Up to a fifth of global greenhouse gas emissions come from deforestation and forest , according to The World Wide Fund for Nature (WWF).
The negative impacts of climate change will drive a raft of increasingly punitive government regulations and legislation – with big impacts on people’s lives and the way businesses function.
In recognition, signatories to the New York Declaration on Forests (including governments, companies, civil society and indigenous organisations) have endorsed “a global timeline to cut natural forest loss in half by 2020, and [will] strive to end it by 2030″. In addition, a global alliance of 400 companies with combined sales of three trillion dollars, organisations that are members of the Consumer Goods Forum, created to achieve net zero deforestation supply chains by 2020.
Let’s focus on the companies – the commercial organisations that have signed up to these voluntary commitments, which include Kellogg’s, Marks & Spencer, Barclays, Nestlé, the palm oil giant Cargill, and Asia Pulp and Paper.
These organisations have stated publically that over the next 5 to 15 years they are going to fundamentally change the specification of the products (as raw materials; semi -finished goods; or completed ready-to-sell products) they trade.
They are effectively introducing a new quality specification for the products, or raw materials, they buy from their suppliers. They require that these goods to have a new intangible quality – let’s call it Forest-Destruction-Free or FDF for convenience. FDF as an intangible quality; it has to be ‘captured’ and added to the products in the country where the raw materials (whether timber, soy, oil palm, beef, leather etc.,) are sourced. FDF then has to be preserved and demonstrated to be present as the goods travel down the supply chain. Because you cannot measure or test a product for FDF, there has to be credible and ‘inspectable’ control systems encompassing each tier of the supply chain – to demonstrate that the goods continue to have that FDF quality indicator.
For the above to become reality – four practical actions are required:
1. The organisation that has made the external public commitment has also to be internally committed from the most senior level. The Commercial Director; their sourcing Managers; and their buyers who are responsible for paying for goods, need to understand why FDF is important and why it has to be evident in the goods they purchase. They need training – with regular top ups and their performance against FDF targets has to be monitored. If it matters it needs KPIs.
2. The specification for FDF products has to be heard – loud and clear – all the way up the supply chain. The demand chain (the pre-cursor and mirror image of any supply chain that specifies what the supply chain must deliver) has to provide and explain the new requirement to each supplier – all the way to the raw material sources. The specification received at each step along the supply chain has to be really clear. All parties need to know what FDF means for them and their business and how to deliver it. Continuous training is required here.
3. As the products (imbued with FDF) travel down the supply chain – passing through primary, secondary and tertiary processing – transparent processes and systems need to be in place to prevent mixing and dilution of material carrying FDF with physically identical material that doesn’t have the quality. There has to be credible traceability systems employed. These can be physical or digital or a combination of both – whatever is appropriate and cost-efficient.
4. Lastly the businesses that signed up to the New York Declaration on Forests (on the 23rd of September, 2014), and the Consumer Goods Forum (next meeting 24-26 June 2015) need to have a transparent FDF compliance management system that enables them to credibly demonstrate their progress towards full FDF compliance – and in the last resort – to only allow products with FDF to enter the supply chain.
The four actions above are already being implemented by thousands of businesses placing timber on the European and American markets for the first time and in accordance with the requirements of the European Union Timber Regulation (EUTR) and the Lacy Act. They are focused on the intangible quality of ‘legality’ being present in wood-based products from the moment the tree is felled all the way to the final market place.
The Lacy Act and EUTR are really the culmination of voluntary ‘legality’ and ‘well -managed’ forest programmes initiated by forward-thinking businesses in the preceding years. Those who led these initiatives have consequently stepped into the regulatory furrow (ploughed by governments in the USA and the EU) with ease. They have worked closely with their supply chains – effectively training them on how to deliver the new requirements. The laggard businesses are still struggling. Their brands and their commercial performance have been significantly damaged with EU and USA governments bearing down on them. Be warned.