Sustainable and Resilient Value Chains: Deforestation

Deforestation is among the most urgent environmental challenges in global value chains. It is driven by a combination of factors, including agricultural expansion, market demand for forest-risk commodities, and land-use dynamics. International trade also plays an important role in shaping incentives and sourcing patterns for forest-risk commodities, such as soy, palm oil, cocoa, timber, and beef. 

This analysis focuses on the roles of VSSs operating in forest-risk commodity sectors—such as the Forest Stewardship Council, the Roundtable on Sustainable Palm Oil, and Rainforest Alliance—and private sector actors in addressing deforestation across value chains. This evaluation utilizes a practical four-step sustainable and resilient value chains framework: Plan/Prepare, Respond, Recover, and Adapt. This approach assesses the effectiveness of standards and corporate practices, from establishing preventative rules to implementing lasting systemic change. 

Key findings indicate that prevention (Plan/Prepare) is the strongest area of progress, with organizations increasingly using advanced monitoring tools and clear rules to stop forest clearing. However, gaps persist in the response stage: monitoring often fails to reach indirect suppliers, especially those beyond tier 1 and 2 in supply chains. And while suspicion of deforestation triggers audits, specific interventions—such as providing necessary support to small farmers or setting clear compliance timelines—are often absent. 

Efforts to recover damaged areas, such as requirements tied to remediation, ecosystem rehabilitation, and grievance processes, have strengthened across VSSs and private sector actors, but implementation remains a challenge. Finally, adaptation actions, including landscape and jurisdictional initiatives and long-term producer support, are emerging but still need to be scaled beyond pilot-level interventions across geographies. 

The report underscores that meaningful progress requires not only strong requirements but also verification, transparency, and equitable support, particularly for smallholders and indirect suppliers. It also highlights the need to continue improving the design and implementation of VSSs and private sector approaches so they are more accessible, consistent, and aligned with emerging policy expectations, like the European Union Deforestation Regulation. 

Without sustained follow-through, early gains may not be durable, and the drivers of deforestation may persist. Ensuring that systems prevent, respond to, and learn from deforestation—while enabling farmers and local communities to thrive—is essential for resilient, deforestation-free value chains.