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


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

  1. 1. Reducing Risk: Landscape Approachesto Sustainable SourcingLee Gross -- EcoAgriculture PartnersMike Godfrey -- Rainforest AllianceBambi Semroc -- Conservation InternationalA presentation to the International Finance CorporationJune 10, 2013
  2. 2. or Collaborators: Int’l Advisory Committee, 22 landscape networks & initiatives
  3. 3. 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
  4. 4. TheTerminology and Practice of Ecoagriculture
  5. 5. "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.
  6. 6. 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?
  7. 7. 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
  8. 8. Scoping Analysis: Modes and Rationales100+ initiatives reviewed27selected by criteria3 in-depth case studies
  9. 9. Address risks at scales
  10. 10. Requires more than “sum of the parts” thinking
  11. 11. 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.
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. Photo 14.2” x 10.31”Positionx: 8.74”, y: .18”Supply Chain InterventionsRegional Producer Support InterventionsPayments for Ecosystem ServicesModes
  18. 18. 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.
  19. 19. RegionalProducerSupportConservationCoffee
  20. 20. Suitability Analysis of Coffee ProductionRegional Producer SupportClimate and Coffee in Chiapas
  21. 21. Regional Producer SupportFarmer Loans in Chiapas• Verde Ventures has lent USD1.5M to 6 Small and Medium-Sized Enterprises in ChiapasElTriunfoVolcanTacana
  22. 22. Payments for Ecosystem ServicesClimate and Coffee in ChiapasCarbon Markets and Policy Engagement
  23. 23. Regional Producer SupportClimate and Coffee in Northern SumatraMap 1 – Northern SumatraAcehTengahDistrictDairiDistrictBenerMeriahDistrictNorthSumatraProvinceAcehProvince
  24. 24. Payments for Ecosystem ServicesClimate and Coffee in Northern Sumatra
  25. 25. 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
  26. 26. 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
  27. 27. 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
  28. 28. 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
  29. 29. Juabeso-Bia Landscape Southwest Ghana (24,000 Ha.)
  30. 30. • 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
  31. 31. • GAP training based onSAN Standards• Forest and LandscapeGovernance• REDD+ activities• Sustainable ForestManagement includingAgroforestry Systems• Small and Medium ScaleForest EnterpriseDevelopmentProject Components
  32. 32. • 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):
  33. 33. 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.
  34. 34. 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:
  35. 35. 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
  36. 36. 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.
  37. 37. Thank you!