Forest Conversion Programme

Geographical location:

Africa/Madagascar > West Africa > Ghana

Africa/Madagascar > West Africa > Nigeria
Asia/Pacific > Pacific Ocean > Papua New Guinea
Asia/Pacific > Southeast Asia > Indonesia
Asia/Pacific > Southeast Asia > Malaysia
Latin America/Caribbean > South America > Argentina
Latin America/Caribbean > South America > Brazil
Latin America/Caribbean > South America > Colombia
Latin America/Caribbean > South America > Ecuador
Latin America/Caribbean > South America > Paraguay

Summary

The Forest Conversion Initiative (FCI) was conceived in 2001 with the goal of reducing conversion of high conservation value forests (HCVFs) and other non-forest areas to palm oil plantations and soy fields in key ecoregions. In order to achieve this objective the FCI employed a number of instruments to engage with relevant stakeholders along the supply chain. The approach which has been most effective so far and which integrates various instruments such as better management practices (BMPs), participatory land-use planning or investment screens have been the initiation of 2 multi-stakeholder roundtables, the Roundtable on Sustainable Palm Oil (RSPO) and the Roundtable for Responsible Soy (RTRS). The rationale behind the roundtables is that development of criteria, their implementation and the mainstream procurement of responsibly/sustainably produced raw materials will transform the markets and thus reduce the pressure on areas with high conservation values.

The Forest Conversion Programme (FCP) builds on the Forest Conversion Initiative. It will have the same goal, namely to ensure that HCVFs and habitats of key species in focal ecoregions are no longer threatened by the expansion of palm oil and soy.

The FCP’s vision is that RSPO and RTRS will transform the production of palm oil and soy by engaging companies that produce, trade or use products containing palm oil and soy, and the banks and other institutions that finance those companies. Concurrently policy dialogues in producing countries will lead to the adoption of a participatory landscape-level land use planning methodology modelled after the high conservation value area (HCVA) concept.

The FCP encompasses the major regions where palm oil and soy are produced and consumed. The project aims to generate a growing demand for sustainably produced commodities in Europe, China and India, that will motivate producers to adopt environmentally and socially responsible practices, including the protection of areas with high conservation value. This strategy will be reinforced by local support in key producing areas aimed at testing and implementing appropriate better management practices and participatory land use planning (HCV methodology).

Background

Over the last 2 decades of the 20th century, deforestation in tropical forests was 10-16 million ha per annum, and this rate is showing no signs of slowing down. The causes are complex and often interrelated. Among them is the role of plantation agriculture. In the next 25 years, 250-300 million ha of tropical forest are likely to be converted into agricultural land where high conservation value forests (HCVFs) and valuable forest landscapes will be lost or degraded. Particularly in danger are tropical lowland rainforest, representing the world's biologically most diverse terrestrial ecosystem.

In recent years, some of the fastest expanding crops have been palm oil and soy. Palm oil and soy constitute the largest raw material base for the rapidly expanding edible oil market; palm oil is the fastest growing crop in the tropics in terms of production. This growing demand globally for palm oil and soy and the subsequent expansion of these crops is a key driving force behind forest and habitat loss, with impacts on freshwater resources and pesticide use.

More than 80% of the global palm oil production occurs in Malaysia and Indonesia. The remainder is produced in Papua New Guinea (PNG), Latin America (Columbia, Ecuador, Brazil) and in Africa (Ghana, Nigeria), where the palm oil originates. Palm oil is predominately used as a vegetable oil, whereas palm kernel oil is used as an ingredient in cosmetics, soaps and food. Projections of global demand for palm oil in 2003 assumed a doubling by 2020, but the suitability of palm oil for biodiesel is expected to increase demand even further, threatening conversion of the remaining tropical lowland forests on the Sumatra, Borneo and New Guinea islands but also in Latin America. The priority market locations are Europe, India and China.

Soy originates from China, but the United States were the major exporter until recently, being surpassed by Latin America. Due to a globally rising demand for animal feed, soy expansion is booming in Brazil, Argentina and Paraguay at the expense of tropical forests and savannahs, like the Cerrado. Major importing countries of Latin American soy meal are Europe and China. Since soy oil can also be converted to biodiesel, global demand may increase beyond original projections depending upon crude oil prices (soy oil is more expensive than palm oil).

Objectives

Overall goals for palm oil by June 2010:
- 30% of global palm oil production is from RSPO-certified sustainable sources.
- 55% of global production is represented in RSPO membership (2006 baseline 40%).
- The percentage of total palm oil used from RSPO-certified sustainable sources is 40% in Europe, and 15% in China and India.
- Conversion of HCVF due to palm oil in Indonesia, Malaysia and Columbia is halved relative to 2005.

Overall goals for soy by June 2010:
- RTRS has developed and pilot-tested criteria.
- Membership of RTRS involves 20% of production in Latin America and 10% elsewhere.
- Major European buyers, Cargill, Bunge and/or Archer Daniels Midland Company (ADM) are members of the RTRS, as are the 3 largest buyers from China.
- First producers are RTRS-certified.
- In Europe 1 million tons of soymeal are from sustainable sources (basel criteria or RTRS).
- A requirement for participatory land use planning for new developments is in the included principles and criteria of the RTRS.
- Pilot HCVF projects have been completed in Argentina, Paraguay and Brazil.

Solution

As originally conceived the Forest Conversion Initiative attempted to halt or slow conversion of HCV areas by developing BMPs, by engaging with market actors along the supply chain, by influencing economic trade and policy, by shaping the investment screens of financial institutions as well as raising consumer awareness. The experience of the FCI shows that roundtable processes designed to involve all relevant stakeholders along the supply chain have been most effective. Secondly, piloting the HCV methodology with companies or provincial/regional governments has been key for the diffusion and acceptance of the methodology. The remaining approaches have been less successful or effective under specific conditions, such as the social pact in Paraguay, a policy intervention which has reduced deforestation by 90%. As a result of these experiences the FCP focuses on 2 approaches, namely roundtables and HCV pilots.

Roundtables

Multi-stakeholder roundtable processes are the primary delivery mechanisms of companies involved in the palm oil and soy supply chains, as well as the financial institutions that fund investments for the sector. The role of WWF is twofold, namely as a stakeholder within the roundtable processes we need to insure that robust and time-bound delivery mechanisms are put in place and enforced and, secondly, to insure that major private-sector players join and stay actively involved in roundtables.

Both palm oil and soy roundtables have the ambition to develop widely accepted criteria to mitigate adverse ecological and social effects. Subsequently, these criteria are to be implemented by producers and buyers, in order to eventually reform respective supply chains. As the initiator of both roundtables, WWF should stay involved in the governance bodies, as well as ensuring that its corporate members implement and procure sustainable palm oil and soy. This should include liaising with other NGOs to ensure that roundtables, respectively corporate members do deliver and stay actively involved (good cop vs bad cop-roles).

HCV pilots

Ensuring that areas of HCV are not converted to palm oil plantations or soy fields is the key objective of the FCP. Therefore it is of utmost importance that the HCV methodology is applied in pilots and subsequently mainstreamed. WWF’s role is to engage with industry to show that the HCV methodology is a workable land-use planning concept and to act as a stakeholder in public consultations. Secondarily, efforts should be undertaken to reach out to regional planning agencies to get landscape-level HCVs implemented as methodology of choice. In Indonesia a number of pilot HCVs have been carried out both at the landscape and concession level and a process is underway to revise the Indonesia HCVF toolkit. There has also been some uptake at the provincial level (Riau). Objectives for the duration of the agreement for Indonesia should be to support companies to apply the HCVF concept, participate in the Indonesia HCVF toolkit revision process to ensure the toolkit is strengthened and gains the support of more stakeholders, and to lobby at the provincial and district level for adoption of the HCV methodology as a key element in land-use planning processes. Likewise, ongoing pilots in Latin America (Colombia, Argentina, Paraguay) should be mainstreamed during the next 3 years.

In other countries (Malaysia, Papua New Guinea, Brazil), where the HCV -concept is unknown or untested, pilot projects should be initiated both at the landscape and concession levels. While WWF can provide some seed money, contributions in kind (expertise, staff time) should be favoured in order to avoid a dependency upon WWF. Once successful pilots have been conducted, WWF’s efforts should focus on mainstreaming the methodology and successively taking over the role of a critical but constructive stakeholder.

With the formation of the HCV Resource Network, established with funding from various forest companies and the World Bank-WWF Alliance, the intention is to build up the HCV Resource Network so that it can supply the support on the HCV concept. In this way resource commitments by WWF can be successively reduced. A key strategy will therefore be to get companies from the palm oil and soy supply chains involved in the HCV Resource Network, including the governance structure and future funding.

Influencing markets

Business and industry engagement in major markets will aim at encouraging companies to join the roundtables and to source sustainable/responsible palm oil and soy. This should include conventional users, as well as the rapidly growing biofuel sector. In the long-term WWF will pursue a watchdog role or develop expanded partnerships with selected corporate actors.

For palm oil, a critical mass of companies have already been recruited to RSPO (160 companies are members of RSPO, representing 45% of global production and including over 70 downstream users). The emphasis of WWF's work in the European market will shift to encouraging or pressuring the member companies to set and pursue ambitious targets for procurement of sustainable palm oil. In China and India, where less progress has been made, WWF will focus on recruiting pioneering companies to join RSPO and offer intensive support to selected companies to help them develop and implement responsible purchasing policies and practices.

For soy, the membership of RTRS is still small and should ideally increase to roughly 25 European and North American companies. Concurrently, efforts need to be stepped up to recruit members from China and India to both roundtables. This should happen a) via specific support from business and industry staff in these countries who are familiar with the business culture of these countries, as well as b) increasing the capacity and resources within WWF China and WWF India. It is envisioned that by 2010 more than 10 Indian and/or Chinese companies are members of either roundtable and, in combination, switch 15% of these countries’ palm oil and soy procurement to sustainable sources.

Market-based activities in the main producing countries (palm oil: Malaysia, Indonesia; soy: Brazil, Argentina, Paraguay) should continue to focus on constructive engagement with producers and the initiation of pilots relating to sustainable production and/or HCV-based land use planning.

In addition, WWF will engage with the banking sector to encourage lending and investment screening compatible with RSPO criteria to minimize risk to banks associated with poor social and environmental practices of their clients or assets within the palm oil sector. WWF will publish a “handbook” on investment screening in the palm oil sector, and seek endorsement of the practices described in the handbook from leading international banks. WWF will offer training in the use of the handbook to local banks in Singapore, Indonesia and Malaysia with the aim of encouraging investment screening practices amongst local banks. A longer term goal will be to encourage the central banking authorities in these countries to incorporate responsible screening practices in their banking regulations. If this approach is successful, WWF may seek to replicate it in the soy sector.

Communications

The role of communications activities within the FCP is twofold, namely to raise consumer and business awareness about the impacts of palm oil and soy production and to generate pressure for companies to develop and implement procurement policies for sustainable palm oil and soy.

In emerging markets like India and China, public awareness of Corporate Social Responsibility (CSR) and responsible procurement policies is still growing. Here basic business and consumer information campaigns related to the ecological footprints of palm oil and soy, as well as the solutions recommended by WWF will be launched. These may also help in raising the profile of WWF in respective countries.