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Can the bioeconomy help save the Amazon from deforestation?
Published on Reuters, 18 December 2024
December 17 - News earlier this year that Asian factories supplying H&M and Zara were buying cotton linked to deforestation and land-grabbing in Brazil doubtless come as a shock to the two global fashion giants, who pointed to the fact that the cotton had been certified sustainable by the Better Cotton initiative, which in turn said an independent audit had found the three farms named had not breached its standards.
But the report, by NGO Earthsight, only reinforces Marc Palahi’s conviction that the only way to protect the reputation of big brands, and the biodiversity-rich areas of the world where the raw materials for their products come from, is through dramatically shortening supply chains so that much greater value is left with the producers.
“When you look at the value chain of coffee, cocoa, cotton, it’s very long and complex, with 15 to 20 intermediaries. Most of the capital goes downstream in branding, distribution, et cetera. And less than 10%, sometimes it's 1% or 2% in the case of coffee, goes to the farmers,” he says. “So, what we need to do is to shorten these value chains and mobilise the capital that is lost here, so that we can increase the investments in the horizontal, in the landscape level.”
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Palahi is CEO of the Circular Bioeconomy Alliance, a charity founded in 2020 by King Charles, which was officially launched in November during a reception in the opulent setting of St James’s Palace in London.
The Spaniard, who until last year was director of the European Forest Institute, recalls being invited to have tea with then-Prince Charles at his Balmoral estate in 2019 after giving a speech in Aberdeen on how to transition from a linear, fossil-based economy towards a circular bioeconomy, focused on maximising the use of the Earth’s biomaterial resources, and minimising waste.
The prince asked him to accompany him on a trip to the Solomon Islands, to provide advice on sustainable forestry and the opportunities that a circular bioeconomy approach could offer the island country, which lies to the east of Papua New Guinea.
Four years later, it was clear from companies and communities represented at the St James’s Palace reception, that some of the seeds sown during that first trip together have already begun to bear fruit, with several “living labs” established to demonstrate the potential for brands to source directly from producers.
Intercropping cotton with alternative tree species leads to improvements in soil health, water usage and helps control pests, reducing the need for expensive chemical inputs
Two of them have to do with cotton, one of the most environmentally destructive commodities, with the production of a single cotton T-shirt requiring around 2,700 litres of water, and outsized amounts of polluting pesticides and fertilisers.
Next year, Armani Group will begin selling T-shirts produced from its Apulia regenerative cotton project in the Italian state of Puglia, among the first field experiments in Europe testing cotton grown as part of an agroforestry system.
Intercropping cotton with alternative tree species leads to improvements in soil health, water usage and helps control pests, reducing the need for expensive chemical inputs. Importantly, farmers are also able to diversify their income.
Although at an earlier stage of development, agroforestry-grown cotton is also being introduced in the more challenging environment of Chad, in Africa, where water extraction for industrial agriculture, largely cotton production, has seen Lake Chad shrink in volume by 90% from 1963 to 2001.
Luxury brand LVMH, which has set a target of implementing regenerative agriculture in all its strategic supply chains by 2030, has partnered with the Circular Bioeconomy Alliance and the International Rescue Committee on the project.
But Giorgio Armani is selling its organic T-shirts for 390 pounds. What will it take for H&M and Inditex to be able to include agroforestry-grown cotton in their supply chains?
Palahi, who is also chief nature officer of Swiss private banking firm Lombard Odier, says the CBA at this stage is working with influential companies that have the interest and resources to devote, developing blueprints that others will be able to follow.
Lombard Odier, operating separately from the Circular Bioeconomy Alliance, for years has been developing a strategy to transform agricultural value chains by cutting out the margin-sapping middle men
“We are testing how to make these transitions from an extractive, synthetic approach (to commodity production) towards a regenerative, circular bioeconomy approach. …. It doesn’t mean that what we are going to do with cotton and other products (will be) so expensive that we can only do it with the luxury sector.”
He points to coffee as a commodity that is ripe to take to commercial scale. Lombard Odier, operating separately from the Circular Bioeconomy Alliance, for years has been developing a strategy to transform agricultural value chains by cutting out the margin-sapping middle men. It is looking to start with coffee, by converting farmers in three coffee landscapes to using regenerative and organic agroforestry methods, investing in their capacity to process green beans into roasted coffee, and selling directly to buyers. Discussions are being had with a global fast food company, a UK supermarket and a major catering company to gauge interest.
Michael Urban, Lombard Odier’s chief sustainability strategist, said at the Building Bridges sustainable finance event in December that its strategy makes strong sense, even from a strictly financial standpoint.
He gave the example of from Laos, where a “modest amount of capex”, in shade trees, irrigation systems and production apparatus, along with investing in better wages and social security for workers, was enough to enable a coffee farmer to go from selling 1,000 kilograms a year of green coffee beans into the commodity markets, at a margin of 40 cents per kilogram, to sell finished roasted beans directly to specialty coffee offtakers, at a margin of USD 5 per kilogram.
One big selling point for buyers, says Urban, is that the coffee comes with 100 key performance indicators about the beneficial climate and social impact of its coffee, including the increase in soil organic carbon, clean water, biodiversity, and protection of wildlife habitat, along with social capital benefits.
Palahi points out that coffee is the commodity that is most under threat from climate change, with 50% of coffee-producing regions predicted to become unsuitable as the planet warms
Palahi points out that coffee is the commodity that is most under threat from climate change, with 50% of coffee-producing regions predicted to become unsuitable as the planet warms. Organic coffee firm Slow Forest Foods, a vertically integrated firm selling roasted coffee beans from farms in Laos and Indonesia, is part of the Circular Bioeconomy Alliance.
“We felt confident to start with coffee,” says Palahi, “but we will continue with cotton, and cocoa. You know, all of these products need to be produced in a totally different way.”
This year coffee prices rose to record highs as drought, including in the coffee heartland of Brazil, badly affected yields. Cocoa yields in Africa have also been slashed, affected by harsh weather and heat-induced spread of plant disease.
Palahi says this underline why the move to a circular bioeconomy is so critical. “During these four decades of extractive chemical farming, we have altered the immune system of our land,” he says. “We have weakened our natural capital, which is the basis to produce any ecosystem service - and food is an ecosystem service. So now, we are having the lowest resilience in the moment where we are seeing the most extreme climate shocks ever. Just like when you alter the immune system of our bodies, any disease spreads faster and can kill you.”
The development of a bioeconomy was a hot topic at the G20 meeting in Brazil, which has championed it as a path to sustainable economic growth. Globally the bioeconomy is estimated to be worth about $4 trillion today, and is expected to almost double to USD 7.7 trillion by 2030.
And bioeconomy was a major focus at the COP16 biodiversity talks in Colombia, which saw the launch of a Pan-Amazon Network for Bioeconomy, uniting Indigenous peoples, local producers, impact investors and financial institutions to promote a nature-based economy in the Amazon biome, which is under grave threat from deforestation for timber and illegal mining.
According to the Inter-American Development Bank, the nine countries and 50 million people of the Amazon are well-positioned to benefit. There are more than 200 natural products that are used by local people in the Amazon, with at least 60 of these identified as having commercial potential.
Materials sourced from the Amazon are already found around the world, including nutrient-rich superfood açaí, natural rubber, which makes up 20%-40% of the soles of French footwear brand Veja, ((known as Vert in Brazil) and ingredients for cosmetics companies, notably Brazil's Natura &Co.
In an interview at COP16, Angela Pinhati, the company's chief sustainability officer, said Natura sources 45 natural ingredients, working in collaboration with 44 communities across the Amazon.
Earlier this year Natura &Co secured a 1.3 million Brazilian real sustainability-linked loan connected to regenerating bio-inputs from the Amazon.
We have a goal of reaching 55 bioactives by 2030, we're currently protecting 2 million hectares of standing forest, reaching 3 million by 2030
“It is a relationship based in transparency and in long-term relationships, and we have a dedicated team, based close to the Amazon, to visit the communities and ensure all the communities are complying with international certification,” she says, “We have a goal of reaching 55 bioactives by 2030, we're currently protecting 2 million hectares of standing forest, reaching 3 million by 2030.”
Julio Barbosa is president of Brazil’s National Council of Extractivist Populations, the organisation formed by rubber tapper and activist Chico Mendes. He says he would like more companies to follow the example of Natura &Co and Veja, paying communities a social premium on top of the market value for ingredients.
The biggest promise of the bioeconomy, he says, is that it could prevent young people leaving the forest to travel to distant cities to attend school and earn an income, by giving them access to technology and dignified work in their own communities.
But technical assistance and insecurity of land tenure are big barriers, he says, as is the overwhelming strength of Brazil’s agribusiness lobby, which is seeking to “keep the bioeconomy invisible”.
Indigenous people, however, also fear over-extraction will lead to their traditions of respect for nature and ecological balance being lost. This has already been seen in the intensification of acai into monocrop plantations to meet explosive global demand, which one study found was threatening the integrity and biodiversity of the Amazon. There are also rising health and safety risks to workers who have to climb high up the trees to collect the fruit, and carry heavy baskets long distances to sell them.
It's very important that we use the right definition of circular bioeconomy, otherwise I am very much afraid of some countries using the bioeconomy as a concept to continue doing extractive activities
Fany Kuiru, who is head of the Coordinating Body of Indigenous Organisations of the Amazon Basin (COICA), said: “We’re looking at (the bioeconomy) as products that are unique, that come from traditional knowledge, that are done sustainably and benefit local people,” she says, "We interact with the ecosystem according to our view of the universe and our traditional calendar. That needs to be respected.”
Palahi says Indigenous leadership in developing the bioeconomy in the Amazon will be critical. One product that his alliance is looking to develop commercially is vanilla, which grows wild in the Amazon, working with Indigenous leaders in the Amazon Sacred Headwaters Alliance of Ecuador and Peru.
The bioeconomy will be in the spotlight again in 2025 at the G20 meeting in South Africa and at COP30 in Brazil, he says. “It's very important that we use the right definition of circular bioeconomy, otherwise I am very much afraid of some countries using the bioeconomy as a concept to continue doing extractive activities ... Even if you are going to replace plastics by biological products coming from monocultures, in the end you are not regenerating nature. I think if we get this wrong, it can be a disaster.”
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