Updated on September 23, 2017
Natural Rubber – The Next Focus for Sustainable Forestry
This article originally appeared in EY Climate Change and Sustainability Services September newsletter
The evolving definition of sustainable forestry
At first, deforestation was the primary concern for sustainable forestry practices. However, sustainability is not a single issue with a single solution. It was and remains a complex topic that evolves quickly, varies based on specific conditions, and requires a multi-stakeholder approach to tackle. Today, NGOs, investors, and other stakeholders expect companies dealing with forestry products to approach sustainable forestry in a more holistic way, covering a broad range of environmental, social, and governance issues. While a “zero-deforestation” commitment is considered a minimum requirement, a modern company’s definition of sustainable forestry must also include considerations beyond deforestation – such as water and soil management, peatland protection, biodiversity considerations, land rights, livelihood support, child labor, and many others.
In addition to the definition of sustainable forestry widening to cover more issues, the types of industries this definition applies to is also widening to cover more than timber, pulp, paper, and the like.
For example, in 2010, the NGO Greenpeace launched a campaign against Nestle, criticizing the company’s use of palm oil in their widely known brand, KitKat. Oil palm plantations, which provide the palm oil used to produce various foods, soaps, detergents, and many other consumer goods products, can lead to deforestation, peatland destruction, biodiversity loss, and carbon emissions when plantations are not sustainably developed or managed.
Following the campaign, Nestle committed to sourcing its palm oil more sustainably, explaining※2, “By setting critical requirements for its procurement process and checking compliance with our supplier code, Nestlé wants to ensure that its products have no deforestation footprint.”
This commitment was the start of a cascade of commitments by other companies that handled palm oil, including Unilever, Starbucks, L’Oreal, Hershey’s, and Procter & Gamble. Today, many global companies have sustainable palm oil procurement policies and practices, and NGOs continue placing pressure on those that do not with annual rankings, scorecards※3, and campaigns.
Shifting focus to natural rubber
In more recent years, the natural rubber industry has been rapidly becoming a major focus in the context of sustainable forestry.
Although a few scattered initiatives have existed for the development of sustainable natural rubber supply chains, the issue gained greater attention in 2016, when Michelin published their Sustainable Natural Rubber Policy※4 , which included a commitment to zero-deforestation.
Since then, other industry players have been joining in on making public commitments to sustainability and sustainable natural rubber procurement, including tire manufacturers and auto makers. NGOs, like World Wildlife Fund (WWF) and Global Witness, have been quite vocal about the natural rubber industry as well, some approaching companies in a collaborative way, and some attacking companies via reports and campaigns.
Below is a snapshot of major sustainability movements in the natural rubber and auto industry over the past year. These events further highlight a trend towards industry commitment and action, indicating the likelihood of other companies and organizations following suit in the coming months.
What can companies do?
The first thing a company must consider doing when thinking about sustainability as it relates to forest or agricultural products, is understanding their own supply chain. Fully mapping at least 1st tier suppliers would be a good starting point. Then, understanding the global conditions and risks related to those supply chains and suppliers can help the company identify which risks or opportunities are most important to their business.
Engaging with stakeholders, both internally and externally can help the company decide where it stands on its most important sustainability issues, and what it aims to achieve should action be taken. From there, policy and strategy can be drafted, and management systems can be developed to implement the policy, engage with the supply chain, and mitigate those risks identified while generating value for the company.
If a company already has a policy in place for forestry related products, or for sustainable procurement in general, it could be worth considering the incorporation of key wording and taking additional measures to meet the current expectations of society. A gap assessment of current conditions and policies against best practices or stakeholder expectations can help inform the level of enhancement that needs to occur.