Abstract
Supply chain policies that leverage the upstream market power of trading companies and importing countries offer great promise to address forest clearing1,2 in regions of rapid commodity expansion but weak forest governance3,4. Yet leakage—when deforestation is not eliminated but instead pushed to other regions—is a potentially major but unquantified factor that could dilute the global effectiveness of regionally successful supply chain policies5,6. We find substantial domestic leakage rates (43-50%) induced by zero deforestation policy implementation in Brazil’s soy sector, but insignificant cross-border leakage (<3%) due to the interdependence of soy production in the U.S. and Brazil. Currently implemented zero-deforestation policies in the Brazilian soy sector offset 0.9% of global and 4% of Brazilian deforestation from 2011-2016. However, completely eliminating deforestation from the supply chains of all firms exporting soy to the EU or China over the same period could have reduced global deforestation by 2% and Brazilian deforestation by 9%. If major tropical commodity importers adopt policies that require traders to eliminate deforestation from their supply chains, as currently proposed in the EU, it could help bend the curve on global forest loss.
Corporate Diversification
