December.
A field trial shows that paying to keep trees standing pays off.
In Chapter 6 we recounted the history of decades of initiatives intended to “make forests worth more alive than dead”—non-timber forest products, bioprospecting, ecotourism, and the like. A new paper by Seema Jayachandran and her colleagues was the first to evaluate the cost-effectiveness of payments for ecosystem services using the gold-standard randomized controlled trial method, finding that emissions could be avoided for $2.60 per ton of carbon dioxide by paying landowners in Uganda to keep trees standing on their property. This adds another strand to a rope of evidence finding that forest protection offers plentiful emission reductions for less than $10/ton.
New research indicates that formalizing indigenous land rights can make a difference in reducing deforestation.
In Chapter 7 we presented approaches that have been shown to stop deforestation, both in Brazil and beyond. These include designating protected areas, recognizing the territories of indigenous peoples, enforcing forest laws, and paying land owners for their forests’ ecosystem services, as well as limiting the destructive potential of roads and clearing for the production of agricultural commodities. Empirical evidence on the effect of formalizing greater land rights for indigenous people is nascent, but that’s starting to change. Allan Blackman and his colleagues showed that awarding land title to indigenous people reduced deforestation in Peru.
Progress toward deforestation-free commodity supply chains is moving slowly.
In Chapter 8 we described how global demand for commodities produced in the tropics is a key driver of deforestation, and how perverse policies in consumer countries such as biofuel subsidies exacerbate the problem. We also identified “demand-side” policies that could be part of the solution by providing incentives for legal and sustainable production. A 2016 assessment documented slow progress toward achieving corporate targets to get deforestation out of commodity supply chains, and multi-stakeholder coalitions are now focusing their attention on implementation at the scale of subnational jurisdictions.
The action on REDD+ is now at the country level.
In Chapter 9 we recounted the fraught history of international negotiations on forests, and how the link to climate change shifted a confrontational dynamic to one of cooperation on Reducing Emissions from Deforestation and forest Degradation (REDD+). With endorsement of REDD+ in the Paris Agreement, the center of gravity has shifted to country-level implementation in the context of Nationally Determined Contributions toward the goals of the Agreement. More than two dozen countries have now submitted reference levels to the UNFCCC as a step towards eligibility for results-based payments under REDD+, although many are incomplete.
Forest politics remain volatile in Brazil and Indonesia.
In Chapter 10 we analyzed the political economy of forest resource management in developing countries, with a particular focus on Brazil and Indonesia. In both countries, domestic constituencies for forest conservation have continued to struggle against the forces of deforestation-as-usual, while international actors have applied a mixture of carrots and sticks to incentivize reform. In Brazil, an uptick in deforestation in 2016, attributed in part to law enforcement leniency in the midst of a broader political and economic crisis, led to a decrease in performance-based REDD+ payments in accordance with the provisions of its agreement with Norway. In 2016, Indonesia became the first country in the world to obtain the right to issue licenses for the export of legally certified timber to the European Union, reflecting progress in addressing illegal logging. In 2017, government efforts to protect carbon-rich peatlands were dealt a setback when, in the face of industry pressure, the Supreme Court struck down a 2017 ministerial regulation imposing new obligations on holders of fast-growing timber concessions.
In the US, hopes for action on forests and climate have shifted to non-federal leadership.
In Chapter 11 we focused on the politics of REDD+ finance in rich countries, describing how recognition of reduced tropical deforestation as a cost-effective climate mitigation option layered on top of existing rationales for international cooperation to protect forests, such as conservation of biodiversity. In 2017, support for international cooperation on forests weathered national elections in Norway, Germany, and the United Kingdom. In contrast, the unexpected results of the US 2016 presidential election, and the subsequent announcement of the Trump administration’s intention to withdraw from the Paris Agreement, dashed any hopes of stepping up US finance for forests and climate change. However, the abdication of climate leadership at the federal level has injected new energy into non-federal initiatives such as the State of California’s cap-and-trade program, which is now linked to the Canadian provinces of Quebec and Ontario, and retains the possibility of including international forest offsets in the future.
The missing piece? It’s still finance.
In Chapter 12 we described how the availability of international finance has fallen far short of the amount needed to constitute meaningful incentives for change in tropical forest countries, and how disbursement of pledged REDD+ funds has been slowed by a process of “aidification” by donor agencies. In 2017, the board of the Green Climate Fund approved a $500 million pilot program for results-based payments for REDD+, while a handful of countries inched their way toward concluding the first Emission Reduction Performance Agreements under the Forest Carbon Partnership Facility’s Carbon Fund. And a report assessing progress toward Goals 8 and 9 of the New York Declaration on Forests revealed the continuing large gap between forest mitigation potential and available funding. So finance remains the missing piece.
2018 will no doubt be another exciting year for tropical forests, climate, and development. We invite you to start it off right by downloading a free copy of Why Forests? Why Now?
This post originally appeared on theguardian.com, as part of CGD’s sponsorship of the Guardian’s Global Development Professionals Network. Frances Seymour is now a distinguished senior fellow at the World Resources Institute.
If tropical deforestation were a country, it would rank third after China and the United States as a source of emissions. Currently a large part of the problem, forests can be an even bigger part of the solution because trees offer the potential to achieve negative emissions. For example, ending tropical deforestation and allowing damaged forests to recover could reduce global net emissions by up to 30 percent.
The 2015 Paris agreement recognises the importance of forests in achieving climate goals. The agreement incorporates a framework of reducing emissions from deforestation and forest degradation (Redd+). The “plus” connotes the enhancement of forest carbon stocks.
Here are three reasons why Redd+ is a valuable tool in the fight against climate change.
1. It offers a low-cost path to climate stability
Paying developing countries to reduce deforestation is one of the cheapest emission mitigation strategies available to industrialised countries. It allows them to take on more aggressive climate targets at a lower additional cost. Bilateral Redd+ agreements have been drawn up with commitments of only $5 (£4) per tonne of avoided emissions, compared to the $100 per tonne estimates for “clean coal” technologies.
Brazil has led the world in cutting emissions by reducing deforestation in the Amazon. And it did so at an out-of-pocket cost of only one-third the amount spent on hosting the 2016 Olympic Games. And that reasonable expenditure does not take into account all the other benefits produced by standing forests such as generating fresh water for drinking, irrigation, and hydropower.
2. It encourages better international cooperation
While funding for developing assistance is always under pressure, it is particularly so in times of economic austerity and resurgent nationalism. An inconvenient truth is that decades of aid to the forestry sector has not turned the tide on tropical deforestation. But due to its novel payment-for-performance feature, Redd+ promises to be different by focusing on ultimate outcomes rather than proximate inputs.
If the desired results are not achieved, no payment is made. This feature of Redd+ is also politically attractive to developing country governments. A focus on results frames payments as a business transaction among equal partners rather than a paternalistic relationship between donors and recipients.
3. It helps developing countries be part of the global climate solution
Developing countries increasingly recognise that protecting forests is in their own interest, above and beyond the opportunity to obtain results-based finance. Many have signalled their intention to reduce emissions from deforestation as part of their national contributions to reaching the global climate goals, and have pledged to do more with international support.
The map below indicates the dozens of countries that are taking part in internationally-funded Redd+ programmes. Only those highlighted in orange have so far been promised any performance-based reward for success.
Only those highlighted in orange have so far been promised any performance-based reward for success. Source.
If Redd+ is so attractive to industrialised and developing countries alike, why hasn’t more funding been promised? Here are three criticisms put forward by aid agencies, and why they no longer hold up.
1. “It’s hard to measure forest-based emission reductions”
It used to be extremely difficult to monitor forest loss. Before images from satellites became widely available and affordable, it was almost impossible to know if remote areas of forest had been protected or cleared. But now advances in remote sensing technologies have made it possible to detect forest cover change in areas the size of a baseball diamond every few days. In addition to this, our ability to estimate the carbon stock contained in forests is constantly improving. These tools make it feasible to estimate the carbon emissions that result from forest loss with sufficient accuracy to provide a sound basis for results-based payments.
2. “There’s a high risk of corruption”
Some aid agencies have been reluctant to assign funds on a payment-for-performance basis due to fears of corruption. But compared to traditional funding for project participation, results-based finance offers fewer opportunities for diverting funds because payments are not made unless agreed outcomes are achieved.
3. “It has adverse impacts on communities”
To address possible risks to the rights and interests of local communities when a value is placed on forest carbon, principles for safeguards and benefit-sharing have been built into Redd+. Indeed, indigenous groups have used Redd+ policy forums at national and international levels to advance their agendas, and have begun to access a share of Redd+ finance directly.
The main complaint of Redd+ opponents is that buying the carbon protection services of developing countries lets rich, heavily polluting nations off the hook in reducing their own emissions. Let’s be clear: we need both to end deforestation and reduce emissions in rich countries. As Why Forests? Why Now?, the new book that I’ve written with Jonah Busch details, payment-for-performance for protecting tropical forests can be structured in ways to ensure that emission reductions are real and additional. By doing so, rich countries are “buying their way up” rather than “buying their way out”.
The science, economics, and politics of Redd+ are finally aligned. It’s time for results-based finance to follow.
Most discussions of the linkage between forests and poverty—including one last week at the United Nations Forum on Forests (UNFF)—focus on how to increase income to poor households from the harvest and sale of forest products. But at least as much attention should be paid to forest destruction as a pathway to the further immiseration of poor people. As forests are destroyed, poor people often lose access to the forest goods and services they depend on. And because deforestation contributes to the emissions that cause climate change, forest destruction impacts the development prospects of poor countries as well.
Can forests provide pathways out of poverty?
On May 2, I participated on one of several panels at the UNFF12 meeting in New York on the relationship between forests and selected Sustainable Development Goals (SDGs). The UNFF is a subsidiary body of the United Nations, established in 2000 to promote “. . . the management, conservation, and sustainable development of all types of forests and to strengthen long-term political commitment to this end.”
It’s great that UNFF is focusing on the linkages between forests and the SDGs; as I wrote two years ago in a blog about SDG15 (the one that includes forests), the many contributions of forests to objectives such as food, water, and energy security (depicted in Figure 1) are inadequately reflected in the SDG targets overall.
The UNFF panel on the contributions of forests to SDG1 (“End poverty in all its forms everywhere”) was framed around the potential of forests to provide a pathway out of poverty. But examples of sustainable forest management actually providing such a pathway appear to be relatively rare. Panelists and delegates offered a few examples of rural communities gaining increased income from forest products, services, or employment, but they were weighted toward the management of planted forests rather than natural forests. Instead, the panel focused mostly on the many challenges of translating natural forest wealth into money in the pockets of poor people while keeping forests standing.
One useful approach to addressing the lack of clear evidence on how forests can provide pathways to prosperity for the poor is the PRIME framework developed by Priya Shyamsundar and colleagues, with support from the World Bank’s Program on Forests (PROFOR). PRIME stands for Productivity, Rights, Investments, Markets, and Ecosystems. Attempts to nurture community-based forest enterprises have often foundered owing to constraints on the first four factors (the “P,” ‘R,” “I,” and “M”)—low resource and labor productivity, unrecognized rights to forest resources, and limited access to capital and markets.
And while in theory it should be possible to monetize the values of forest-based ecosystem services (the “E”) to provide income to local forest stewards, in practice payments for ecosystem services schemes have found limited application as a poverty reduction strategy, not least because poor people often lack legal status as “sellers” of those services.
In short, mobilizing natural forests as a pathway to prosperity for poor people remains more of a proposition than a widely proven strategy.
The impact of deforestation on poverty
Deforestation, on the other hand, can lead to either prosperity or pauperization, depending on who gains the benefits and who bears the costs. The gains from one-time removal of valuable timber can be considerable, but are often enjoyed by elites in capital cities rather than by the rural poor.
The conversion of forests to other land uses generates winners and losers, both of which may be poor. While it’s true that clearing forests to plant oil palm enables smallholders in Indonesia to send their kids to college, indigenous communities lose access to their livelihoods when their customary forests are converted to industrial-scale plantations. At Loggerheads? Agricultural Expansion, Poverty Reduction, and Environment in the Tropical Forests by World Bank economist Ken Chomitz remains the best resource for understanding such variable deforestation-poverty linkages.
But the impact of deforestation on access to forest goods and services—particularly important to poor households and women—is unambiguously negative. In the first instance, deforestation means the loss of income from collecting wild forest products, which constitute, on average, 21 percent of household incomes in communities that live in and around forests, with the poorest households more forest-dependent.
In addition, forest loss removes the ecosystem services that nurture health and well-being, and buffer poor households from natural disasters. Figure 3 depicts how deforestation transforms forests that provide food and medicine, clean water, and resilience to natural disasters into landscapes prone to landslides, flooding, and the spread of disease.
While maintaining forests might sometimes be a pathway to prosperity for poor people, forest loss can certainly be a road to their further immiseration.
The neglected link between forests and poverty via climate change
Yet even a reframing of forest-poverty linkages to include the local implications of forest loss is incomplete without incorporating the connection between forests and global climate change. The extreme weather events that are becoming more frequent and severe on a warming planet threaten to unravel decades of development gains and impose catastrophic hardship on the poorest households.
According to a 2014 National Bureau of Economic Research Working Paper, exposure to a single severe storm—such as Hurricane Mitch, which hit Central America in 1998—can knock a country off its pre-storm economic growth trajectory for decades. With overall economic growth associated with commensurate income growth for poorer segments of society, climate change poses a roadblock on one of the most reliable pathways to prosperity.
As detailed in Why Forests? Why Now?, deforestation is a globally significant cause of the emissions that cause climate change. And because standing and re-growing forests are a safe, natural, and proven carbon capture and storage technology, maintaining forests is an even greater part of the solution to climate change—equivalent to up to 30 percent of global net emissions.
As depicted in Figure 3, deforestation and climate change reinforce each other in a vicious cycle leading to poverty, with emissions from deforestation contributing to climate change, and climate change compromising the ability of forests to offer a source of resilience to the natural disasters that are becoming more frequent and severe. Poor households and poor countries are suffering first and worst.
The bottom line
As long as discussions about forests and poverty focus only on mobilizing forests for profits, and fail to recognize deforestation as a pathway to pauperization, forums such as the one last week at UNFF risk barking up the wrong tree.
The biomass energy industry, US Senators, and the FAO would have you think that burning wood to produce electricity is a good idea for the climate. Think again.
Forests provide an important source of energy for poor households in developing countries. Fuelwood and charcoal are on average the most valuable forest products to communities that live in and around forests. But according to a new study by Winrock International, woodfuel accounts for 30 percent of climate emissions from forest degradation across the tropics. And the health impacts of burning wood for cooking and heating are severe, especially for women and girls, so many international initiatives are underway to improve access to modern energy services and reduce reliance on wood for fuel.
In some industrialized countries, a reverse trend has been underway, as burning wood for electricity is now being promoted as a climate-friendly source of renewable energy. Ships are sailing across the Atlantic bound for the UK and Europe, laden with wood pellets from North American forests. Some of those pellets are the processed remains of bottomland hardwood forests in my home state of North Carolina.
The emergence of the wood-based electricity industry in rich countries is largely policy-driven, and based on a fallacy: that burning biomass for energy is carbon neutral. After all, trees grow back, right? It’s not a simple as that.
Debunking the carbon neutrality fallacy
A newly released study published by Chatham House meticulously debunks the carbon neutrality fallacy. According to that report, felling entire trees for energy will almost all always lead to higher carbon emissions than burning fossil fuels. When a tree is harvested for energy, the planet loses a piece of its natural carbon capture and storage infrastructure, and mature trees sequester carbon at much higher rates than smaller trees. Further, harvesting whole trees disturbs soils and leads to additional carbon losses.
But what about burning the left-over residues from wood harvesting and processing? Wouldn’t that be okay? Unfortunately, the answer is still often “no.” Why not? There are several reasons:
Incentives for additional harvesting: Whole trees are often misclassified as “residues,” and according to investigations by the Dogwood Alliance, industrial pellet facilities in the US Southeast such as those in North Carolina rely on clearcuts of “low value” timber.
Supply chain emissions: emissions from burning are only part of the story. Full life-cycle accounting for the impacts of wood fuel would take into account the emissions from processing and transporting the wood as well.
Use of harvesting residues: Unless they would have otherwise been burned on site, such wood waste left in the forest would decay more slowly, delaying emissions, and would provide soil nutrients that promote future forest growth.
Use of processing residues: Most sawmill waste already goes to uses such as particleboard, so using them for fuel would increase emissions in the near term.
Fundamentally, the time dimension is critical: burning wood now releases carbon into the atmosphere that will warm the planet and take decades if not centuries to recapture through forest regrowth. To slow climate change, we simply don’t have the luxury of waiting for that to happen, and instead should be working overtime to enhance forest carbon stocks now—with forests one of the only near-term options for negative emissions—rather than settling for break-even eventually.
Based on these considerations, legislation championed by Maine’s delegation to the US Senate that would declare forest biomass to be carbon neutral is a very bad idea.
The FAO fuels the fire
Regrettably, the FAO has apparently fallen for the carbon neutrality fallacy. It has selected “Forests and Energy” as its theme for this year’s International Day of Forests (March 21st), and praises the use of wood energy for “mitigating climate change and fostering sustainable development”. The featured video depicts a woodsman strolling through fall leaves in a temperate forest with a little girl collecting sticks in a basket. The voice-over asks, “What if there were a way to save it all, and use it when we want?” After clips of wood being felled, processed, and burned, the voice-over assures us that “Using wood sustainably keeps a balance for future generations.”
While the tagline of FAO’s video is “The forest: nature’s powerhouse,” growing and burning trees is not a very efficient way to convert sunlight into electricity. According to William Moomaw of Tufts University, burning wood should be compared to the efficiency of photovoltaic panels, which convert solar energy to electricity at about 20 percent efficiency, with no emissions. His back-of-the envelope calculations suggest that this is about 80 times more efficient than growing and burning wood, which generates more emissions per unit of electricity than burning coal.
Déjà vu? Carbon accounting rules are part of the problem
A quirk in how greenhouse gas emissions from biomass energy are reported under the UNFCCC creates perverse incentives for countries to use biomass rather than fossil fuels for energy, even when it’s worse for the climate. To avoid double counting, emissions from biomass are included in land sector reporting rather than energy sector reporting. So when a UK power plant burns wood pellets imported from elsewhere, no emissions are reported. But there’s a problem. According to the Chatham House study, accounting practices for the land-use sector in many countries have the potential to leave emissions from woody biomass unaccounted for.
We’ve seen this movie before: As described in our recent book, Why Forests? Why Now? (drawing on a policy paper by CGD Senior Fellow Kimberly Elliott), EU biofuel policies drove a surge in imports of palm oil from Southeast Asia as a feedstock for biodiesel, and to replace other vegetable oils diverted to produce biofuels. Yet palm oil was being produced on Indonesia’s carbon-rich peatlands—rendering them vulnerable to chronic fires, which in late 2015 generated higher daily emissions than the entire US economy. Not taking into account the emissions from such land-use change makes biodiesel appear to be more climate friendly than it actually is. (See this WRI working paper for more on how accounting errors have led to overstatements of the potential of bioenergy.)
What’s this got to do with development?
The energy mix promoted by policies in industrialized countries has a profound effect on development through its contribution to climate change, which threatens to unravel decades of progress in human well-being. It’s also a small part of a broader set of climate justice issues. Given that we have a fixed planetary limit on the amount of greenhouse gas emissions that can be released into the atmosphere and still keep global warming below 2 degrees Celsius, any additional emissions from rich countries means fewer available to poor countries.
Surely no one could miss the irony: some of the same rich countries that urge strict scrutiny of carbon stock baselines for tropical forests in the context of REDD+ are getting away with fuzzy accounting on the implications of burning wood for the carbon stocks of temperate forests.
Whether temperate or tropical, we can’t have our forests and burn them too.
This article is part of "Forests for Climate and Development," a CGD partnership with the Guardian Development Professionals Network. You can see more on The Guardian's website.
FRANCES SEYMOUR: How did you first become aware of the importance of tropical forests to climate change and development goals?
Photo by World Economic Forum/Monika Flueckiger
PAUL POLMAN: I joined Unilever at the end of 2008. Earlier that year, Greenpeace activists in orangutan costumes had scaled our London headquarters to raise awareness about the deforestation impact of the palm oil going into various consumer products, including our well-known Dove brand. That protest evolved into a really constructive, if challenging, dialogue with Greenpeace on how Unilever could become part of the solution that continues to this day.
So some of my earliest conversations within Unilever were about how we could better use our “procurement muscle” to turn the palm oil industry around—building on the good work that had been started five years earlier, when Unilever was one of the founding members of the RSPO. The more I learned about tropical forests in the course of those conversations, the more I realised that this is not just about trees (magnificent and entirely worthy of our protection though they are in their own right). This is also about biodiversity, climate change, water, poverty and human rights, and the preservation of indigenous ways of life. In short, the forests are the “ground zero” of the twin challenges of climate change and sustainable development.
Our extended responsibility for the total value chain of our products is also something I believe in strongly. As such working on forest protection is for me a logical part of the Unilever Sustainable Living Plan we rolled out in 2010, given that the enormous global demand for food is one of the main drivers of deforestation.
Some of the materials used to manufacture your company’s products are “forest risk” commodities such as palm oil. How is Unilever ensuring that it is part of the solution rather than part of the problem of tropical deforestation, and what is the business case for doing so?
Unilever is the world’s single largest end-user of palm oil, purchasing nearly 3 percent of global palm oil production. Whilst we can not do everything alone, with this scale comes responsibility—to make sure that our supply chains are not driving tropical deforestation, and to tackle endemic social issues such as forced labour and the protection of indigenous people.
We take this responsibility extremely seriously. In 2015, we were already the largest end-user of physically certified palm oil in the consumer goods industry. By 2018, our aim is that 80 percent of our palm oil volumes will be physically certified, and by 2019, 100 percent.
However, our scale also brings us a huge opportunity—not just to de-risk our own supply chain to protect our own reputation, but to help drive sector-wide transformation. Without this, a commodity that is so central to our business will always be problematic, no matter how sustainable the palm oil we actually source is.
We have started to tackle this challenge within our own supply chain, by directing investment towards examples of the broader transformation we would like to see. For example in Sei Mangkei, in North Sumatra, we have invested 130 million euro in a new palm oil refinery that will allow us to work more effectively towards 100 percent physically certified oil, to improve traceability back to the plantation and to bring thousands more smallholders into our supply chain.
We are also using our influence to raise standards across the palm oil supply chain, by applying it to levers such as certification, methodologies and financing, and through engagement across governments and industry. The quality and quantity of this engagement has leapt in recent years, with the Consumer Goods Forum (CGF) commitment to zero net deforestation by 2020, the New York Declaration on Forests and the formation of the Tropical Forest Alliance all moving the agenda forward in different ways. Translating industry and political commitments into tangible change on the ground is the hardest bit, however, and it’s here where we still need to make real progress.
In 2015, an advocacy group identified Unilever as among the “laggards” for its policies and practices related to sourcing of “conflict palm oil.” How did you respond?
Different stakeholders have different priorities and different ways of measuring progress, and as the profile of palm oil has risen, more and more civil society groups have started to pay attention. While most have praised us for our leadership, some have criticised what they saw as a gap between our ambitions for, and work on, sector transformation, and the “nuts and bolts” of our sustainable palm oil sourcing policy. So in late 2015/early 2016, we took the opportunity to further evolve our policy to make sure it properly reflected our ambitions. We invited a range of NGOs and other stakeholders to contribute their views, and we held an independently-facilitated workshop in London that enabled people to meet us and discuss the issues in more depth.
Out of that process came our new palm oil policy, in which we committed to the 2019 deadline for 100 percent physically certified oil, as well as setting out our requirement for compliance across our suppliers’ entire operations, not just the palm oil that we buy from them. I’m pleased to say that the same advocacy group now rates us as a “front runner”—for now! It is the job of NGOs to continually push companies’ comfort boundaries, although we continue to prefer working with NGOs that are willing to come on this journey with us and be part of the changes needed, which often require involvement of third parties.
In Paris in 2015, you committed the company to move toward preferential sourcing of commodities from jurisdictions that were making progress on reducing deforestation—what progress have you made on that pledge over the last year?
We have made some good initial progress on making this pledge come alive.
At a small scale, we have started to test the idea of preferential sourcing from deforestation-free jurisdictions in the district of Kotawaringin Barat, in Central Kalimantan province, Indonesia. Here, like across Indonesia, smallholders have much lower productivity than the commercial plantations, despite making up approximately 40 percent of the country’s palm oil production. That means that there are big opportunities to increase yields, improve livelihoods and protect forests at the same time. However, increasing the productivity of smallholders is often constrained by issues such as lack of farmer groups and training, and limited access to markets and finances.
In response, we have agreed to partner with the provincial government of Central Kalimantan, the district government of Kotawaringin Barat and the NGO/expert institute INOBU to take a “village by village” approach to sustainable palm oil. In practice this means supporting all smallholders in the village of Pangkalan Tiga to reach RSPO and ISPO standards of palm oil production, as well as mapping the palm oil smallholders in at least three further villages in the district, helping thousands of farmers to obtain land certificates, business licences and environmental permits.
The certification of all smallholders in Pangkalan Tiga would make it the first certified “sustainable village” in the world of palm oil. The partnership is the first public-private agreement between a sub-national government and an international buyer, and if successful has the potential to be expanded to other areas in the district.
At a larger scale, we recently announced our involvement in a new finance facility for investing in deforestation-free sourcing areas. The Tropical Forests & Agriculture Fund is an initiative of the Norwegian Government and IDH, which aims to protect over 5 million hectares of forests and peatlands in tropical production and sourcing areas directly through projects secured by 2020.
It will do this by de-risking private capital investments into large deforestation-free production and protection initiatives. The Fund will be launched in mid-2017 with an initial committed capital of $100 million from the Norwegian governments’ International Climate and Forest Initiative (NICFI), based on a 2020 capitalization target for the Fund of US$ 400 million, to be drawn from bilateral and multilateral public donors as well as private sector partners. The Fund aims to trigger US$1.6 billion in private capital investments and by 2020 to fund more than 20 production and forest protection projects globally.
The Fund will be an incentive for governments of countries with tropical forest areas to reduce deforestation and related greenhouse gas emissions, by driving enhanced, high productivity investments in countries and jurisdictions that have policies to that regard in place.
Unilever plans to invest $25 million in the Fund over a five year period, targeting palm oil smallholders in our priority sourcing areas in Indonesia and West Africa. We see this money as a highly leveraged investment to secure our long-term access to sustainable sources of the commodities on which our business relies.
What has emerged as the most difficult challenge in implementing the company’s commitments to get deforestation out of its supply chains?
One of the biggest challenges we face is that the vast global palm oil supply chain is incredibly long, complex and opaque, and so working out where palm oil that has been grown on recently deforested land is entering our supply chain is very hard. Unilever needs palm oil not just for our food products but also for our personal care portfolio, the latter in the form of numerous palm oil derivatives which increases the complexity of our palm oil supply chain significantly.
Even achieving a basic level of traceability has been a challenge, although we have made good progress and now 73 percent of our volume can be traced back at least to the processing mill in the country of origin. A critical tool in this effort has been the World Resources Institute’s Global Forest Watch platform, which recently announced new functionality to use the power of satellite monitoring to track and manage forest-related sustainability performance.
Whilst keeping up momentum towards 100 percent traceability, we are at the same time working with Proforest, Rainforest Alliance and Daemeter on our existing mill traceability data to identify high-risk sourcing areas around those mills.
It is these challenges, along with the inherent limitations of certification schemes, that have been the driver for our commitment to preferentially source from entire jurisdictions that are making demonstrable progress to protect forests whilst increasing agricultural productivity.
What is the primary reason that more companies haven’t followed Unilever’s lead in pledging to promote transformational change in eliminating deforestation from commodity supply chains?
I think, actually, that more companies are starting to play transformative roles in commodity supply chains. M&S, for example, is very aware of the importance of raising standards across the industry and a real champion of collaborative working to achieve this across an impressively wide array of products and commodities. More broadly, the Consumer Goods Forum resolution of zero net deforestation by 2020 foresees a very transformative role for itself and member companies, although implementation is neither as uniform nor as aggressive as we need, of course.
Leadership starts with a firm commitment at the top, and a longer term vision for business beyond the confines of quarterly reporting. Companies often worry that their supply chains need to be whiter-than-white before they can stand up and talk about the broader changes that need to take place—they worry they will be shot down in flames if they don’t have a perfect story to tell about their sourcing. But at Unilever we find value in acknowledging our limitations and mistakes, but making the case for the transformational change anyway. And this makes sense—because a company does not operate in a vacuum, but in a much larger system, and both need to change together.
What’s the single most important thing governments in tropical producer countries could do to accelerate progress toward more legal and sustainable commodity production?
Governments of tropical forest countries could accelerate progress hugely by implementing the land use reforms necessary to grow their economies without destroying forests.
These include clarifying concessions and ownership (for example through the completion of Indonesia’s One Map initiative), improving transparency of decision-making, protecting the customary land rights of forest communities and indigenous people, strengthening the enforcement of forest and clamping down on illegal deforestation.
They could then ensure all relevant policies—from financing to infrastructure—were fully aligned with and supportive of such a “green growth” agenda.
At a sub-national level, they could demonstrate political appetite and practical actions to partner with sustainable commodity buyers, public and private donors and investors and local NGOs to create deforestation-free jurisdictions.
…and governments in rich consumer countries such as the US and the UK?
The Paris Agreement, adopted at COP21, sent a strong message about the critical role that forests can play in international climate action and included explicit mention of REDD+. The stand-out country in this space is Norway, as their International Climate and Forest Initiative has established REDD+ “pay for performance” partnerships with key forest countries such as Brazil and Indonesia. The commitment at COP21 by Norway, alongside the German and UK Governments, for another $5 billion for REDD+ over the next five years should jump-start other, longer-term commitments from other developed countries that can be aligned to the jurisdictional “produce protect” approaches discussed earlier.
Governments in consumer countries can also play a huge role in strengthening the signals sent by the private sector for deforestation-free commodities—particularly through their procurement, trade and development assistance policies. Some countries have made good progress, but we need more ambition and coherence, for example at EU level, where the EU should broaden its approach to illegal logging to include forest-risk commodities such as palm oil and soy.
You recently participated in the World Economic Forum in Davos. How do you think high-level networking events like that, as well as business groupings such as the Consumer Goods Forum, and multi-stakeholder partnerships such as the Tropical Forest Alliance 2020, can help actually reduce deforestation?
Events like the World Economic Forum in Davos may sometimes look like talking shops and there is of course always that risk. But in actual fact, such meetings play a very important role. They get people together, including those representing many different countries and companies, who literally would not be in a room together at any other time during the year. And having got them together, they provide a strong incentive for people to cooperate, collaborate and come to some sort of decision or agreement that moves the agenda forward in some way. Initially, it may seem like this is more of a shuffle than a step or even a leap—but sometimes it is these small movements that actually lead to much larger things. The New York Declaration on Forests, which was a significant coming-together of global commitments to tackle deforestation, was catalysed by a series of meetings in Davos earlier that year.
Business groupings such as the CGF and multi-stakeholder partnerships such as the Tropical Forest Alliance play a slightly different role, both to the World Economic Forum and to each other. The CGF helps companies to focus on their commodity supply chains, making their way through all the complexity and the challenges. While the Tropical Forest Alliance brings a much wider set of committed stakeholders together to focus on priority geographies. It is early days of course for the latter but much good progress has been made, not least the recent “Marrakech Declaration for the Sustainable Development of the Oil Palm Sector in Africa.”
Your endorsement of our new book Why Forests? Why Now? referred to it as a “welcome source of optimism.” In light of the daunting challenges faced by the global community in reaching the goals of the Paris Agreement, why are you optimistic that we’ll be successful in marshalling the potential of tropical forests to contribute?
I’m optimistic because there seems to be huge amounts of energy, momentum and good will in this area. People are actively wanting to come together and make something big happen, and we know that there are triple wins—for forests, people and climate—there for the taking. As Desmond Tutu recently said, “I am a prisoner of hope.”
Over the last few years, an increasing number of companies that produce, trade, or buy “forest risk” commodities have pledged to get deforestation out of their supply chains. Now, the focus of advocacy groups has rightly shifted to monitoring the implementation of those commitments, and a powerful new tool—Trase—released late last year will increase transparency and accountability.
But voluntary efforts by progressive companies will not on their own be sufficient to end tropical deforestation. A “jurisdictional approach” that marries public and private efforts at the scale of political units offers a promising way forward.
Corporate pledges aim to end the leading cause of forest loss
For years, poor people have been blamed as the main cause of tropical deforestation. In our new book, Why Forests? Why Now?, my coauthor Jonah Busch and I bust that persistent myth. Instead, the leading driver is the commercial-scale clearing of forests to establish new soybean fields, cattle pastures, oil palm and tree crop plantations to produce globally-traded commodities. Much of the clearing is illegal, and a significant portion of the products are exported to rich-world markets.
This industrial clearing of tropical forests is bad news for the climate. Figure 1 below illustrates the magnitude of carbon dioxide emissions from deforestation associated with the trade of such products across continents over the period from 2000 to 2009. Production and trade have only increased since then.
The good news is that civil society activism, new technology for monitoring forest cover loss, and enlightened leadership at a number of companies have combined to generate an increasing number of corporate commitments to get deforestation out of commodity supply chains. As illustrated by the timeline in Figure 2, a trickle of such commitments starting a decade ago has become a cascade, culminating in 53 companies signing on to the New York Declaration on Forests in 2014.
Now, as a 2020 deadline for compliance approaches, companies are busy figuring out how to implement their commitments, and forest watchdogs are focused on making sure that they do. On the sidelines of the climate negotiations in Marrakech in November 2016, the beta version of a new tool was unveiled that will be helpful to both in ensuring accountability.
The Trase platform—for “Transparency for Sustainable Economies”—was developed by the Stockholm Environment Institute and the Global Canopy Programme. It combines data from satellite monitoring of forest loss with customs, trade, logistics, and production data to illuminate the origin of commodities being imported to any country in the world, and thus the degree to which they may be associated with deforestation.
Crucially for the monitoring of corporate commitments, and a big step forward from the analysis presented in our book, Trase also identifies the traders and importers involved in the supply chain along the way. So if you want to know how much soy was sourced by a specific commodity trader such as Bunge from a particular high-deforestation municipality in Brazil in 2015, and where it ended up (hint: likely China, Spain, or Peru), TRASE can give you an answer.
Necessary, but not sufficient
Ensuring follow-through on the corporate commitments made to date is important in its own right. Given the large area of undeveloped forest land controlled by producers, and the breadth of sourcing by the traders and buyers that have made those commitments, implementation would make a non-trivial contribution to reducing deforestation. And because many corporate pledges also include a social dimension (e.g., “no exploitation”), full implementation would also reduce the misery often inflicted on local communities through appropriation of their land or mistreatment of their labor.
Unfortunately, a 2015 assessment led by Climate Focus suggests that progress toward the goal of eliminating deforestation from commodity supply chains has been slow on the part of the multinationals who signed up to the 2014 New York Declaration on Forests. But even had it been faster, we need to be honest that implementation of voluntary corporate commitments alone is unlikely to turn the tide on tropical deforestation. As a theory of change, it fails the “3E” test of Effectiveness, Efficiency, and Equity:
Effectiveness: As long as there are markets that are relatively insensitive to environmental and social criteria (for example, the top three consumers of palm oil include China, India, and Indonesia), there will be producers willing to supply them. And forest areas set aside by companies to comply with their commitments are vulnerable to encroachment by third parties in the absence of law enforcement, or even reallocation by government if the land is part of a concession rather than owned outright.
Efficiency: Under the voluntary model, every company has to invest in tracing its supply chains down to the level of individual farms or plantations in order to manage the risk of sourcing from recently deforested land (unless they source from districts with no deforestation at all).
Equity: In order to manage that risk and cut costs, companies might choose to cut smallholders out of their supply chains. Further, cut-off dates (i.e., products from land deforested before year X is okay, after year X is not okay) reward those producers that deforested early, and disadvantage forest-rich areas that came late to the party.
The promise of the “jurisdictional approach”
An idea gaining traction as a way to address those concerns is to link implementation of corporate commitments to efforts to reduce deforestation at the scale of political jurisdictions—districts, states, provinces, or even entire countries—linking public and private sector roles in joint efforts to decouple commodity production from forest conversion. In large countries such as Brazil and Indonesia, action at the sub-national scale may be an essential complement to national-level policy efforts.
Under this “jurisdictional approach,” multiple stakeholders—including companies as well as government agencies, smallholders, indigenous and civil society groups—come together to agree on goals for better land-use, and how to achieve them. Performance standards (such as “no deforestation” and “no exploitation”) would be then applied at the scale of entire administrative units rather than at the level of individual farms, plantations, or concessions. For example, the Roundtable on Sustainable Palm Oil (RSPO) has launched a pilot program to explore certification of entire jurisdictions.
A key rationale for the jurisdictional approach is recognition of the irreplaceable role of government in land-use planning, conflict resolution, and law enforcement. As a result, the approach is not the same as the so-called “landscape” approach, efforts focused on the supply sheds of particular commodities, or ecological units (such as watersheds), unless they happen to coincide with political/administrative boundaries.
Targeting the jurisdictional scale for transforming commodity production has the potential to score higher on the 3E test than voluntary corporate commitments alone:
Effectiveness: By assessing performance at the scale of an entire jurisdiction, there would be less opportunity for “leakage” to irresponsible producers within or between areas covered by voluntary commitments. Indeed, covering all producers in a jurisdiction would provide incentives for progressive companies to lobby governments for improved regulation and enforcement to level the playing field and maintain their own access to markets.
Efficiency: While such jurisdictional-scale assessment of performance could not completely substitute for the monitoring of individual companies, it could allow a shift to a somewhat “lighter touch” in risk management. The Trase platform will allow companies and watchdogs alike to zero in on areas of greater or lesser relevance to individual supply chains.
Equity: Within such a system, it would be less risky for buyers to source from all producers within a high-performing jurisdiction—including smallholders. And because of the involvement of government, the jurisdictional scale could also provide an entry point for dealing with land-use conflicts, including those stemming from illegal land conversion in the past. It is also the appropriate scale for rationalizing land-use planning, which could include land-swaps to free up degraded land for agricultural expansion, while protecting intact forest areas previously slated for conversion.
The theory of change and its assumptions
In large, forest-rich countries such as Brazil, Indonesia, and Peru, much of the authority for land-use rests with sub-national authorities. But what would prompt sub-national political leaders to sign up for such a change process? In 2014, leaders of some 20 tropical states and provinces participating in the Governors Climate and Forests Task Force committed to reduce deforestation by 80 percent in return for commensurate and certain results-based finance. Yet a recent study by Daemeter Consulting found that at least in Indonesia, there is not currently a “value proposition” for such leaders to depart from practices that result in deforestation-as-usual.
While no single financial or market incentive is likely to do the trick on its own, the idea behind the jurisdictional approach is that a bundle of public and private incentives could be assembled that would provide a sufficient value proposition for change. Those incentives could include:
Preferential market access: At the climate talks in Paris in 2015, Unilever and other leading companies committed to preferential sourcing from jurisdictions making progress toward sustainable forest management. If those commitments could be translated into firm contracts to buy commodities from those jurisdictions if indicators of progress toward reducing deforestation were achieved, that would represent a tangible incentive for change.
Preferential access to finance and investment: A number of banks that have pledged to get deforestation out of their lending portfolios have also committed to increase their investment in “green” projects. In addition, new investment funds are being set up with jurisdictional “screens” that make eligibility for access to money contingent on performance criteria applied at the scale of the entire district or province. The Government of Norway launched just such a fund with a target of $400 million in Davos last week.
Fiscal incentives: High-performing jurisdictions could also be rewarded with cash, either through public sector funding allocations (as is being done in India, where forest cover is included in the formula for revenue distribution across states) or international climate finance (such as those available under REDD+—the framework for reducing emissions from deforestation and forest degradation incorporated into the Paris Agreement).
Reputational rewards: In addition, many political leaders want to be recognized for their contributions to solving the global problems of deforestation and climate change, as well as delivering local benefits such as controlling forest fires or corruption, or providing smallholders with access to international markets. At an official side event at the climate talks in Marrakesh, a governor from Peru emphasized that leaders of provinces in the Amazon wanted them to be branded as “green.”
Together, such incentives could combine to support a “race to the top” as public and private sector interests in reducing deforestation converge. As a district head in Central Kalimantan put it when I met him last year, “I want Unilever to buy palm oil from the smallholders in my district, rather than from that other district down the road.”
But this theory of change rests on a number of assumptions that might not always hold:
That such incentives will be sufficient to overcome incentives for business as usual on the part of political leaders, who often are able to reap votes and financial benefits from promoting forest conversion. The potential value of countervailing market and fiscal incentives will vary across commodities and jurisdictions.
That companies will be willing to stick their necks out to participate in multistakeholder efforts, and lobby for increased government action. Effective government pressure to disband a group of companies that had pledged to work collectively to implement no-deforestation commitments in Indonesia has had a chilling effect there.
That companies will be willing to engage in promoting transformation, rather than yield to the temptation to simply disengage from risky jurisdictions. Companies could rationally decide to focus their sourcing from areas where most forests are already long gone rather than at the deforestation frontiers most in need of change, leaving those frontiers to exploitation by companies unencumbered by no-deforestation commitments.
Threading the needle
For advocates of protecting forests and the people who live in and around them, the challenge is how to simultaneously hold companies accountable for performance in implementing their commitments, while encouraging them to engage in transformational change efforts at the jurisdictional scale—a tiny needle’s eye to be threaded indeed. (The nature of the challenge was demonstrated at Davos last week: in response to a Greenpeace report critical of HSBC for financing forest destruction in Indonesia, the company’s CEO defended his company by claiming that continued engagement of poor-performing clients was necessary for change.)
Threading the needle at jurisdictional scale will require that public sector, private sector, and civil society actors reward intermediate milestones of progress—such as delineating protected areas, legalizing established smallholders, and increasing law enforcement effort—even though all problems are not yet solved. It’s a slippery slope away from a focus on ultimate outcomes—such as the “phase three” REDD+ payments for performance in reducing deforestation championed in our book—but expecting immediate achievement of high performance standards jurisdiction-wide is unrealistic in most places.
Such an effort will also require deciding what progress at the jurisdictional scale looks like. For example, while the RSPO pilot program mentioned above has developed principles to underpin the concept of “Jurisdictional Certification,” it will also need to develop indicators for their practical application.
Finally, such an effort will require providing companies with “cover” for good faith engagement in jurisdictions on the path to transformation, but not there yet. If companies believe that they will be vilified for sourcing from an area that experiences deforestation, even while they are actively working toward transformational change, they are unlikely to take that risk. One corporate representative recently commented to me that being part of a multistakeholder effort involving credible civil society organizations could help provide a level of comfort for such risky engagement.
The bottom line
In Why Forests? Why Now?, we characterize REDD+ as a great idea that hasn’t yet been tried at scale. While there are a number of promising initiatives in Brazil, Indonesia, Peru, and other countries, the same can be said of the jurisdictional approach. By turning a spotlight on the current forest-related performance of supplier jurisdictions and the companies that source from them, Trase provides a timely tool that will help us get on with it.
This blog is one of a set based on a panel hosted by the Stockholm Environment Institute and the Global Canopy Programme at the Global Landscape Forum in Marrakesh during UNFCCC COP 22. The panel discussion focussed on the risks, challenges, and opportunities involved in monitoring progress towards more sustainable commodity supply chains. Links to complementary blogs from the same discussion forum by Charlotte Streck of Climate Focus and Rod Taylor of the World Resources Institute can be found here.
The world’s elite—plus a few ringers like me—gathered last week in the small Swiss village of Davos to discuss the state of the world at the 2017 Annual Meeting of the World Economic Forum (WEF). Although not formally on the agenda, the issue of tropical forests infiltrated a number of discussions. But first, a quick recap of the meeting’s big themes that provided the broader context.
Frances Seymour speaks at Davos 2017
Photo by Gianina Caviezel
Three leading themes
There is no typical Davos experience. Over the week-long forum, participants can choose from more than 400 events on the official program, many with limited sign-up, ranging from speeches by world leaders in the 1000-seat plenary hall to taking part in an extraordinarily moving simulation of A Day in the Life of a Refugee (in which I managed to lose my identity card and money within the first five minutes). Other events—where (I assume) the “real” business is conducted—are by invitation only. And those are before you get to the dozens of early breakfasts, evening receptions, and late nightcaps sponsored by individual companies, countries, and others. But from events accessible to me, and chance conversations in lounges and shuttle buses, I’d say the top three themes of this year’s meeting related to technology, China, and Trump.
The Fourth Industrial Revolution was the theme of the 2016 WEF, and carried over into 2017 discussions. Companies focused on software, social media, and robotics were prominent among participants and sponsored events and spaces. Rapid technological change in areas such as artificial intelligence and self-driving cars was highlighted as creating opportunities for business, but also potential disruptions to society, especially inequality and unemployment. A particularly creepy exhibit was a demonstration of Sofia, a human-sized android with close-to-true facial expressions and skin tone, who is probably already overqualified for many of today’s lower-skilled jobs.
The Rise of China
A second theme was the rise of China. The keynote speech by President Xi Jinping, the first Chinese head of state to attend the WEF, stimulated the loudest buzz in the corridors. His robust defense of more inclusive, sustainable, and better-governed economic globalization as an engine for achieving global prosperity struck many participants as an inflection point in the world order, if not turning it upside-down. He specifically called out the Paris Agreement on climate change as an example of the need to adhere to multilateralism. Executives from Chinese companies were well represented in discussions ranging from ending illegal fishing to generating employment in Africa.
The Transition to Trump
The leadership transition in the United States cast a shadow over every conversation in Davos. An inevitable question to each panel or interviewee was about the likely impact of the Trump administration on whatever issue was being discussed, ranging from climate change to gender equality. While everyone acknowledged the unpredictability of the new president’s policies, my overall impression of the answers to those questions was one of forced optimism that maybe they wouldn’t be as bad as they look in prospect. For example, Secretary of State John Kerry used the WEF as a platform to enumerate the many foreign policy achievements of the Obama Administration that he hoped the new regime in Washington would sustain.
Stoking nostalgia for the outgoing administration, Vice President Joe Biden gave a moving talk about his cancer moonshot, and a plenary address affirming the need to maintain both economic and political elements of the current liberal international order. It was telling that hundreds of WEF delegates chose to attend a Friday evening concert by the Afghan Women’s Orchestra rather than watch Trump’s inaugural address.
Forests at Davos: MNCs embrace SDGs
A life-sized wooden sculpture of a tree by John Grade was the first thing greeting 2017 WEF participants as they entered the Congress Centre. And while the program did not include any sessions focused on forests per se, tropical forests featured prominently in discussions focused on issues such as climate change and food systems. Even celebrity chef Jamie Oliver, in an interview with Ariana Huffington, mentioned rainforest devastation as one of the reasons we need a “food revolution”.
One of the most powerful features of the WEF is the Global Situation Space, a giant screen outside the main plenary hall on which digital data on global trends are presented by Carnegie Mellon University in time-lapse animations. Presentations on the Climate Crisis and the Food Crisis (to which yours truly contributed) gave due attention to tropical deforestation as a contributor to greenhouse gas emissions and food insecurity.
Watch Food Crisis: The Big Picture, presented at Davos 2017
I had arrived at a plenary panel on climate change prepared to be annoyed by the usual exclusive focus of such discussions on energy, but was pleasantly surprised by the extensive air time given to forests. Although the session was somewhat marred by an awkward exchange between Al Gore and Prime Minister Hasina over whether or not Bangladesh should build a coal-fired power plant in the Sundarbans mangrove forests, the panel featured Yu Xubo (the CEO of COFCO) talking about getting deforestation out of commodity supply chains, Prime Minister Erna Solberg announcing new Norwegian funding toward this objective, and Stuart Gulliver, the CEO of HSBC, defending himself against a Greenpeace report slamming the bank’s finance of forest destruction by palm oil companies in Indonesia.
The theme of this year’s WEF was Responsive and Responsible Leadership, and one expression of that theme was to feature the U.N. Sustainable Development Goals in elements of the program. The colorful circular SDG lapel pins were a frequently glimpsed accessory on suits, and a few corporate leaders talked about the SDGs with the zeal of recent converts. My sample of one-on-one conversations included banter with a billionaire who expressed skepticism about the human causes of climate change, and responding to an Indonesian businessman’s interest in the disproportionately high emissions from crops grown on peat soils.
But overall, corporate leaders did not vote with their seats to demonstrate interest in sustainability. A number of sessions explicitly framed around related topics were poorly attended, such as a useful one on Mainstreaming Sustainable Production where fewer than half of the chairs were filled. So while it’s great that the WEF is leading Davos Man to water, the next step is to figure out how to make him drink.
Lagging behind norms on gender and food
Over wine and cheese one evening, a former WEF Secretariat employee described the organization to me as “an essential self-authorizing instrument of global governance”. To the extent that he’s right, I found it discouraging that the WEF lags behind in modeling norms that I had naively started taking for granted in the world that I usually inhabit.
Much attention was given to the WEF’s 2017 achievement of ensuring that at least 20 percent of the participants were female. But a number of all-male panels suggested the need for continued evangelism for the Owen Barder Pledge. A New York Times article providing a glimpse of a woman’s experience in Davos rang true to my own, especially the structural disadvantage of constantly having to change shoes.
Free food and drink were abundant and delicious in Davos. But despite posters on the wall exhorting participants to show leadership by eating a plant-based diet—and presumably the need to be sensitive to the dietary restrictions of culturally diverse participants—beef was featured as entree of set menus for several of the catered meals that I attended. As detailed in our new book, Why Forests? Why Now?, beef production is an outsized contributor to tropical deforestation and the emissions that cause climate change.
Why Forests? Why Now? draws upon science, economics, and politics to show that tropical forests are essential for climate stability and sustainable development, that now is the time for action, and that payment-for-performance finance is a course of action with great potential for success.
Climate change threatens the world’s poorest people most. They are least protected from climate-related disasters by savings or insurance, least able to access modern health care when diseases spread, and least able to move to safer locations when storms rage. Preventing dangerous climate change is critical for promoting global development. And saving tropical forests is essential to doing both.
At CGD, Frances is leading a new project designed to create global consensus on the importance of forest conservation and to promote results-based financing for a program known as REDD+. REDD stands for “Reducing Emissions from Deforestation and Forest Degradation Plus Preservation,” with the "plus" connoting conservation and sustainable management of forests and the enhancement of forest carbon stocks. Forest loss and land conversion generates as much as a fifth of world’s emissions of heat-trapping gases, so unless we can find a way to dramatically slow deforestation, there is little chance of holding the increase in average global temperatures this century below 2 degrees Celsius—widely seen by climate scientists as the tipping point to runaway climate change (see this new World Bank infographic for a taste of what’s likely in store within your lifetime).
The key, Frances explains, will be to make forests more valuable standing than chopped down.
“Global demand for commodities that replace forests—such as cattle to produce beef for domestic consumption and export, soybeans, palm oil, pulp and paper—is extremely high. So if we want to address deforestation, we have to find ways to reform supply chains so that markets are sensitive to the environmental impacts of the source of those globalized commodities.”
So, I asked, “How do we do that?”
“As long as there are bad actors that are willing to deforest highly valuable landscapes to make some money, then the government has got to step in,” Frances says.
In addition, “there is a group of consumer-facing retail companies that have made a commitment to remove deforestation from their supply chains,” for example, paper products companies and palm oil producers who pledge that their activities will not fuel deforestation. However, she adds, there are limits to how much such private voluntary initiatives can accomplish.
The winning combination, she says, is “a combined approach that marries the voluntary private initiatives with strengthening of governance and regulatory frameworks in the producer countries.”
Because people all over the world will benefit from reductions in tropical-forest destruction, REDD+ proposes mobilizing finance in high-income countries to help off-set the costs of forest preservation costs in developing countries—in effect, to make protecting the forests worth more than cutting them down.
Currently this mechanism lacks of the one thing it needs: a willingness in the global North to pay for forest protection in the global South. Negotiators had hoped that restrictions on emissions in the industrialized countries would generate demand for carbon credits. So far it hasn’t worked out that way.
“Everyone got all dressed up and went to the altar for REDD+ anticipating that an agreement [to restrict global emissions] would be reached [at the 2009 Climate Summit] in Copenhagen,” Frances explains.
“That didn't happen, and subsequently there's been scrambling in "REDD+ world" to come up with a new vision for how the finance and [REDD+]mechanism would work in the absence of such an agreement and large scale finance,” she explains.
One risk is that REDD+ would fall prey to some of the problems that affect foreign aid (see Nancy Birdsall’s Seven Deadly Sins: Reflections on Donor Failings). And one way to avoid these problems—and to increase Northern willingness to pay—is to build into the program new pay-for-performance approaches, such as CGD’s Cash-on-Delivery Aid, that focus on outcomes rather than inputs and processes.
Of course, adopting such an approach would require having reliable, detailed, and frequently updated information on the status of tropical forests. Fortunately, such a system is now available.
As REDD+ has been struggling to sink roots, CGD has been developing a tool known as Forest Monitoring for Action (FORMA), which uses satellite data to generate regularly updated online maps of tropical forest clearing. FORMA is at the core of the World Resources Institute’s Global Forest Watch 2.0, which unites satellite technology, data sharing, and human networks around the world to fight deforestation
FORMA data “is critical to any REDD+ mechanism,” Frances says. “It has to be clear where deforestation has taken place, and FORMA does that and also makes transparent where deforestation is taking place now.”
One approach made possible by FORMA data is to determine a deforestation rate baseline, so that a country's performance in reducing deforestation is compared to what would have happened otherwise, and then pay for improvements. CGD senior policy associate Michele de Nevers explains how this could work in a recent policy paper that builds on David Wheeler’s previous work on a Forest Conservation Performance Rating System or fCPR (for more, see also my recent Wonkcast with Wheeler and WRI’s Nigel Sizer).
Together with Michele and other CGD colleagues, and drawing upon her own formidable knowledge of forests, development and climate change, Frances will author a report presenting evidence of the importance of forests to averting catastrophic climate change, and co-chair a working group to develop consensus around the potential and technical approaches to pay-for-performance finance for forest conservation.
I’m delighted to be welcoming Frances to CGD for what promises to be important, challenging and exciting work. I share her hope that a rapidly growing awareness of the urgency of the climate threat, a growing confidence in pay-for-performance finance approaches, and the sophisticated monitoring technology embodied in FORMA will persuade wealthy countries to help foot the bill for forest protection in the developing world.
Sound far-fetched? Perhaps. But Frances and I and many of us here at CGD are convinced it’s worth trying. After all, averting runaway climate change—not to mention protecting the homes of the lemurs and bonobos—is in everybody’s interest.
In May 2014, Nancy Birdsall, William Savedoff, and Frances Seymour visited Brazil as part of a three-country study to gain insights into the value of future expansion of performance-based payments in other countries. This brief is based on discussions with government officials, NGO staff, private entrepreneurs, and independent researchers in Brazil about the policies and programs that are associated with reduced deforestation and forest degradation in Brazil, with particular attention to the influence of the Brazil-Norway Agreement and the Amazon Fund.
The Center for Global Development (CGD) and Organisation for Economic Co-operation and Development (OECD) will hold two thematically-linked, consecutive events.
We will begin with the release of the 2014 OECD Development Assistance Committee (DAC) annual flagship publication, the Development Co-operation Report (DCR), at 9:45 a.m. This year’s DCR focuses on the challenges and opportunities for Mobilising Resources for Sustainable Development. A presentation of the report’s key findings and recommendations will be followed by a discussion and questions from the floor.
Following a coffee break, CGD fellows Frances Seymour and Jonah Busch will present a preview of the findings from a forthcoming CGD book, Why Forests? Why Now? at 11:15 a.m. The book draws upon science, economics, and politics to show that tropical forests are essential for climate stability and sustainable development, that now is the time for action, and that payment-for-performance finance is a course of action with great potential for success.
The first part of the program will provide a valuable overview of the available resources and options for mobilising financing for sustainable development. The second will allow a deeper look at how to apply the ideas in the OECD-DAC report to the specific and urgent challenge of protecting the climate and promoting development by slowing tropical deforestation.
Please join the Embassy of France and the Center for Global Development as we honor CGD Senior Fellow Frances Seymour, who has been awarded the title of Officer by the French Republic’s Order of Agricultural Merit (Officier de l'Ordre du Mérite Agricole) for her work to reduce deforestation and promote sustainable development as Director General of the Center for International Forestry Research (CIFOR) from 2006 to 2012. The Order of Agricultural Merit, consisting of three ranks: Commander, Officer and Knight, is an order bestowed by the French Republic to individuals for their outstanding services to agriculture in public duties or in the practice of agriculture. It also rewards people who distinguish themselves in scientific research or in related publications. To date, women account for only 27% of those receiving this honor and few of these are American women.
Seymour received the honor for her leadership in encouraging dialogue between the worlds of science and policy, developing a culture of impact assessment at CIFOR, establishing the annual Forest Day, and insisting on the highest quality scientific research. As a CGD Senior Fellow, Seymour leads the Tropical Forests for Climate and Development initiative. Her work has focused on creating a global consensus about the importance of forest conservation and promoting results-based financing for REDD+ (Reducing Emissions from Deforestation and Forest Degradation).