Sectoral Indicators

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Globally, over 90% of forest loss is thought to be from conversion of land from forest into agricultural land, according to satellite imagery from the Food and Agriculture Organization of the UN (FAO).

Financial services and products are primarily linked to land conversion through the financing of commodity production. A specific focus should therefore be applied on transactions relating to high-risk products.

The predominant commodities driving land conversion around the world are cattle, soy, palm, timber, coffee, cocoa, rubber, minerals, oil, and gas. The level of risk associated with each commodity depends on the region of origin. For example, research indicates that in Southeast Asia, rubber, paper and pulp, and palm oil are the commodities that most drive land conversion; in South America, soy and cattle; and in Africa, cocoa, coffee and timber.

The following commodities are high risk for land conversion across the Southeast Asia and Pacific, Sub-Saharan Africa and South and Central America regions, and clients and transactions relating to these sectors should be scrutinised more closely for associated financial crimes linked to land conversion.

For the specific risk intersection of countries and commodities, and how these apply to particular financial crime along the value chain, see also the Risk Assessment panel of the toolkit.

Cattle

Cattle grazing is a primary driver of land conversion, particularly in Brazil (where it accounts for 72% of the country’s forest loss). Indeed, between 2001 and 2015, the conversion of forests to cattle pasture around the world was five times higher than for any other commodity. Brazil accounted for 48% of this, followed by Paraguay (9%) and Colombia (5%). Globally, around 40% of deforestation can be attributed to livestock grazing (and this figure does not consider the additional land converted to soy plantations driven by demand for soy-based livestock feed).

High-risk products:

Beef Fresh, frozen and processed, including in ready meals.
Untreated leather products Raw and tanned hides.
Finished leather products For use in cars, furniture or fashion items.
Palm Oil

Oil palm is a popular crop owing to its 25-30-year economic lifespan, relatively low labour requirements, and comparatively high income-generating abilities compared to subsistence food crops. Land is cleared to make way for plantations, which includes the planting of crops and erection of processing mills on site (bunches of palm fruit must be processed within 24 hours of harvesting to maintain the quality of the oil)—and is most prevalent in Southeast Asia. Some studies indicate that half of new palm oil plantations in Indonesia and Malaysia replace forests and that this deforestation is very much market-driven, since annual peaks in forest loss for this purpose correspond with peaks in palm oil prices (offset by a one-year lag).

High-risk products:
Palm oil Used in processed foods, baked and confectionary products and for biofuel.
Palm kernel oil Used in the oleochemical industry for making soap, detergent and cosmetics, and for industrial use.
Palm kernel meal Used in animal feed and in electricity production.
Soy

Almost all (circa 97%) land converted for soy production is in South America (predominantly across Brazil, Argentina, Bolivia, and Paraguay). Today, Around 77% of this is used as livestock feed, for poultry, pigs and aquaculture. Research also suggests that as soy production expands into former pastures, it pushes this pasture further into forested land, expanding the frontier. This means that some forest areas that have been replaced by cattle grazing pasture may not be attributable to increased direct demand for beef or dairy so much as displacement caused by production of soy crops (although, in a reciprocal relationship, soy expansion is also itself driven by demand for livestock feed).

High-risk products:

Soy meal for livestock feed Used in livestock feed, and therefore livestock products that may have been fed on soymeal, including poultry, eggs, dairy, beef, and pork.
Soy oil Used as a vegetable oil and an ingredient in processed foods, cosmetics, industrial products, and biodiesel.
Soy for direct consumption Used for soy sauce, tempeh, tofu, soy flour, soy milk, textured vegetable protein, and edamame.
Soy lecithin Used as an emulsifying agent in baked food products and coffee creamer, among others, as well as in cosmetics, textiles, paints, coatings, and waxes.
Cocoa

Although cocoa is produced in 62 countries across the world, the majority (65%) is from Africa followed by Indonesia (17%). Research suggests that cocoa cultivation is an underlying driver of over 37% of forest loss in protected areas in Côte d’Ivoire and up to 40% in Ghana. Cocoa-driven deforestation in West Africa is exacerbated because the associated agricultural activity damages the soil, so farmers may expand to new areas, freshly converting land in the hope of greater productivity and yields.

High-risk products:

Cocoa liquor or paste Used in chocolate.
Cocoa butter or cocoa powder Used in chocolate and baked goods or confectionary.
Cocoa pulp Used in soft drinks, alcohol, and pectin.
Cocoa pod husks and bean shells Less commonly used to create cocoa meal for animal feed.
Rubber

Natural rubber (rather than synthetically produced from petroleum byproducts) is derived from the rubber tree, which is now predominantly grown in Southeast Asia, which accounts for over 90% of global production (although native to Brazil and the Guianas, South American rubber trees often suffer from a fungal leaf blight). The remainder comes from South and Central America and Central Africa.

High-risk products:

Rubber balls, medical equipment, latex gloves, balloons, boots, tyres (which tend to be a blend of synthetic and natural rubber).
As a component in industrial and engineering applications.
Coffee

Forest loss and land conversion from coffee production occurs predominantly in Indonesia, Brazil, Madagascar, Peru, Colombia, and Vietnam. Coffee plants become less productive as they age, producing fewer berries (the seeds of which are the ‘beans’), which then incentivises farmers to convert more land for the purpose of planting new trees.

High-risk products:

Coffee
Timber

The timber sector covers trees harvested to produce, among other things, sawn-wood, plywood, particleboard, furniture, fuelwood, pulp, and paper. Existing forest can be cleared to make way for monoculture plantations, or trees can be felled and sold for timber and associated products (like wood pellets, derived from forests in West Africa and used to heat low-carbon boilers in homes across Europe). Globally, there has been a shift in the sector over the past couple of decades away from wood being felled from natural forests towards land clearing for the purpose of cultivating monoculture plantations. Although paper consumption in North America and Europe has decreased since the early 1990s, given the rise in digital communication, demand across Asian market continues to rise. 

High-risk products:

Construction materials

Used for flooring, solid wood, laminate or parquet blocks; window frames, doors and doorframes; skirting, decking, garden buildings; telegraph poles, fencing, boat building; railway sleepers, tool handles.

Softwood (e.g. pine), plywood or laminate, luxury hardwood Used for furniture.
Wood pellets 

Used as a component in industrial processes, e.g. for electricity generation.

Food processing

Used for smoked goods.

Paper

Used in magazines, books, stationery, office paper, boxes, packaging, tissues, labels, wet wipes.

Charcoal, sawdust, wood pellets, wood chips, firewood

Used for fuel.

Valuable tree species (e.g. Mahogany, rosewood)

Used for ornaments, handicrafts and high-end furniture.

Minerals

In some areas, like Suriname and Guyana, hard commodities like minerals have overtaken soft commodities like cattle and agriculture as the leading cause of deforestation (mining is currently considered to be the fourth largest driver of deforestation worldwide). This is something of an accelerating trend: more than 35% of all mining-related deforestation in tropical forests from the past two decades has occurred in the last five years. Minerals related to land conversion are primarily gold, coal, bauxite, iron ore, and copper. Minerals required for ‘green’ or ‘clean energy’ technologies like electric cars also contribute to land clearing. Despite the increase in demand for clean energy minerals, however, 71% of global direct mining-related deforestation can still be traced to just two mineral commodities: coal and gold.

Key Minerals:
Copper

Used as a key mineral renewable energy systems across the world to generate power from ‘clean’ sources of energy like solar, hydro, thermal, and wind energy and to help the world transition away from fossil fuels. However, copper mining also drives deforestation across Indonesia, Papua New Guinea and Subsaharan Africa, including the Democratic Republic of the Congo, the Republic of the Congo, South Africa, Namibia, and Zambia. With indications that copper production is insufficient to meet the requirements of the transition to low-carbon energy sources, burgeoning demand and prices are also incentivising illegal miners. Indeed, illegal copper mining has risen in the Amazon as illicit gold miners diversify their income streams and across Zambia’s Copperbelt, where organised crime groups’ involvement is common.  

Cobalt

Used as a key component in batteries, cobalt contributes to lead clearing in Sub-Saharan Africa. Although it is hard to calculate how much deforestation in the Congo Basin is directly attributed to cobalt mining, since the region’s resource-richness has led to forest loss for many overlapping extraction activities, it has been estimated that millions of trees have been cut down for this purpose. The Democratic Republic of Congo possesses half of the world’s cobalt reserves (four million tonnes, as of 2022), and currently accounts for around 70% of global production. The high incidence of associated forced and child labour in the country when it comes to mining this key mineral has led commentators to coin the term ‘blood cobalt’.

Rare Earth Elements

17 scarce metallic elements which power magnets used in wind turbines and electric vehicles require land clearing for mining across China, Thailand, Myanmar, Brazil, the US, Russia, Madagascar, India, Australia, Vietnam, and Burundi, and have been associated with human rights abuses in many of these jurisdictions. For example, a six-month-long investigation by Global Witness of satellite imagery and local community interviews revealed that the number of rare earth mines in Myanmar’s Kachin state had expanded from just a handful in 2016 to over 2,700 spanning almost 300 separate locations by March 2022, with the area of forested hills impacted equivalent to the size of Singapore. This dramatic expansion, which is also financing groups linked to the military junta, is reportedly being driven by China’s outsourcing of its own rare earth mining industry to Myanmar.

Nickel

Used in lithium-ion batteries in electric vehicles, Nickel has caused deforestation across Indonesia to make way for open pit mining of low-grade laterite (from which nickel is extracted). Although laterite nickel tends to be found close to the surface of the earth, it is generally spread across large areas, meaning mines usually require expansive land clearing. Sulawesi, an Island of Indonesia, has lost more than half a million hectares of forest since 2011, and 36% of its remaining forests are occupied by nickel mining concessions – an area which looks set to increase, given demand for nickel is slated to grow to over 40 times its 2020 levels.

High-risk products:
Gold Used in jewellery, processors and connectors in electronics like computers, tablets, televisions, printers, gaming consoles, modems and smartphones.
Coal

Predominantly used as a fossil fuel for energy production and industrial processes.

Bauxite Used in aluminium production and the manufacture of other industrial products such as abrasives, cement and chemicals.
Iron ore Predominantly used to produce steel found in ovens, washing machines, fridges, dishwashers, planes, trains, ships, trucks and cars, and as a component in animal feed and fertiliser production.
Copper Used in electric generators, electrical wiring in houses, appliances and cars, in roofing, plumbing and industrial machinery.
Cobalt Used in lithium batteries, as well as in airbags for cars, and magnets
Nickel Used to manufacture stainless steel, as well as nickel sulfate (a key ingredient in the making of batteries for electric vehicles).
Rare earth elements

Used in wind turbines, televisions, magnets, and X-rays.

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