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Reducing Risk: Landscape Approaches to Sustainable Sourcing - at the IFC, June 10, 2013

Reducing Risk: Landscape Approaches to Sustainable Sourcing - at the IFC, June 10, 2013



Co-presenters: ...

Lee Gross, EcoAgriculture Partners
Mike Godfrey, Rainforest Alliance
Bambi Semroc, Conservation International

Discussing the risk mitigation advantages of a multi-stakeholder, landscape-scale approach to agribusiness development, especially where businesses face climate change, water security, or community risks.



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  • Businesses are increasingly at risk of “sustainability megaforces” – interconnected risks that will have unprecedented effects on business performance and profitability in the futureThese mega-forces include: climate change; competition for energy, land, water and material resources; population growth and migration; poverty and food insecurity; and ecosystem degradation. Food and beverage businesses will be directly and indirectly affected by a range of global trajectoriesKPMG, 2012. Expect the Unexpected: Building business value in a changing world.-------------------Based on our research findings, agribusinesses find water, climate, and community risks to be urgent, and best suited to piloting landscape approaches. Agribusinesses and food sector brand manufacturers are increasingly aware of sustainability risks. The interconnectedness of the water-food-energy-climate nexus is increasingly being recognized by business as requiring integrated solutions. In some cases, stability in key sourcing and operational regions may be at stake. World Economic Forum, 2011. Water Security: The Water-Food-Energy-Climate Nexus. Island Press.---------------
  • Out of the >100 cases surveyed, 27 were selected based on meeting the criteria identified above. From these 27 examples, we identify 9 general rationales for business engagement and 6 modes or tools to put these rationales into practice (see figure 1). Though our data gathering faced some limitations,6 as mentioned above, some general trends could be identified. As data table 1 (see appendix) shows, most cases have more than one rationale for business engagement. The most common identified rationales are: local community and operational risks, value chain efficiency and voluntary standards compliance. The first two refer to business concerns about supplies and sourcing areas. The latter two are generally more focused on supply chain and demand-side or market preference concerns. Businesses view these rationales as risks, and find ways to mitigate those risks through landscape approaches. These risk mitiga- tion activities (modes) tend to follow a pattern, based on the entry point for engagement, the risks and available options to mitigate those. In section III. we explore in greater detail the entry points for businesses to engage a landscape approach. Though we characterize ‘partnerships, multi-stakeholder dialogue, planning and management’ as a mode, it can also be considered as an enabling condition to a landscape approach, as it occurs to varying degrees in all modes we reviewed.
  • Landscape approaches are different from scaling up the efforts of individual interventions. Addressing the challenges of climate adaptation, water stewardship and building community relations all require “more than the sum of the parts” thinking. Requires more than “sum of the parts” thinking
  • What do we mean by a landscape approach? Multi-stakeholder cross-sector planning and actionThe landscape approach has been championed by organisations active in the development and conservation sectors for many years, though the concept has been slow to migrate into mainstream corporate thinking. Now this report from the “Landscape for People, Food and Nature Initiative”, sets out a case for companies to think about their business in landscape terms.When sourcing area quality and sustainability is a priority, focus beyond the level of individual production units is required. For instance, watershed health, biodiversity conservation and habitat connectivity, land and resource tenure, and many other factors can strongly influence social, economic, and environmental sustainability. When productivity is threatened by a multitude of risks that cannot be mitigated on-farm or via supply chain programmes, investments in long-term solutions via landscape approaches to mitigate risks to the business may be necessary.We propose the following business-oriented definition of a landscape approach: Identifying risks to the business beyond the farm- or facility-scale, and recognizing that long-term business success is tied to healthy communities and ecosystems. Thus, a landscape approach refers to activities in a specific geography that: seek to improve food production, ecosystem services, and rural livelihoods;includes policy, planning, management or support activities at the landscape scale; involves inter-sectoral and/or multi-stakeholder coordination; and is highly participatory and supports adaptive collaborative management.Landscape approaches hold potential to mitigate constellations of risks in addition to ongoing risk mitigation interventions at the farm level and through supply chain approaches. Thus, landscape approaches provide a framework to deliberately work in an integrated manner beyond the farm-scale to support food production, ecosystem conservation, and rural livelihoods across entire landscapes. “I cannot say landscape level approach is now integral to our approach. I do believe that we will gradually move away from assessing and improving sustainability at individual farm level to landscape level.”-Anonymous  In both these examples, it is about reaching beyond one commodity or resource user, there are social and ecological dimensions, partnerships are critical, and scale is reached.This report demonstrates that when profitability is threatened by a constellation of risks that cannot be mitigated solely on-farm or via supply chain programmes, landscape approaches offer solutions. Landscape approaches provide a framework to deliberately work in an integrated manner beyond the farm-scale to support food production, ecosystem conservation, and rural livelihoods across entire landscapes.
  • Replication in 3 additional geographiesConservation Coffee in priority landscapes for conservation in Peru, Colombia, Costa Rica & Panama
  • C.A.F.E. Practices- Includes practices on deforestation for expansion of agriculture since March 2004; Assessment of large farms for areas of high conservation value- Ensure 100% of coffee is ethically sourced by 2015; at 93% in 2012
  • Conservation Coffee (1998-2006)El Triunfo Biosphere Reserve, ChiapasTransboundary La Amistad reserve in Panama and Costa RicaValle de Cauca Reserve in ColombiaBahuaja-Sonene National Park in Peru
  • Examined shifting suitability for coffee in region in face of climate changeSuitability analysis stats: the land most suitable for Arabica production is expected to decline from current level of 265,400 hectares to 60,500 by 2050, a decrease of nearly 75% and areas at 600 meters in altitude will most likely shift out of coffee production. Facts on Coffee & Mexico:In terms of the value of perennial agriculture production (tree crops + pasture), coffee represents 21% of the value of production for state of Chiapas.  The Sierra Madre of Chiapas is responsible for 20% of the coffee in Chiapas and is one of Mexico's most important coffee producing regions.  Chiapas coffee production represents 36.8% of national coffee production Coffee represents up to 98% of the land cover at mid-elevation levels in the Sierra Madre. Represents an estimated 183,000 producers (a little less than 10% of the economically active population)
  • Farmer Loans- $20M by 2015 in loans; at $15.9M in 2012
  • Engaged 23 communities, representing 236 farmers in coffee and carbon projectConserved 307.5 hectares and planted 210,258 treesProvided average of $100 / year in supplemental income to farmers via carbon market (average of nearly 27% of a participating farmer’s income)Developed Coffee and Climate Strategy for the Sierra Madre of Chiapas
  • Northern Sumatra Conservation CorridorSpans Aceh and North Sumatra ProvincesEncompasses 3 globally important sites for conservation (2 terrestrial, 1 freshwater)Holds the 2nd largest lake in the world (Lake Toba)Home to several globally threatened species - Thomas leaf monkey and 3 civet species. Suitability Analysisthe potential for pests to enter new regions due to shifting rainfall patterns and higher temperatures may reduce coffee production in N. Sumatra and Aceh.
  • Conservation agreements with 23 coffee communitiesEngaged more than 640 farmers in 23 communities through conservation agreements Established 5 farmer field schools to train farmers on best practices Built 2 nurseries (4 more by June) to plant 300,000 treesHelped delineate forest boundaries for communitiesAssisted communities in gaining more secure land tenure for areas under coffee cultivation
  • ROI factors include – farmer behavior
  • On farm production partly depends on off-farm management; cocoa production area is a mosaic of cocoa farms and forest lands presenting a real opportunity for landscape managementCarbon financing can be the mechanism to increase the resilience by increased carbon stock through increasing shade, enhancing soil management and introducing better agricultural practices.
  • Increased monitoring and evaluation to test the hypothesis against achievements and results of the pilot;Complete the Program Design Document (PDD) for the forestry REDD+ methodology and validate as an acceptable approach;Complete the farmer training and subsequent certification steps as indicated by both the interest and outcomes such that farmers are remunerated for the improved management systems;Communicate more broadly the landscape model that integrates climate-forestry/agro-forestry and certification into a complete package of tools and interventions;Secure second phase funding for to meet the initial business, social and environmental targets set.

Reducing Risk: Landscape Approaches to Sustainable Sourcing - at the IFC, June 10, 2013 Reducing Risk: Landscape Approaches to Sustainable Sourcing - at the IFC, June 10, 2013 Presentation Transcript

  • Reducing Risk: Landscape Approachesto Sustainable SourcingLee Gross -- EcoAgriculture PartnersMike Godfrey -- Rainforest AllianceBambi Semroc -- Conservation InternationalA presentation to the International Finance CorporationJune 10, 2013
  • www.ecoagriculture.org or www.landscapes.ecoagriculture.org+ Collaborators: Int’l Advisory Committee, 22 landscape networks & initiatives
  • Strategic Advisory Committee: World Business Council for SustainableDevelopment, IFC, Rio Tinto, Unilever, Nestlé and Mars Inc.Working Group: Conservation International, Rainforest Alliance,Solidaridad, African Wildlife Foundation, World Resources Institute,Fauna and Flora International, Root Capital, University of Greenwich,and EcoAgriculture Partners.Business Working Group
  • TheTerminology and Practice of Ecoagriculture
  • "The landscape approach hasbeen championed byorganizations active in thedevelopment and conservationsectors for many years, thoughthe concept has been slow tomigrate into mainstreamcorporate thinking. Now thisreport from the Landscape forPeople, Food and NatureInitiative, sets out a case forcompanies to think about theirbusiness in landscape terms."- José Lopez, Executive VicePresident, Operations, Nestlé S.A.
  • Why do businesses pursue alandscape approach?Drivers: Is it as a consequence or identified as agoal at the outset?Rationale: Why is the business motivated topursue this?Modes:What methods or tools do businesses applyto put these rationales into practice?
  • Businesses are increasingly at risk of“sustainability megaforces”KPMG, 2012. Expect the Unexpected: Building business value in a changing world.Climate ChangePoverty andFood SecurityCompetitionfor resourcesIncreasingdemand
  • Scoping Analysis: Modes and Rationales100+ initiatives reviewed27selected by criteria3 in-depth case studies
  • Address risks at scales
  • Requires more than “sum of the parts” thinking
  • Reducing risk through landscape approachesSource: Kissinger, G., A. Brasser, and L. Gross, 2013. Reducing Risk: Landscape Approaches to Sustainable Sourcing.Washington, DC. EcoAgriculture Partners, on behalf of the Landscapes for People, Food and Nature Initiative.
  • Case studies● SABMiller: reducing water risksin Bogotá,Colombia andGeorge, South Africa with WWFand GIZ● Olam: cocoa and forestinitiative inWestern Ghanawith Rainforest Alliance● Starbucks: coffee in Mexico,Indonesia and Brazil withConservation International
  • Photo 25.51” x 10.31”Positionx: 8.53”, y: .18”Photo 14.2” x 10.31”Positionx: 4.36”, y: .18”Landscapes forPeople Foodand NatureInitiative –The StarbucksCase StudyBambi Semroc
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”1. The Landscape Approach within the Starbuckscontext2. Rationale for Engaging at Landscape Level3. Modes of Engagement- Supply Chain Interventions- Regional Producer Support- Payments for Ecosystem Services4. Value of Landscape Approach5. Challenges of Landscape ApproachOutline
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”Landscapes within theStarbucks and CI contextsStarbucks Language• Coffee communities• Coffee supply chainsConservation International Language• Coffee landscapes• Coffee communities• Conservation corridors
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”RationaleOperational Risks• Price volatility due to market dynamics.• Declining production and yields due to climatechange and aging farmer demographicReputational Risks• Environmental risks related to deforestation,greenhouse gas emissions, water use and quality• Community risks associated with farmer incomeand livelihoods, including food security
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”Supply Chain InterventionsRegional Producer Support InterventionsPayments for Ecosystem ServicesModes
  • ModesSupply Chain InterventionsC.A.F.E. Practices• Promote and verify adoption ofbest practices within the supplychain.• Provide assurance to Starbuckson social and environmentalperformance of its supply chain.
  • RegionalProducerSupportConservationCoffee
  • Suitability Analysis of Coffee ProductionRegional Producer SupportClimate and Coffee in Chiapas
  • Regional Producer SupportFarmer Loans in Chiapas• Verde Ventures has lent USD1.5M to 6 Small and Medium-Sized Enterprises in ChiapasElTriunfoVolcanTacana
  • Payments for Ecosystem ServicesClimate and Coffee in ChiapasCarbon Markets and Policy Engagement
  • Regional Producer SupportClimate and Coffee in Northern SumatraMap 1 – Northern SumatraAcehTengahDistrictDairiDistrictBenerMeriahDistrictNorthSumatraProvinceAcehProvince
  • Payments for Ecosystem ServicesClimate and Coffee in Northern Sumatra
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”• Increased understanding of critical issuesfacing coffee supply currently and in thefuture.• Fewer surprises to undermine investments insupply chain development and regionalproducer support.• Ability to achieve and report on results at aconcentrated scale.Value of the LandscapeApproach
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”• Different language than that used bycompanies.• Lengthy and non-integrated commodity supplychains do not lend themselves to landscapethinking.• Requires looking at multiple commodities tomaximize resiliency of the landscape andcommunities.• Difficulty calculating a direct ROI to thecompany on the investment due to externalfactors.• Requires long-term commitment to sourcingarea to justify investment.Challenges of theLandscape Approach
  • Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”AcknowledgementsLPFN Initiative - Lee Gross, Gabrielle Kissinger, AndréBrasserCI Mexico - Monica Morales, David OlveraCI Indonesia - Terry Hills, Fazrin RahmadaniCI-CELB - Joanne Sonenshine, John BuchananCI-Verde Ventures – Neel Inamdar, Lorena Bustos, AnaLopezGötz SchrothStarbucks Coffee Company – Kelly GoodejohnCIATCATIEAmbioEcosurUniversity of North SumatraThank you
  • Hypothesis: that the resilience of the cocoa production systemsincreases with increasing forest cover of the surrounding lands andwithin the cocoa farms themselvesDescription: Olam, in partnership with Rainforest Alliance, is pilotinga landscape approach to mitigate business risk in their cocoa valuechain through a novel program in Ghana emphasizing cocoa agro-forestry production systems, certification and REDD+Climate Cocoa Partnership for REDD+ PreparationTimeline: 2011-2013Partners: Olam International Ltd., Rainforest Alliance, GhanaForestry Commission,Goal: to ensure that the climate-friendly farm level practices areescalated and replicated to a landscape and forest management level
  • Juabeso-Bia Landscape Southwest Ghana (24,000 Ha.)
  • • Reputation: opportunity to be a first-mover company to bringclimate friendly cocoa to the market;• Community concerns: income opportunities from carbonmarkets for farmers by increasing carbon stocks;• Value chain efficiencies:1. option to build resilient supply chains when farmercommunities sensitized and starting to understand theconcept of managing a landscape as opposed to managingfarms in a sustainable way.2. opportunity to break the link between cocoa production anddeforestation ;• Reduce operational risks due to climate concerns and resourcesecurity;• A learning exercise to change and improve corporate programs;Corporate Rationale
  • • GAP training based onSAN Standards• Forest and LandscapeGovernance• REDD+ activities• Sustainable ForestManagement includingAgroforestry Systems• Small and Medium ScaleForest EnterpriseDevelopmentProject Components
  • • On farm production partlydepends on off-farmmanagement; cocoa productionarea is a mosaic of cocoa farmsand forest lands presenting a realopportunity for landscapemanagement• Carbon financing can be themechanism to increase theresilience by increased carbonstock through increasing shade,enhancing soil management andintroducing better agriculturalpractices.Preliminary Findings (1):
  • Preliminary Findings (2):• Carbon financing requirescollaborating with governments toinduce better legislation, to complywith global standards and to securebasic quality of the wider cocoaproduction landscape.• Corporate policies can drivechange and success – the projectbuilds on Olam’s existingsustainability strategy and LivelihoodCharter• Landscape approach can mitigatemultiple risks: climate change,reputational, operational, communityconcerns and value chainefficiencies.
  • 1. Increased monitoring and evaluation to test the hypothesisagainst achievements and results of the pilot;2. Complete the Program Design Document (PDD) for theforestry REDD+ methodology and validate as an acceptableapproach;3. Complete the farmer training and subsequent certificationsteps as indicated by both the interest and outcomes such thatfarmers are remunerated for the improved managementsystems;4. Communicate more broadly the landscape model thatintegrates climate-forestry/agro-forestry and certification into acomplete package of tools and interventions;5. Secure second phase funding for to meet the initialbusiness, social and environmental targets set.Next Steps:
  • Lessons LearnedRationale● Landscape andcommunityhealth are atthe core ofbusinesssuccess● Valuing therisk/cost ratio● Investing inbetterdecisionsInvestment● Partners withshared interest● Need for collectiveaction in thesourcing area andsector● Developmanagementsolutions across thelandscape● A package ofsolutions providesgreater impact than‘one-off’s’Valueproposition● Avoidedcosts—basisof thebusiness case● Solid riskassessment● Added valueaccruing to allpartners● Position thebusiness forlong-term
  • Recommendations based on our review Assess and manage risks and opportunities at scale Mitigate landscape risks in partnership Integrate landscape risks and the investments requiredto mitigate them into business plans at all levels Evaluate landscape approaches as an opportunity toincrease both the efficiency and effectiveness ofsustainable sourcing.
  • Thank you!www.landscapes.ecoagriculture.org