Soft commodities are goods such as palm oil, soy, coffee and other products that are grown as opposed to mined. They can play a huge role in deforestation when land is cleared to provide space for agriculture.
The announcement that the Soft Commodities Compact has grown to ten banks was made today at a meeting in London hosted by Paul Polman, Chief Executive of Unilever, and The Prince of Wales, who brought together business leaders to move from commitments to action on removing deforestation from commodity supply chains.
Most of the palm oil the world now produces is from companies who are committed to zero deforestation by 2020 - last year this rose to over 90 per cent. The case for banks to support their consumer goods clients in implementing commitments that remove deforestation from their supply chains is therefore stronger than ever - it clearly can be done.
Standard Chartered's decision to adopt the Compact means that around 20 per cent of the market for international financing of agricultural commodities is now aligned behind the Compact's goal, and will support the zero deforestation target.
Banks can make a difference for the world's forests," acknowledged David Nussbaum, WWF-UK Chief Executive. He added: "These 10 banks have set the bar for other financial institutions in terms of tackling deforestation - which is essential to avoid dangerous climate change. Action on deforestation includes requiring banking clients at least to use credible third party certifications for deforestation risk factors, for example Forest Stewardship Council (FSC) or Roundtable for Sustainable Palm Oil (RSPO) certification. We call for all banks and investors to apply similarly robust policies across their business."
The Soft Commodities Compact was developed, with advice from WWF, by the Banking Environment Initiative (BEI), Cambridge Institute for Sustainability Leadership (CISL) platform, and The Consumer Goods Forum (CGF). The CGF represents 400 of the world's biggest consumer goods retailers and manufacturers, with over $3 trillion in combined procurement power. Soft commodities are unsurprisingly very important in the futures markets, so the involvement of these organisations is key.
The Consumer Goods Forum welcomed the leadership of the Banking Environment Initiative. Ingacio Gavilan, Director, Sustainability at The CGF said, "The global challenges business and society face today are too complex for any one player to solve by themselves, so it's important to us that the consumer goods industry works with key intermediaries in the economy such as international banks.
"The BEI is providing impressive leadership by changing the norms for how banks integrate a strategic response to deforestation into their financing policies and products such as trade finance solutions."
Not only does this kind of action help forests, it also helps the banks, as Andrew Voysey, Director of Finance Sector Platforms at CISL explained: "On a daily basis we hear just how far the banking industry has to go to regain trust that it is serving society's best interests.
"CISL's work with banks focuses on enabling practical solutions. With the Soft Commodities Compact we are seeing new business norms and financing solutions emerge from the banking industry that help people and businesses respond to the global challenge of feeding a growing population without compromising the natural resources that communities all around the world rely on."
Mark Devadason, Global Head of Sustainability at Standard Chartered said that the bank "believes adopting the Soft Commodities Compact, a client-led initiative, will help us support our clients to be here for good by transforming soft commodity supply chains to support zero net deforestation."
He added that this move will "promote economic and social development, and build on the outcomes we are already achieving through membership of the Banking Environment Initiative."
"There is a compelling business case for driving deforestation out of our supply chains," said Jeff Seabright, Chief Sustainability Officer at Unilever.
He explained that "not only does it reduce reputational risk and safeguard our future licence to operate, but through deep collaboration with both our suppliers and tropical forest countries, we can increase yields, improve livelihoods and secure sustainable supplies of agricultural raw materials into the future - all the while mitigating our contribution to climate change. The financial sector plays a critical role in enabling such win-win outcomes."
Zero deforestation by 2020 has a real chance of becoming a reality with the big players on board bringing their influence to bear. You can support our Save Forests campaign by signing up via the links to the right of this page.