The world’s population is growing at an immense rate. According to projections from the U.N., in the next 30 years it is expected to grow by 2 billion people, from 7.7 billion currently to 9.7 billion in 2050. It’s an issue that impacts almost every area of global policymaking, especially against a backdrop of climate change, and one that demands sustainable and innovative solutions. Aside from pressing issues such as where all of these new people will live, balancing the dual interests of maintaining the world’s biodiversity while being able to generate enough food to sustain the world’s new population will be a challenging balance to strike.
The delicate balance
The role of forests in mitigating climate change is critical; they play a key role in fostering biodiversity, as well as enabling water and soil conservation. At the same time, between 1990 and 2020 the world lost 420 million hectares of forest — an area larger than the European Union. Fighting deforestation is therefore one of the stated aims of the EU’s Green Deal. In November, the EU announced the adoption of new proposals to stop deforestation as part of a raft of initiatives aimed at supporting delivery of the broader commitment set out in the Green Deal to reach carbon neutrality by 2050. More specifically, the proposed regulation aims at curbing forest degradation, by ensuring that the products bought and consumed by EU citizens on the local market are deforestation free. It cites wood, soy, beef, palm oil, cocoa and coffee as the main contributors to the issue, and will aim to place due diligence rules for any company wanting to sell these products on the EU market.
Millions of people around the globe rely on forests for food security, livelihoods and energy sources. Successful implementation of any such initiatives will therefore have to ensure that in such a globalized supply chain, any knock-on impacts for people living in other countries are carefully managed, in order to ensure that the EU’s progress doesn’t come at the expense of sustainable development elsewhere.
Collaboration is key
Many globally-active companies are already leading their own private efforts to fight deforestation. Close collaboration with third parties such as policymakers and non-governmental organizations (NGOs), as well as knowledge-sharing with those parties, can be an effective way of accelerating progress. A good example of one such alliance is the Lowering Emissions by Accelerating Forest finance (LEAF) coalition, which includes supporters from both the private and public sector, and aims to provide financial support to those countries or states committed to “increasing ambition to protect tropical and sub-tropical forests and reduce deforestation”. The coalition, which recently announced at COP26 that it had successfully mobilized $1billion in funding, has so far screened applications from some of the corners of the world with the highest deforestation challenges, such as the Brazilian Amazon and countries in West Africa, like Nigeria and Ghana. Through this initiative, LEAF is able to provide unprecedented financial support to local governments in order to manage any unintended financial shocks to individuals that can result from the imposition of new regulations and targets intended to limit deforestation.
It is for precisely this reason that Bayer — as a global leader in health and nutrition — is working with the entire value chain to make sure they take a holistic approach to avoid deforestation and to put forward concrete solutions that will protect biodiversity and forests. A good example of their efforts in this area is an initiative to work closely with farmers to increase the sustainability of their agricultural systems, including by decreasing land use pressure. Understanding that converted land has ten times more economic value than forest land, the company has committed to helping individual farmers to increase revenue on their existing agricultural land to try to reduce the temptation to expand. To do this, the company is investing €2 billion per year in developing new and sustainable innovation, while also providing farmers with high-yielding seeds, safe pesticides and digital solutions for precision farming, alongside training in good farming practices that foster regenerative agriculture. It has also introduced an incentive program to deter farmers from converting land even when they have legal permits to help to limit any financial impact that such a decision may prompt.
In Brazil, an area with one of the world’s largest deforestation challenges, Bayer’s Responsible Soy Project is a good example of how private business can support the impact on farmers of the implementation of new legislation down the supply chain. Introduced in response to the 2015 European Compound Feed Manufacturers’ Federation (FEFAC) new soy sourcing guidelines, the initiative — a collaboration with Cefetra — supported local farmers in their need to meet a standard of responsibility in several areas, including environmental stewardship, land management, legal compliance and employment practices. The initiative was able to offer 360-degree support to its large network of farmers, and helped many of them to achieve Certified Responsible Soy (CRS) accreditation.
Five years on, the first group of farmers has been certified, producing roughly 1.6 million mt of sustainably produced soybeans. It is a level of success that would have taken much longer to reach, had either Cefetra or Bayer set out to achieve it alone; collaboration was key.
Managing the human impact
Implementation of any new regulation must be carefully monitored to ensure that any negative or unintended impacts can be managed effectively. In the case of the EU’s deforestation initiative, this means paying close attention to any shifts in supply and demand that may be occasioned by price shocks resulting from shifting regulation.
Ensuring that the trade system remains inclusive must therefore be a top priority of this legislation, particularly in high-risk rural areas where any impact on supply chains could ultimately put farmers at risk of falling into poverty. An important consideration that must be taken into account to avoid such a scenario is ensuring that any risk categorization doesn’t exclude certain farmers, or even countries, from trading with certain regions. Any such move could impede the ability of companies to source from high-risk countries in line with their own internal due diligence regulations, which could ultimately cut off those farmers who rely on this trade the most for survival.
It is also worth noting that according to the current draft regulations, farmers would be required to physically separate products depending on where they are being exported to, which could potentially lead to higher costs. Therefore, a mass-balance approach is a more suitable concept, where documentation and evidence of deforestation-free production is moved through the supply chain. It ensures that the volume of deforestation-free products claimed by importing operators does not exceed the amount produced by licensed farmers in any given time period.
Companies like Bayer, which work on the ground with farmers all over the world, including in vulnerable areas, are therefore uniquely placed to help the EU implement its ambitious deforestation goals, while balancing the complex needs at every single stage of the supply chain. Collaboration could, therefore, not only ensure a higher degree of success when it comes to the implementation of new regulations but accelerate any benefits too. It makes sense, for the environment, for the global trade system and, most importantly, for all of the people who depend on both of those things to survive — and that is all of us.
1European Parliament. (2021). The European Union and Forests. Available at: https://www.europarl.europa.eu/factsheets/en/sheet/105/the-european-union-and-forests