Coste’s organization forms part of a complaint filed before the Competition Bureau of Canada challenging the integrity of SFI, a system created by the pulp and paper industry in 1994 that is meant to reassure environmentally conscious consumers. The standard applies to everything from furniture to cardboard boxes and toilet paper.  

The Competition Bureau enforces the Competition Act, which prohibits false and misleading statements about products or services companies offer. 

“People desperately want to believe that logging can be done well, and that we can meet our needs for timber and fibre without having a devastating impact,” Coste says in an interview. “The story that can’t be manipulated is the one told out on the land. You get out into some of these areas, into some of these clear-cuts in forests that are SFI-certified, and there’s absolutely nothing sustainable about it.” 

The complaint, led by Ecojustice on behalf of the Wilderness Committee, Greenpeace Canada and several other environmental groups, was filed three years ago. The complainants say they want SFI to stop calling their certification “sustainable,” to issue public correction of their claims and to pay a $10-million fine. 

SFI, a non-profit organization, has now certified more than 150 million hectares of forest in North America, of which 76% are in Canada. Products that bear its seal are understood to be sourced from forests that are responsibly managed.  

But, critics argue, forestry companies certified by SFI can continue to clear-cut forests, spray glyphosate to suppress natural regrowth, and replace them with lucrative softwood plantations. Coste calls it “greenwashing.” “Some of the biggest clear-cuts in the rarest old-growth forests are in SFI-certified forest operations,” Coste says. “It undercuts the credibility of all third-party certifications.” 

In an emailed statement, SFI tells Corporate Knights that “this complaint has no merit and attempts to create confusion in the marketplace,” adding that “complaints like this are used to mislead brands, governments, and the public into the real value and impact of the SFI Standard.” 

Another signatory to the complaint, Peter Wood, is a professor in the Department of Forest Resources Management at the University of British Columbia. Wood has been studying forestry certification since 1999, first for the province’s Ministry of Forests and later for non-government organizations.

“Forest certification initially held a great deal of promise, as a way to bypass government inaction in addressing unsustainable rates of logging and ease pressure on the world’s few remaining primary forests,” he says. “This is not the way that it has played out.” 

In a 39-page complaint submitted to the Competition Bureau, the environmental groups argue that the SFI standard does not require specific environmental outcomes. While the framework outlines steps that could contribute to sustainable forestry, it does not mandate them.

Wood says many of the requirements are “vague and discretionary, largely aspirational.” Companies seeking certification hire the auditors who assess them, he adds, and the standards focus on whether companies have programs in place rather than whether those programs produce measurable results. As a result, Wood argues, industry-led certification systems have allowed large volumes of wood products to enter the market with sustainability labels, without significant changes to forestry practices. 

SFI submitted a six-page response to the Competition Bureau, arguing that the organization is governed by an 18-member board divided equally among industry (including representatives from Canadian forest-product giants Canfor and Irving), conservation, and Indigenous and social sectors. The organization says it undertakes a standards-revision process every five to seven years, which includes review from technical experts; Indigenous groups; industry; private forest landowners and public forest managers; Canadian government agencies, including the Ministry of Natural Resources; environmental non-profits; labour unions; and others. The public is also given an opportunity to comment on the revisions. 

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SFI also says that their “standards are internationally recognized methodologies” and stated that disagreement among experts does not mean that a methodology is false or misleading. 

“SFI has a very slick website and associated promotional materials, and they make big claims around the label’s ability to provide assurance of sustainable forest management,” Wood says. “But if you take a close look at the forest management standards, upon which all of their claims essentially rest, there’s nothing in there that is capable of assuring a given level of performance.” To illustrate the point, Wood points to SFI’s “performance measures” that require certified organizations to protect endangered species. The problem? They require only that companies to have a program in place that “addresses” this issue, with no reflection on whether a program is effective or what impact logging has had on the species.   

SFI tells Corporate Knights that “while SFI sets the standard, independent, third party-accredited certification bodies certify organizations to the SFI Standards” and that a certificate is issued only after the independent certification body determines that an operation conforms to SFI’s requirements. They also say that annual surveillance audits by certification bodies are “mandatory on all certified operations to maintain certification. So, if an organization doesn’t meet the standard, they do not receive a certificate.” Meanwhile, the complainants argue that they have not seen an SFI certification be refused or removed for not meeting the requirements of the process.  

In response, an SFI spokesperson says that they are aware of 19 certificates that were relinquished between January 2022 and June 2024 by companies that could not meet new requirements. 

“[The] government has a strong role to play in protecting Canadian consumers from bogus claims made in the marketplace, including the sustainability of the products they buy,” Wood says. “But this requires pressure from consumers and voters.”

Wood and the claimant ​​​​environmental groups consider the Forest Stewardship Council (FSC), founded in 1993, to be a stronger option. Though smaller by comparison to SFI, certifying just 50 million hectares, Ecojustice’s submission to the Competition Bureau notes that FSC’s structure and governance were designed to give equal voting power to business, environmental and social interests, including Indigenous Peoples. But, Wood says, in the 1990s, the forestry industry put significant effort into creating other options. “It appeared that these were deliberately trying to detract from the efforts of the Forest Stewardship Council, supported by Indigenous organizations and environmental groups,” Wood says. “I hope the Competition Bureau upholds a high bar in this case and prevents corporations from greenwashing . . . It should not be left up to individual consumers to go around verifying the myriad claims that are made in the marketplace every day, or read the hundreds of pages of standards that support these claims.”

Kegan Pepper-Smith, a managing lawyer on the case at Ecojustice, notes the slow pace of resolution. In the three years since the organization brought the complaint, they have not heard anything apart from one meeting soon after the Competition Bureau’s investigation was launched. “The logging practices under the SFI standard continue, and there’s been no redress for our clients or for the consumers,” Pepper-Smith says in a phone interview. 

The Competition Bureau tells Corporate Knights that the agency is legally obligated to conduct its work confidentially and cannot provide details related to the case or its status. Likewise, SFI says that no enforcement action has been taken by the Competition Bureau as of writing.  

“That’s really impactful for folks who want to speak with their money and make choices about what products they buy, and are being misled to think that they’re purchasing products that are sustainably sourced,” Pepper-Smith says. “It’s not only about the impact in the forest; it’s also about the impact on the consumers and their ability to . . . [use] their money to support sustainable practices.” 

Leah Borts-Kuperman is an award-winning journalist based in North Bay, Ontario. Her reporting has been published by Canada’s National Observer, The Narwhal, The Logic and The Walrus, among others. 

Response from the Sustainable Forestry Initiative (SFI), sent on April 27, 2026:

“Contrary to the article’s claims, SFI’s Standard requires prompt reforestation using ecologically appropriate native species and prohibits the conversion of native forests to plantations. It also includes multiple safeguards to ensure that regenerated forests do not develop plantation characteristics, but instead resemble native or semi-natural forests at maturity.

The article’s assertion that SFI’s requirements lack measurable impact or performance is simply incorrect. Every Objective, Performance Measure, and Indicator in the Standard must be met and independently verified by a third-party auditor before an organization can achieve certification. These requirements are outcome-based, ensuring that meaningful and measurable results are delivered.

One example is SFI’s robust, performance-based requirements for the protection and conservation of old-growth forests. The Standard also mandates integrated pest management practices that minimize chemical use and prioritize the least-toxic, narrow-spectrum pesticides.”

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But even as the Trump administration shoots down emerging clean-energy technology, it has rushed to secure critical minerals – the raw materials that are crucial to renewable energy and emerging military technology – and the United States has spearheaded a number of actions meant to break China’s hold over the critical-mineral supply chain. Some experts say that the administration’s emphasis on national security is the likely point of its rush for critical minerals. But if the Trump administration stockpiles more of the minerals than the Pentagon uses, or if the mining industries don’t come together in the course of Trump’s second term, others believe that the president’s efforts could ultimately support renewable energy under a future administration.

“Currently, [critical mineral policy is] being deployed to advance a bellicose nationalism,” says Lorah Steichen, research manager at the Transition Security Project, a non-profit that investigates the U.S. and U.K. military industrial complexes as climate and economic threats. “Which is clearly in opposition to a just energy transition.”

On February 2, President Trump and the U.S. Export-Import Bank, or EXIM, announced an initiative called Project Vault – a $12-billion public–private partnership to stockpile critical minerals, meant to insulate the United States from supply shocks. It will consist of $2 billion in private capital and a $10-billion EXIM loan: companies such as Boeing, General Motors and Alphabet are expected to participate in the program and will be able to draw from the stockpile, provided they replenish the material they use.

“In theory, the project can already be used for clean energy,” says Bryan Bille, a policy and geopolitical principal at Benchmark Mineral Intelligence. Even if the current administration focuses on directing much of the stockpile toward the military, Bille explains, it will still be focused on ramping up U.S. battery capacity to serve the data centre boom.

A few days after the stockpile was announced, the administration held a “Critical Minerals Ministerial” in D.C. with representatives from more than 50 countries, where Vice President JD Vance proposed a special trade zone that would use tariffs to determine price floors and allow participating countries more stable access to critical minerals. The administration recently announced that it would also use AI to set price floors in some cases, specifically when dealing with minerals like gallium – 95% of which the United States imports from China. Because the market is currently so distorted by its single supplier, Peter Cook, a climate and energy analyst at The Breakthrough Institute, explains, AI could help determine the actual cost of producing gallium, which is essential to semiconductors and other electronics.

But whether any of this lasts is dependent on critical mineral policy being codified into legislation, Cook says, pointing to the Securing America’s Critical Minerals Supply Act, which is currently in the Senate. “The key is if something like Project Vault is going to be durable beyond a single administration,” Cook says. “I think there’s certainly a possibility for [clean energy and national security stockpiling] to complement each other, instead of cannibalizing each other.”

Currently about 80% of rare-earth imports in the United States come from China, and the Trump administration has worked aggressively to break this market stranglehold through trade deals, taking equity stakes in several mining companies (which have been called into question by Democrats in the House and Senate), holding a summit to secure the AI supply chain, and even defying international law by exploring deep-sea mining in international waters.

But securing minerals alone is not enough to oust China as the world’s rare-earth and critical-minerals heavyweight. The United States still lacks the processing power to mould those minerals from raw materials, and killing the Inflation Reduction Act subsidies squashed a stream of demand, making it difficult to diversify the mineral supply chain, explains Tom Moerenhout, a professor at Columbia University who leads the Critical Materials Initiative at the Columbia Center on Global Energy Policy.

“The short-term bottleneck is getting these [processing facilities built],” Cook says. “But the real bottleneck is going to be just overall supply from a geologic perspective.” In other words, even if mines were to be up and running tomorrow, the United States might not have access to a sufficient supply of critical minerals.

To complicate matters, there isn’t an absolute overlap between the minerals needed for green energy and those needed for defence production. Antimony, for example, which the administration has made a point of seeking out, is used in military technology but not solar panels or EV batteries. And, in recent weeks, conservatives appear to have made an abrupt about-face on clean technology, likely spurred by the extreme energy demands of data centres. How this will play out in the long run remains unclear.

Experts agree that building up resilient supply chains and infrastructure could be helpful, should a future administration return the country’s focus to a clean transition. But a robust, domestic network of mining and mineral processing will require a fundamental shift in how we think about and plan for mineral extraction and extractive zones as well.

“Everybody is criticizing China for this dominance, but it was created by the West,” says Raphaël Deberdt, a postdoctoral fellow at Copenhagen Business School who studies mining anthropology. “We offshored industries that we thought were too polluting. The dominance of China in terms of processing is the result of basically 40 years of the West not wanting that done in their countries.”

Nevertheless, an effective green industrial policy, Steichen, of the Transition Security Project, explains, is not just about reducing risk in the supply chain or providing the right incentives, but also minimizing the volume of extraction. “None of that is possible as long as critical-mineral strategy is premised on national security and mineral military expansion,” she says. The data centre explosion has put the need for increased mineral recycling into sharp relief, as the chips and servers required for operation need to be replaced every few years – creating tons upon tons of e-waste, much of which is not recycled.

A 2024 report in Nature Computational Science estimated that the rapid adoption of large language models will generate 2.5 million tons of e-waste a year by 2030. “If we’re using public money, there should also be attention to labour, environmental and community standards,” Steichen says. “As well as some of the potential problems around reinforcing U.S. resource nationalism.” The United States disposes of an enormous amount of critical minerals in mine wastewater, and the Energy Department’s research arm, ARPA-E, is currently working on ways to recover usable material from that waste. But regardless of how many solar panels the United States is able to build domestically, Steichen underscores that a truly effective green industrial policy will require global climate cooperation.

This article originally appeared in Grist. It has been edited to conform with Corporate Knights style. Grist is a non-profit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at grist.org.

The post How Trump’s rush to secure critical minerals for war could (eventually) help the green transition appeared first on Corporate Knights.

The study from environmental non-profits Changing Markets Foundation and Mighty Earth analyzed the climate plans of the United States’ and Europe’s top-grossing supermarkets, including the United Kingdom’s Tesco and Sainsbury’s, U.S. retail giant Walmart and German chains Lidl and Asda.

The meat and dairy sector is responsible for around a third of atmospheric methane and accounts for a third of all supermarket emissions. Scientists say the highly potent greenhouse gas – 80 times more powerful than carbon dioxide over a 20-year period – must be slashed by 40% to 45% by 2030 to meet climate goals.

Despite this urgency, Thursday’s analysis identified an overwhelming lack of action to tackle the powerful climate-heating gas. None of the retailers analyzed had a target in place to reduce methane, or to report on how much of the greenhouse gas they are responsible for through the products they sell.

Only five of the supermarkets surveyed had plans to boost sales of plant-based proteins, despite eating less meat and dairy being a key recommendation of climate scientists who say it’s crucial to meeting climate goals. And just six had concrete plans to reduce their overall supply chain emissions.

The report calls on all the retailers to set an ambitious target for reducing methane by at least 30% by 2030, echoing the aims of the Global Methane Pledge, a voluntary framework led by the European Union and the United States, and agreed by world leaders in 2021.

Maddy Haughton-Boakes, senior campaigner at the Changing Markets Foundation, said methane emissions were a “major blindspot” for supermarkets. “Cutting methane this decade is our emergency brake on runaway global heating, yet retailers are barely pressing it,” she said.

‘No real leaders’

The report looked at top-performing supermarkets in the United States and Europe – based on their yearly revenue, volume of grocery sales and dominance in the meat and dairy retail market.

These supermarket chains were then assessed on their ability to tackle methane against 18 indicators, including on set targets, reported emissions, and plans to scale up plant-based alternatives to animal-sourced food. Not one of the 20 retailers had plans to reduce – or even report on – their methane emissions.

The highest-scoring retailer – Tesco – scored 51 out of 100 in the assessment. Germany’s Schwarz Group – the world’s fourth-largest retailer – was in second place with just 35 points. The average score across all indicators among retailers was 20 out of a possible 100 – a rating the authors said indicated a “dismal lack of action and major room for improvement.”

Two supermarkets – the U.S chain Albertsons and Spain’s Mercadona – scored no points at all. All the U.S “big four” supermarkets – including retail titan Walmart and Albertsons, as well as Costco and Kroger – were in the bottom half.

The lack of reporting and target-setting puts retailers behind other companies in their methane ambitions.

European dairy giant Danone set a precedent for large food firms for introducing a methane-reduction goal in 2023. Other dairy companies, including French multinational cheese marketer Bel Group and the U.S subsidiary of French dairy company Lactalis, are also now reporting on their emissions.

Gemma Hoskins, global methane lead at Mighty Earth, accused supermarkets of “ignoring the methane problem in their meat and dairy aisles.”

“Retailers are uniquely positioned to urgently drive down agricultural methane emissions in their supply chains,” she said. “That starts with being honest about the impact of the products they sell and working harder and faster to reduce that impact.”

More action needed 

The report identifies an apparent “disconnect” between retailers’ ambitious climate promises and action. Nearly half (nine) of the retailers analyzed had set net-zero targets. This included the U.K.’s Tesco, which has said it aims to meet net-zero emissions across its supply chain by 2050.

Eleven supermarket chains acknowledged that emissions from animal agriculture significantly drive climate change, and several – including Casino and Tesco – suggested that increasing sales of plant-based foods could help reduce climate impacts.

However, these pledges were not accompanied by real-world actions to reduce emissions. Only six retailers had set targets to reduce Scope 3 emissions as part of their climate commitments. This category of emissions – which includes the transport, production and distribution of food – make up an estimated 93% of supermarkets’ overall climate footprints.

The report called on supermarkets to ensure that net-zero targets were accompanied by real reductions in Scope 3 emissions. Retailers should introduce a “comprehensive plan” on how to reduce emissions from across their value chains, the report argued, including time-bound near- and long-term targets for reductions in greenhouse gases.

“Given the sheer scale of meat and dairy emissions, retailers cannot credibly meet their net zero targets without tackling methane,” Hoskins of Mighty Earth told DeSmog. “Increasing plant-based products and reducing methane emissions from meat and dairy must be a core strategy for every supermarket.”

Plant-based transition 

Most retailers had no plans to increase sales of plant-based products, the report found.

Just five of the retailers surveyed – Tesco, Asda, Carrefour, Schwarz Group and Dutch supermarket group Ahold Delhaize – have set measurable targets for increasing alternative-protein sales globally. This is despite the world’s leading climate science body, the Intergovernmental Panel on Climate Change (IPCC), calling for wealthier consumers to transition to more plant-based diets to tackle harmful greenhouse gas emissions.

In a 2024 analysis, the non-profit Madre Brava and the consultancy firm Profundo found that a 50% shift to plant-based proteins by six leading food retailers alone could also save emissions equivalent to removing 25 million petrol and diesel cars from the EU.

A shift to plant-based proteins also has considerable health benefits. Scientific assessments have shown that Europeans eat twice as much meat as is recommended by the “healthy diet basket” – a metric used by the United Nations as a benchmark for ideal nutritional intake.

In a landmark report last year, the UN’s World Health Organization (WHO) estimated that diets high in processed meats – which are linked to cancer, heart diseases and other non-communicable diseases – are responsible for 117,290 deaths across Europe.

A study published in December found that even processed plant-based products – such as veggie burgers – still offer substantial environmental, health and nutritional benefits compared to animal products, though these are even greater for unprocessed alternative proteins.

Changing Markets and Mighty Earth argued that supermarkets should take heed of the recommendations of the EAT-Lancet, a major 2019 scientific commission into climate-friendly diets, and aim to sell 60% plant-based protein products versus 40% animal-based proteins by 2030.

Food retailers should roll out attractive own-brand plant-based ranges across their stores, the authors recommended, and shift marketing and storefront efforts to promote healthy alternative proteins such as legumes and tofu over animal-based foods.

The article was first published by DeSmog. It has been edited to conform with Corporate Knights style. Read the original article here.

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Fast fashion is one of the most polluting industries globally, often relying on synthetic fibres that have an ultimate origin in fossil fuels.

At the same time, the links between corporate fast-food entities and poor health and deteriorating environmental conditions is well established. Likewise, fast technology brands design for obsolescence to boost sales, requiring that more and more mineral wealth is extracted from the ground. Almost all of these activities require mining in some form along the supply chain.

Mining is also increasingly fast, with a focus on the creation of wealth for a select few and meeting global demand, not on the needs of local communities. Since the 1970s, global material footprint has quadrupled. While circular-economy strategies, such as recycling, can play a role in meeting the increasing demand for raw materials, mining cannot be completely offset by recycling alone.

The slow fashion and slow food movements are an antidote to overconsumption, promoting sustainability by emphasizing the value of quality, origin and production. New research suggests that a slow, small-scale mining movement could maintain supply, yield similar sustainability outcomes and provide a range of other benefits.

Out of this earth

The central premise of slow mining is to give control over production levels to those who work at the mine site itself. The concept recognizes that meeting global demands for raw materials requires local solutions and was evolved out of research into small-scale mining in Yukon, Canada. Additional research in Ghana has also shown how slow mining efforts led by small-scale miners can supply vital materials while also taking care of both local communities and environment.

Small-scale mining is the gradual harvest of a resource by a community (known as a rural collective economy) using more bespoke technologies (such as sluicing equipment) that miners are able to purchase – or build – and maintain themselves. Small-scale miners can also be owner-operators of their mines, where they have control over production rates to protect local communities and extend the life-of-mine for continued and secure steady income.

Small-scale mining activities are relatively common throughout the Yukon, where 108 active small- to medium-scale placer mines work to produce around 72,464 crude ounces of gold annually. By comparison, a single large-scale hard-rock gold mine can generate approximately 200,000 ounces annually in the same territory.

Yukon stands out as one of the few active small-scale mining industries in the Global North.

Artisanal and small-scale mining employ more than 40 million people in the Global South. “Slow” small-scale mining operations in Ghana have persisted despite shutdowns by a government that have favoured large, often multinational, mining enterprise under the banner of environmental protection.

Supportive structures

There are significant similarities and differences between the experiences of small-scale miners in Canada and Ghana. Notably, in both the Global North and the Global South, governance and regulation can hinder the existence of smaller mining enterprises.

Important regulatory frameworks, such as the Canadian National Instrument 43-101, are designed to protect markets, not communities or environments. This framework can make it difficult for small-scale mining enterprises to enter the sector. The dominant focus on large mining enterprises, tied to stock markets and globalization, overshadows the potential benefits of small-scale mining.

However, the Yukon government’s Placer Mining Act has helped to incubate and protect small-scale mining. Meanwhile, a floating pool of professionals who work with Yukon mining practitioners to develop place-based solutions that promote positive outcomes for mining practitioners and environment has helped the Yukon become a global leader in slow mining.

The resulting embrace of slow, small-scale mining has enabled rural communities to gradually adapt and grow with the industry. This approach enhances community resilience to boom-and-bust commodity life cycles, facilitates the development of integrated rural value chains and promotes local ownership and management, all of which can curb urban migration and create meaningful work.

Sustainable production-consumption ethos

The insights in small-scale mining from the Yukon have implications for a growing array of globally in-demand mineral and metal resources. Sustainability concepts in the mining industry have advanced toward holistic understanding, rooted in strong sustainability. Mining need not be an inherently colonial activity, and working with Indigenous people and incorporating Indigenous ways of knowing into the mine life cycle are key to overcoming sustainability challenges.

We need new mining business models anchored in local communities. Modern small-scale mining and switch-on/switch-off mining are being considered in Europe. Artisanal and small-scale mining in medium- and low-income nations produce a significant amount of critical minerals.

Who owns a mine is important, and research has shown that decentralized, locally owned mines positively correlate with high human development index outcomes and can help resist state-corporate mineral ownership.

In Canada, community-owned small-scale mining of critical minerals is economically and socially viable.

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Better alternatives

This comes at an important juncture in the expansion of raw material extraction activities that are needed to sustain the low-carbon transition but can potentially cause excessive stress to the natural environment and communities.

Slow mining illustrates how widespread global consumption is tied to the experience of mining communities, and the expectations of local stakeholders for sustainable livelihoods in sustainable environments.

Alongside slow fashion and slow food, slow mining demonstrates that the responsibility for better environmental and social outcomes lies with both a truly responsible mining industry, and a responsible culture of moderate consumption.

Cassia Johnson is a PhD candidate in earth and environmental sciences; Deborah Johnson is senior lecturer in politics and international relations; and Kathryn Moore is senior lecturer in critical and green technology metals, all at the University of Exeter.

This article first appeared in The Conversation; it has been edited to conform with Corporate Knights style. Read the original article here. 

The post How slow, small-scale mining can meet demand in a more sustainable way appeared first on Corporate Knights.

Car companies are increasingly embracing electric vehicles as a new market opportunity exposed by worsening climate and biodiversity crises. But, while electric vehicles have no tailpipe emissions, there are a lot more factors involved in producing a car: steel, tires, batteries and people affected along the supply chain. The mining and manufacturing of these metal-dense machines puts heavy burdens on landscapes, Indigenous peoples and workers. It’s not enough for a car to be EV to be considered truly “clean,” the report says.

The Lead the Charge coalition assembled 80 measures of what a clean car supply chain would look like, ranking the top 18 automakers against it. The indicators include policies and actions to promote using recycled materials, sustainable mining practices, unions and efforts to reduce emissions. The intention, the coalition says, is to encourage competition among firms pushing their suppliers to achieve responsible practices.

The ranking is in its second year, but car companies still have large blind spots, the authors say, especially related to the rights of Indigenous peoples to free, prior and informed consent (FPIC) on mining projects.

“What the scorecard shows me is that the automotive industry is really not ready to participate in the supply chain in a responsible way, and in particular, with respect to understanding, preventing and mitigating any impacts on Indigenous peoples,” says Kate Finn, executive director of First Peoples Worldwide, an Indigenous-led research and advocacy group at the University of Colorado Boulder and member of the coalition.

Around the world, more than half of identified deposits of minerals in high demand by electric vehicles and other climate technologies are on or near Indigenous and peasant lands.

The report defines a “clean car” as having (1) a fossil-free supply chain that also has the lowest possible negative impact on human health, biodiversity, resource depletion and ecosystem resilience; and (2) a supply chain throughout which the rights of Indigenous peoples, workers and local communities are respected.

U.S. automakers scored slightly better on average than their European rivals, and East Asian firms fell behind as they lacked policies to address decarbonization in the production of steel and aluminum. The average score was 19%, and no company scored above 50%.

It’s not enough for a car to be EV to be considered truly “clean.”

 

– Lead the Charge coalition

After Ford and Mercedes-Benz, Tesla appeared in the third slot, up from last year’s ninth spot, the largest jump of any firm. One reason was that it became the first to disclose specific emissions from its use of steel, a ubiquitous material that emits significant greenhouse gases during smelting.

The coalition named Toyota and Honda “climate laggards,” due to continued failure to disclose actions to reduce emissions and a history of lobbying against climate action. The rapidly expanding Chinese firms BYD, SAIC and GAC also ranked low, as they published little information about their supply chain and had few disclosures in general.

The authors note that Chinese firm Geely, however, stood out for its improvement over just a year in setting human rights policies for its supply chain.

Of the car companies mentioned — GM, Ford, Toyota, Tesla, Mercedes-Benz, BYD, SAIC, GAC, Honda and Geely — only Mercedes-Benz responded to Mongabay’s request to comment.

Its statement reads: “We consider ‘Lead the Charge’ to be a meaningful benchmark. The research and results are well-founded and published transparently. In addition, the benchmark interacts directly with the evaluated companies. We also welcome the objective of interaction with the organizations behind Lead the Charge. Overall, we are pleased with the result, which at the same time gives us an incentive to continue our intensive efforts.”

Steel, body and batteries

In addition to human rights issues, the scorecard has a focus on some of the most dominant materials in an electric car: steel, aluminum and the lithium-ion battery, which often includes lithium, nickel and cobalt. The steel and aluminum industries together emit roughly 10% of all greenhouse gases, and in an electric car, the materials account for more than half the weight, according to a report by consulting firm Kearney. The car industry consumes the third-highest amount of steel of any industry, and it is the top user of aluminum and batteries.

The battery makes up roughly another quarter of the car’s weight. Some companies in the ranking received higher scores because they sell batteries without nickel and cobalt, an emerging trend as they adopt lithium iron phosphate (LFP) batteries, which are believed to have lower supply chain risks.

The emissions of steel and aluminum have received less public scrutiny than battery materials, and car companies have made scant progress on pushing suppliers to reform climate-warming practices. A third of the companies have yet to take any action on decarbonizing their aluminum and steel supply. “Green” steel and aluminum make use of energy and processes that shrink emissions.

“Automakers have a big role to play to realize a transformed steel and aluminum industry, as they are major buyers and have a strong pull on global purchasing power,” says Annie Sartor, aluminum campaign director at Industrious Labs, a member of the coalition.

Chris Alford, senior strategist for auto supply chains at climate justice network the Sunrise Project and who helped design the methodology, says only official company disclosures were used to evaluate a firm’s actions. Firms are held accountable for official disclosures more strongly than marketing material or other actions.

“The way that we structured the leaderboard was actually to give more weighting to the indicators where companies have to provide evidence of concrete implementation of commitments and policies, as opposed to the ones that are really just, ‘Have you got a policy? Or have you made a commitment?’ or ‘Have you set a target?’” Alford said.

Handling critical minerals

The leaderboard highlights a few case studies within automotive supply chains that the authors say are worth addressing.

In Indonesia, which produces almost half of the world’s nickel, the production of this metal used in many lithium-ion battery types and in steel has been tied to deforestation, rising greenhouse gas emissions, mishandling of toxic waste and violations of the rights of Indigenous peoples. An analysis by Mighty Earth of satellite data found that Indonesia’s 329 nickel mining concessions have driven up to 378,970 hectares (more than 936,400 acres) of deforestation since 2000.

Ford has bought a direct stake in a developing nickel project in Indonesia, saying that it aims to produce a sustainable supply.

Mining firms and regulators, the authors say, have posed significant threats to Indigenous peoples who depend on these forests. In North Maluku, an uncontacted tribe had its customary territory granted to mining companies by government officials.

Indonesia’s nickel production also suffers from its reliance on electricity produced by coal-fired plants that are off-grid and within industrial zones, which has undermined its climate plans.

Indonesia’s nickel production relies on a smelting technology that produces three times as much waste as other nickel smelting facilities. Nickel firms have said they will process and store the waste on land, although experts have expressed doubt that it can be safely maintained, as rainfall and earthquakes could trigger leaks. Nearby in Papua New Guinea, a study found that toxic waste piped into the ocean is making its way into fish, terrestrial plants and even local residents.

U.S.-based GM is one of the few companies that have an explicit requirement for its suppliers to respect FPIC. However, the report notes, GM has invested directly in and seeks to supply from Lithium Americas and its project at Thacker Pass in Nevada, a site considered sacred to several tribes.

Lithium Americas has fielded multiple lawsuits filed by Indigenous groups that claim the infringement of religious rights, lack of consultation and potential groundwater contamination. In November, a judge ruled against three tribes that argued in a lawsuit that consultation needed to finish before operations began.

Solving the gap

Ian Lange, an economics professor at the Colorado School of Mines and adviser to former U.S. President Trump’s White House, expresses some doubt that there are short-term solutions to cleaning up supply chains for cars. Companies don’t have many options for selecting mined materials, he says, and suppliers have historically been unable to demonstrate the true origin of the materials they receive, sometimes taking liberties in providing false certificates of origin.

“It’s hard to keep track of all that,” Lange says.

In the long run, there are likely two solutions that the industry will devise, Lange says. A robust recycling market, which responsibly handles its waste and emissions, may be able to contain pollution and manage human rights concerns better. Also, mining companies may seek out jurisdictions, like the United States, where consumers may assume ethical sourcing.

The Thacker Pass project in Nevada is an early test of this idea. Considering the land and religious rights issues at Thacker Pass, Lange says, “no deposit is as pure as driven snow.”

Finn thinks producing minerals within the U.S. without ensuring FPIC is not likely to improve the social and environmental impacts that mining has on nearby communities. U.S. law does not achieve the FPIC standards outlined in the U.N. Declaration on the Rights of Indigenous Peoples, she says.

“This is our work at First Peoples [Worldwide]: to build the business case for free, prior and informed consent, and that companies have a responsibility to go above and beyond domestic regimes in terms of their responsibility to respect Indigenous peoples, they have the responsibility to do so all the way up to the level of the U.N. declaration,” Finn says.

This article was first published by Mongabay. Read the original story here. 

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To Waller, a governor of the Federal Reserve that sets U.S. monetary policy, glacial growth is proof that the Fed’s efforts to tame inflation are working. “Our goal is to rein in demand,” he said, noting that the Fed’s higher interest rates had already dampened consumer spending, slowed home sales and shaken up the tight job market. By mid-2022, the labour shortage had driven annual wage growth above 10% for the first time in 40 years.

Canada has shown similar steel as the annual inflation rate jumped from 1% in early 2021 to 8% by mid-2022. The Bank of Canada hiked interest rates seven times last year: a harsh reality for anyone who recently took out a mortgage with a variable interest rate. Yes, high rates halted the red-hot housing market, but with mortgage costs doubling, fewer Canadians can now afford to own their own homes.

In the United States, activist group Accountable.US has labelled the inflation battle a war on workers. “Apparently, millions of Americans likely losing their jobs under further rate hikes is a sacrifice the Fed is willing to make,” noted Accountable.US spokesperson Liz Zelnick in November. The former policy analyst for the Massachusetts Treasurer’s Office blames runaway inflation on companies taking advantage of COVID and supply chain chaos to hike prices way beyond normal levels. Indeed, by mid-2022, U.S. companies’ gross profit margins rose to 15.5%, a 72-year high.

“The Fed’s ill-advised policy only draws attention from the real culprit behind out-of-control costs: corporate greed,” said Zelnick. “Highly profitable corporations have kept raising prices on working families while rewarding wealthy investors with billions in new handouts.”

It’s not just activist groups saying so. In September, a number of speakers took turns accusing businesses of price gouging at a congressional hearing on “corporate influence on inflation.” The best known was former U.S. labour secretary Robert Reich, who said wages have lagged inflation for more than a decade. Reich said businesses are “raising their prices above increases in their costs.”

And those prices stick, he said, because most businesses “face so little competition. Since the 1980s, two-thirds of all American industries have become more concentrated.”

Reich urged Congress to adopt a windfall profits tax – and beef up antitrust enforcement to discourage unnecessary price increases, concluding that “the major effect of interest-rate hikes is to depress wages and eliminate jobs.”

Apparently, millions of Americans likely losing their jobs under further rate hikes is a sacrifice the Fed is willing to make.

-Liz ZelnickAccountable.US spokesperson

Canadians face similar pressures, but the inflation-relief debate is mostly missing. At the Conference Board of Canada, a leading economic policy think tank, chief economist Pedro Antunes says he supports the Bank of Canada’s anti-inflation medicine. He says the central bank reacted too slowly when inflation began creeping above its 2% inflation target in early 2021. “Inflation was eating away at our purchasing power, because there wasn’t enough production to meet demand.” With the central banks using a fiscal firehose to cool things down, Antunes believes the hard part is now over. The Conference Board now forecasts inflation will hit 3.8% in 2023 before settling around 2.2% in 2024.

Antunes is loath to address business profiteering. He says corporate profits are usually a percentage of sales – meaning that if prices are on the rise, you can expect higher profits than normal.

Not so sanguine is Sheila Block, senior economist with the Canadian Centre for Policy Alternatives. She agrees the inflation wave had many drivers – from COVID to Russia’s invasion of Ukraine – but insists that wage costs have not been to blame. She also notes that corporate profits rose from 12.5% of GDP in 2019 to 16.8% in mid-2022 – near their historic highs. She says Canada’s inflation problem stems not from excess consumer demand, but from a “perfect storm” of international issues and business opportunism.

“I don’t think the Bank of Canada is operating on any ill will,” she says, “but its policies are compounding the negative impacts of inflation.”

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Last fall’s severe droughts and flooding in Western Canada were a stark reminder that we need to build more resilience into the food system. B.C. farmers lost more than 600,000 animals as well as crops and costly electrical infrastructure to the floods. In the Prairies, many ranchers, unable to pay escalating costs for hay, were forced to cull their herds. Harvests of field crops such as wheat, canola, barley and peas saw a decrease of 36% from the prior five-year average, forcing grain companies like Viterra and Richardson to pay prices far above their export value and farmers who’d pre-sold their harvests to swallow the costs. Climate-related events like this across the globe are only beginning to ripple into markets and food prices, but the time to act is now.

A number of food companies are stepping up to the global climate change effort, including a handful of Canadian ones, but the large majority have yet to take meaningful action. Most companies support a range of sustainability projects (reducing plastic bag use, promoting local food) and make a variety of claims using buzzwords like “natural” or “green,” but without credible, internationally recognized, third-party standards and verification, the threat of greenwashing looms large. 

Food production and agriculture need a different set of standards than other industries, so the Science Based Targets initiative (SBTi) is currently developing specific guidance to support food companies with land-related emissions in setting their targets, aligned with the global carbon accounting standards of the Greenhouse Gas (GHG) Protocol. The Value Change Initiative works with companies, civil society actors and internationally recognized frameworks to define how to address and account for GHG emission reductions across global value chains. It recently launched a Food & Agriculture Working Group focused on removing barriers to reducing Scope 3 emissions (indirect GHGs from a company’s supply chain rather than its operations and energy use) in agricultural value chains.

Sustainable supply chain standards and guidance for food and agriculture companies are currently evolving, meaning that the plane is being built as it flies. Pressure from consumers and investors is mounting for food companies to take credible climate action. For example, a Ceres investor-led initiative is pushing 50 high-emitting food companies to improve their GHG emissions disclosures, set ambitious emission reduction targets, and implement ambitious climate-transition action plans. 

Globally, more than 1,000 companies have signed up to the SBTi. In Canada, 48 companies and small and medium enterprises have agreed to it. But just a handful of Canadian food companies have committed to the process so far, and many corporations are simply not disclosing their emissions. 

Without credible, internationally recognized, third-party standards and verification, the threat of greenwashing looms large. 

Once companies have had their targets approved, they calculate their baseline GHG emissions and the most effective routes to reductions. Emissions are divided into Scope 1 (emissions from sources owned or controlled by the company), Scope 2 (indirect emissions from purchased electricity, steam, heating or cooling consumed) and Scope 3. Under the SBTi, the bulk of companies’ reductions toward net-zero targets have to come from insetting (reducing emissions within their own value chains) as opposed to offsets purchased from GHG reduction projects elsewhere. 

In the food sector, more than 80% of emissions typically come from supply chains. While it makes sense for companies to start by reducing emissions in their own operations, changing all their lightbulbs and electrifying their vehicle fleets won’t get them close to their targets. They need to examine their supply chains to find the big cuts. Heavy emitters in agriculture include nitrogen fertilizers, which emit nitrous oxide (a GHG about 300 times as potent as carbon dioxide), and the methane emissions from manure and cows burping (more than 25 times as potent as carbon dioxide).

The good news is that it’s not only possible to significantly reduce on-farm emissions, but that farms have a great potential to pull carbon down from the atmosphere and sequester it in the soil. They can do this with regenerative practices such as growing “cover crops” that prevent soil erosion and increase soil fertility between the cash crops, reducing soil disturbance (by reducing or eliminating tillage) or managing nutrients to reduce GHG emissions from products like nitrogen fertilizer.

Early studies suggest that farmers using such techniques can increase profit margins by as much as 30%, but only after at least two to six years. In general, they will need support from supply chain partners, governments or others during the transition years. This is beginning to happen in Canada, with programs like McCain’s target of transforming all the farms it sources its potatoes from to regenerative agricultural practices by 2030, using principles including minimizing soil disturbance, enhancing crop and ecosystem diversity, reducing agro-chemical impacts, and integrating organic and livestock elements. Another example is General Mills’ goal to convert one million acres of land into regenerative operations, including through a pilot project with 45 oat farmers in North Dakota, Saskatchewan and Manitoba. 

The even better news is that regenerative farming not only sequesters carbon, but builds healthy soils, increasing resilience to our increasingly erratic climate. Planting cover crops and reducing tillage can build soil structure, increasing its capacity to absorb water. This both reduces runoff during floods and saves moisture for times of drought. 

Canada’s potential to reduce GHG emissions with agricultural natural climate solutions is strong, and companies play a critical role in incentivizing change within their supply chains. The risk to their own supply chains and the planet is too high if they don’t take action. 

Beth Hunter develops food and agriculture initiatives across Canada and is Nature United’s agriculture program advisor.

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Last week, Senator Leo Housakos introduced a private member’s bill in the Canadian Senate that, if passed, would ban all imports from the region.

Joining a long list of human rights groups, governments and others, Amnesty International this summer accused the Chinese government of carrying out massive, systematic abuses against two million Muslims in Xinjiang Uyghur Autonomous Region in order to “forcibly assimilate [them] into a homogenous Chinese nation possessing a unified language, culture, and unwavering loyalty to the Chinese Communist Party.”

European Commission President Ursula von der Leyen announced in September that the EU will ban forced-labour products after several German clothing companies were accused of profiting from Uyghur labour in Xinjiang. 

In July, the U.S. Senate passed a bill banning all products made in Xinjiang. And this fall, Georgia Senator Jon Ossoff called for the U.S. to completely shed its reliance on Chinese supply chains to build up its solar energy capability. The global production of solar panels has been linked to forced labour in Xinjiang, where 45% of the world’s polysilicon supply (a key component in solar panels) is manufactured.

The Canadian government has been warning companies to be wary of suppliers that may be linked to China’s oppression of Uyghurs and other Turkic Muslims since earlier this year. 

The Chinese government has also been accused of herding ethnic minorities into forced labour camps as part of a larger program of ethnic cleansing – allegations the country denies. Canada and many other nations prohibit the import of goods produced by forced labour, and companies linked to the repression of workers in or from Xinjiang risk their financial and reputational futures. 

The authoritarian regime’s position as the world’s largest manufacturer has often left the rest of the world torn between opposing China’s human-rights abuses and jeopardizing trade relations. But Canadian business leaders can count on one political reality: failure to police your supply chain in Xinjiang could mean you’re helping to perpetuate these abuses, even unintentionally.

This isn’t just a problem for companies buying supplies from Xinjiang. Reports indicate that the government has relocated Uyghur labourers and other ethnic minorities to factories across the People’s Republic, meaning forced labour could be a component of any Chinese supply chain.

Canada is taking these issues seriously. Last fall, a parliamentary subcommittee called China’s mistreatment of Xinjiang’s Muslims “the largest mass detention of a minority community since the Holocaust.” In February, the House of Commons declared China’s actions “genocide.” While members of the federal Cabinet abstained from that vote, a month later Ottawa imposed sanctions on China for the first time since the 1989 protests in Tiananmen Square. The sanctions prohibit Canadians from dealing with named Xinjiang officials or the state-owned company that runs the region’s detention camps.

Last year, the federal government also enacted a ban on importing products made with forced labour, as part of its obligations under the United States-Mexico-Canada Agreement. The Globe and Mail reports that the Canada Border Services Agency has since blocked at least one shipment from China under the prohibition. Housakos says his bill, which would impose a blanket geographic ban on products from Xinjiang, would make it easier for officials to confiscate problematic shipments. 

Researchers say forced labour often occurs at the early stages of the supply chain. The highest risk likely involves products made with cotton, although other dodgy categories include electronics, chemicals, cars, tomato products and solar panel components. In mid-November, a CBC Marketplace investigation conducted in partnership with The Guardian and the Investigative Reporting Project Italy revealed that major food brands, such as Nestlé, Del Monte and Unilever, had bought tomatoes for their products from companies in Xinjiang and processed them in intermediary countries. 

A recent report by researchers at Sheffield Hallam University in England also found that more than 100 big retailers, including Lululemon, Banana Republic, Costco, H&M and others, were at high risk of having cotton from Xinjiang in their products.

How can businesses reduce their risks? “Companies should be revising their sanctions policies and procedures,” advises Toronto law firm McCarthy Tétrault. The firm warns that companies need to be aware of who is on Canada’s sanctions list and what they own. Companies are urged to take advantage of the federal Trade Commissioner Service, part of Global Affairs Canada, which can offer updated advice on due diligence and risk mitigation related to forced labour. 

All importers are advised to develop their own expertise in supply-chain monitoring.

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But in March, Ontario’s farmers’ markets were closed to slow the spread of COVID-19. With traditional outlets shut down, farmers had to adapt, and quickly. Instead of passing bags across crowded stalls and trading stories with customers, they went online, boxing orders and delivering them by truck to homes at an accelerated pace, conducting what’s typically a hands-on business with the addition of gloves, masks and six feet of distance.

This shift to e-commerce has created new pressure, and a renewed focus, on regional food systems. In April, markets in many provinces began to reopen but with new safety protocols in place that limit how and when people shop. On April 24, in a move that underscored the importance of direct sales channels, the Ontario government said it would invest $2.5 million to help food producers and farmers’ markets make the transition to e-commerce.

For some farmers, it’s meant rushing to get inventory online and sales started overnight, highlighting the precariousness created by the closure of markets and restaurants. A third of the 500 vendors in the Greenbelt Markets network, which supports Ontario farmers, also supply to restaurants and wholesale businesses. Quebec’s farmers’ union says the sector has seen more than 30% of its market disappear with the closure of hotels, restaurants and institutions. Online sales can mean the difference between survival and unemployment.

The pandemic is also turning what was a burgeoning trend for the farm-to-table movement, home delivery, into an essential part of food sales. Services that were requested infrequently before March are now commonplace. Sarah Bakker of Field Sparrow Farms in Bobcaygeon, Ontario, used to receive a few orders a month for home delivery. Right now, it’s 40 a week.

“We were already thinking of 2020 as the year of home delivery,” said Simon Huntley, who runs Harvie, a Pittsburgh-based technology platform that helps farmers sell directly to customers. But he didn’t anticipate how quickly the pandemic would alter demand. One hundred and eighty farms in the U.S. and Canada are currently using Harvie, and most have seen their sales increase by 200%. “It’s accelerated in two weeks what was going to happen in 10 years,” Huntley said.

Farmers have had to turn to neighbours and local partners when the inventory they planned for a regular week sells out. “You can’t just magically make more stuff appear,” said Cooper. She increased orders from other sources to fulfill her sales, which doubled this season. But, she said, “It’s not easy being a small farm and then having to rely on other small farms.”

“[The pandemic] accelerated in two weeks what was going to happen [on farms] in 10 years.”
—Simon Huntley, Harvie

Platforms like Harvie, Local Line and Open Food Network offer product features specific to farmers’ needs, like virtual markets for multiple farms and customizable orders. These will be essential as the demand for local food increases.

Stress on supply chains caused by the pandemic created long waits for home delivery by large retailers. Going to grocery stores has become more fraught. And while new containment measures for food delivery, such as low-contact and drive-through pick-up, require physical distancing, people still want proximity to the source of their food: to know where it comes from, that it’s reliable, and to support local businesses.

And with restaurants closed, buying farm-direct produce is also a way to eat well at home. Farmers are reaching new customers as a result. “I knew this was big when my ex-mother-in-law texted me to ask where to get home-delivered food,” said Huntley.

Orit Sarfaty, the chief program officer at Evergreen, a national organization focused on the health of urban environments, agreed. In March, her team signed up 10 farmers in 24 hours to fill 150 boxes with fresh produce for Evergreen’s Farm in a Box program. Now, she said, “I’m getting messages from people who’d never been to our farmers’ market. This was the first time they’d experienced fresh produce from a farm.” Evergreen’s boxes were sold out through May.

The loss of markets comes at a critical time for the agricultural sector. About 55,000 temporary foreign workers travel to Canada each year to work on large farms during the peak growing season. Most of them work in Quebec and Ontario.

Because of the pandemic, fewer workers are expected to arrive. When they do, they have to undergo a two-week quarantine period. In April, the federal government said it would provide $1,500 per person to offset the cost of housing and feeding workers during isolation, but that hasn’t prevented a number of deadly COVID-19 outbreaks on southwestern Ontario farms. About 350 workers in the Windsor-Essex region have tested positive and two have died.

As people continue to shelter in place, it’s not clear what business will look like in the long-term. Many farmers hope the current demand is a sign that the confluence of agriculture and technology will turn local food into a mainstream habit.

Will that habit last? “That’s the million-dollar question. It’s the conversation I’m having with every single one of my farming friends,” said Bakker. But, she added, “We’re going to keep delivering as long as the demand is there.”

Jordan MacInnis is a writer based in Toronto.

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On January 1, 2019, Jair Bolsonaro began his tenure as the president of Brazil. In Bolsonaro’s first eight months in office, his administration has had a profound impact on Brazil’s forests and its Indigenous population, and critics now link Bolsonaro’s anti-environment policies and rhetoric with the wildfires affecting Brazil’s Amazon rainforest. But Bolsonaro is not the only one fuelling the fire as agro-businesses expand into forested regions, driven by global demand for Brazilian commodities. Consumer goods like beef and soy are largely to blame for the need to clear land. Thus, food producers sourcing ingredients in Brazil, financial industries and trading governments all have a role in addressing deforestation and human rights issues in Brazil.

Bolsonaro’s destructive policies

Less than a year in power, Bolsonaro’s impact on the environment and Indigenous peoples has been far-reaching. Deforestation levels in Brazil between July 1 and 22 of this year alone were 111% higher than they were in all of 2018. Over 120 pesticides were authorized in 2019 to date, some of which have been classified by the U.S. Environmental Protection Agency as “dangerous” or “extremely dangerous” for humans and the environment. All this occurred under the auspices of the Brazilian Ministry of Agriculture, whose powers have increased at the expense of the Ministry of Environment. The MoE and its anti-deforestation agency, Ibama, have suffered drastic budget cuts since Bolsonaro came into power, lessening their ability to identify and penalize instances of illegal deforestation. The new Minister of Environment, Ricardo Salles, dismissed environmental fines as ‘ideological’, leading civil servants in the Ministry to distance themselves from the minister in an open letter in April.

The Bolsonaro administration has also proposed transferring the protection of Indigenous rights to the Ministry of Agriculture again after congress voted against the initial proposal. Because of his strong ties to Brazil’s agribusiness, many are concerned the Minister of Agriculture will further subordinate Indigenous land rights to agricultural industry interests. During his campaign, Bolsonaro swore “to not demarcate another centimetre of Indigenous land” for protected status. Roughly 12% of Brazil’s lands are Indigenous lands, spread over 700 territories, of which about a third is waiting for official recognition.

Corporate deforestation pledges 

Bolsanaro’s reputation as “the most environmentally dangerous head of state in the world,” as The Economist recently put it, doesn’t just affect Brazil’s forests and Indigenous communities. International firms will want to keep a watchful eye on exactly how they’re doing business in Brazil. The Brazilian beef and soy industry has been singled out for fuelling many of the roughly 26,000 fires recorded in the Amazon this month, as land is typically cleared by farmers and ranchers to grow crops and raise cattle. Brazil is the largest beef exporter in the world with around 25% of the global beef market. In the last year, it has also surpassed the U,S. as the world’s largest exporter of soy (much of that soy is used as animal feed). As well, global demand for Brazil’s timber exports is contributing to the deforestation. Chances are high that firms taking advantage of less rigorous regulations may be doing so on disputed or demarcated Indigenous territories.

Despite Brazil’s regulatory rollbacks, countries and companies importing from Brazil have their own commitments on deforestation and human rights to uphold. Given the misalignment of these commitments with Brazil’s policies and practices, continuing to buy commodities from Brazil could prove to be contentious and pose reputational risks. In May 2019, several UK food retailers were named and shamed in the media for continuing to purchase products from Brazil’s JBS (the world’s largest meat processing company) despite the fact that investigations found the company was sourcing cattle from illegally deforested areas in the Amazon.

Over 50 of the world’s biggest companies (including Cargill, McDonald’s, Walmart, and Lloyds Banking Group) have pledged to halve deforestation in their supply chains by 2020 under the 2014 New York Declaration on Forests. This after a 2010 alliance on deforestation driven by the Consumer Goods Forum (CGF) saw 400 international companies pledge to zero net deforestation supply chains for palm oil, soy, beef and pulp and paper by 2020. American agri-giant Cargill, one of the largest exporters of Brazilian soy, has been heavily criticized for recently announcing that it would not meet its 2010 pledge. It’s also facing a backlash for backtracking on its commitment to a soy moratorium in Brazil’s Cerrado region – known as the world’s most biodiverse savanna.

Forest-related commitments in agricultural supply chains

Being implicated in the deforestation of Brazil’s traditional Indigenous lands could also put companies at odds with their public commitments on human rights, which are aligned with the interests of the UN’s Office of the High Commissioner for Human Rights (OHCHR). The 2007 UN Declaration on the Rights of Indigenous Peoples was seen as a landmark development for the OHCHR. Providing mechanisms for Indigenous peoples to provide free, prior, and informed consent for projects in the Brazilian Amazon may be a way forward for companies looking to ease current tensions. In April, an Ecuadorian court suspended government plans to auction off Indigenous Waorani territories for oil exploration stating that the government didn’t receive the tribe’s consent.

Role of the Financial Sector

Multinational corporations aren’t alone in their exposure to Brazil’s Amazon and Cerrado. Banks play a central role as an intermediary between the financial markets and the consumer goods sector, including food and agricultural companies. Boycotts of Brazilian beef and byproducts overseas could lead to longer loan payback terms and negatively impact banks’ credit portfolios. Similarly, if improvements to environmental standards take priority in EU-Mercosur trade negotiations, banks operating within Brazil will be under increased exposure to ESG integration against financials risks.

Sustainalytics looked at the financing policies of 13 of the biggest domestic and foreign banks in Brazil by assets (10 domestic, 3 foreign).  Only three of the Brazilian banks (Banco do Brasil, Caixa Econômica Federal, and Itaú Unibanco Holding S.A.) have general environmental and social guidelines that mention or address deforestation, Indigenous peoples or cattle ranching practices. Notably, none of the banks in our research sample has a standalone policy addressing Indigenous peoples and rights. The three foreign banks (Barclays PLC, BNP Paribas SA, and JPMorgan Chase & Co.) had policies addressing deforestation and soft commodities (i.e., cattle ranching, timber products, soy, etc.).

In the absence of stronger environmental protections from the Brazilian government, bank financing policies can be influential in ensuring borrowers respect international norms and standards. Poor or non-existent policies can exacerbate the deforestation practices fueling Brazil’s fires.  Domestic and foreign banks operating within Brazil can manage their exposure to reputational and other ESG risks by establishing or improving social and environmental lending policies for sensitive sectors like agriculture and soft commodities.

For instance, French international banking group BNP Paribas encourages its agricultural commodities producers to have their crops or plantations certified against Round Table on Responsible Soy, Better Cotton Initiative, Bonsucro or UTZ principles and standards by 2020. It encourages cattle farmers to have their production systems certified by 2020 against the Standards for Sustainable Cattle Production Systems by the Sustainable Agriculture Network.

Banks could also work with NGOs that monitor the environmental and social impacts of deforestation and set up ESG funds that exclude poor performers with respect to deforestation practices. They could also introduce or bolster requirements for consultation with Indigenous Peoples.

Altamira, Brazil. Photo by Victor Moriyama/Greenpeace.

Call for a regulatory crackdown by Europe

While the EU has enforced legislation on illegal timber, illegal fishing and conflict minerals, there is no regulation on agricultural goods linked to deforestation. As a major trading bloc and a significant consumer of agricultural products associated with global deforestation, the EU holds some responsibility and has an opportunity to drive change and set best practice standards.

The European Commission has received numerous requests from academics and stakeholder initiatives, such as the Amsterdam Declaration, calling for regulations requiring proof that goods placed in the EU market don’t contribute to either global deforestation or human rights abuses. A 2017 motion by the European Parliament called for regulation of the EU’s footprint on the world’s forests and highlighted the need for effective protection of Indigenous peoples rights and forest-dependent communities.

We all have a role in making sure Brazil’s rainforest is safeguarded well into the future. Governments can regulate beef, soy, timber and other imports linked to deforestation. The financial sector can leverage its role and influence companies to reduce deforestation and improve relationships with Indigenous peoples. It’s also incumbent on the consumer goods industry to uphold its voluntary commitments in the face of weakened regulations and protections. Much will depend on the willingness of the actors involved, be they cattle farmers, multinationals, consumers, banks or investors, to recognize the power they hold, and to act on it.

Jean-François Obregón is a Senior Associate, Insurance, Real Estate and Asset Management Research at Sustainalytics and based in Toronto.

Jessica Grant is an Associate, Consumer Goods Research at Sustainalytics and based in Amsterdam.

Thijs Huurdeman is an Associate, Consumer Goods Research at Sustainalytics and based in Amsterdam.

A version of this story first appeared on Sustainalytics.com.

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