Annual report 2019Annual report

Production vs Protection: Finding the balance for Healthy Forest Landscapes

www.earthworm.org

—RISI European Conference LisbonMarch 10th 2020

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About Earthworm Foundation

Expertise on socialand environmental

issues

Working across 5 continents with ground-based

projects

Foundedin

1999

Over 100 member companies

The products we consume represent our biggest impact on the planet. We can transform the way they are made so that it becomes one that respects People and Nature.

We work around the world from our HQ in Switzerland to our offices in the Americas, Asia, Africa and Europe. The majority of our staff work on the ground, developing solutions at the heart of the social and environmental challenges our world faces.

Earthworm Foundation (formerly TFT)

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Commodities

Biomass Charcoal Cocoa Coconut Flavours &Fragances

Natural Rubber

Palm oil Pulp & paper

Seafood Stone Sugar WoodSoy

We work in the value chains of a diverse range of products, using our unique solutions to create change.

Value chains we work on

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Hazelnut

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Global strategy

PeopleThere are 570 millionfamily farms in the world, with over one billion workers. Many stay at the bottom of the supply chains that bring our food and products to the table. We find ways to empower and support them to become resilient.

Forests30 percent of the world’s landmass is taken up by forests. Roughly 7.3 million hectares disappears every single year. We build tools to both monitor and halt deforestation.

SoilsAgricultural land represents 40 percent of the Earth’s landmass. Decreasing land fertility is releasing tonnes of CO2 into the atmosphere, speeding up climate change. We develop innovative models to revive soils and support farmers.

OceansOceans cover three quarters of the world’s surface. Overfishing is disrupting the marine food chain. We monitor the fishing industry to create transparent and sustainable supply chains.

Earthworm’s playground

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Our strategy

ImplementationWe work with companies to instil responsible practices. Our member companies set ambitious goals and lead the transition to responsible business.

InnovationWe convene interdisciplinary experts and entrepreneurs to co-design solutions that overcome barriers to building responsible value chains.

Chain reactionWe share our successes and stories to inspire a wider audience and ignite chain reactions that enable solutions to go to scale.

How we workOur strategy is supported by three complementary pillars

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Challenges

Production vs. Protection?

The world as we know it today is at risk of collapsing. Forests are being cleared, soils are overexploited and oceans are being overfished. It’s all happening at an alarming rate.Our climate is changing rapidly and we have lost 50% of the Earth’s biodiversity in 40 years.

Forests are a key part of the equation!

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Challenges

State of the World’s Forests

• Net forest loss is the ongoing trend – especially in the tropics due primarily to Palm Oil, Soy, Beef, Pulp Paper - but rates are decreasing (until 2015)

• Despite the net forest gain in some countries – reforestation, forest reclaiming agricultural lands – it doesn't highlight the “quality” of forest and degradation is a more pertinent theme in these temperate and boreal ecosystems.

• Pulp & Paper Industry accounts for approximately 40% of all industrial wood traded globally. The industry and those downstream therefore have great leverage to promote and implement “responsible forest management”

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Evolving Approaches:Certification

Limitations: • FMU focused – doesn’t address cross boundary issues e.g. peat• Challenging in terms of accessibility/affordability to smallholders, which make up a large proportion of supply in

some geographies,• Availability – it’s a risk for some downstream brands if purely reliant of certification as part of strategy • Competing schemes – confusion and double certification, which adds costs • As any system its open to abuse for those that want to cheat the system • Approx 14% of forest worldwide certified – though within PP this accounts for upwards of 50% of raw material• Bureaucratic system & slow to react – Swedish standard & other took over 6 years to refresh & IFL Motion 65• GP – initial supported walked away in 2019…

Nonetheless, I think that the ambitions of both schemes are to push “Responsible Forest Management” and are working on the limitations above and will move with the times to stay relevant!

FSC PEFC Hectares certified 205 mio ha 325 mio ha

COC Certificates 41k 20k

Presence 90 countries 70 countries

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The way we work

Evolving Approaches:Responsible Sourcing Policies

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• In 2010 Nestlé attacked by GP for Palm Oil coming from deforestation into their Kit Kat bars. • EF, Nestlé & others responded by developing “Responsible sourcing Guideline” & implemented in this in the their top priority

commodities • The theory - internalise RS these issues you become more responsible for what happens in upstream, to get on the ground and

see for themselves what is happening and how to find solutions.• Certification fits well within this model – helps to demonstrate meeting different aspects of RSG, but also focus on where it isn't

working as well as it should & work to improve standards. • Since then around thousand responsible sourcing policies developed but there’s also limitations – not meeting 2020

commitments e.g. Forest 500• But it’s helped to stimulate solutions to determine what is/isn’t deforestation and how to monitor it among others.

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The way we work

Evolving Approaches:Responsible Sourcing Policies - Solutions

High Carbon Stock (HCS)

• When No-Deforestation commitments came out needed a practical approach to determine what is and what isn’t forest.

• EF, GP, GAR set about to define this – draw a line between young scrub and regenerating forest (locally defined) & what isn’t forest can be developed & what is forest conserved.

• HCS is now incorporated with HCV methodology and embedded into certification standards.

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Starling

• Joint venture between EF & Airbus• Aim was to create a tool to help brands &

producers help brands/producers practically demonstrate how they’re meeting their No-Deforestation commitments.

• Different from GFW in that references an annual basemap……..

• PO was the priority but Nestlé trialing & adapting this in 4 locations of Pulp & Paper (NW Russia, SE USA, BC, Canada & Indonesia)

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Priority Transformation Areas

Russian Boreal

We are working with industry, Indigenous groups, NGO and government stakeholders to protect threatened caribou habitat and IFLs while maintaining viability of the forest products industry. Starling will be a key tool in this work.

British Columbia

We are working with producer companies to increase

their capacity to prevent and resolve social conflicts,

primarily through training and support around FPIC

implementation.

Brazil

Indonesia

US Southeast

In collaboration with industry and other stakeholders that supply from the area, key HCVs within sourcing areas will be identified through Starling and restoration projects will be explored with smallholders in order to restore connectivity

A coalition of buyers (such as Nestlé & Mars), suppliers, NGOs and local government are working to protect Intact Forest Landscapes in this region & support a thriving industry. Starling mapping will be a key element to bring to the table for these discussions.

EF is working with APP in Indonesia on credible monitoring of deforestation, improving practices on contracted labour as well as peat and forest restoration commitments. Starling mapping will help to verify and chose priority areas.

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Dvinsky, N.W. Russia

Challenge: High Conservation Values /Intact Forest Landscapes

• Nestlé exposure to Russia as a souring region & highlighted as a high priority geography • Presence on the ground meeting with industry & key stakeholders e.g. WWF, GP & others to get bigger picture• Despite EoT campaign, remained engaged to use leverage & drive transformation in the sector• Dvisnky core (300,000 ha) formally protected in October 2019, but still key issues to address – identification & management

of HCVs, socio-economics, valuing the forest resource. • Oct 2019 Nestlé MARS funding towards “inception phase” of WWF lead Dvisnky Landscape (Ecological & Socio Mapping • Core group (WWF, FSC, EF) looking to collaborate for a Vision of the Landscape (Industry, HCV, Livelihoods)

Dvinsky Landscape Launch – provisionally June 2020

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The way we work

Evolving Approaches:Healthy Forest Landcapes (HFL) BackgrooundEF members needed an innovative, adaptive approach to provide:

• Systematic and credible insight to key landscape-level forest dynamics, including forest carbon, specifically for the catchments of their mills

• Ability to identify, investigate and – if appropriate – help to address serious reductions in any key elements of forest landscape health.

These capabilities will become increasingly valuable as:

• Policy makers, investors, civil society etc. focus on forests’ potential to address the climate & biodiversity emergency. Growing focus on boreal latitudes.

• Rising demand for timber and fibre, both for traditional end uses, and to feed the bio-economy. Forests are a renewable, but limited resources.

Essentially to get a better grip and have scientific knowledge of what is happening in supply basin to be able to back up claims and justify decisions/compromises between production/protection and react as necessary

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The way we work

Evolving Approaches:Healthy Forest Landcapes (HFL) ObjctivesProvide transparency at forest landscape level, about change in • Forest cover,• biodiversity, • forest carbon, and • socio-economic health

Support informed, constructive stakeholder engagement, and NGO dialogue

Globally consistent in core metrics measurement & headline reporting

Locally adaptable: secondary metrics, data sources, and focus of detailed reporting

To inform decision making, and interventions for better forest outcomes

To be additional and complementary to forest certification

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The way we work

Evolving Approaches:Healthy Forest Landcapes (HFL)Approach

1. Map & engage local stakeholders on the key issues

2. Define sourcing area for mill sourcing areas

3. Monitor standard & additional metrics trends at the landscape

4. Analyse “unusual trends”

5. Intervention – find that balance

Trialling this with EG members in SE USA and looking to scale up to other landscapes n South USA, Baltics & Portugal

Essentially to get a better grip and have scientific knowledge of what is happening in supply basin to be able to back up claims and justify decisions/compromises between production/protection and react as necessary to be able to find that balance.

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Closing StatementForests are under increasing pressure from the demand side as well as climatic threats and this is projected to continue putting further pressure on the remaining forest resources.

Forests therefore have an inherent value – both financial & societal (climate change, biodiversity, recreation & health) & we therefore need to find an approach to find this balance before its too late

There are some solutions out there and could the a combination of: • Certification• Responsible Sourcing• Policy level – SDGs• HFL• Or others e.g. scorecards, holding to account

Regardless of the approach/es it is going to mean compromises and need to go about it with eyes wide open and have the transparency to see an answer what effects we’re having on the key requirements of forest

Not one way to do this but some of the points we feel are key:• Knowing your supply – boots on the ground • Don’t pull away from the risks without first understanding & trying to find solutions – other wise nothing will change• No cut and paste – act locally in key landscapes• Work in partnership & cross commodity – we cant do it alone • Focus resources – some locations higher risk/priority • Open & transparent & be able to back up with science how decision have been made on the compromise of the

balance

Essentially this for me is what “responsibility” is about, wherever you are in the supply chain and we will have a good chance to do even better in our sector and lead the way!

Production

Protection

© Igor Podgorny / Greenpeace