Summary
Demand for agricultural commodities is a major driver of tropical deforestation, contributing to climate change and biodiversity loss and eroding forest-based livelihoods. In response, hundreds of multinational firms have adopted policies to end deforestation in their supply chains. Impact evaluations to assess the additionality of these forest-focused supply chain policies (FSPs) have proliferated. However, the influence of underlying contextual factors, such as supply chain structures, on FSPs’ effectiveness and equity remains poorly understood. Here, we present the first pan-tropical comparative analysis of the four leading forest-risk commodities – Brazilian cattle and soy, Indonesian palm oil, and West African cocoa – to examine how supply chain structures influence FSPs’ adoption, implementation, and outcomes. Drawing on 268 semi-structured interviews and focus groups with supply chain actors, our analysis enables us to improve middle-range theory about the influence of supply chain structures on policy outcomes. Specifically, we identify that by increasing the complexity of commodity transactions, FSPs necessitate that firms establish close supply chain linkages with suppliers. If suppliers have high capabilities to comply, these linkages are straightforward to establish. However, if suppliers have low compliance capabilities – as is common among smallholder farmers – and FSP firms have low market share, close linkages are difficult to develop. In these cases, firms often vertically integrate their supply chains. This improves control over deforestation-free production but disempowers farmers, undermining equity. Collectively, these empirical and theoretical contributions show that to overcome effectiveness-equity tensions and achieve transformative change, firms must invest in building smallholders’ compliance capabilities across their supply bases.