Deforestation is the number one cause of emissions in chocolate supply chains. The results of the Chocolate Scorecard are in, and companies that implemented satellite based deforestation monitoring outperformed companies that hadn’t yet fully implemented this new technology across sustainability metrics. The best performers were chocolate companies that used the tech to its full potential: not only to monitor supply chain deforestation, but also to respond through grievance systems and risk prevention activities. Companies that had clear SBTi (Science-Based Targets) and roadmaps to achieving them also scored well.
Satellite Monitoring Scores a 10
With the EU Deforestation Regulation (EUDR) coming into force in 2024, the cocoa sector must prepare to halt deforestation in supply chains, or risk losing access to lucrative EU markets. The law will level the playing field for early adopters of supply chain transparency through satellite monitoring. It obliges chocolate companies trading in the EU to have a 100% deforestation free supply chain.
“Companies need to develop and expand satellite monitoring systems for the locations they buy from. However, the responses to the survey suggest that only a few companies use satellite or remote sensing tools for deforestation detection.“
– Chocolate Scorecard
Industry pioneers are already ahead in the race for EUDR compliance with zero-deforestation commitments made through the Cocoa & Forests Initiative (CFI).However, data from the Chocolate Scorecard suggests that very few companies have achieved 100% deforestation mapping across all sourcing areas. Satellite monitoring allows a proactive approach to supply chain deforestation with the ability to benchmark high/low risk areas for deforestation and plan accordingly. Polygonal mapping, which relies on one-off GPS inputs to create a static polygon boundary or a given concession, will only reveal deforestation after the fact, making pre emptive action impossible. A lack of regulation–readiness contributed to low rankings on the Chocolate Scorecard, while frontrunners were awarded extra credit.
Keeping it Consistent
Inconsistent cut-off dates hampered many companies’ performance on the Scorecard. Cut-off dates stipulate a time from which a company commits to sourcing its commodities without deforestation. A 2017 cut off date, for example, means a company will not have to check if the land they’re using was deforested before 2017. If the land was cleared after 2020, they can’t use commodities grown on that land in their products if they want to trade in the EU in line with the EU’s recent Deforestation Regulation.
Under the CFI, some companies made just such a commitment, but the cut-off year varied among the companies assessed. Satellite monitoring can allow companies to verify land as deforestation free as far back as the 1980’s, so there’s no reason companies can’t agree on a consistent cutoff date. This kind of collaborative, cross-regional approach would go a long way towards stopping deforestation associated with bulk cocoa.
Similarly, companies that had varying levels of consistency in their sustainability strategies from country to country scored less.
Satelligence is able to offer global deforestation and other environmental risk monitoring with consistent accuracy due to its groundbreaking, ISAE-3000 Type 1 Certified algorithm that allows carbon modelling approaches to be adapted to any ecological region.
Turning Data into Action
Monitoring supply chain deforestation might be enough for a passing grade, but to excel companies will need to engage with stakeholders through effective grievance processes. Flimsy grievance processes that don’t take advantage of the latest technology were a commonality among low scorers. In many cases, there were staff grievance processes and not environmental ones, or, grievance mechanisms were not publicly accessible. Strong grievance policies lead to strong action, which is why the Consumer Goods Forum and Satelligence joined forces to help companies create robust grievance policies.
With satellite monitoring, companies can get automated alerts on deforestation, and independent, scientific evidence to augment environmental grievance procedures. Satellite monitoring is also able to identify risks like fire, or encroachment, so companies can capture risks before they get out of hand. While it’s important that companies highlight their sustainability progress, satellite monitoring technology allows them to back claims with hard evidence, respond to grievances as they occur, not after the fact, and to prioritise the allocation of their resources. Just like with any test, the Chocolate Scorecard gives more points to companies that can show their work.
Collaborate to Succeed
Another key finding from the results of the Chocolate Scorecard is the beneficial effect that industry collaboration, joint commitments and deforestation policies have had. This approach has proven to be successful in other commodity sectors like palm oil. Supply chains are often interlinked, and, in many cases, companies ask for the same information from suppliers. Collaboration within the sector is win-win. It will drive greater levels of participation, improving the quality and quantity of available sustainability and concession data, and encourage further innovation. As data scientists and remote sensing engineers collaborate to advance the technology, sectoral partnerships like the CFI also advance available sustainability data, enhancing the impact of satellite-powered deforestation data. Geospatial monitoring providers like Satelligence can benefit from leveraging large customer networks, even deploying common event IDs between customers and suppliers to alert to deforestation and other risk events.
The Future of Sustainable Cocoa
Ending deforestation should be a driving force behind the cocoa sectors’ sustainability aspirations. The rapid development of new technologies in the sector are rapidly breaking down the barriers, and excuses, for industry laggards.
If the cocoa sector embraces the potential of existing technologies, it can reach beyond halting deforestation, but in ensuring that the growth of cocoa can contribute to a diverse, nature-positive environment that promotes biodiversity and supports smallholders. Significant penalties loom for companies that fail to comply with the EU Deforestation Regulation.
Thankfully, this year saw Scorecard performance improve for those unafraid to embrace new technology and new ways of doing business. The frontrunners are proving that a deforestation-free, profitable cocoa sector is possible. For those lagging behind, fear not, Satelligence has recently signed some major contracts, so we expect to see even more high scores next year.