Co-presenters:
Lee Gross, EcoAgriculture Partners
Mike Godfrey, Rainforest Alliance
Bambi Semroc, Conservation International
Discussing the risk mitigation advantages of a multi-stakeholder, landscape-scale approach to agribusiness development, especially where businesses face climate change, water security, or community risks.
Cornell Landscapes Research Forum (Dr. Louise Buck)
Reducing Risk: Landscape Approaches to Sustainable Sourcing - at the IFC, June 10, 2013
1. Reducing Risk: Landscape Approaches
to Sustainable Sourcing
Lee Gross -- EcoAgriculture Partners
Mike Godfrey -- Rainforest Alliance
Bambi Semroc -- Conservation International
A presentation to the International Finance Corporation
June 10, 2013
3. Strategic Advisory Committee: World Business Council for Sustainable
Development, IFC, Rio Tinto, Unilever, Nestlé and Mars Inc.
Working Group: Conservation International, Rainforest
Alliance, Solidaridad, African Wildlife Foundation, World Resources
Institute, Fauna and Flora International, Root Capital, University of
Greenwich, and EcoAgriculture Partners.
Business Working Group
5. "The landscape approach has
been championed by
organizations active in the
development and conservation
sectors for many years, though
the concept has been slow to
migrate into mainstream
corporate thinking. Now this
report from the Landscape for
People, Food and Nature
Initiative, sets out a case for
companies to think about their
business in landscape terms."
- José Lopez, Executive Vice
President, Operations, Nestlé S.A.
6. Why do businesses pursue a
landscape approach?
Drivers: Is it as a consequence or identified as a
goal at the outset?
Rationale: Why is the business motivated to
pursue this?
Modes:What methods or tools do businesses apply
to put these rationales into practice?
7. Businesses are increasingly at risk of
“sustainability megaforces”
KPMG, 2012. Expect the Unexpected: Building business value in a changing world.
Climate Change
Poverty and
Food Security
Competition
for resources
Increasing
demand
8. Scoping Analysis: Modes and Rationales
100+ initiatives reviewed
27selected by criteria
3 in-depth case studies
11. Reducing risk through landscape approaches
Source: Kissinger, G., A. Brasser, and L. Gross, 2013. Reducing Risk: Landscape Approaches to Sustainable Sourcing.
Washington, DC. EcoAgriculture Partners, on behalf of the Landscapes for People, Food and Nature Initiative.
12. Case studies
● SABMiller: reducing water risks
in Bogotá,Colombia and
George, South Africa with WWF
and GIZ
● Olam: cocoa and forest
initiative inWestern Ghana
with Rainforest Alliance
● Starbucks: coffee in
Mexico, Indonesia and Brazil
with Conservation
International
13. Photo 2
5.51” x 10.31”
Position
x: 8.53”, y: .18”
Photo 1
4.2” x 10.31”
Position
x: 4.36”, y: .18”
Landscapes for
People Food
and Nature
Initiative –
The Starbucks
Case Study
Bambi Semroc
14. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
1. The Landscape Approach within the Starbucks
context
2. Rationale for Engaging at Landscape Level
3. Modes of Engagement
- Supply Chain Interventions
- Regional Producer Support
- Payments for Ecosystem Services
4. Value of Landscape Approach
5. Challenges of Landscape Approach
Outline
15. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
Landscapes within the
Starbucks and CI contexts
Starbucks Language
• Coffee communities
• Coffee supply chains
Conservation International Language
• Coffee landscapes
• Coffee communities
• Conservation corridors
16. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
Rationale
Operational Risks
• Price volatility due to market dynamics.
• Declining production and yields due to climate
change and aging farmer demographic
Reputational Risks
• Environmental risks related to deforestation,
greenhouse gas emissions, water use and quality
• Community risks associated with farmer income
and livelihoods, including food security
17. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
Supply Chain Interventions
Regional Producer Support Interventions
Payments for Ecosystem Services
Modes
18. Modes
Supply Chain Interventions
C.A.F.E. Practices
• Promote and verify adoption of
best practices within the supply
chain.
• Provide assurance to Starbucks
on social and environmental
performance of its supply chain.
20. Suitability Analysis of Coffee Production
Regional Producer Support
Climate and Coffee in Chiapas
21. Regional Producer Support
Farmer Loans in Chiapas
• Verde Ventures has lent USD
1.5M to 6 Small and Medium-
Sized Enterprises in Chiapas
El
Triunfo
Volcan
Tacana
22. Payments for Ecosystem Services
Climate and Coffee in Chiapas
Carbon Markets and Policy Engagement
23. Regional Producer Support
Climate and Coffee in Northern SumatraMap 1 – Northern Sumatra
Aceh
Tengah
District
Dairi
District
Bener
Meriah
District
North
Sumatra
Province
Aceh
Province
25. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
• Increased understanding of critical issues
facing coffee supply currently and in the
future.
• Fewer surprises to undermine investments in
supply chain development and regional
producer support.
• Ability to achieve and report on results at a
concentrated scale.
Value of the Landscape
Approach
26. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
• Different language than that used by
companies.
• Lengthy and non-integrated commodity supply
chains do not lend themselves to landscape
thinking.
• Requires looking at multiple commodities to
maximize resiliency of the landscape and
communities.
• Difficulty calculating a direct ROI to the
company on the investment due to external
factors.
• Requires long-term commitment to sourcing
area to justify investment.
Challenges of the
Landscape Approach
27. Photo 1
4.2” x 10.31”
Position
x: 8.74”, y: .18”
Acknowledgements
LPFN Initiative - Lee Gross, Gabrielle Kissinger, André
Brasser
CI Mexico - Monica Morales, David Olvera
CI Indonesia - Terry Hills, Fazrin Rahmadani
CI-CELB - Joanne Sonenshine, John Buchanan
CI-Verde Ventures – Neel Inamdar, Lorena Bustos, Ana
Lopez
Götz Schroth
Starbucks Coffee Company – Kelly Goodejohn
CIAT
CATIE
Ambio
Ecosur
University of North Sumatra
Thank you
28. Hypothesis: that the resilience of the cocoa production systems
increases with increasing forest cover of the surrounding lands and
within the cocoa farms themselves
Description: Olam, in partnership with Rainforest Alliance, is piloting
a landscape approach to mitigate business risk in their cocoa value
chain through a novel program in Ghana emphasizing cocoa agro-
forestry production systems, certification and REDD+
Climate Cocoa Partnership for REDD+ Preparation
Timeline: 2011-2013
Partners: Olam International Ltd., Rainforest Alliance, Ghana
Forestry Commission,
Goal: to ensure that the climate-friendly farm level practices are
escalated and replicated to a landscape and forest management level
32. • Reputation: opportunity to be a first-mover company to bring
climate friendly cocoa to the market;
• Community concerns: income opportunities from carbon
markets for farmers by increasing carbon stocks;
• Value chain efficiencies:
1. option to build resilient supply chains when farmer
communities sensitized and starting to understand the
concept of managing a landscape as opposed to managing
farms in a sustainable way.
2. opportunity to break the link between cocoa production and
deforestation ;
• Reduce operational risks due to climate concerns and resource
security;
• A learning exercise to change and improve corporate programs;
Corporate Rationale
33. • GAP training based on
SAN Standards
• Forest and Landscape
Governance
• REDD+ activities
• Sustainable Forest
Management including
Agroforestry Systems
• Small and Medium Scale
Forest Enterprise
Development
Project Components
34. • On farm production partly
depends on off-farm
management; cocoa production
area is a mosaic of cocoa farms
and forest lands presenting a real
opportunity for landscape
management
• Carbon financing can be the
mechanism to increase the
resilience by increased carbon
stock through increasing
shade, enhancing soil
management and introducing
better agricultural practices.
Preliminary Findings (1):
35. Preliminary Findings (2):
• Carbon financing requires
collaborating with governments to
induce better legislation, to comply
with global standards and to secure
basic quality of the wider cocoa
production landscape.
• Corporate policies can drive
change and success – the project
builds on Olam’s existing
sustainability strategy and Livelihood
Charter
• Landscape approach can mitigate
multiple risks: climate
change, reputational, operational, co
mmunity concerns and value chain
efficiencies.
36. 1. Increased monitoring and evaluation to test the hypothesis
against achievements and results of the pilot;
2. Complete the Program Design Document (PDD) for the
forestry REDD+ methodology and validate as an acceptable
approach;
3. Complete the farmer training and subsequent certification
steps as indicated by both the interest and outcomes such that
farmers are remunerated for the improved management
systems;
4. Communicate more broadly the landscape model that
integrates climate-forestry/agro-forestry and certification into a
complete package of tools and interventions;
5. Secure second phase funding for to meet the initial
business, social and environmental targets set.
Next Steps:
37. Lessons Learned
Rationale
● Landscape and
community
health are at
the core of
business
success
● Valuing the
risk/cost ratio
● Investing in
better
decisions
Investment
● Partners with
shared interest
● Need for collective
action in the
sourcing area and
sector
● Develop
management
solutions across the
landscape
● A package of
solutions provides
greater impact than
‘one-off’s’
Value
proposition
● Avoided
costs—basis
of the
business case
● Solid risk
assessment
● Added value
accruing to all
partners
● Position the
business for
long-term
38. Recommendations based on our review
Assess and manage risks and opportunities at scale
Mitigate landscape risks in partnership
Integrate landscape risks and the investments required
to mitigate them into business plans at all levels
Evaluate landscape approaches as an opportunity to
increase both the efficiency and effectiveness of
sustainable sourcing.
Businesses are increasingly at risk of “sustainability megaforces” – interconnected risks that will have unprecedented effects on business performance and profitability in the futureThese mega-forces include: climate change; competition for energy, land, water and material resources; population growth and migration; poverty and food insecurity; and ecosystem degradation. Food and beverage businesses will be directly and indirectly affected by a range of global trajectoriesKPMG, 2012. Expect the Unexpected: Building business value in a changing world.-------------------Based on our research findings, agribusinesses find water, climate, and community risks to be urgent, and best suited to piloting landscape approaches. Agribusinesses and food sector brand manufacturers are increasingly aware of sustainability risks. The interconnectedness of the water-food-energy-climate nexus is increasingly being recognized by business as requiring integrated solutions. In some cases, stability in key sourcing and operational regions may be at stake. World Economic Forum, 2011. Water Security: The Water-Food-Energy-Climate Nexus. Island Press.---------------
Out of the >100 cases surveyed, 27 were selected based on meeting the criteria identified above. From these 27 examples, we identify 9 general rationales for business engagement and 6 modes or tools to put these rationales into practice (see figure 1). Though our data gathering faced some limitations,6 as mentioned above, some general trends could be identified. As data table 1 (see appendix) shows, most cases have more than one rationale for business engagement. The most common identified rationales are: local community and operational risks, value chain efficiency and voluntary standards compliance. The first two refer to business concerns about supplies and sourcing areas. The latter two are generally more focused on supply chain and demand-side or market preference concerns. Businesses view these rationales as risks, and find ways to mitigate those risks through landscape approaches. These risk mitiga- tion activities (modes) tend to follow a pattern, based on the entry point for engagement, the risks and available options to mitigate those. In section III. we explore in greater detail the entry points for businesses to engage a landscape approach. Though we characterize ‘partnerships, multi-stakeholder dialogue, planning and management’ as a mode, it can also be considered as an enabling condition to a landscape approach, as it occurs to varying degrees in all modes we reviewed.
Landscape approaches are different from scaling up the efforts of individual interventions. Addressing the challenges of climate adaptation, water stewardship and building community relations all require “more than the sum of the parts” thinking. Requires more than “sum of the parts” thinking
What do we mean by a landscape approach? Multi-stakeholder cross-sector planning and actionThe landscape approach has been championed by organisations active in the development and conservation sectors for many years, though the concept has been slow to migrate into mainstream corporate thinking. Now this report from the “Landscape for People, Food and Nature Initiative”, sets out a case for companies to think about their business in landscape terms.When sourcing area quality and sustainability is a priority, focus beyond the level of individual production units is required. For instance, watershed health, biodiversity conservation and habitat connectivity, land and resource tenure, and many other factors can strongly influence social, economic, and environmental sustainability. When productivity is threatened by a multitude of risks that cannot be mitigated on-farm or via supply chain programmes, investments in long-term solutions via landscape approaches to mitigate risks to the business may be necessary.We propose the following business-oriented definition of a landscape approach: Identifying risks to the business beyond the farm- or facility-scale, and recognizing that long-term business success is tied to healthy communities and ecosystems. Thus, a landscape approach refers to activities in a specific geography that: seek to improve food production, ecosystem services, and rural livelihoods;includes policy, planning, management or support activities at the landscape scale; involves inter-sectoral and/or multi-stakeholder coordination; and is highly participatory and supports adaptive collaborative management.Landscape approaches hold potential to mitigate constellations of risks in addition to ongoing risk mitigation interventions at the farm level and through supply chain approaches. Thus, landscape approaches provide a framework to deliberately work in an integrated manner beyond the farm-scale to support food production, ecosystem conservation, and rural livelihoods across entire landscapes. “I cannot say landscape level approach is now integral to our approach. I do believe that we will gradually move away from assessing and improving sustainability at individual farm level to landscape level.”-Anonymous In both these examples, it is about reaching beyond one commodity or resource user, there are social and ecological dimensions, partnerships are critical, and scale is reached.This report demonstrates that when profitability is threatened by a constellation of risks that cannot be mitigated solely on-farm or via supply chain programmes, landscape approaches offer solutions. Landscape approaches provide a framework to deliberately work in an integrated manner beyond the farm-scale to support food production, ecosystem conservation, and rural livelihoods across entire landscapes.
Replication in 3 additional geographiesConservation Coffee in priority landscapes for conservation in Peru, Colombia, Costa Rica & Panama
C.A.F.E. Practices- Includes practices on deforestation for expansion of agriculture since March 2004; Assessment of large farms for areas of high conservation value- Ensure 100% of coffee is ethically sourced by 2015; at 93% in 2012
Conservation Coffee (1998-2006)El Triunfo Biosphere Reserve, ChiapasTransboundary La Amistad reserve in Panama and Costa RicaValle de Cauca Reserve in ColombiaBahuaja-Sonene National Park in Peru
Examined shifting suitability for coffee in region in face of climate changeSuitability analysis stats: the land most suitable for Arabica production is expected to decline from current level of 265,400 hectares to 60,500 by 2050, a decrease of nearly 75% and areas at 600 meters in altitude will most likely shift out of coffee production. Facts on Coffee & Mexico:In terms of the value of perennial agriculture production (tree crops + pasture), coffee represents 21% of the value of production for state of Chiapas. The Sierra Madre of Chiapas is responsible for 20% of the coffee in Chiapas and is one of Mexico's most important coffee producing regions. Chiapas coffee production represents 36.8% of national coffee production Coffee represents up to 98% of the land cover at mid-elevation levels in the Sierra Madre. Represents an estimated 183,000 producers (a little less than 10% of the economically active population)
Farmer Loans- $20M by 2015 in loans; at $15.9M in 2012
Engaged 23 communities, representing 236 farmers in coffee and carbon projectConserved 307.5 hectares and planted 210,258 treesProvided average of $100 / year in supplemental income to farmers via carbon market (average of nearly 27% of a participating farmer’s income)Developed Coffee and Climate Strategy for the Sierra Madre of Chiapas
Northern Sumatra Conservation CorridorSpans Aceh and North Sumatra ProvincesEncompasses 3 globally important sites for conservation (2 terrestrial, 1 freshwater)Holds the 2nd largest lake in the world (Lake Toba)Home to several globally threatened species - Thomas leaf monkey and 3 civet species. Suitability Analysisthe potential for pests to enter new regions due to shifting rainfall patterns and higher temperatures may reduce coffee production in N. Sumatra and Aceh.
Conservation agreements with 23 coffee communitiesEngaged more than 640 farmers in 23 communities through conservation agreements Established 5 farmer field schools to train farmers on best practices Built 2 nurseries (4 more by June) to plant 300,000 treesHelped delineate forest boundaries for communitiesAssisted communities in gaining more secure land tenure for areas under coffee cultivation
ROI factors include – farmer behavior
On farm production partly depends on off-farm management; cocoa production area is a mosaic of cocoa farms and forest lands presenting a real opportunity for landscape managementCarbon financing can be the mechanism to increase the resilience by increased carbon stock through increasing shade, enhancing soil management and introducing better agricultural practices.
Increased monitoring and evaluation to test the hypothesis against achievements and results of the pilot;Complete the Program Design Document (PDD) for the forestry REDD+ methodology and validate as an acceptable approach;Complete the farmer training and subsequent certification steps as indicated by both the interest and outcomes such that farmers are remunerated for the improved management systems;Communicate more broadly the landscape model that integrates climate-forestry/agro-forestry and certification into a complete package of tools and interventions;Secure second phase funding for to meet the initial business, social and environmental targets set.