commodities Archives - EU REDD Facility

Reducing the bitterness of coffee from Vietnam’s Central Highlands

20 June 2022/by Carlos Riano

I love coffee in the morning, its taste, its aroma and the boost of energy it gives me to start the day. While enjoying a fresh brew some years ago, I began to think about what was behind my morning cup – where do the beans come from? What are the landscapes where they are produced like? And who are the people that harvest this coffee?

These are questions I continue to reflect on in my work. Over the last 10 years, I have supported efforts to reduce deforestation, much of which has been driven by the production of agricultural commodities, including coffee. In my current work, I focus on finding ways to support sustainable coffee production in Vietnam.

*Agricultural landscape of Di Linh, Lam Dong Province. Source: Nguyen Que Huong Le, MDRI*

The world’s largest producer of robusta coffee

In recent decades, the Central Highlands region of Vietnam has become the world’s main production area of robusta coffee. Major companies like Nestle, Jacobs Douwe Egberts, Lavazza, Olam and Starbucks source from this region, bringing Vietnamese coffee to supermarket shelves and cafés around the world. Likewise, national coffee companies like VinaCafe and Trung Nguyen have arisen as a symbol of the coffee-culture in Vietnam.

The transformation of the Central Highlands into a coffee capital reminds me of Colombia, my home country. In Colombia, the famous Coffee Triangle landscape experienced a boom in the production of arabica coffee at the beginning of the 19th century owing to agricultural expansion policies. Currently, the region has become the symbol of the ‘Café de Colombia’ origin certification, which is recognised as one of the best coffees in the world.

I see many parallels between the coffee stories of the two countries, and the economic, social and environmental impacts associated with coffee cultivation. The environment in the Central Highlands of Vietnam, just like in my country, is suffering from the negative effects of unsustainable coffee production. Rapid expansion of coffee crops is driving deforestation. Coffee is also spreading to areas inappropriate for its cultivation because of unsuitable soils and limited access to water. As a result, coffee farmers deplete groundwater resources and use an excessive amount of chemicals and fertilisers.

Environmental issues are mixed up with socioeconomic challenges. Despite coffee being a valuable commodity, the region has not bore the fruits of increased coffee production and has one of the highest rural poverty rates in the country. Opportunities for minority groups to benefit from the coffee trade are limited, especially for women. Between the ’70s and the ’90s, the arrival of international companies and an accelerated immigration caused by national resettlement policies, including the establishment of new economic zones and the land-use reform or “Doi Moi”, led to the boom in the price of coffee. Since then, local communities and ethnic minorities have been largely marginalised, being unable to adapt their traditional practices to the economic development of the region, due to their limited formal education and lack of capacity to adapt to the new business requirements. This gives a bittersweet taste to coffee coming from the region.

How sustainability helps shift the paradigm

Instead of exacerbating the situation for farmers and the environment, I want my cup of coffee to contribute to addressing climate change, while leaving no one behind. But how can I sweeten up my morning cup of coffee and make it sustainable?

There is a common understanding that soil, water, forests and other natural resources are limited, and that our planet that is warming because of humans activities. Making the transition towards sustainability is therefore our duty. These efforts should involve the whole coffee supply chain – producers, traders and, of course, consumers. We all must ensure that our cup of coffee is sustainably produced. But what does than mean?

I like the definition of sustainability used by the United Nations, which includes three dimensions:

An economic dimension, where everyone in the commodity supply chain must obtain a fair wage for their work and that profits are shared equitably
A social dimension, with inclusive and ethical work, reasonable working hours, no child labour, and giving options to farmers for optimising their croplands
An environmental dimension, where the exploitation of natural resources is done sustainably, biodiversity is protected and global warming kept below 1.5 ºC

Vietnam has an ambitious agenda for transitioning towards sustainability. Among other things, the country has committed to implement an ambitious national plan to address climate change as part of its nationally determined contribution (NDC) under the Paris Agreement and has committed to the Sustainable Development Goals (SDGs). Both incorporate sustainability as an inalienable principle and include several policies and measures in the agricultural and forest sectors aimed at curbing carbon emissions and reducing poverty.

The use of organic fertilisers, improving water irrigation techniques and protecting, conserving and managing sustainable forest lands, and providing access to education, health and decent jobs to people

Coffee certification – turning commitments to action?

International commitments are a good starting point, but how can we implement sustainability on the ground?

A first attempt has been through certification schemes that aim to improve the environmental and social impacts of coffee production by encouraging the use of organic fertilisers, the protection of forest and biodiversity, and fair labour practices. Certification schemes for coffee were first introduced in Vietnam more than 20 years ago. Some of these schemes, including Rainforest Alliance, Fairtrade, C.A.F.E or 4C, are active in the Central Highlands. In 2019 and 2020, Vietnam was reported to be the world’s top sustainable coffee producer (GCP, 2021) with more than 360,000 tons annually, which is almost double Brazil’s and triple Colombia’s production of certified coffee.

Despite the implementation of these schemes, certified coffee remains a fraction of overall production (around 1.75 million tons in 2020), and environmental, social and economic challenges persist in the Central Highlands. Among other things, most coffee growers cannot afford the costs of obtaining certification. The premiums offered for certified coffee do not compensate for the production costs associated with meeting the standards. In fact, the labour’s wage is usually not integrated into the certification schemes.

And finally, there are difficulties in implementing the traceability systems, which track coffee beans from the plantation to the final consumer. These systems are highly time consuming to set up. But they are also characterised by low monitoring and evaluation level of social and environmental issues, such as child labour, local communities’ inclusion and compliance with regulations on the use of pesticides and other chemicals.

Acting on sustainability at the right scale: the jurisdiction

Advertisement of crops without glysophite — *Advertisement of crops without glyphosate, promoting crops free of chemicals as a good agricultural practice. Source: Satrio Wicaksono, EFI*

Although certification initiatives have helped increase sustainable coffee production and allowed consumers to recognise sustainable products, they cannot address the deforestation that occurs at the margins or outside of certified concession areas or farms. Measuring sustainability performance at subnational jurisdiction level, rather than at farm or concession level, can help achieve impact at scale while ensuring the participation of smallholders and minorities. With this orientation, stakeholders from different sectors, positions, interests and needs, including local governments, civil society organisations and companies, can dialogue on sustainable coffee production.

With a jurisdictional approach, stakeholders can measure the sustainability in an entire administrative area (province, district or others). By working at the jurisdictional level, it is possible to safeguard forests, carbon and biodiversity across the landscape, not just at farm level. Such an approach also reduces costs for groups of farmers and for small and medium agribusinesses. It further provides a strong incentive for identifying and supporting collective, joint solutions, given that failure to reach or maintain the standard impacts all actors involved. This helps to transform entire landscapes towards sustainability.

At EFI, we are testing this new recipe to promote sustainable coffee in two districts of Vietnam’s Central Highlands. It is composed of few but powerful elements:

Social inclusion at the jurisdiction level, using a multistakeholder platform with the leadership of the local government institutions, to allow representatives of the coffee supply chain, including local communities and ethnic minorities, that are in the jurisdiction to actively participate in the sustainable production of coffee.
Environmental enhancement, which occurs when sustainable agriculture practices and land-use planning are in motion along the supply chain. These practices reduce water consumption, protect the forest and soil and increase the quality of the coffee in the jurisdiction.
Economic benefits for the people in the jurisdiction. With an improved organisation of producers, more transparent and shortened supply chains and existing certifications, the coffee produced in the jurisdiction is more competitive and can comply with the evolving international market requirements, like those in the proposed EU regulation on deforestation-free commodities.

We are developing a system to measure, track and assess the sustainability of coffee production at the jurisdictional level, beyond farms. It includes the participation of all stakeholders along the supply chain, fostering collaboration and transparency, while working to protect the forest, water and soil in the jurisdiction and improve working conditions. At the end of the day, we aim to transition the entire coffee sector towards sustainablity.

That’s the cup of coffee that I want to smell and taste.

Six ingredients of successful partnerships for legal and sustainable forest-risk commodities

20 June 2022/by Satrio Adi Wicaksono

The EU and other countries are developing measures aimed at curbing deforestation and forest degradation driven by the expansion of agricultural land used to produce commodities such as beef, cocoa, coffee, palm oil, soy and wood. In addition, consumers increasingly want to know that goods and products they buy are produced without harming people or the environment. But how can we ensure legal and sustainable value chains that unleash local wellbeing and protect forest and biodiversity without excluding smallholders? The answer may be in the mixing of six ingredients to whip up successful multistakeholder partnerships that can support legal and sustainable supply chains of forest-risk commodities.

Partnerships at the heart of the EU REDD Facility

Partnerships are at the heart of what we do at the EU REDD Facility. We work collaboratively with a broad range of stakeholders in the public and private sectors to develop innovative solutions and approaches. Our aim is to improve land-use governance and reduce pressures on forests in commodity-producing countries across Africa, Asia and South America.

Partnerships were a recurring theme at the recent 15^th World Forestry Congress, which took place from 2 to 6 May 2022 in Seoul, Republic of Korea. The Congress concluded with the adoption of the Seoul Forest Declaration, which outlines six priority actions. The first of these actions is a call for sharing and integrating “the responsibility over forests […] across institutions, sectors and stakeholders in order to achieve a sustainable future”, given that “forests transcend political, social and environmental boundaries and are vital for biodiversity and the carbon, water and energy cycles at a planetary scale.”

During the Congress, together with RECOFTC, we organised a side-event that focused on ‘forests without boundaries.’ Titled “Innovative partnerships to promote legal and sustainable forest-risk commodities,” the side-event featured five panellists of diverse backgrounds. They explored key success factors and lessons learnt from various multistakeholder partnerships aimed at supporting legal and sustainable supply chains of forest-risk commodities. The event also built on the EU REDD Facility’s experience, including its Transparency Pathway, which charts six pragmatic steps to make collaboration between public and private supply chain actors more impactful and inclusive, while reducing costs and gaining positive visibility in global commodity markets.

Satrio Adi Wicaksono from the EU REDD Facility moderated the side event featuring five panellists. Mathis Freytag, Doreen Asumang-Yeboah and Chay Senkhammoungkhoun (seated from left to right) joined in person. Karina Barrera and Tran Quynh Chi joined virtually. Credit: Beatrix Cornally (RECOFTC)

The six ingredients

The event identified the following six ingredients to concoct successful partnerships to promote legal and sustainable supply chains of forest-risk commodities.

1. Dig in with a demand-driven dialogue

Regardless of the level and scope of the partnerships, they must be built upon an open, equal and fair dialogue. The actors enter the dialogue willingly as they see the benefits they can draw from being part of such partnerships. Chay Senkhammoungkhoun, Project Field Coordinator at RECOFTC, often facilitates village-level dialogues on land and commodity governance between local communities and the private sector in Lao PDR. He noted that because actors have different needs and interests, they must be ready to “give” and “take” during the negotiations.

2. Trust: the main ingredient

All panellists highlighted the importance of trust as the main ingredient of a successful partnership. Such trust is built upon a shared understanding among actors of the partnership’s objectives and vision.

Further, partnerships require a clear structure, in which each actor is aware of its role and responsibility. As an example, Karina Barrera, Undersecretary of Climate Change, Ministry of Environment, Water and Ecological Transition of Ecuador, cited the ProAmazonia programme in Ecuador. She explained how the government can demonstrate leadership by coordinating the planning, implementation and monitoring of sustainable supply-chain programmes at various governance levels.

Another trust enhancer is transparency in communication with partners about expectations and actions. Existing information and transparency instruments in the context of the supply chains of forest-risk commodities, such as Trase, can create a more efficient partnership.

3. An inclusive and collaborative kitchen

All panellists agreed that the process should not exclude any important stakeholder group, and that often underrepresented groups, such as smallholders, indigenous peoples, local communities, and women, must be meaningfully involved in the partnership. However, an inclusive partnership requires some legwork.

Doreen Asumang-Yeboah, Natural Resource Governance Practitioner from Ghana, has been active in the Ghanaian civil society space for over a decade. She reminded the audience that stakeholder mapping is crucial. Stakeholder groups, such as the private sector or local communities, are composed of people with different aspirations. Understanding these nuances ─and the societal context─ is key to ensure true inclusiveness.

Further, additional support to ensure effective participation of underrepresented groups might be needed, for example in the form of capacity building. Sufficient funding for this is thus important.

4. A palatable environment

Incentives are key to sustain the partnership in the long run. Tran Quynh Chi, Regional Director Asia Landscape, IDH, who has the experience of developing multistakeholder partnerships in the agricultural sector in various landscapes and jurisdictions throughout Asia, highlighted the importance of finding a business case for each of the involved stakeholders. Economic and trade incentives are especially useful to make partnerships palatable to many actors across the commodity supply chains, in both producing and consuming countries.

All types of incentives need to be clarified and optimised over time as part of creating and strengthening enabling environments. As noted by Karina Barrera from Ecuador, the government plays an important role. For example, at the subnational level, the government can coordinate jurisdictional deforestation-free programme involving all partners. The coordination includes connecting producers with potential buyers or off-takers and with the financial sector or donors. Further, the government at various levels provides the regulatory and institutional frameworks, in addition to promoting the progress achieved.

5. Don’t start from scratch

Mathis Freytag, Advisor, Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), emphasised that there is no need to reinvent the wheel when a new partnership is developed. For example, an existing multistakeholder platform might be repurposed to meet new partnership objectives, especially if it works well and includes all key actors. For many of these actors, continuing and building upon what works is preferable, as it is more efficient and cost-effective.

At the very least, new partnerships must leverage success recipes from past and existing partnerships. In the context of international partnerships to promote deforestation-free supply chains, lessons learnt from the timber sector, especially from the Voluntary Partnership Agreement (VPA) processes of the EU Forest Law Enforcement, Governance and Trade (FLEGT), can inform potential partnerships focusing on other forest-risk commodities.

6. A pinch of patience

All panellists underscored that partnerships are not built overnight. Building trust and effective partnerships that don’t go stale takes a lot of time, patience and hard work. All partners must therefore be aware of the various limitations when setting up a partnership and adjust their expectations accordingly. Thus, the timeline must be realistically developed starting from the planning stage.

*Palm oil smallholders in Indonesia. Source: Good Return*

As we enter our second decade, we at the EU REDD Facility continue to mix and blend these six ingredients of successful partnerships. They form part of the recipe for innovative and collaborative approaches and solutions to advance our partner countries’ forest and land-use governance and development goals. We invite all interested partners to exchange further ideas on multistakeholder partnerships to support legal and sustainable supply chains of forest-risk commodities.

Innovative partnerships to promote legal and sustainable forest-risk commodities

2 May 2022/by EU REDD Facility

On 2 May 2022, as part of the XV World Forestry Congress, the EU REDD Facility and RECOFTC will co-host a hybrid side-event. The side-event will show how improved accessibility and transparency of information along complex commodity supply chains can help improve governance, build trust among trade partners, and support accountability. It will explore how to achieve this while ensuring that smallholders, local communities, and indigenous peoples can benefit from international trade.

A new transparency pathway to decoupling commodity trade from deforestation

15 June 2021/by Thomas Sembres

Global supply chains are notoriously complex and opaque, making it very difficult to address sustainability issues in mainstream markets – including deforestation, sustainable livelihoods, child labour and land grabbing.

In recent years, however, there’s been a surge of global supply chain transparency instruments, data and analysis to help company and government efforts to stop deforestation associated with commodity trade. These include:

online databases
dashboards
scorecards
traceability platforms
interactive maps
independent local monitoring initiatives

These advances in supply-chain transparency are transforming capacities to identify more systematically the greatest opportunities for action. For instance, subnational data analysis across major commodity producing countries in the tropics shows that the vast majority of deforestation linked to the production and trade of agricultural commodities occurs in a handful of places where the commodities are produced.

However, this is not where efforts to manage deforestation risks in commodity supply chains are systematically concentrated.

Traditional approaches to tracking forest-risk commodities

Traditional approaches to tracing and verifying forest-risk commodities rarely penetrate a market far enough to be able to separate the bad from the good, at scale. The bad is often kept hidden in complex and opaque supply chains. Good practices like sustainable production don’t get the market visibility they deserve, and thus often fail to receive incentives from commodity markets to sustain their efforts.

The following are illustrations of the proportion of total world production covered by a sustainability certification scheme (green) versus the proportion that concentrates 80% of commodity-driven deforestation within four global supply chains (red). These are estimations made by EFI based on various sources.

Initial situation: efforts and risks disconnected

Share of the world production covered by a sustainability certification scheme (green) versus the proportion concentrating 80% of commodity-driven deforestation in four global supply chains (red) extrapolated from patterns of the largest producing tropical countries for each of these supply chains (Brazil, Indonesia, Argentina and Côte d’Ivoire).

This is a situation without prioritisation of efforts, with a high disconnect between areas concentrating the highest risks and voluntary certification and verification efforts.

Clearly, the data revolution alone is not enough. Many actors are overwhelmed with information or remain unable to seize the opportunities that it can provide. Increasingly, the most significant challenge is making data useful for specific policy purposes, based on shared understanding of trusted information.

A new approach: the Transparency Pathway

A new approach is possible: one that leverages transparency at both ends of major agricultural commodity supply chains, and that can turn policy aspirations into pragmatic measures to decouple deforestation and trade.

Our new Transparency Pathway offers a pragmatic method to shift commodity markets towards sustainability, by harnessing the potential of existing information and transparency instruments.

Transparency Pathway: Channelling efforts towards risks

In this situation, efforts are channelled towards risk areas through the Transparency Pathway, after agreeing on a risk-based mechanism with stricter requirements (e.g. mandatory third-party verification) for high-risk areas only. This also enables reducing the burden of proof on producers in low-risk areas.

Six steps for harnessing the power of data

The Transparency Pathway is a tested method that builds on our experience in supply chain transparency in various countries. In particular, it draws on our partnership with Trase, the first initiative to unlock subnational supply chain transparency at scale in tropical countries.

The method charts six pragmatic steps designed to make collaboration between public and private supply chain actors more impactful and inclusive, while reducing costs and gaining positive visibility in global commodity markets. Incremental information disclosure is used as a mechanism to reduce information asymmetry among actors, improve governance and support increased accountability.

The six steps are:

Building trust by engaging stakeholders
Measuring subnational commodity deforestation
Assessing jurisdictional sustainability
Tracking supply chains to jurisdictions
Establishing a central point of information
Independent monitoring

These steps are adaptable to the country and supply chain context, and the whole process can be applied to any measurable sustainability issue.

A jurisdictional approach

We have chosen to take a jurisdictional approach in the Transparency Pathway for several reasons:

Possibilities for balancing detail and scale.
Jurisdictional approaches provide a middle ground between finer approaches that are impossible or too costly to implement at scale, in the absence or incompleteness of property-level data on deforestation, production and supply chain connections; and on the other hand, coarser scale approaches. These may be risk analysis at national level that cannot have the necessary finesse for targeted and proportionate interventions, ending up with much fewer levers for action.
A strategy to include vulnerable actors.
Traditional farm-level certification approaches tend to exclude the people with the greatest needs, such as small-scale farmers and indigenous communities. This is because they usually place the burden of proof on commodity producers. Small-scale producers rarely have the skills and resources needed to meet this burden of proof and obtain certification. Small-scale producers can also struggle to meet sustainability standards if their land is not zoned for legally planting crops, if administrative procedures are complex, or if official monitoring and law enforcement are not fairly or evenly directed. Only the government and local authorities can address these governance issues.
Recognition of government authority to control land use and supply chains.
The advantage of involving local governments is that they often have the authority and legitimacy to implement sustainability policies – and sometimes, in decentralised systems, to issue regulations – that cover the entire land area under their control. They may also have the authority to monitor and enforce relevant laws and regulations. When their authority is limited, through their institutional connections and the involvement of the national administration, they can leverage regulatory changes at the necessary level. Adopting a jurisdictional approach in monitoring enables building on existing national information systems as much as possible.
A strategy to reduce the risk of leakage across supply chains and territories.
Deforestation, water contamination, and child labour are among many challenges that unfortunately have a great capacity to shift across places and supply chains. These ‘leakage effects’ are a constant concern in efforts to reduce deforestation and forest degradation. Jurisdictional approaches allow for going beyond the inevitable fragmentation of other approaches that would focus on just one supply chain or group of actors in a territory. ‘Free riders’ or ‘poor performers’ don’t go unnoticed and peer pressure from other supply chain actors can help bring them on board. Leakage effects may still occur between jurisdictions, hence the interest in nesting a subnational jurisdictional approach within a national process. This is the approach taken in the Transparency Pathway, inspired by the Terpercaya experience in Indonesia.

A guide to decoupling commodity trade from deforestation

Governments, supply chain organisations and anyone convening a multi-stakeholder process to improve the sustainability, governance and reputation of a sector or supply chain will find the Transparency Pathway a practical guide for harnessing the transformative potential of data.

Its principles have been informed by several initiatives supporting the sustainability of commodity supply chains. These initiatives have facilitated constructive engagement among stakeholders, and made the Transparency Pathway a tested way to inform domestic policy making, investment decisions and commodity trade.

We invite you to explore the method further – take a look at the new Transparency Pathway website and don’t hesitate to get in touch for more information.

Terpercaya: Building a supply chain of understanding and trust

27 November 2020/by Jeremy Broadhead

I’m frequently asked why tropical countries shouldn’t clear forests when many industrialised countries cleared theirs years ago. It’s an interesting question and one that I’ve been grappling with since I first went to Indonesia over 25 years ago.

I lived in Central Kalimantan in 1994-1995 working on the research component of the Indonesia-UK Tropical Forest Management Programme. From Palangkaraya, the provincial capital, it was around eight hours drive to the project’s hut where I lived – the pondok – in a pristine forested valley in the Kayu Mas timber concession in Kotawaringin Timur. All along the route, the forest had been logged and heavily loaded logging trucks were a frequent sight and a considerable danger in travelling along the steep slippery roads.

*Wheel loader and logging truck in Central Kalimantan, 1994. Source: Jeremy Broadhead*

I spent a lot of time counting and measuring trees across the project’s permanent sample plots, each of which contained over 200 tree species – far more than my home country, the UK, which has only around 50 native species in total. Most of the plots were ultimately logged as part of a growth and yield experiment. At that time, forest cover in Indonesia was still over 60% compared to 11% at home.

In recent years, as the rewilding and reforestation movements have gained strength in the UK, I’ve thought more about this discrepancy. In the UK the situation was the result of an ice age which sharply reduced species diversity, and thousands of years of human activity and forest clearance. In England, forest cover has been estimated to have been only 15% in 1086 when Britain’s earliest public record the Domesday Book was written. Having reached a low point of 5% at the turn of the last century, significant efforts were made to increase UK forest cover to a present-day 13%.

That Indonesia had much more forest and with much higher species diversity did not mitigate the loss of forest. But it was also clear that the demand for land and forest products was increasing as it has done all over the world for many centuries. In the years since, oil palm plantations have been established on 40% of the land area in Kotawaringin Timur. Just over half the district is natural forest but only 1.9% of that is intact. Since 2000 the district has lost 43% of its tree cover and many actors, economies and consumers around the world have played a part in this transition.

*Global Forest Watch information on Kotawaringin Timur*

In 2015, just over 1 million tonnes of palm oil were produced in Kotawaringin Timur, the fourth highest-producing district in Indonesia, with 3.5% of national production. Half was consumed domestically, about 9% in the EU and a minor quantity in the UK. India and China consumed around 10% each. Kotawaringin Timur has, however, experienced significant economic growth since the 90s and between 2003 and 2017 poverty rates more than halved while GDP almost doubled between 2010 and 2019.

*Trase palm oil supply chain data for Kotawaringin Timur*

Extensive areas of forest have been lost to agricultural development in Kotawaringin Timur and I often wonder about the Dayak communities and forest technicians with whom I used to work. Sangai, the village where the Camp 48 concession headquarters stood along with the project’s guesthouse and laboratory, must have been a quiet place before the loggers arrived. Along the road between Camp 48 and the project’s pondok were small houses, constructed by Dayak workers to honour the forest spirits.

Living a transitory life between the pondok and Camp 48 with occasional visits to Palangkaraya and Jakarta, I didn’t get many insights into traditional life but I was fortunate enough to visit Tumbang Gagu, a village in Upper Mentaya District in Kotawaringin Timur where a famous longhouse stands. We spent the night with the inhabitant Dayaks, slaughtering and roasting a pig to eat with rice and plants from the forest. They couldn’t tell us how old the longhouse was, only that it was there when Krakatau erupted, which was in 1883. As well as using timber for construction, villagers were reliant on the surrounding forests for food, medicine and other products used in daily life such as rattan and dyes.

Forest protection and restoration – whose responsibility?

Inequalities in land acquisition have plagued human development the world over and desire for agricultural land and economic development has played a huge part. However, if deforestation and dispossession are accepted as a part of economic development, then where does that leave the environment and forest-dependent people? To suggest that all countries let their forest cover fall to the levels seen in the UK could also constitute a race to the bottom which would do untold damage to the global environment and the legacy left to future generations. And in this age of increased awareness of human rights, capabilities also exist to uphold local rights and labour rights and to separate economic growth from negative social and environmental impacts.

In the context Kotawaringin Timur, although customary groups have been able to claim forest since the milestone ruling of the Indonesian Constitutional Court in 2013, there are still no registered customary forests. This may be a result of a lack of information, organisation or leadership, or the choice of a different ownership and/or management model by local people. Unfortunately, information is not readily available but by tracking customary forests as they are claimed and registered, information from organisations like the Customary Territory Registration Agency (BRWA) can allow supply chain actors to determine whether local rights are being respected. This, in turn, can help to protect forests, as has been found in many parts of the world.

Development, agriculture and forests – time for a new story

Through past centuries production of agricultural and forest commodities has supported livelihoods, driven economic growth and underpinned welfare improvements, but it has also been a major cause of forest loss. Demand for many products considered to be drivers of tropical deforestation and forest degradation continues to increase, but in recent decades, climate change and biodiversity loss have driven countervailing efforts to protect and restore forests.

The palm oil industry is a major contributor to the economy of Indonesia and in 2018, 36.6 million tonnes of palm oil were produced, equal to roughly half of the world’s supply. More than 80% of the palm oil was exported, valued at USD 18.2 billion. The expansion of oil palm plantations has helped lift more than 10 million Indonesians out of poverty since 2000 and the palm oil industry supported the livelihoods of 23 million people in 2018, 4.6 million of them involved in independent smallholdings. Palm oil is also used in an astonishing array of products used around the world, its productivity and versatile characteristics making it highly valued.

Despite all the positives, the palm oil industry is often seen in a negative light. Along with other agricultural commodities, such as rubber, soya, coffee, and cocoa, palm oil has been blamed for destroying the environment and violating the rights of communities and workers in areas where it is produced.

While various initiatives have responded by making efforts to reduce deforestation in commodity supply chains, political rifts have opened with different lobbies making opposing claims regarding the impetus for, and fairness of advocacy and regulation. The differences in opinion have highlighted the need for improved supply chains of information on land and forest management. Better information exchange could help bridge gaps in understanding along the commodity supply chain and better differentiate factors underpinning the contradictory huge EU demand for palm oil and its negative reputation.

EU economies undoubtedly want palm oil, but the call to stop exporting deforestation and the emissions it produces are growing ever louder. For supply chains of sustainably produced commodities to be successfully established, however, the greatest need is not only for a supply chain of objective information but a supply chain of understanding and trust working in both directions.

Production of agricultural and forest commodities has supported livelihoods and driven economic growth, but it has also been a major cause of forest loss by Jeremy Broadhead

Working together

In spite of arguments over palm oil sustainability, reducing deforestation and forest degradation is fortunately a goal agreed by many countries, and related aspirations have been formalised in the Sustainable Development Goals (SDGs) and Nationally Determined Contributions (NDCs) under the Paris Agreement. However, land and forest governance is complex, and the distribution of rights and responsibilities for forest protection, economic welfare and social protection need to be understood and broadly agreed upon for effective, equitable and sustainable progress to be achieved.

Industrialised countries are increasingly taking responsibility for negative impacts overseas but to ensure that positive impacts of trade are not extinguished in the process, support is needed such that SDGs and NDC targets can be met. Most countries have committed to reducing deforestation and forest degradation along with many companies, while in industrialised countries forest area is generally on the increase and forest conditions are improving.

Questions over rights and responsibilities remain. But with domestic legal frameworks supportive of elements encapsulated in the SDGs and NDC, a foundation for equitable progress exists. Through accompanying dialogue and data collection, domestic laws can serve to facilitate sustainable production of commodities, and market-related benefits of sustainable production can be more widely communicated. The EU-Indonesia Voluntary Partnership Agreement which has now been licensing timber exports from Indonesia since 2016 pioneered this approach.

By discussing complex land and forest governance issues with stakeholders along the supply chain and sharing objective information, mutual understanding of European and Indonesian perspectives can help create a chain of trust parallel to the commodity supply chains. This can inform choices to drive progress towards common goals and distribute responsibilities to ensure that principles are upheld, benefits accrue to those making progress and costs are not born by the vulnerable.

The Terpercaya Initiative

The aim of the Terpercaya initiative is to support dialogue and cooperation on sustainability and trade and to accelerate district transitions to sustainability in Indonesia. Terpercaya means ‘trustworthy’ in Bahasa Indonesia. The rationale behind the initiative is that by collectively defining sustainability at scale and disseminating information on related indicators, trust can be built amongst supply chain actors and policy and market incentives can be established to encourage positive progress. This approach supports attainment of SDGs and NDC targets in producer countries, while reducing the environmental footprint of consuming countries.

The Terpercaya Advisory Committee is chaired by the Indonesian National Development Planning Agency (Bappenas) and includes members from a wide range of key stakeholder groups. Terpercaya effectively allocates accountability to producers and supply chain actors associated with individual districts, as a means of promoting progress towards sustainability while adhering to principles of legality and legitimacy. Legality is upheld by alignment with domestic legal frameworks, and legitimacy strengthened through the leadership of the multi-stakeholder Advisory Committee.

The system is designed to work at scale so that all actors are included, and to draw on available, objective, independently verifiable data for regular tracking of progress against indicators reflecting the environmental, economic, social and governance dimensions of sustainability. By building on laws relevant for sustainable palm oil production, they also support widespread adoption of the Indonesian Sustainable Palm Oil (ISPO) standard. Indicators allow questions to be answered such as:

Are smallholders being supported and are they benefiting?
Are forests and peatlands being protected?
Are indigenous and local people’s rights being upheld?
Are equitable systems of governance operating?

The district approach hinges on the role local governments can play given their authority and legitimacy to promulgate regulations and policies for sustainability. Districts, for example, have the authority to issue certain permits as well as monitor and enforce laws and regulations, and resolve tenure legality issues. In this way, district approaches underpin the transition of the entire jurisdiction towards sustainability.

A data collection and dissemination platform currently being developed with support from Inobu should provide visibility for sustainable districts and enable sourcing decisions and assessment of due diligence by responsible buyers. Bappenas has expressed interest in using indicator data to help programme support for districts in reaching goals set out in the national mid-term development plan. Work is also underway to determine ways that the platform could be used to support transactions between buyers and companies trading palm oil from sustainable districts. Through the Terpercaya approach it is hoped that forest protection can be a part of socio-economic development in moving towards a greener future.

Towards a greener future

Much positive progress has been seen in recent years in Indonesia through Government adoption of a moratorium on oil palm expansion, ISPO revamp, peatland restoration efforts. The country’s timber legality assurance system (SVLK) has been successfully implemented, the Indonesia-EU Voluntary Partnership Agreement in place, and there is falling poverty and steady, measurable reductions in deforestation rates.

What we’re seeing is a change from conflict between nature and industrialisation to complementarity. A healthy environment is an economic necessity, and the dichotomy between environment and economy no longer holds. By building a supply chain of understanding and trust, supply chains of sustainable commodities can hopefully flourish.

Achieving zero-deforestation commitments: Lessons from FLEGT Voluntary Partnership Agreements

20 June 2017/by EU REDD Facility

Learn about the importance of addressing governance challenges in public and private sector zero-deforestation initiatives. This paper explores lessons from Voluntary Partnership Agreements (VPAs) under the EU FLEGT Action Plan.

Making ‘zero-deforestation’ commodity production and trade a reality

20 June 2017/by EU REDD Facility

The major threat to tropical forests today comes not from loggers but from large-scale forest clearance to meet rising demand for agricultural commodities. Recognising this, governments and businesses around the world are increasingly pledging to eradicate deforestation from supply chains of such commodities.

Unlocking supply-chain data to reduce deforestation: The Trase initiative

27 June 2016/by EU REDD Facility

Building a business case for forest-friendly commodities in Côte d’Ivoire

14 October 2015/by EU REDD Facility

The EU REDD Facility supported the work of the National REDD+ Secretariat in Côte d’Ivoire to develop a strategy for engaging effectively with the agricultural sector and private actors. The innovative project engaged national commodity producer associations in discussions on decoupling deforestation and production of commodities.

Drawing on experience to develop REDD+ benefit sharing in the Republic of the Congo

13 October 2015/by EU REDD Facility

The EU REDD Facility has contributed to the development of an improved model for sharing benefits from REDD+ in the Republic of the Congo. The model draws on experiences from the country’s existing local development funds. By analysing existing benefit-sharing models in different sectors in the Republic of the Congo, engaging with stakeholders, providing technical assistance and building capacity, this project has supported the development of a mechanism for rewarding forest-friendly behaviour and providing local communities with benefits from REDD+ funds.