Annual report

EU REDD Facility: Highlights from 2020

Developing solutions to tackle drivers of deforestation

At the EU REDD Facility, we work with partners in tropical forest countries in Africa, Asia and Latin America, developing innovative solutions and approaches to improve land-use governance and reduce pressure on the world’s forests.

To do this, we work on:

This year, COVID-19 brought unprecedented challenges for the world’s forests and the people depending on them. The pandemic has had serious social, economic and environmental consequences in our partner countries. Forest-risk commodity exports decreased dramatically, jeopardising financial security in agricultural sectors. At the same time, operators and producers prioritised tactics for their economic survival over environmental standards.

Yet despite these difficult times, our partners remained committed to improving land-use governance as part of their efforts to slow, halt and reverse deforestation. This report presents highlights from the Facility’s work in 2020.

Cocoa pods hanging on a tree.


Assessing payment for environmental services models for progress towards sustainably produced cocoa

With sustainability becoming a key part of how chocolatiers market their products globally, major companies and state actors are increasingly committing to eliminating deforestation from cocoa supply chains. In tropical forest countries, small-scale producers contribute a large share of the cocoa traded globally.

Smallholder farmers – central to the transition towards sustainable production – struggle however to invest in sustainable practices when they live below the poverty line and have limited access to finance. For this reason, some large companies that have committed to eliminate deforestation from their cocoa supply chains are encouraging smallholders and communities to implement sustainable practices in exchange for technical and financial support.

The Facility has deep experience with designing and testing payment for environmental services (PES) approaches for smallholder sustainable cocoa production and forest restoration. In 2020 we used this experience to do a stocktake of PES experiences in Côte d’Ivoire, conducted in cooperation with Ivorian Forest and Environment ministries.

Our assessment confirmed that incentive mechanisms are important for covering the initial investment costs of shifting to sustainable production. For change to happen at scale, it is essential to ensure that these initiatives not only support the initial costs of agroforestry and replantation, but also provide solid income diversification opportunities.

Nonetheless, our conclusion is that PES approaches should be viewed as a means and not an end. In some cases, similar results can be achieved without financial incentives through actions such as legal reform, higher or less volatile commodity prices, or developing timber or non-timber forest product value chains.

To strengthen analysis of the economic viability of cocoa agroforestry systems, the ‘1 for 20 Partnership’  – which aims to scale up financing for sustainable agricultural production in Côte d’Ivoire – collected additional data. These insights were shared with cocoa and forest stakeholders. In addition, we worked closely with Cargill, a major cocoa trader, and the PUR Projet, a French social enterprise, to assess revenue impact of agroforestry on smallholders.

Growing interest in supply chain transparency approaches in response to evolving market requirements

The complexity and opacity of global supply chains has made it difficult to tackle deforestation in mainstream markets. For the majority of commodities with deforestation risks, there is little or too scattered information to support action and policy implementation. In such contexts, working with our partner the Transparency for Sustainable Economies (Trase)  initiative proves useful in tracking commodities from their places of production to consumer countries through exporters and importers. This approach systematically links supply-chain actors to specific production areas, in this way better identifying risks and opportunities. This also responds to producing countries in need of more and regular information on how to prepare for and adapt to emerging market expectations and requirements.

Building on this approach and progress made in tracking jurisdictional sustainability in the context of palm oil production in Indonesia, we worked with public and private sector stakeholders to assess the feasibility of transparency approaches for cocoa sectors in Côte d’Ivoire, Ghana, Colombia and Ecuador.

With the NGO Nitidae, we collected cocoa supply chain traceability data for Côte d’Ivoire and Ghana and identified main data gaps. We are assessing the feasibility and potential of implementing a transparency approach to manage sustainability risks of cocoa production in Côte d’Ivoire and Ghana, to inform EU-West African policy dialogue on sustainable cocoa.

In response to evolving market requirements for agricultural commodities around the globe, Colombia and Ecuador recently started building domestic information systems to monitor forest-risk commodity trade. With the Colombian Ministry of Environment and its technical institute IDEAM, we initiated a study on how to enhance transparency and traceability in the cocoa sector. The study will inform Colombia’s National Roundtable in charge of monitoring zero-deforestation commitments. In Ecuador, we assisted coordination between ministries and the UN-supported PROAmazonia  on the scope and feasibility of a cocoa traceability and transparency system.

Finally, we worked with NGOs, companies in the soy business and Trase experts to address deforestation risks in the soy sector, which is where the EU has greatest opportunities for reducing its commodity trade-driven deforestation. Enhanced supply-chain transparency in the soy sector enabled a constructive dialogue between private sector actors (soy traders, retailers and investors) and civil society organisations. In the context of the French strategy on imported deforestation, these insights help to address deforestation risks in trade in a pragmatic and non-discriminatory way and inform targeted interventions in soy-related deforestation hotspots in producing countries such as Brazil.

Oil palm harvesters in Indonesia.

Facility partner countries increasingly use the Facility’s Land-use Planner to support decision making

We saw interest this year in our Land-use Planner from Colombia, Vietnam, the Republic of the Congo and Côte d’Ivoire. The tool helps develop land-use scenarios, compare social, economic and environmental impacts, and weigh policy decisions. In 2020, we made an improved version of the tool available, enabling institutional users to be more autonomous in using the tool and bringing together a wider set of information to the community of users, such as land-use data, methods and case studies.

In Colombia, the Ministry of Agriculture used the Land-use Planner to evaluate scenarios for stabilising the agricultural frontier and reducing deforestation. We also introduced the Planner for the first time in Asia. In Vietnam, authorities piloted the tool for planning in the Lac Duong district, where local forest ecosystems are under threat from expansion of coffee production and other agribusiness.

In the Republic of the Congo, the tool helped stakeholders in the Tropical Forest Alliance’s Africa Palm Oil Initiative build scenarios for sustainable palm oil development. In Côte d’Ivoire, local actors leading on the regional spatial planning process expressed interest in piloting the tool to inform planning dialogues. Partners in Cameroon continued to use the tool to inform participatory land-use planning decision making at local level.

Community forestry as a way to improving livelihoods and achieving climate commitments

There are many ways that communities protect, manage, and utilise their forests. Some rely on logging and the timber trade to support their livelihoods. In Colombia, promoting community forestry is a key priority under the National REDD+ Strategy. Responding to a request by Colombia’s Ministry of Environment, we analysed ways to ensure that community forestry is economically viable and supports livelihoods, and at the same time that it contributes to national climate and forest-related objectives and commitments. Our analysis will be used to inform the National Roundtable on Community Forestry.

In Indonesia, we worked on ways to facilitate legal production and trade of timber from customary forests while also supporting sustainable management, protecting against deforestation, and improving customary groups’ livelihoods. Our findings and recommendations have been presented to the National Forestry Council and key stakeholders to aid policy and regulatory processes regarding customary forestry.

Community forestry works in Urabá, Colombia.

Deforestation-proofing public and private investments to leverage finance to meet climate and forest goals

Mainstreaming climate objectives within sectoral policies and balancing competing development priorities can be a major struggle. When this is the case in tropical forest countries, investments that impact forests and land use are often uncoordinated or incoherent. This constitutes a barrier to implementing climate and sustainability objectives. The Facility’s Land-use Finance Tool (LUFT) helps partners map investments that shed light on potential mismatches between climate and land-use-related policy objectives and planned spending in their countries and districts. In this way, they can look beyond climate finance to track flows of finance that drive pressure on forests and contribute to global greenhouse gas emissions.

In Cambodia, the LUFT was used to track financial contributions to implementing the National REDD+ Strategy, as well as investments to be aligned to REDD+ objectives. This helped to build the case for more international support and increase the coherence of spending. The Democratic Republic of the Congo also started to use the LUFT to track all public land-use spending since 2009, with the aim of informing the Central African Forest Initiative.

Lessons learnt from LUFT case studies have been presented to the Climate-aligned Finance Tracking Group facilitated by Climate Policy Initiative, as well as the Economics of Land Degradation Initiative of GIZ, the Global Environment Facility’s Restoration Initiative and UNDP-led initiatives in Latin America.

COVID-19: a global pandemic providing risks and opportunities for forests, climate and the EU REDD Facility

The COVID-19 pandemic has brought to the forefront some of the most pressing global challenges in recent history, including for the world’s forests and the people depending on them. Preventive measures and travel restrictions to slow down or halt the spread of the pandemic have and will continue to have severe social, economic and environmental consequences in Facility partner countries. In Colombia for instance, a study has shown that as a consequence of reduced law enforcement due to COVID-19, deforestation is on the rise again in the Amazon region. These trends are being confirmed in several countries in Africa and South-East Asia. At the same time, forest-risk commodity exports decreased drastically, generating financial risks in several agricultural sectors and lowering environmental and sustainability priorities of operators and producers. The COVID-19 pandemic has revealed that global supply chains are more vulnerable than ever imagined, forest communities and civil society representatives are under increasing pressure, and sustainability goals are making place for economic survival. The uncertainty caused by the COVID-19 pandemic makes the future unclear.

Yet we see many Facility partners, including our private sector partners in Côte d’Ivoire for instance, still committed to the sustainability and Green Deal agenda. Working with our partners to transition to virtual working environments, in 2020 we brought together large stakeholder groups to continue work virtually. These included high-level government officials, such as the directorate-generals in charge of land use planning and agriculture in the context of a Facility-organised Tropical Forest Alliance meeting on palm oil legality in the Republic of the Congo. We organised virtual stakeholder consultations in Indonesia, Côte d’Ivoire and the Democratic Republic of the Congo, and facilitated technical dialogues around cocoa supply chain transparency between line ministries in Colombia and Ecuador. More than ever, we are collaborating with local partners and experts to advance work on halting deforestation and promoting legal and sustainable land use.

Rice fields in Siem Reap Province, Cambodia.

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