Commodity-Driven Deforestation Learn how to correctly analyse this topic.

Sarah Simon

11 min Read Time | June 1st 2022

Key Takeaways

Deforestation can have severe consequences on the environment. Some companies source products that contribute to deforestation directly, while others produce them.

When assessing the impact of deforestation, make sure to focus on environmental impacts to contextualise the impact (i.e., assessing CO2 emissions or others). Also, analyse the depth, breadth, and persistence of the impact. Make sure the readers can clearly identify the scale by providing the amount of deforestation that took place.

Social impacts and the ecological impacts due to investments are covered in separate topics.

What it is?

95% of deforestation worldwide occurs in the tropics, a majority of which is driven by agriculture. Forests are cleared to grow crops, raise livestock, and produce products such as paper. 60% of tropical deforestation is attributed to beef, soy, and palm oil (also known as oilseeds). Paper products are the third-largest driver of deforestation.

Various environmental impacts result from deforestation: drought, land infertility, and soil erosion and flooding, among others.

The impacts of habitat destruction and biodiversity loss are treated within this topic.

Forests also play a critical role in mitigating climate change. They act as a carbon sink, soaking up carbon dioxide that would otherwise be free in the atmosphere and contributing to ongoing changes in climate patterns.

Around the world, temperate, tropical, and boreal forests are being degraded and cleared. The main drivers are farming, resource extraction, logging, and urbanisation.


Sources

https://www.worldwildlife.org/threats/deforestation-and-forest-degradation
https://ourworldindata.org/what-are-drivers-deforestation
https://www.pachamama.org/effects-of-deforestation#:~:text=The%20loss%20of%20trees%20and,of%20problems%20for%20indigenous%20people

E SDG PRINT 15

SDG choice

✅ SDG: 15

✅ Category: Processes

Impact assessment

Introduction

Other than carbon dioxide equivalent emissions from land conversion, the introduction should clearly state the environmental impact such as land and soil erosion, drought, and flooding, among others. One to two lines on this in the introduction will suffice.

Ideally, the geographical context of where those activities are taking place should be discussed, i.e., if the core analysis discusses the impact of a company regarding deforestation or ecological devastation in Indonesia, then the introduction should provide context to the ecological devastation that Indonesia has experienced specifically.


Core Analysis

Must include:

  1. What issue is being tackled and how

  2. How this has impacted ecosystems, biodiversity, and natural resources

  3. The scale of the impact (number of hectares deforested, biodiversity loss, etc.)

  4. The depth and persistence of the impact

  5. Contextualize the impact, where is it happening? What are the specificities of these places?

  6. Try to be as specific as you can: where is the deforestation taking place, and since when?

Good to have:

  1. Ideally, the geographical context of where those activities are taking place should be discussed, i.e., if the core analysis discusses the impact of a company on deforestation or ecological devastation in Indonesia, then the introduction should provide context to the ecological devastation that Indonesia has experienced specifically.

  2. To help readers assess the impact scale and value, you can contextualise the impact. For instance: How extensive is the company’s deforestation compared to the industry is it part of?



= > If the company is sourcing beef, oilseeds, or forestry/paper products:

These concerns companies that are consuming these commodities to produce their products and services.

The core analysis should capture the company’s impact concerning the broader issue by providing the following information:

  • How much of the commodity did the company source? This is likely to be reported in tonnes.

  • Disclose the amount sourced sustainably (if any), and remember to be critical of certification schemes, whether it is by the RSPO, FSC, PEFC, GRSB...etc.

  • Provide an estimate for the amount of land deforested in hectares to produce the commodity.

  • Evaluate the environmental impacts: how is the climate affected?

  • Try to be as specific as you can: where is the deforestation taking place, and since when?

  • How many suppliers does the company have? How large are those companies? How much do they purchase/consume per year? Specificities per supplier are a plus.



= > If the company is producing beef, oilseeds, or forestry/paper products:

Again, these concerns companies, most likely suppliers producing these commodities, sell them in the relevant markets.

The core analysis should capture the company’s impact in relation to the broader issue by providing the following information:

  • How much of the commodity did the company source? This is likely to be reported in tonnes.

  • What is the company’s market share in the commodity industry?

  • Disclose the amount sourced sustainably (if any), and remember to be critical of certification schemes, whether it is by the RSPO, FSC, PEFC, GRSB...etc.

  • Provide an estimate for the amount of land deforested in hectares to produce the commodity.

  • Evaluate the environmental impacts: how is the climate affected?

  • Try to be as specific as you can: where is the deforestation taking place, and since when? How much do they produce per year?

No matter what the company’s activities are, you may go back to the Logical Model if needed.

To help readers assess the impact scale and value, you should contextualise the impact. For instance:

  • How extensive is the company’s deforestation compared to the industry is it part of? (Learn more about comparisons here).

  • In evaluating the impact on climate, how much CO2 could these forests absorb if they were still there and how much CO2 is released by cutting them down?

Points to consider:

  1. If the company is sourcing/consuming a commodity -

    1. How much is sourced; the amount sourced sustainably (be critical about certifications), and estimations of land deforested to produce the commodity consumed?

    2. How many suppliers does the company have? How large are those companies? How much do they purchase/consume per year? Specificities per supplier are a plus.

  2. If the company is producing a commodity -

    1. How much of the commodity did the company source;

    2. What is the company’s market share in the commodity industry; how much is produced sustainably (be critical about certifications), and estimations of land deforested to produce the commodity?

  3. The main focus of the analysis should be the materials sourced for the products sold by the company.

    1. A company sells various products; hence, palm oil is not the only ingredient it sources.

    2. Kindly discuss all the materials sourced by the company that requires forests to be cut down for timber or convert land for other purposes such as farming, cattle ranching, etc.

    3. Proceed to estimate how many trees were cut down/ how much land was cleared.

    4. Mention the impact of having such amounts of forest cleared on ecosystems and biodiversity.

Common mistakes:

  • Estimating land use and assuming the land used was deforested.

  • Using market share to estimate the impact

  • Notes can tend to be very general and add information either about the industry or specific countries without mentioning the company’s operations. In other words, lack of specific data.

  • Discussing only palm oil.



Also, ask yourselves the following questions:

1/ The breadth of the impact

  • Is the impact local, national, or global?

  • How many species or people are concerned?

2/ The depth of the impact

  • Is the biodiversity or people concerned deeply affected, or does the issue just marginally impact them?

  • Are the changes brought by the issue profoundly changing society or the planet?

3/ The persistence of the impact

  • How long would the impact described last for? Months? Years? Decades?

  • How reversible is the impact described in the impact analysis? Can it be easily stopped/extended?

Find more about evaluating the scale of the impact in Step 5: Assess scale and value.

Helpful Sources

Forest 500: an NGO which reports and assesses the deforestation policies of the largest players in commodity production, processing, manufacture, and/or retail and ranks them.

RSPO and other certifications are certainly a good step for companies to take. However, it’s essential to be critical of this certification (like any). These reports shed some light on the issues associated with certificates:

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