Reflections on Chocoa

In episode #13 of the Carblecast, Sander Reuderink, CEO at Carble, shares three observations on the Chocoa exhibition in Amsterdam: from the EU Observatory base map to why cocoa companies are abandoning offsetting and embracing methodologies that focus on reducing emissions in their supply chains. Watch the episode or read the blog.

The first observation: the main problem of the EU Forest Observatory base map.

The problem with the EU Forest Observatory base map is that it overstates forests. Cocoa plantations, as well as other commodities, are often interpreted as forests. If an importer only relies on the Forest Observatory base map, it would show that all their farm polygons fall in lands that are classified as forest at the cutoff date, which is December 31st, 2020.

Are there better and more accurate maps out there? Yes. As the market is booming with plenty of companies offering services for EUDR compliance and remote sensing, there are enough options to use better maps than the EU Forest Observatory map. But the question is: will cocoa companies use these alternative and more accurate maps? 

There are two reasons why cocoa companies will not use the proprietary maps:

1. It’s impossible to check the quality of these maps. For example, it’s very easy, of course,  for somebody to develop a map that understates the amounts of forests in cocoa supply chains. These maps need to be peer-reviewed to give cocoa companies any value.
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2. It’s still unclear how the competent authorities (which is the term the EU describes the government bodies that will check imports) will do their analysis. If they compare a certain set of polygons with an entirely different base map, then there will be a significant difference in the outcomes.

What could be a possible solution?

One approach we are testing is to use a combination of these open-source and peer-reviewed maps. Let’s break it down into three steps:

1. we start with the EU Forest Observatory base map,
   
   
2. then we add a crop identification layer, which shows all the areas that were established cocoa or coffee plantations before the year 2020. We then remove these areas as being not forest.
   
   
3. and then finally, we also look at deforestation events after 2020, since we’ve seen that a lot of companies, when they collect their farm polygons, include some remaining forest that the farmers decided to protect within their farm boundaries. These also fall under EUDR compliance.

The second observation: Offsetting has left the building. 

Cocoa companies, and other commodity markets, are abandoning offsetting. And there are three reasons why they are doing this:

1. All major companies, especially in the cocoa and chocolate space, have committed to the Science Based Target initiative. The SBTi is very clear on offsetting. It requires companies to reduce 90 to 95% of their emissions, including their value chain emissions, before using carbon removals (= offsetting) as carbon credits to neutralize the last 5 to 10% of their hard-to-abate emissions.

2. The new GHG protocol, coming out later this year, states that selling carbon credits from your value chain is no longer an option. Because any reduction or removal associated with the sale of carbon credits from your supply chain needs to be reduced from your own GHG target accounting.
   
   
3. And finally, the European Green Claims Directive makes it illegal for companies to claim carbon neutrality or positive carbon climate impact based solely on carbon offsets. So companies need to reduce or remove emissions before compensating for them.

The third observation: cocoa companies are seeing the potential for emission reductions

To grasp why companies are embracing reductions, we need to understand the difference between the terms reduction and removal. 

Reduction is when we have reduced emissions within a supply chain. We prevent carbon from entering the atmosphere. A removal is when we sequester carbon from the atmosphere. So we plant trees that grow, and throughout 20 years period they absorb carbon dioxide from the atmosphere and turn into biomass: more trees.

The second thing we need to understand is the difference between land use change emissions and land management emissions. Land use change emissions are emissions from carbon that are being released due to a change in the use of land: a forest becomes a plantation. Any change in the tree cover of a plantation after the land use change event is considered land management, and this has to be reported separately.

To summarize, deforestation isn’t the same as tree cover loss. Deforestation has to do with a change in the primary use of the land, from forest to agricultural land. Tree cover loss happens afterward at the plantation. And this tree cover loss is a massive component of the footprint within coffee and cocoa supply chains. 

Once a cocoa farm is in our supply chains, it’s too late to prevent deforestation. But what we can do, is prevent the tree cover loss within these plantations. But why is this relevant? Previously the focus of companies was on planting new trees in their supply chains. And trees take 20 years to grow and absorb all the carbon back from the atmosphere. If trees are cut down and burned, all that carbon enters the atmosphere immediately. So clearly, preventing tree cover loss should have the highest priority within the cocoa industries.

The positive news is that larger cocoa and chocolate companies are seeing the relevance of reducing tree cover loss in their supply chains. A start to create a sustainable net-positive cocoa industry.

Do you have questions after watching the episode, or reading through the blog? Please fill out the form, and we will contact you as soon as possible.