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Ban on deforestation products will protect Cerrado, EU says

Soy crop in Mato Grosso: the Cerrado is the second largest biome in the country — Foto: Ruy Baron/Valor
Soy crop in Mato Grosso: the Cerrado is the second largest biome in the country — Foto: Ruy Baron/Valor

The European Union believes its proposal to ban the import of beef, soy, coffee and other products from deforestation and forest degradation will protect much of the Brazilian savanna, the biome called Cerrado, where 75% of the country’s agribusiness is located.

In a meeting this week with agriculture ministers from the 27 EU member countries, the Environment Commissioner, Virginijus Sinkevicius, highlighted the importance of implementing “zero deforestation” in imports and signaled that more ecosystems could be covered by the initiative in the future.

“As an example, we estimate that the proposal should contribute to the protection of about two-thirds of the area of native vegetation remaining in the Cerrado biome, a vast tropical savanna ecoregion in Brazil,” he told ministers.

To Valor, Mr. Sinkevicius’ team said that “area remaining of native Cerrado vegetation” means the area of this biome that has not yet been transformed into pasture, agriculture, infrastructure, etc., before 2020.

The European official said that the EU does not yet have the same kind of detailed data for the Amazon. “We studied the precise case of the Cerrado because it is mostly a savanna,”, he explained. “In any case, since the Amazon is essentially a tropical forest, it is clear that the (European) Regulation will protect most of its surface.”

The Cerrado is the second largest biome in the country in terms of area, only surpassed by the Amazon rainforest. It is responsible for 24% of the country’s greenhouse gas emissions. Between 1985 and 2019, the area of agriculture grew more than tree times in the biome, today reduced to half of the original vegetation: there are 25 million hectares of crops and 61 million hectares of pastures, according to MapBiomas.

When the European proposal for “zero deforestation” in the import of six commodities – beef, soy, coffee, cocoa, wood and palm oil – was presented in November 2021, the Environment Commissioner told the European Parliament that, in the text, “deforestation” means the conversion of the forest into agricultural use, whether or not induced by man; and “forest’” means land of more than 0.5 hectares with trees of more than 5 meters and canopy cover of more than 10%, or trees capable of reaching these limits, excluding agricultural plantations and lands predominantly under agricultural or urban use.

The interpretation of certain experts is that the Pantanal has not yet entered this definition. But in the case of the Cerrado, one part fits and another one does not, depending on the 10% level, and this has an impact on exporters. Thus, for products from Cerrado areas which may be included in the definition of forest, it will be necessary to segregate products from other areas according to the geolocation of production. Companies will need to show that these commodities are not linked to deforestation for the bloc of 450 million consumers.

In an impact assessment document released in November, the EU underlined that stricter rules aimed at protecting the Amazon rainforest have already been shown to accelerate the conversion of Cerrado savannas and wetlands to agricultural production.

Brussels warned that it planned to work in partnership and give support to producer countries on aspects related to “root causes of deforestation”, such as governance, law enforcement and fighting corruption. It also wants to strengthen international cooperation with the main consuming countries to promote the adoption of similar measures to prevent products from supply chains linked to deforestation and forest degradation from being placed on the market.

In the EU’s assessment, the main drivers of deforestation vary geographically. The expansion of agricultural land dedicated to palm oil plantations is one of the main causes of deforestation in Southeast Asia, for example, while the clearing of forests for cattle pasture and for soy plantations and land speculation (land grabbing, often associated with the forced displacement of local communities) are the main drivers in South America. The expansion of cocoa plantations has had a significant impact on deforestation in Central and West Africa.

Source: Valor International

https://valorinternational.globo.com

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Reduction of deforestation is off radar of B3 companies

Brazil's Amazon: Deforestation rises ahead of dry season - BBC News

Brazilian companies still fail to place deforestation at the center of their climate concerns. A survey by the consultancy Luvi One shows that only 16% of local companies listed on the stock exchange include the preservation of forests in their climate targets. In Europe, this percentage is 90%. When the specific targets are taken into account, with the definition of deadlines and the percentage of reduction to be achieved, the result is even lower: only 5% make commitments to contribute to blocking deforestation in the country.

“Brazil has debated for a while that the preservation of forests was a matter for governments. The private sector had a minor role in the discussion. Now, the consumer market itself requires that companies position themselves in relation to forests, especially with respect to deforestation in the Amazon,” said economist Felipe Gutterres, CEO of Luvi One.

In the survey, 384 companies listed on the B3 were analyzed. Among the sectors of the stock exchange, the wood and paper companies are among the best positioned – 67% of companies have goals in this aspect, followed by power companies, with 53%. The beverage sector also appears at the top of the list, represented at B3 only by Ambev, which has high targets. In agriculture, half of the companies are committed to reducing deforestation.

The methodology included the analysis of the published reports and the existence of open and specific goals to reduce environmental impacts. It was also verified whether the sustainable development goals of the United Nations and the Global Reporting Initiative (GRI) methodology, which addresses sustainability issues in their annual reports, are met, in addition to the companies’ environmental management acts.

The survey shows that 100 companies on the B3 have the worst performance on the issue of forests, from sectors such as personal use and cleaning products, fabrics, shoes and clothing, computers and equipment. These companies do not have any targets for deforestation reduction.

Despite the initially negative result, the tendency is that the picture starts to change, albeit slowly. Industries in more difficult situations, the issue may be left behind, Mr. Gutterres said. “Whoever is left out of the global trend will also start to notice difficulties in doing business and attracting investments. A natural selection will take place. ESG is not just an acronym, it is a stance,” he said. For the executive, there is a “great generation of value” to be discovered in the preservation of forests with the carbon credit market. According to the survey, 29% of the Brazilian listed companies have gas emission reduction goals. With regard to water-related commitments, the percentage is 24%.

Katerina Trostmann, head of sustainability at BNP Paribas in Brazil, said that companies are understanding that they need to embrace the transition agenda, and this has been happening. “We have seen an acceleration by our clients to adopt targets and be transparent. One trend for 2022 is climate transparency,” she said.

Source: Valor International

https://valorinternational.globo.com

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OECD calls for reduced deforestation in Brazil

Mathias Cormann — Foto: Herve Cortinat/OECD
Mathias Cormann — Foto: Herve Cortinat/OECD

The Organization for Economic Cooperation and Development (OECD) on Tuesday invited Brazil to open membership discussions — but has imposed conditions: effective protection of the environment and action on climate, including halting deforestation, as well as the fight against corruption. The invitation to Brazil and five other countries — Argentina, Peru, Romania, Bulgaria, and Croatia — was approved by consensus by the 38 members of the OECD.

The invitation for talks come five years after Brasília formally requested membership – which has become a priority for the country’s foreign policy. It is a victory for Brazilian diplomacy, since the expectation in Europe was that this would hardly happen before the November 2022 presidential elections, due to the “great reticence” of some members towards President Jair Bolsonaro. France joined the consensus by signaling that it will be “demanding and vigilant” in negotiations with Brazil, according to European sources.

The OECD’s approval means just that — starting negotiations. The entity sent a letter to President Bolsonaro on Tuesday. And the understanding in the organization’s circles is that the country that responds first — confirming commitments to OECD values — starts the process first. In fact, there seems to be some concern that one or the other will take longer. The current government of Argentina may have some difficulty with capital controls, for example, notes one source.

Negotiations could take three to five years for the country to complete the process of compliance with the OECD’s 253 legal instruments. The invitation for membership will come after the negotiations, so not before 2025.

In a statement released early Tuesday evening, OECD Secretary-General Mathias Cormann said the process for acceptance as a member will include a strict and in-depth assessment by more than 20 technical committees of the candidate country’s alignment with OECD standards, policies and practices. As a result of those technical reviews — and prior to any invitation to candidate countries to join the organization as members — changes in the candidate country legislation, policy and practices will be required to align them with OECD standards and best practices, thus serving as a powerful catalyst for reform.

“Brazil has intensified its participation in the OECD since the request for accession [in 2017] and now we are well prepared to move forward,” said the Brazilian ambassador to the entity, Carlos Márcio Cozendey.

Last week, the Minister of Economy, Paulo Guedes, sent a letter to the OECD assuring commitment that Brazil will comply with the codes of capital liberalization and invisible transactions, the entity’s two main instruments in the economic aspect. This move strengthened “Brazil’s credentials” to finally receive the invitation, according to a government source. In any case, the parallel process in the OECD Council of Ministers was already underway. None of the other five candidate countries for membership has even begun the process of binding to the organization’s required codes.

These codes allow aspiring countries to make gradual progress toward liberalization of capital, investment, and services, with expectations of an improved business environment. And, according to sources, before sending the liberalization and intangibles codes to Congress, the government needs to comply with those requirements.

In Brazil, the new foreign exchange law has been approved. Being part of the OECD means having greater contact and more convergence with international best practices, as well as a boost to the domestic reform agenda, according to the government’s evaluation. But the OECD itself signaled that the candidates should commit themselves to other priority issues.

“The OECD invitation translates the international recognition for the agenda of structural economic reforms led by Minister Guedes and supported by President Bolsonaro,” said the Secretary of International Affairs of the Ministry of Economy, Erivaldo Gomes. “At the same time, it stresses the importance of following up on those reforms, especially the tax overhaul, a necessary condition to complete the process of joining the organization.”

For the National Confederation of Industry (CNI), this is “an extremely important step for the Brazilian productive sector,” which will serve as an impetus to leverage important reforms, increase the competitiveness of industry, and foster more sustainable growth in the country.

Brazil has been a key partner of the OECD since 2012 and formally applied to join the group in 2017. It is also admittedly the candidate country most convergent with the organization’s legal instruments — and the country most engaged with the organization’s committees and working groups, integrating discussions in more than 30 instances.

Source: Valor international

https://valorinternational.globo.com/

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