Operation Sunlight

We work to protect forests by catalyzing corporate and financial reforms in the global soft commodity sector

We Work to Protect Forests by Catalyzing Corporate and Financial Reforms in the Global Soft Commodity Sector

Forests need sunlight to survive. Not only is sunlight essential for photosynthesis, but forests also need socioeconomic sunlight to create the visibility and transparency on which good governance, the rule of law and corporate accountability depend. Where darkness reigns, criminals and unscrupulous corporations act with impunity—grabbing land, destroying forests, exploiting workers, and forcibly displacing indigenous peoples and other vulnerable forest-dependent communities.

Nowhere is this truer than in the production of agricultural commodities such as soy, cattle, palm, coffee and cocoa. More than 70% of global deforestation is attributable to clearing land to produce commodities. Much of this deforestation is done illegally and recklessly by merciless commodity producers, many of them large public companies backed by global finance. Darkness in the heart of the forest economy hides the identity of commodity producers who drive deforestation, as well as that of the managers, directors, owners, bankers, traders and consumer companies that enable them. Bringing the soft commodity economy fully into the sunlight is essential for halting deforestation—full stop. Forests have no hope without this, and we have no hope to avoid the worst impacts of climate change without forests.


Sunrise on the Horizon 

Though the tropical forest and land economy is currently just dappled with light, several encouraging developments suggest a new era of radical transparency beckons. These positive trends include:

  • Access to big data: Forest champions have access to more high-quality data about the global land and forest economy than ever before. This data comes from satellites, global financial information systems, the open internet and much more.
  • Acceleration of technology: Technologies that hardly existed a decade ago are rapidly becoming cheaper, better, faster and ubiquitous. This technology empowers forest champions like never before.
  • Emergence of innovative analysis: Forest champions are using this new data and new technology to create previously unimaginable tools that give forest champions the information they need in real time. From Global Forest Watch (which makes new deforestation visible within a day) and Trace (which shows current international trade patterns for commodities) to Real-Time Radical Transparency (discussed below, which will automate instantaneous access to global financial data), forest champions are more empowered than ever before.
  • New global consensus: For the first time, the international community has agreed to end natural forest loss, understanding that goal as essential for alleviating poverty, tackling climate change and achieving sustainable development. Forests are a central part of global Sustainable Development Goals and the only sector with its own chapter in the Paris Agreement on climate change.
  • Growing awareness of climate risk: Companies, shareholders, analysts and regulators increasingly understand the reality of climate risk and are taking action to manage it. Less than a decade ago, only socially responsible investors making up a small fraction of global capital markets worried about climate change. Today, the world’s largest pension funds and asset managers see climate change as a material financial risk that requires active management.
  • Expansion of legal jurisdiction: In the past few years, the United States, United Kingdom, Netherlands and others have expanded the scope of their international environmental laws and asserted stronger jurisdiction over extraterritorial crimes in general, including money laundering, corruption, wire fraud, tax evasion, racketeering and more. These new laws give forest champions, including developing country governments and civil society organizations, the ability to go after forest crimes like never before.
  • Corporate advocacy campaigns: The past five years have seen an explosion of successful civil society advocacy campaigns targeting consumer companies, commodity traders and commodity producers. Forest champions have demanded and secured an unprecedented number of corporate commitments to no deforestation, no peat, no exploitation (NDPE). Having made these commitments, companies face more pressure than ever to eliminate deforestation from their supply chains.

When viewed together, these trends mean that forest champions everywhere have more information, more technology, more tools, more financial leverage, more international support, more rule of law and more corporate accountability than ever before. The table is set to radically transform and disrupt global deforestation-based agriculture into a more sustainable system.

Sunlight is the ultimate source of all renewable energy. Big data, tools and analysis can serve as the clean power plant for radical transparency about lands and forests. In expert handsand with the right partners  data, tools and analysis can electrify vital new stakeholders needed to drive the world toward strong action to protect and restore forests. Keep reading to learn about how Climate Advisers Trust is using these tools to build a forest-friendly planet.

Real-Time Radical Transparency

Climate Advisers Trust is leading the creation of new tools for forest advocates, harnessing the full power of the information age to create radical transparency in the soft commodities sector. From analysts communicating with major equity holders, to regulators and civil society in tropical forest countries, to global law enforcement – a new tool can see behind the public face of major commodity companies, in a way that puts transparency and therefore accountability in the hands of civil society around the world.

That is the Real-Time Radical Transparency (R2T2) vision: anyone, anywhere can identify the companies, individuals, banks, investors and products that are associated with deforestation. Such a tool would provide complete traceability of beneficial ownership, business partners, supply chains and financing. It would identify legal violations, flag shortcomings in meeting established corporate governance standards, and shine a light on corruption and conflicts of interest. And critically, it would display these findings in a way that allows anyone to understand the relationships driving behavior, displayed in custom, data-rich relationship maps for any company or sector, as easy as a Google search.

Moving Capital Markets

In a society connected by global trade, the power to change markets is the power to change the world. Around 70 percent of global deforestation occurs in developing countries to create new farmland to grow agricultural commodities, such as soy, palm, cattle, coffee and cocoa. Much of this deforestation depends on finance through regional and global capital markets. These markets provide –via both equity and debt securities instruments –the capital that companies need to turn forests into plantations and ranches.

Truly transforming global and regional capital markets depends on one thing: convincing the market that deforestation-based agriculture is risky and less profitable than forest-friendly agriculture.  Success means convincing the financial sector that deforestation represents a material financial risk, and that effectively managing these financial risks from deforestation is an opportunity to create significant value.

In 2017, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), who represents the heads of the central banks and monetary authorities of the G20, provided clear guidance on how companies can transparently report their deforestation-based risks. More than 250 financial institutions and companies have pledged to implement the TCFD’s guidelines, including as these guidelines relate to forests and agriculture.

Yet, most of these financial institutions and companies, let alone others, lack the information and tools needed to proactively manage deforestation-based financial risk generally and the TCFD’s recommendations specifically. This is a challenge crying out for solutions, and Climate Advisers Trust is working to shed light on the realities of the risks posed by stranded land and forest assets, create demand for action by powerful market players, and bring actionable solutions including new financial products, technologies, and tools to the task of building more forest-friendly markets.

Strategic Litigation

Corruption, bribery, tax evasion, money laundering, illegal logging, land confiscation and other illegal acts are rampant in the forest and land-use sectors of many developing nations. The adverse consequences are devastating: social conflict, injustice, poverty, economic stagnation and climate change. Fighting forest crime is therefore imperative.

Although building the rule of law in forest countries is a vital long-term goal, the strategic use of developed country litigation can serve as an immediately available complement to domestic enforcement and governance reforms in developing nations. Existing developed country laws have considerable reach and power, and political and legal conditions for using them to combat forest crime are improving across the developed world.

Criminal and civil laws in many developed nations have long covered transboundary acts provided some substantial connection to those developed nations exists. Often those connections are easy to find. Over the past several decades, many developed countries have expanded the extra-territorial jurisdiction of their laws and courts.

Despite the broad, deep and expanding reach of developed country laws and courts, with some notable exceptions regarding enforcement of environmental laws (relating to illegal trade in timber and wildlife), to date there have been few uses of strategic litigation to combat forest crime. Why? It’s not entirely clear.

The good news is that governments, international organizations and civil society organizations are starting to work more closely together on international forest crime. Climate Advisers Trust will help build capacity for these efforts, building and litigating cases with the goal of combatting the ills of forest crime and protecting the benefits of forests.