Between 2015 to 2025, around 750 million people are expected to move into cities worldwide, contributing to the burgeoning consuming class - and this urbanization in emerging economies like China, India, and Brazil will be the dominant driver of economic growth over the coming decade.
To illustrate, consumer spending as a share of China’s GDP is expected to surge from around 36% in in 2008 to 49% by 2030.
Similarly in India, the middle class doubled in size over an eight-year period from 300 million in 2004 to 600 million in 2012. This growth will also have an impact on the amount and type of food people consume. Developing economies – including China, India, other Asian countries and Africa – are projected to account for 35% of the future global increase in food demand, as population growth in these countries will coincide with a dietary shift towards more animal protein-based.
These trends, coupled with unsustainable agricultural production practices, could have an adverse environmental impact if left unchecked. This is especially the case for deforestation-linked commodities such as beef, soybean, and palm oil. At present, major emerging market importers (China and India) and market producer-consumers (Brazil and Indonesia) together account for up to 40% of global demand for some of these commodities. This share is expected to increase further by 2025.
AlphaBeta estimates that a ‘business-as-usual’ production scenario could lead to an increase in deforestation attributed to these countries from 855,000 hectares in 2015 to 990,000 hectares by 2025. To put this number into perspective, this is equivalent to an area the size of Jamaica – or almost 1 million football fields – being deforested annually .
However, the increasing demand for forest commodities need not come at the cost of more deforestation if a conscientious effort is made to source sustainably. Focusing our attention on China – where the overall demand for deforestation-linked commodities is high – there is a range of actions which stakeholders can pursue to further promote sustainable sourcing. These findings were based on a workshop in Beijing conducted by AlphaBeta, the Paulson Institute and TFA2020 with several prominent members from international organizations, the private sector and government think-tanks.
First, participants highlighted the vital role of governments in developing guidelines and a definition of ‘sustainable sourcing’ to which businesses can refer. A promising initiative in this regard is China’s Timber Legality Verification System, which will regulate the legality of timber and timber products within the country. The system sets out requirements for regulating timber products at the forest management level and throughout the chain of custody.
Second, industry – particularly the financial sector – can play a vital role in developing more sophisticated risk models that take account of unsustainable sourcing approaches and provide incentives for more sustainable practices. There is also a clear need for the private sector to take the lead in establishing joint industry commitments related to sustainable sourcing. One such initiative is the Chinese Sustainable Meat Declaration, a commitment by the Chinese Meat Association and businesses to promote sustainable meat production, trade and consumption.
Finally, there is a clear role for civil society in helping to educate consumers about the importance of sustainability and to help importers build their capabilities around sustainable sourcing. For example, organizations such as the World Wildlife Fund have had a promising impact by using celebrities, like Chinese actress Fan Bingbing, to promote sustainability in pulp and paper in China.
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Innovations in digital technologies could play an enabling role to support the efforts of various stakeholders. For example, blockchain technology could be used to track exported products, improving traceability and ensuring that the entire batch has been sourced from sustainable jurisdictions. Also, consumer insights via Internet of Things technology could help e-commerce companies engage in targeted messaging about specific deforestation products, thereby improving consumer awareness. Finally, precision-farming technology which accounts for the variability of soil attributes could boost production efficiency and reduce the need for more land.
Emerging economies play a vital role in ensuring sustainable supply chains. Together with various stakeholders from the private sector and non-governmental organizations, governments in these markets can shift to more sustainable approaches to consumption.