The influence of company sourcing patterns on the adoption and effectiveness of zero-deforestation commitments in Brazil’s soy supply chain

Abstract

Many companies sourcing agricultural commodities with high deforestation risk have committed to zero deforestation, meaning they intend to eliminate deforestation from their supply chains. While previous research has attempted to assess progress against such initiatives, little is known about how the characteristics of sourcing patterns may influence the adoption and potential effectiveness of zero-deforestation commitments. Supply chain stickinesshere defined as the geographic persistence in trade relationships between traders and sourcing regions over timemay reflect lock-in effects and the level of trust between the parties involved. Here, we use a metric of supply chain stickiness, calculated from temporal network analyses on the Brazilian soy export supply chain, as a proxy for these underlying dynamics to explore their effect on the adoption and effectiveness of zero deforestation commitments (ZDCs). Using data for 2004-2017, we find that although stickier traders are more likely to adopt ZDCs, they also appear to have less effective ZDCs than other traders (as indicated by the level of soy and territorial deforestation in their sourcing regions). This finding suggests that additional strategies are needed to increase the effectiveness of ZDCs.

Gaps in adoption and implementation limit the current and potential effectiveness of zero-deforestation supply chain policies for soy

“…Instead ZDC adoption in the Cerrado is even more skewed to the largest firms (table S1). Such large companies are more likely to have the resources needed to implement their policies including more stable sourcing relations with producers that are favorable for policy dissemination (Leijten et al 2022). Yet, while they appear well-positioned to make good on their commitments, none of these companies have implemented their Cerrado ZDCs along their full supply chain.…”

“…SoyM signatories handled around 90% of exports from the Amazon in 2017 (Zu Ermgassen et al 2020). Because these companies preferentially source from certain municipalities, levels of ZDC implementation vary across space (Leijten et al 2022). This heterogeneity is relevant because the collective local market share of companies implementing ZDCs may influence supplier decisions regarding forest clearance.…”

“…Finally, ascertaining the future potential of ZDCs relies partially on a better understanding of which companies adopt ZDCs. Existing research suggests no significant differences in soy-deforestation risk between firms with and without ZDC, and that traders with geographically stable sourcing areas are more likely to adopt a ZDC (Zu Ermgassen et al 2020, Leijten et al 2022). However, it remains unclear how other factors condition ZDC adoption in soybean supply chains.…”

A Value Chain Approach to Forest Landscape Restoration: Insights from Vietnam’s Production-Driven Forest Restoration

“…In complex, long and non-integrated value chains with multiple suppliers, as shown by Lyons-White and Knight (2018) for the case of palm oil, no-deforestation commitments failed due to colliding perceptions among local and international value chain actors regarding 'forests' and 'deforestation' definitions, weak national laws and complex, often nontransparent chain structures. Supply chain stickiness, as demonstrated by Leijten et al 2022 for the case of soy production and trade in Brazil, leading to regional dependencies in sourcing, is another hampering factor. Hence, if self-commitments to be successful, they must be framed and institutionalized based on clearly defined Ha et al (2022) standards, goals and regulations, for which we consider certification schemes, enforced and monitored by independent third-party auditing agencies, may serve as an appropriate method.…”

Explaining the stickiness of supply chain relations in the Brazilian soybean trade

“…In other words, stickiness influences the rationale of local land actors who make deforestation decisions based on the perspective of the future arrival of commodity traders or the future persistence of their presence in a certain region, therefore conducting speculative land occupation and deforestation. A local actor might be more likely to occupy and deforest land in preparation for agriculture when they anticipate that their region is developing sticky relationships with certain traders that are coming to build a silo or a refinery in a region, and less likely to invest in speculative deforestation if the relationships with traders operating at the moment are not sticky, as this means that the trader might soon leave the area ( Leijten et al, 2022 ). Overall, this points to a need to understand how supply chain stickiness might influence land use dynamics in commodity-producing regions, its impacts on sustainability issues such as deforestation, and how such stickiness might moderate the impact of interventions to improve these sustainability outcomes.…”