• Half of tropical deforestation is illegal.

• Illegal and unsustainable timber and goods are flooding global markets.

• Many companies need regulation to incentivize them to behave ethically.

Demand for a few commodities, particularly palm oil, soy, beef, and pulp and paper, is driving tropical deforestation around the world. By destroying these tropical forests, we are gambling with the stability of our climate, threatening the existence of vulnerable species, and undermining the critical role they play in the health of our planet.

Half of all tropical deforestation is illegal. This happens when producers clear more than permits allow, give bribes for land or permits, fail to follow procedures for identifying pre-existing rights with communities, and more.

These violations result in environmental damage, social conflict, economic injustice and inequality. They also result in lost revenues to governments that could otherwise be used to advance the social good – with conservative estimates of global losses at more than $17 billion per year.

A key part of the global effort to reduce tropical deforestation has come from the private sector, with multinational corporations committing to eliminate deforestation products from their supply chains. Sustainable and legal producers can meet demand for agricultural products without any additional forest conversion; however, they face stiff competition from the cheaper illegal and unsustainable products that are flooding global markets.

In other sectors – such as illegal timber, conflict minerals, and illegally harvested seafood – voluntary efforts by companies were often an important or even necessary step to demonstrate leadership and show what was possible.

But promises alone — even those backed up by financial resources — historically have not been not enough. Success was only achieved when effectively complemented by national and/or international regulations and agreements.

Ultimately, some companies are leaders: They consider good environmental and social practices to be critical to their success, and as a result invest in robust systems to ensure them. Other companies will be laggards: For them, sustainability and social practices are just not a concern.

A strategy based only on voluntary zero-deforestation commitments – driving leaders towards progress and converting laggards to leaders – will not be sufficient. There are just too many heel-draggers, many of whom are not highly exposed to public pressure to change.

Out of reach

Currently, only 12% of companies active in agricultural commodity supply chains have a zero- or zero-net deforestation commitment that applies to all their sourced commodities. Additionally, the pace of new commitments has slowed dramatically over the past few years. Even if every leading company with a zero-deforestation commitment achieved zero deforestation at the firm level, the shared global goal of reaching zero deforestation supply chains across entire sectors of the economy would remain well out of reach.

Regulations prohibiting the import of illegally produced agricultural products will force the laggards to reform or find new unregulated markets. When companies are exposed to legal liabilities, they will demand far more information and transparency from their suppliers, making it more and more difficult for producers who rely on illegal deforestation to find a market for their goods. Well-documented and traceable legal and deforestation-free production will become more valuable on the global market, and its supply will increase to meet demand.

Regulation is needed to support voluntary commitments on deforestation
Regulation is needed to support voluntary commitments on deforestation

As companies throughout the supply chain improve their capacity and technology to track supplies to source regions in order to document legal production, it will become easier for them to avoid all deforestation entirely. Demand-side regulation that requires legality has the capacity to open the floodgates for additional voluntary zero-deforestation commitments.

Together, voluntary zero-deforestation commitments and demand-side regulation to prohibit illegality will:

• Force all traders and buyers to know their sources and supply chains.

• Squeeze out the “worst-of-the-worst” illegal production, reducing corruption and improving the economic health of producer countries.

• Increase zero-deforestation production and the number of companies willing to go completely deforestation free.

In the United States about a decade ago Congress extended trade protections to illegal timber. These measures have not only significantly reduced imports of illegal wood, but they have also helped spark similar policy reforms around the world.

What’s the World Economic Forum doing about deforestation?

Halting deforestation is essential to avoiding the worst effects of global climate change.

The destruction of forests creates almost as much greenhouse gas emissions as global road travel, and yet it continues at an alarming rate.

In 2012, we brought together more than 150 partners working in Latin America, West Africa, Central Africa and South-East Asia – to establish the Tropical Forest Alliance 2020: a global public-private partnership to facilitate investment in systemic change.

The Alliance, made up of businesses, governments, civil society, indigenous people, communities and international organizations, helps producers, traders and buyers of commodities often blamed for causing deforestation to achieve deforestation-free supply chains.

The Commodities and Forests Agenda 2020, summarizes the areas in which the most urgent action is needed to eliminate deforestation from global agricultural supply chains.

The Tropical Forest Alliance 2020 is gaining ground on tackling deforestation linked to the production of four commodities: palm oil, beef, soy, and pulp and paper.

Get in touch to join our mission to halt to deforestation.

This year, I [Schatz] will introduce legislation that will make it illegal for companies to import the products of illegal deforestation. Meanwhile, Forest Trends continues to work on governance and regulatory issues in both producer and consumer countries to combat illegal deforestation. We cannot continue to undermine other countries’ efforts to manage their rural economies and keep their forests standing by buying up the products of illegal deforestation. Buying stolen trees is bad; buying the products from entire swaths of stolen, illegally deforested land is that much worse, and must be stopped.