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PANEL
“Zero deforestation commodities and the dynamics of
regime complexity”
George Schoneveld, Pablo Pacheco, Marie-Gabri...
Panel contributions
Presentation 1 – George Schoneveld
‘Environmentalizing’ corporate self-regulation: Externality problem...
Source: Adapted from Global Forest Resources Assessment, FAO (2015)
Deforestation trends
Natural Forest Loss, 2000 - 2015
...
0%
20%
40%
60%
80%
100%
Asia Africa Latin
America
Combined
Urban expansion
Infrastructure
Mining
Subsistence
agriculture
C...
Regulatory initiatives to eliminate deforestation from supply chains
HardSoft
Private
Public
Multi
International regime complexity
• No coherent set of hierarchically imposed rules --> failure to develop conventions
• Par...
Emerging questions on ZDC and regime complexity
• Disruptive regulatory innovation challenging existing standards?
• Corpo...
Environmentalizing corporate self-regulation:
Externality problems arising from zero deforestation
commitments
George Scho...
Study Objectives
Identify governance challenges that need to be
overcome to better harness the sustainable
development pot...
Method
1. Identify full ZD committers from Forest Trends’ 250
commodity ‘power brokers’
• Commitment applicable to ALL geo...
Adoption trends
Commitment
(full)
20%
Commitment
(partial)
18%
No
Commitment
62%
25% 24%
8% 7%
Adoption rates, by commodit...
Drivers of adoption
• Unsurprising results
• Northern companies, publically
listed more likely
• Companies involved in pal...
Zero deforestation commitment
HCS
72%
FSC
6%
PEFC
11%
None
11%Not time
bound
24%
2030
4%
2020
67%
In place
5%
Suppliers
fu...
Zero deforestation implementation
0%
20%
40%
60%
80%
100%
Recognized
approach
Trace to
source
Geo-spatial
monitoring
All m...
Externality commitment
• Widespread adherence to HCV and
FPIC for wood and oil palm
• No peat conversion in oil palm
• No ...
Externality implementation
• Implementation FPIC, HCV indicators
indirectly (baseline, monitoring,
management plans)
• HCS...
Overall performance
0
0.2
0.4
0.6
0.8
1
Palm Soy Wood Cattle Total
Commitment
Implementation
0
0.2
0.4
0.6
0.8
1
Palm Soy ...
Performance determinants
Naïve regression (DV=Score of commitment substance) Naïve regression (DV=Score of implementation ...
Implications for governance
• Efforts to develop coherent ZD rules (HCSA, SPOM) and integrate into
certification (RSPO NEX...
Thank you.
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Environmentalizing corporate self-regulation: Externality problems arising from zero deforestation commitments

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Presented by George Schoneveld, from the Center for International Forestry Research (CIFOR), at the XVI Biennial IASC Conference ‘Practicing the commons: self-governance, cooperation, and institutional change’, in Utrecht, the Netherlands, on July 12, 2017.

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Environmentalizing corporate self-regulation: Externality problems arising from zero deforestation commitments

  1. 1. PANEL “Zero deforestation commodities and the dynamics of regime complexity” George Schoneveld, Pablo Pacheco, Marie-Gabrielle Picketty, Isabel Drigo, and Paolo Cerutti IASC 2017 July 12, Utrecht
  2. 2. Panel contributions Presentation 1 – George Schoneveld ‘Environmentalizing’ corporate self-regulation: Externality problems arising from zero deforestation commitments Presentation 2 – Pablo Pacheco The politics and practice of sustainability commitments: The case of palm oil in Indonesia Presentation 3 – Marie-Gabrielle Piketty & Isabel Drigo Zero-deforestation commitments in the Brazilian Amazon: Progress, limits and proposal for eco-efficient landscapes through a jurisdictional approach Presentation 4 – Paolo Cerutti Inclusiveness, equity, and sustainability: Ideas needed for informal timber operators in sub-Saharan Africa Q & A
  3. 3. Source: Adapted from Global Forest Resources Assessment, FAO (2015) Deforestation trends Natural Forest Loss, 2000 - 2015 -10 -8 -6 -4 -2 0 2 Naturalforestchange(inMha/yr) 2000-2005 2005-2010 2010-2015 -2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 Net annual forest change 2010-2015
  4. 4. 0% 20% 40% 60% 80% 100% Asia Africa Latin America Combined Urban expansion Infrastructure Mining Subsistence agriculture Commercial Agriculture 0% 20% 40% 60% 80% 100% Asia Africa Latin America Combined Livestock grazing Fire Woodfuel Logging Drivers of deforestation (2000-2010) Drivers of forest degradation (2000-2010) Source: Adapted from Hosonuma et al. 2012 Drivers of Deforestation Livestock 62% Soy 15% Oil palm 6% Sugarcane 4% Cocoa 2% Rubber 2% Cotton 2% Other 7% 0% 20% 40% 60% 80% Beef Wood Palm Soy Deforestation embedded in trade (2000-2012) Deforestation embedded in production of commercial agriculture commodities (2000-2012) Source: Adapted from EC 2013
  5. 5. Regulatory initiatives to eliminate deforestation from supply chains HardSoft Private Public Multi
  6. 6. International regime complexity • No coherent set of hierarchically imposed rules --> failure to develop conventions • Parallel, conflicting, and overlapping rules and institutions • Emerge to fill substantive or procedural gaps, regime shift, or create strategic inconsistency Risks Opportunities Forum shopping Innovation Rule downgrading Upwards convergence Increasing transaction costs Systemic adaptive capabilities Compliance barriers Ambiguity and reduced accountability Risks and opportunities of regime complexity
  7. 7. Emerging questions on ZDC and regime complexity • Disruptive regulatory innovation challenging existing standards? • Corporate strategy to promote a regime shift in favor of self-regulation? • Excessive emphasis on forests reducing focus on issues such as food security, smallholder VC inclusion, and other HCV? (e.g. demand for non-forest land driving expansion onto cropland, wetlands, peatland, and reduce SH participation in GVS due to high costs of monitoring and compliance support) • New challenges emerging for other private and public actors to address externality problems and support implementation? Regime reinvention?
  8. 8. Environmentalizing corporate self-regulation: Externality problems arising from zero deforestation commitments George Schoneveld (CIFOR) and Peter Jopke (GIZ) Presentation 1
  9. 9. Study Objectives Identify governance challenges that need to be overcome to better harness the sustainable development potential of Corporate ZD through analysis of: 1) Factors driving adoption of ZD commitments 2) Gaps in ZD commitments 3) Potential risks arising from failure to account for negative social and environmental externalities 4) Factors shaping good ZD commitments
  10. 10. Method 1. Identify full ZD committers from Forest Trends’ 250 commodity ‘power brokers’ • Commitment applicable to ALL geographies and ALL operations 2. Development of hierarchical framework • Expert consultation 3. Analyze performance of committers (51) across 41 indicators • Corporate policies, strategies, reports, interviews 4. Scoring by indicator (0, 0.5, 1), averaged, weighted by criteria Principle 1. Commitment to ZD (ZD) 2. Traceability and monitoring (ZD) 3. Reporting, transparency and third party verification (ZD) 4. Smallholder support and inclusion (EXT) 5. Protection of valuable non-forest land (EXT) 6. Land justice (EXT) 7. Prevention detrimental ILUC (EXT) HF principles Substantive scope Implementation mechanisms Zero Deforestation 7 indicators 9 indicators Externalities 14 indicators 11 indicators Types of indicators
  11. 11. Adoption trends Commitment (full) 20% Commitment (partial) 18% No Commitment 62% 25% 24% 8% 7% Adoption rates, by commodity 38% 23% 15% Adoption rates, by type of corporation 19/50 23/15710/43 16/68 9/1336/8041/163
  12. 12. Drivers of adoption • Unsurprising results • Northern companies, publically listed more likely • Companies involved in palm and timber more likely • Soy less likely • Type of company little impact, integrated marginally more likely • Large companies not more likely
  13. 13. Zero deforestation commitment HCS 72% FSC 6% PEFC 11% None 11%Not time bound 24% 2030 4% 2020 67% In place 5% Suppliers fully adopt ZD 27% Suppliers supply ZDC 65% Not all suppliers ZD 8% • Most commitments time- bound (now – 2030) • Only 3 companies explicit cut-off dates; 11 implicit • Adoption of accepted forest definitions • Palm and soy commitments embrace HCS • Wood FSC or PEFC • Cattle most arbitrary • Commitments mostly cover suppliers • But do not require suppliers to be ZD free
  14. 14. Zero deforestation implementation 0% 20% 40% 60% 80% 100% Recognized approach Trace to source Geo-spatial monitoring All met No Yes 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Annual reporting Sourcing locations disclosed Independent verification All met No Yes • Strong commitment to full adoption of traceability systems • Weak commitment to plantation-level traceability -- > mills suffice • Rely on supplier declarations • Limited commitment to disclosing sourcing locations or reporting progress • Limited commitment to independent verification of performance • Challenging for monitoring groups to evaluate progress and hold companies to account • Limited adherence to ZD certification systems (e.g. SAN, RSPO Next) Traceability and monitoring Transparency and independent verification
  15. 15. Externality commitment • Widespread adherence to HCV and FPIC for wood and oil palm • No peat conversion in oil palm • No explicit commitment to maintaining smallholder supply base • Only few companies commit to supporting smallholder compliance • No explicit recognition of ILUC, protection forest estate • Food security protection function of FPIC 0% 20% 40% 60% 80% 100% HCV protection FPIC Peatland protection Support smallholders No forest off-loading Prevention of ILUC Protect food security Yes No Commitment to safeguards
  16. 16. Externality implementation • Implementation FPIC, HCV indicators indirectly (baseline, monitoring, management plans) • HCSA further enables integration FPIC- HCV-HCS • Emphasis partial segregation/MB reduces capacity to monitor suppliers • No R&R, food security baselines and plans, ILUC safeguards • No explicit strategies on supporting smallholders • Only independent verification pledged by 27% of ‘no peat’ adopters 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% No full commitment Partially segregated/mass balance/Greenpalm Fully segregated
  17. 17. Overall performance 0 0.2 0.4 0.6 0.8 1 Palm Soy Wood Cattle Total Commitment Implementation 0 0.2 0.4 0.6 0.8 1 Palm Soy Wood Cattle Total Commitment Implementation ZD performance, by commodity Externality performance, by commodity
  18. 18. Performance determinants Naïve regression (DV=Score of commitment substance) Naïve regression (DV=Score of implementation mechanisms)
  19. 19. Implications for governance • Efforts to develop coherent ZD rules (HCSA, SPOM) and integrate into certification (RSPO NEXT, SAN, ISCC) --> innovation, upward convergence • Little apparent corporate interest in comprehensive co-regulation • Lack of commitment to smallholders, weak integration of food security, and no consideration for ILUC • Challenging to address through certification due to its supply chain orientation • Territorial/landscape approaches to address spillovers • More prominent role of state institutions required (e.g. LUP, tenure security)
  20. 20. Thank you.

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