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Commercial agriculture is driving significant deforestation, mainly associated with the expansion of oil palm, soybean and beef supplies for national and international markets. Unsustainable logging in natural forests contributes to forest degradation and logged-over forest is often replaced with agricultural cash crops or tree plantations.

Commercial pressures on land have accelerated due to a growing global demand for food, feed and fiber. Several public and private policy responses have emerged to deal with these challenges. Commodity-specific voluntary standards systems have been developed to promote more sustainable production, and major corporate groups are also adopting ‘zero deforestation’ commitments. Some governments in consumer countries, notably the United States and in the European Union, have introduced regulations to limit imports of timber and biofuels that do not comply with legal and sustainability standards, while financial service providers are integrating environmental, social and governance (ESG) criteria.

These public and private policy responses bring significant opportunities for moving toward sustainable supply, but also risk excluding smallholders that are not able to upgrade their production systems. Innovative approaches are required to improve business and finance models to support sustainable and inclusive options with potential for scaling up and out toward more sustainable supply with greater social inclusion.

In this way, FTA contributes to supporting sustainable and inclusive development while helping to achieve wider objectives of low-emissions development and climate change mitigation and adaptation.

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