Supply Chain Transparency: Making the Consumer Connection for Forest Responsibility

Originally published on TriplePundit

Humans have always had an intimate, complicated relationship with forests.

We clear away trees to make room for development and agriculture, harvest them for paper, pulp, and palm oil and seek refuge in their remaining intact solitude. Human wellbeing depends on trees.

Forests suffer when opaque supply chains stretch across continents and oceans, isolating consumers, producers, and growers and hiding the shared stake each has in a stable resource. It is the challenge of globalization in a consumer-driven economy. So if healthy forests do so much for us, why do we continue to destroy them?

That’s a rhetorical question with no easy answer.

Even as deforestation remains an issue in most parts of the world, especially in the tropics, there is a growing demand for “deforestation-free” wood and pulp products, traceable to their source. Crucial to this trend is strengthening partnerships between all stakeholders: industry, government, NGOs, and academia. But for companies looking to minimize risk from resource disruption, overly burdensome regulation, or public backlash, there is arguably no more important stakeholder alliance for companies than with their consumers and suppliers.

For a transparent, end-to-end supply chain, the triad of consumer-brand-supplier is where the rubber meets the road. 

Supply change

According to the Carbon Disclosure Project’s 2016 Global Forests Report, as much as $906 billion of lost revenue is at risk from deforestation. “Supply chains are like rows of dominoes,” says the report, “if unsustainable commodities enter the top of a supply chain, the effects will cascade throughout.

Failing to address deforestation will have knock-on reputational impacts, manifesting themselves as consumer boycotts, community opposition, and increased regulatory scrutiny. Business growth is at risk.”

Deforestation, therefore, is a principle risk for commodity-based companies, as well as the planet. Nonetheless, overcoming business-as-usual short-termism is difficult and requires sustained effort. Seventy-seven percent of the companies reporting to the CDP identify at least one supply chain risk “with the potential to generate a substantive change in business operations, revenue or expenditure.” However, only 42 percent of those companies have analyzed the availability or quality of their “forest-risk” commodity supply chains over the medium-term.

“Companies need to make sure they are planning for the long-term,” the CDP report states, “to ensure the sustainable supply of these commodities in future.”

In their 2016 report, Supply Change: Tracking Corporate Commitments to Deforestation-free Supply Chains, Forest Trends tracks 579 public commitments from 366 companies (Ed. note the 2017 report is now out, available here.) While the report applauds steady progress, it is “only the starting point.” Transparency around these commitments remains lacking, the report emphasizes. Only one in three of the commitments tracked by Forest Trends provides public information on “tangible steps” for achieving stated goals.

“Corporate action is critical to achieving ambitious goals for ending commodity-driven deforestation,” says the report.

We encourage all companies to update their stakeholders on their progress along the way and the hundreds of other companies that have not yet made a commitment to doing so.

Leveraging consumer demand

When the Rio Summit in 1992 failed to produce an agreement to stop deforestation, a coalition of business, environmental, and community leaders launched the Forest Stewardship Council. Now working out of 80 countries, FSC focuses on market-based solutions to deforestation, offering forest management and chain-of-custody certification through third-party verification.

Triple Pundit recently spoke with Brad Kahn, communication director for the Forest Stewardship Council in the U.S. about the central role consumers play in their work and for sustainable commercial forestry in general.

“At the end of the day,” says Kahn, “in our economy the consumer is king (or queen). FSC’s top priority is building consumer awareness, so we can help influence decisions about products they use every day.”

“Approximately 2/3 of the economic activity in the United States is driven by consumer purchases. Consumers are critical to the success of any market-based effort like FSC,” Kahn says.

“We are a voluntary system that depends on demand for products from responsibly managed forests to drive improvements on the ground. However, to accomplish this goal we need to work with partners in the corporate and NGO sectors.”

FSC has invested years working closely with businesses to build supply and to grow consumer demand for sustainably sourced forest products, “largely through the development of procurement policies and sourcing commitments,” says Kahn. “Now with FSC certified products available at stores people shop at every day, we can begin to engage consumers directly.”

One of their “most significant efforts to date” to engage consumers is the One Simple Action campaign. Part of the success of the campaign, says Kahn, is supported by some of biggest players in the corporate world, including Procter & Gamble, HP, and Patagonia.

These are the leaders in demonstrating the value of consumer engagement. “People want to make a difference,” Kahn says.

The ROI of engaged consumers and caring employees

“Informed consumers are critical to the continued growth and uptake of FSC certified forests,” says Kahn, citing market research supporting the need for such certification to help”differentiate products and increase consumer purchase intent.”

“We know that consumers generally, and millennials specifically, care about the impact of their purchases.”

Some laggards may still balk that there is measurable ROI for such efforts, but, as Kahn and others state, the ROI of sustainable forestry “is not just in terms of sales and price, but also brand value, risk mitigation and employee satisfaction.”

“(Employee satisfaction) is often overlooked at first,’ Kahn says.  “In our experience, employees want to feel like the work they do matters. and FSC is one way they can feel good about their work.”

“Anecdotally, we have heard from many companies that FSC initiatives really matter to employees, who see them as a way to do good in their daily work.”

But how to differentiate between real progress and “feel good” PR?

Green tall tales? Making sense of certification

“Sustainability” has joined other phrases, like “paradigm shift,” in danger of being trod into insignificance by careless overuse. As mentioned previously, claims of “certification” often come with little transparency or verifiable data to back them up. Unfortunately, this doesn’t make the task any easier for engaged consumers concerned about the impact of their consumption.

“There are so many sustainability claims being made today that it is critical to ask questions and dig deeper,” says Kahn. “One way to evaluate a standard is to see who supports it.”

“Claims made by businesses alone can have limited impact, but when consumers see businesses and environmental groups making claims together, there’s a lot more validity.”

FSC, for example, is endorsed by many environmental groups, like WWF, Greenpeace, NRDC, Sierra Club, and The Nature Conservancy. Native communities, labor unions and many community development groups also support FSC’s approach.

There are other programs, of course, among them the Sustainable Forestry Initiative with support from Terra Choice, the World Business Council for Sustainable Development, and World Resources Institute. SFI sets standards for forest management, fiber sourcing, and chain-of-custody. An independent board of directors oversees standards and verification.

The iSeal Alliance can help make sense out of the claims and standards across many sectors, including forestry and forestry products.

The point is that claims made by businesses are transparent and independently verifiable. As the Forest Trends report says, there is still a long way to go for the widespread adoption of these best practices, but leaders blazing the trail.

“Some companies like Procter & Gamble and Unilever,” the report states, “are taking a leading approach of contracting third-party verifiers such as BDO and KPMG to conduct in-field verifications, but these are the exceptions rather than the norm.”

See the forest for the trees

We’re all treehuggers. This characterization may be anathema for some, but none of us will get very far in this world without trees.

When Columbus first set foot in the Americas, the continent was thick with trees. “It’s said that squirrels could travel from tree to tree from the Northeast to the Mississippi without ever having to touch the ground,” says Chris Roddick, chief arborist at the Brooklyn Botanic Garden in New York, in a LiveScience blog post.

Europe had long ago cleared out much of its forests. Settling in the new world, Europeans encountered what must have appeared as an endless expanse of forest cover. As a result, trees were harvested much like cod were fished: as if the supply was inexhaustible.

“In the history of the human transformation of the earth, one of the key processes must be deforestation,” writes Michael Williams in a paper published in the Journal of Historical Geography. Human development tends toward a widening gap between consumer and resource.

We get after the trees and forget there is an entire forest. It’s the difference between exploitation and management. Without a holistic, global strategy in place informed by an engaged by concerned consumers, it’s hard to see the forest for the trees.

That’s as true today as it was ever was, but there’s a lot more at risk.

Image credit: Sergei Akulich, courtesy Unsplash

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