Collaborative Leadership for Sustainable Development in Global Supply Chains

Hull, R.B., D. Robertson, C. Kimmel, and B. McCutchan. (2014). Collaborative Leadership for Sustainable Development in Global Supply Chains: Partnering Across Sectors to Reduce Amazon Deforestation. Solutions 5(4): 51-59. https://thesolutionsjournal.com/article/collaborative-leadership-for-sustainable-development-in-global-supply-chains-partnering-across-sectors-to-reduceamazon-deforestation/

Feature

Collaborative Leadership for Sustainable Development in Global Supply Chains: Partnering Across Sectors to Reduce Amazon Deforestation

by R. Bruce Hull, David Robertson, Courtney Kimmel, and Barbara McCutchan

Bruce Hull

As a consequence for the global demand for food, deforestation in Brazil is partially due to the growth of soy farms.

In Brief Agricultural supply chains move massive amounts of resources around the world, transforming landscapes where production occurs. For example, meat produced and consumed in Europe and Asia is linked—through soybean farms—to deforestation in Brazil. This study describes a collaborative effort to limit deforestation while increasing production of soybeans by promoting compliance with existing laws and regulations. Collaborators included the Nature Conservancy, Cargill, farmers, government agencies, and other stakeholders. A key message is that organizations from different sectors can achieve direction, alignment, and commitment of goals and resources to create novel solutions to complex problems.

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A

mazon deforestation is a consequence of global demand for food.1 Forests get cleared mostly to graze livestock, but some get cleared to grow soybeans, as soy is a more profitable crop. Brazilian soybean production increased from 1 million tons in 1969 to 63 million tons in 2009 to about 90 million tons today, which would make it the world’s largest soy producer, much of which is exported to China as feedstock for pork production.2 China began looking overseas for soy in the mid-1990s when it became clear that its domestic production capacity was insufficient to meet rising demand for this waterhungry crop, so it now imports most of the soybeans it needs and thereby imports 14 percent of its annual water needs.3 This trend is expected to continue.4 Soybean agriculture is the focus of this study.

Massive amounts of water, land, and pollution flow through global supply chains. Solutions to challenges of this scale require collaboration among actors from business, government, and civil society. The study reported here describes one such innovative collaboration.

Global Trends: Towards Cross-Sector Collaboration Global Trends 2030, the recent National Intelligence Council publication, is illustrative of literature examining cross-sector collaboration, in this case driven by the declining influence of nation-states. In a scenario titled “Non-State World,” the report describes collaboration with non-state actors as becoming the norm.9 Nations increasingly struggle to control what crosses their borders through global supply chains or manage systems critical to their wellbeing such as climate, fisheries, and capital flows. Other literature examines how new roles are being played by businesses, which are devising and applying strategies to mitigate risks that were once the

purview of governments, such as climate change, degraded ecosystems, and social unrest.10,11,12 Cross-sector collaboration was cemented as a cornerstone strategy for sustainable development at the 1992 United Nations Conference of Environment and Development, with the conference’s explicit emphasis on building capacity in all sectors, not just government.13,14,15 Governance transitioned towards more marketoriented solutions and NGOs began targeting market actors.16 This transition accelerated with the 2002 World Summit on Sustainable Development,

Key Concepts • Rich in water and land, Brazil is increasingly at the production end of global agricultural supply chains, with deforestation as a consequence.

• Cross-sector collaboration has been dogma since the 1992 United Nations Conference of Environment and Development, yet acceptance and understanding of it remains limited.

• Cross-sector collaboration in Santarém, Brazil promoted compliance with Brazil’s forest laws and regulations, limited deforestation, and increased soybean production.

which further promoted collaboration as the preferred means of governance for sustainable change.17 Neoliberal policies deepened this trend by promoting privatization, outsourcing of government services, and otherwise assigning to market actors responsibilities previously exercised by governments.18 Actors from the three sectors are motivated to collaborate for different reasons.

Businesses collaborate with governments and civil society to justify their publicly-granted license to operate.19 Collaborative solutions also can reduce costs of energy, raw materials, accidents,

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and remedial training.20 Collaboration also can inspire innovation of new technologies and, relevant to the story told here, help reduce risks, increase productivity, and expand markets.21 Governments collaborate with cross-sector actors to extend influence beyond their formal institutional limits, political boundaries, and regulatory powers.22 Collaborative approaches tend to be more politically palatable and less expensive than regulatory solutions because they are more transparent, voluntary, and selfenforcing.23 In addition, governments find fewer political obstacles when new programs draw on recognized international standards used by transnational NGOs and corporations.24,25 Civil society actors collaborate in order to leverage their resources.

NGOs targeting labor, public health, and justice issues have long accepted that cross-sector collaboration is both necessary and desirable.26 Through collaborative efforts, NGOs extend reach to powerful actors and more resources, increasing the potential of broader and more lasting change.27,28

Responding to Amazon Deforestation: The Santarém Collaborative Santarém, the setting for this study, is a municipality in northern Brazil, in the state of Pará, in the Amazon River watershed. Compared to other states in Brazil, Pará has amongst the highest amounts of mining activity, timber harvesting, smallholder farmers, designated indigenous lands, and people living in poverty.29 It is experiencing rapid growth in exports through new ports and roads. Understandably, Pará is attracting intense interest from multinational corporations and transnational NGOs because of its development opportunities and challenges. Lessons learned here likely have wider applicability because developing regions around the world face similar challenges of being on the production end of powerful global

Tom Bradnock / CC BY-NC-ND 2.0

In 2004, Cargill partnered with The Nature Conservancy to develop a strategy in response to the negative impacts of the corporation’s new port in Santarém.

supply chains.30 The following study is based on interviews with key participants, reports, and grey literature, as well as cited published literature.

In 2000, Cargill—a leading international provider of agricultural products and services—began constructing a port facility in Santarém to ship grain down the Amazon river rather than trucking it along crowded, potholed roads to distant and crowded Atlantic ports. Infrastructure developments of this type are consistent with longstanding government efforts to promote northern Brazil’s economy,31 but licensing this new port became controversial because it was seen as the leading edge of enormous change

and access to Amazonian resources (as of this writing, at least 10 new ports are in various stages of licensing and construction in Pará). In 2004, The Nature Conservancy (TNC)—a global conservation organization—began discussions with Cargill in São Paulo Brazil and with the Cargill Foundation in the United States to develop a strategy for responding to the port’s impacts on soybean production and deforestation.

Initially, TNC and Cargill focused on developing a Forest Friendly Soy certification that rewarded producers who don’t deforest. These efforts were tabled when both TNC and Cargill joined the Roundtable for Responsible

Soy (RTRS), a parallel effort that began about the same time to set industry-wide production standards targeting deforestation (lead by WWF and Unilever).32,33 However, TNC and Cargill worried that RTRS would not launch soon enough to slow escalating deforestation in Para or to address delays in approval of Cargill’s new port. They joined RTRS, which became the prime platform for soy standards, but continued their independent collaboration to initiate what we are calling the Santarém Collaborative.

In April of 2006, Greenpeace published Eating Up the Amazon. 34 Greenpeace asserted that multinational agricultural companies, (e.g.,

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Farmers are motivated to participate in the Collaborative by Cargill’s promise to purchase from all deemed compliant, as well incentives such as access to loans and technical assistance.

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Bruce Hull

Archer Daniels Midland, Bunge, and Cargill) financed deforestation of the Amazon by facilitating production and export of soy. The report also targeted the US and European food industry (e.g., McDonalds) as being complicit in supporting soy-based animal feed. It also criticized the Brazilian government for lack of governance.

International attention on soybean production intensified Brazil’s Forest Code requires landowners to maintain, restore, or offset 20 percent to 80 percent of forest cover—the actual amount varies with biome—as well as maintain forest cover along water edges and in other ecologically significant areas.35 It is one of the most ambitious environmental laws in the world. Critics argue that it infringes on private property rights, hinders economic competitiveness, and makes farmers environmental criminals. Various revisions have reduced the required size of riparian buffers, granted amnesty to owners of small parcels who had cleared forests before 2008, and—significant to this study—established the Environmental Register that requires landowners to map their lands or face fines.

Each property is supposed to be mapped for farmers to receive authorization to legally clear forests compliant with the Forest Code; those who clear too much are fined.

However, inspections were often infeasible due to limited staffing, the vast size of the region, and inadequate satellite imagery. Even if inspected, enforcement was minimal so as to not scare off landowners from program participation and in recognition of the important economic and political roles of agriculture in the region.36 Thus, actors lacked sufficient budget, staff, technical capacities, and motivation to enforce existing environmental law. Santarém was not unique in this regard. Research has shown that compliance with government policies, anywhere, requires that certain conditions exist, including affordable

and reliable assessment of compliance, meaningful consequences of noncompliance, practical and affordable means of becoming compliant, and tangible benefits for being compliant.37 The Santarém Collaborative sought to put these conditions in place.

Mapping properties and monitoring compliance was difficult and cost prohibitive. So, in 2005, the Santarém Collaborative funded (significantly with Cargill Foundation financing) and built (initially by TNC staffing and contracting) a system to do it.

The resulting geo-referenced database allowed Cargill, TNC, government agencies, and producers to map properties and monitor land cover.

Mapping and monitoring capacities now exist in private consultancies and government agencies, so TNC is, intentionally, working itself out of this job.

Other obstacles to compliance were the lack of practical and affordable means of becoming compliant, lack of punishment for being noncompliant, and lack of benefit for being compliant. The Santarém Collaborative addressed these needs by providing free or heavily subsidized technical assistance to landowners striving to become compliant. It also helped broker purchases of forest reserves that farmers could use to offset cleared forest on their land, thus becoming compliant. Cargill incentivized compliance by requiring proof of compliance for all soybeans it purchased in the region and by promising to purchase all the soybeans deemed compliant. Thus, even though there was no price premium for compliant soy, farmers could be confident of a steady revenue stream, making it less risky to invest in achieving compliance.

Stakeholder Motivations TNC was motivated to leverage ongoing efforts to conserve critical habitat and biodiversity. The traditional strategy of buying land or securing

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conservation easements to exclude or limit economic development was neither practical nor desirable given the scale of commodity production in the Amazon and the critical role agriculture plays in regional economic development and global food security.

TNC therefore used the strategy of concentrating and intensifying agricultural practices on lands already deforested, thus limiting expansion of agriculture onto lands deemed of “high conservation value.” This strategy was consistent with TNC’s field-to-market and corporate partnership strategies practiced elsewhere.38

south. “Green” product certification and production standards relevant to European Union and North American consumers may not be effective in these emerging markets.41,42 Increasing producer compliance with local environmental laws and norms, however, is a strategy that may be successful.

Cargill also had multiple motivations to engage in the Santarém Collaborative, not the least of which was protecting its brand and enhancing its reputation. Campaigns such as Greenpeace’s Eating up the Amazon threatened both.43 Moreover, licensing of its new terminal seemed slow

Collaborative approaches tend to be more politically palatable and less expensive than regulatory solutions because they are more transparent, voluntary, and self-enforcing.

Both TNC and government actors were motivated to reduce administrative costs by creating self-perpetuating and self-funding practices that would spread across the region. “Santarém was our school…. When [TNC] started here, we didn’t even have an idea of what to do. This wasn’t about conservation [according to what is taught in] books. We developed a strategy after we got here. Now, we think we have a model that will work for the entire Amazon.”39 Lessons learned and momentum gained in Santarém motivated and informed similar efforts elsewhere in Brazil such as Legal Lucas in Mato Grosso and Sustainable West in Bahia.40 Another motivation of TNC was to devise conservation strategies relevant to the changing and globalizing market. The largest increases in consumption over the next 40 years is likely to occur in rapidly developing countries in Asia and the global

as government actors considered objections by transnational and local NGOs. By helping lead the Santarém Collaborative, Cargill built its reputation as a “good” actor in the region.44 Importantly, Cargill was managing risk. Cargill will profit from a reliable and steadily increasing supply of soybeans, so it benefits from improving efficiencies in soybean production.

Intensifying agricultural production is difficult to institutionalize in underdeveloped, frontier economies such as the Amazon, where easily available land and weak governance produce geographically extensive low-yield production systems. The Santarém Collaborative promoted agricultural intensification through investments in technology, agronomic research, extension services, stable property rights, long-term purchase agreements, and predictable government intervention. These conditions should increase supply

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of high-quality soybeans on lands proximate to the Cargill port. Cargill also created capacity to manage future risks by improving its quality control system. The monitoring system used to ensure compliance with forest law was mentioned as something that could be leveraged to monitor pesticide use and water quality, which would help avoid other brand-damaging and public health concerns such as pesticides in breast milk or food supply.

Government agencies have goals of sustainable economic development and enhancing public health, both of which the Santarém Collaborative promoted by intensifying soybean production and making it compliant with existing environmental laws. Like companies and NGOs, government agencies (in Brazil and elsewhere) also are motivated to protect and enhance their reputations. We heard concerns about threats to Brazil’s international reputation and national sovereignty.

Because the Amazon rainforest and biodiversity are globally significant, Brazil has been and remains a potential target of interventionist policies by international actors. A functional Forest Code and sustainable soybean production mitigates such concerns.

Government agencies also are motivated to manage risks and revenue. There was expressed concern about international competition.

The United States, one of Brazil’s key competitors in soybeans, is perceived as trumpeting its supposedly higher environmental standards, which could create a competitive disadvantage for Brazilian exports. Additionally, the new mapping and monitoring capacities provide government actors an interim step towards settling land tenure and titling issues, which previously presented intractable political risks. A report from the World Bank suggests that the mapping and registry of farms was an important step towards establishing a more formalized land tenure system.45

Matt Hintsa / CC BY-NC-ND 2.0

Sunset as seen from the riverside walkway in Santarém, with Cargill’s soybean terminal in the distance.

Farmers and farmers’ unions were reluctant to participate. Most soy producers migrated to the region, purchased farms already deforested, did not understand that a “deforestation debt” applied to them, and did not understand why rules were different around Santarém than other places in Brazil. Yet, they found sufficient profit-oriented and risk-management motivations to justify participation.

Participation gave farmers access to markets through Cargill, who required evidence of compliance and in turn agreed to buy whatever was produced.

Participation also allowed access to credit. Companies and landowners could access National Development Bank loans and related resources only when their municipalities were off a so-called “black list,” a status that the Santarém Collaborative helped maintain by promoting compliance.

Cargill also offered loans and technical

assistance, but only to producers working towards compliance. Another big incentive was assistance with mapping and monitoring, which otherwise would be too expensive and technical for many to achieve. Importantly, the mapping process helped farmers reduce uncertainties about disputed property rights. Producers largely left out of the discussion— and whose needs might not be met by these arrangements—are the owners of small farms using traditional farming practices. These farms and people are scattered throughout the region, pre-date export-oriented industrial agriculture, and seek different socio-economic and environmental outcomes.46

Conclusions New cross-sector collaborative solutions will be needed to achieve sustainable development in the face

of mounting global demand, increasingly powerful global supply chains, and rising risks from price volatility, climate change, and degraded ecosystems.47,48 The expanding soy frontier in the Amazon rainforest is illustrative of these challenges and the collaboration in Santarém is illustrative of a solution.

The Santarém Collaborative sought to limit deforestation while increasing soybean production. Many of the collaborators’ motivations may generalize to actors in similar situations. Cargill, like most companies, is motivated to control risks, manage their brand, and add value. Of particular interest to readers of this journal, businesses such as Cargill are increasingly addressing risks from climate change and ecosystem degradation.49 Government agencies in Brazil, like elsewhere, are motivated to increase and sustain economic

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Lima Pix / CC BY 2.0

Initiatives such as the Santarém Collaborative seek to limit deforestation while increasing soybean production in Brazil.

growth and to increase their actual and perceived efficacy and hence legitimacy. TNC, like most NGOs, seeks to leverage scarce resources and remain relevant in a rapidly changing context, such as globalizing markets likely to transform green certification and production standards.

Because of overlapping motivations, these actors from different sectors coordinated roles and resources to create a system that was more powerful than the sum of its parts. TNC developed and applied the technology needed to map and monitor compliance with Brazilian forest law. Cargill funded some of the development of that technology, used its purchasing power to encourage farmer participation by agreeing to buy only from producers who were participating in and compliant with the system, and helped fund changes to farming practices required by compliance. Government actors supported this innovation, used the system to

inform enforcement and funding decisions, and adopted complementary programs. Individual farmers and the farmer’s union eventually endorsed participation, applied the technology, and accepted risks and costs associated with becoming compliant such as taking on loans and taking land out of production.

Cross-sector collaboration makes possible strategies and solutions more powerful than what can be accomplished when acting independently, and we hope readers are encouraged to experiment. However, cross-sector collaboration is no silver bullet and must be approached with caution. Collaboration requires investments of time, trust, and resources. Common ground is elusive, so agreement isn’t always achieved, and even if it is, most commitments are voluntary and difficult to enforce. These challenges can discourage stakeholder participation, so ultimately there must be enough benefit for each stakeholder to justify

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the “costs” of collaboration. Much remains to be learned about how to help collaborative arrangements emerge and succeed. Efforts such as those at Santarém are important incubators for collaborative, crosssector solutions.

Acknowledgments We would like to acknowledgement Christoph Hrdina for the doors he opened, to Edenise Garcia with TNC for fact checking, and the interviewees at Cargill, The Farmer’s Union of Santarém, and TNC-Amazon program headquartered in Belém.

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