IDH 2025 Annual Report: Better Environment

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Introduction Impact in Numbers What is driving progress

Introduction

Many of current agricultural practices drive environmental degradation and contribute to climate change. Environmental degradation in turn drives agricultural failure.

In 2025, that cycle stopped being a background condition and became an operational reality. Supply disruptions in cocoa and coffee made climate resilience a boardroom priority (see also the chapter on Better income). The EU Deforestation Regulation (EUDR), will make deforestation-free sourcing a legal requirement, albeit with a delay in the implementation deadline. Flooding in Aceh damaged 42,000 hectares of palm oil plantations while program delivery was underway. These were not risks on the horizon. They were events occurring within businesses’ operating year.

We see this strongly affecting companies’ approach to sustainability. For some of them, the most important question driving sustainability decisions in 2025 was whether they would have continuity of raw material supply over the years to come. The business case for resilient farming systems and deforestation-free supply chains has become a supply security argument, and we see that the case is getting stronger.

Environmental transitions depend on the people managing land, labour and natural resources, with women and young people central to this work yet frequently constrained by unequal access to finance, technology and decision-making. Addressing those constraints is what allows environmental solutions to be adopted and sustained.

Over 2021–2025, IDH has worked on building the evidence, platforms and tools that make environmental action commercially viable for the companies and farmers who need to take it. We believe, and early signals from our portfolio support this, that protecting agricultural production and protecting natural systems can become the same investment, if they are made the right way and at the right points of the system.

What is needed for a better environment

IDH's environmental work is organised around four objectives. They address different aspects of the same challenge, and progress in one consistently depends on progress in the others.

Climate adaptation

Climate mitigation

High-yielding regenerative agriculture

Ecosystem conservation and restoration

Globally, deforestation and watershed degradation are the main forces undermining the natural systems on which agricultural production depends. Halting and reversing that loss is therefore of the utmost importance. We have seen that this requires governance systems that give companies, governments and communities a shared reason to protect them.

A food system is only climate resilient and nature positive if it safeguards all of these objectives simultaneously, sustaining the communities and value chains dependent on it. Our programs therefore aim for pragmatic synergies between these areas, while leaving room to set different priorities in different contexts. Some of our landscapes focus largely on reducing deforestation in the world's remaining tropical forest basins; others work to restore agricultural regions already severely degraded. Both work extensively on climate adaptation at the same time.

In regenerative agriculture, some value chains design practices for rapid decarbonisation, others for resilience. Throughout, we hold to the need to maintain high yields, which reduces the macro pressure of agricultural expansion into natural ecosystems. These interventions are built to work for the communities that implement them, recognising that farmers need viable economic foundations, and that women's access to land, finance and decision-making shapes whether change takes hold.

What’s happening through our partnerships

*Cumulative results for 2025 against the 2021-2025 funding cycle

Better Environment in numbers

The 2021–2025 cycle closed with the following cumulative results across the Better Environment portfolio. They are presented here in three groups: from farming practices on the ground, through the governance platforms that coordinate action at landscape level, to the conservation and restoration outcomes those efforts produced.

Farm practices

Landscape governance

IDH's environmental work operates at two scales: field-level programs that change what happens on individual farms, and landscape programs that coordinate what happens across an entire sourcing region. Over the cycle, 5.4 million hectares of cropland and 11.7 million hectares of forest and watersheds came under Production, Protection and Inclusion (PPI) approach governance, reaching 93% and 96% of their respective targets. These are not hectares under IDH management; they are hectares within governance platforms where producers, companies, governments and civil societies have agreed to shared land use objectives and shared investment.

Ecosystem conservation and restoration

What is driving progress

Agriculture shapes the environment it depends on. Farming practices contribute to soil depletion, water stress and emissions, while climate change directly disrupts the conditions that make agricultural production viable, including rainfall patterns, temperature ranges and the frequency of extreme weather. Addressing this requires action at three distinct levels: at the farm, where practices can be changed and where the economics of transition determine whether change happens at all; across sectors and landscapes, where shared infrastructure makes collective action viable and measurable; and in the governance and capital systems that determine whether change in a specific place is durable and reaches those who need it most.

The farm and company-level argument

Making the business case at farm and company level

As IDH, the starting point for environmental transition in agricultural supply chains is commercial viability. Farming households operating on thin margins cannot absorb the cost of addressing environmental problems whose causes and consequences extend well beyond their fields. Companies that have tried to transfer that cost through supplier requirements alone have found it does not produce lasting change. The question IDH's programs have been focused on is different: how can the transition to more sustainable farming practices be structured so that it reduces costs, stabilises income and strengthens resilience, which in turn makes the economics work for farmers and for the companies that source from them.

This is primarily a farm and company-level argument. It concerns the practices farmers control directly - soil health, input intensity, water use, on-farm emissions - and the business models that determine whether improving those practices is financially viable. Where IDH has been able to demonstrate that viability clearly, the case travels beyond the program.

Our work in cotton

In 2025, as part of our cotton work, we have seen this in two separate programs. An independent midline evaluation of our Regenerative Production Landscape Collaborative (RPLC) in Madhya Pradesh (India), which works with over 120,000 cotton and soy farmers, confirmed viability across three measures. Farmers using intercropping, reduced chemical inputs and agroforestry integration saw input costs fall while yields held. Modelled greenhouse gas intensity dropped from 3.6 to 0.45 tCO₂eq per hectare. Average household income in the treatment group was 32.5% above the comparison group.

Women's self-help groups proved the most effective delivery mechanism for practice adoption, with uptake of 75.9% compared to 67.3% among men, and evaluators identify women's agency as a driver of ecological outcomes, not a consequence of them. In Chandrapur (India), an independent endline evaluation of the Better Cotton program found that 44% of farmers outside the program adopted at least one regenerative practice independently, through peer learning and a shift in what local input suppliers stocked.

These results demonstrate that the farm-level transition is a viable business case when it is designed around farmer economics from the start. But on-farm practice change, even adopted at scale across a program, does not resolve the environmental problems that sit beyond the individual farm: the deforestation happening across a sourcing landscape, the watershed degradation affecting multiple communities, the emissions accumulating across an entire value chain. Those problems operate at a different level and require a different response.

Our work in sector initiatives

From company commitments to sector-level action

Deforestation and land use change are collective problems. A single company's sourcing commitments, however ambitious, cover only a fraction of a sourcing region. First movers bear the highest costs. And without shared standards and shared accountability, competitors who do less undercut those who do more. The result is that voluntary individual action reaches a ceiling well before it changes how a sector operates. IDH's contribution over 2021–2025 has been to build the structures for pre-competitive action that allows companies to act together on climate mitigation and adaptation: shared methodologies, governance bodies, and platforms that hold pre-competitive commitments in place and allow them to function independently of any single program or funder.

One of the most long-standing IDH programs that works on pre-competitive action has been the Sector Initiatives, which brought together several sector platforms across flowers and plants, fruit and vegetables, juice, nuts, spices, vanilla and aquaculture. These initiatives have been launched, hosted and supported by IDH since 2010 with the aim of bringing together competing companies to define shared sustainability ambitions. In sourcing, as well as in sustainability standards around environmental, social and related supply risks - challenges that no single company can improve alone, but only through alignment and coordination the sector could achieve.

In 2025, several sector initiatives reached independence from IDH: they became even more member-governed and completely member-funded. The private sectors and other partner members of the initiatives are now in the driving seat for setting their own agendas, with IDH still playing the role of advisors to the Steering Committees/Board of some of them and of a knowledge partner on thematic issues. Despite the associated challenges, this transition has been a success, demonstrating that these sectors see enough value in the shared structure to sustain it without IDH financial and organisational support.

Over 2021 – 2025, several sector initiatives made public commitments to climate action, signing up to net-zero targets and regulatory frameworks that required them to demonstrate environmental performance. The gap was immediate: no common agreed framework existed, and no practical tool was available that companies could apply consistently across their supply chains. IDH began addressing this gap within one sector initiative (fresh fruit and vegetables), developing a methodology in close collaboration with external experts in carbon accounting.

While initially conceived as a measurement solution, the work quickly demonstrated broader value by creating a shared, pre-competitive understanding of environmental hotspots and priorities at sector level, often translated in an environmental roadmap. What started as a response to one sector challenge, proved relevant for others which faced the same needs, and the tools were adapted for aquaculture, juice, and spices.

By 2025, this work has gained further traction and maturity. IDH supported the development of a benchmark protocol to compare and assess the correct reporting and use of Product Environmental Footprint Category Rules for the EU. It was applied to FSI (FloriPEFCR) which is now used and paid for by more than 35 companies, supporting collective accountability and action without IDH’s direct involvement. In aquaculture, the Environmental Footprint tool did more than generate data: it created a shared, pre‑competitive understanding of supply‑chain hotspots, enabling companies to align priorities and act collectively on emissions reduction. And in the vanilla initiative – where the sector faces major deforestation issues - the members benefitted substantially by adapting the IDH landscape deforestation monitoring tool to identify key risk areas.

Our work in landscape programs

IDH’s landscape programs address a different level of the problem. Where sector initiatives work across an entire industry regardless of geography, landscape programs work within a specific place - a sourcing region, a watershed, a forest frontier - bringing together the companies, governments and communities whose decisions shape what happens there. The environmental problems they address are inherently local: deforestation in a palm oil producing province, watershed degradation in a coffee landscape, land use change in a cattle-ranching state. No sector-level standard resolves them. They require the actors present in that specific geography to align around shared governance and shared investment to build the resilience of farming systems and ecosystems in the specific places where climate shocks are already arriving.

In 2025, the evidence from the landscape of Vietnam's Central Highlands gives the clearest measure of what that collective action is worth. An independent analysis found that achieving regenerative outcomes at landscape level cost up to 15 times less than when companies pursued the same objectives individually. The cost reduction is not incidental; it is what makes landscape-scale environmental action financially viable for companies that would otherwise face prohibitive first-mover costs.

SourceUp is how that landscape model scales. It connects landscape initiatives with corporate sourcing strategies across sectors and geographies, giving companies a route to invest in and report on jurisdictional action well beyond their own supply chains. In 2025, SourceUp reached 75 active landscapes after tripling its audience within the year. The Consumer Goods Forum's Forest Positive Coalition renewed its partnership with SourceUp as its core reporting platform. SourceUp also absorbed the Jurisdictional Action Network, previously hosted by the World Economic Forum's Tropical Forest Alliance, extending its reach into corporate and landscape practitioner communities across commodities and geographies IDH does not directly work in.

Looking ahead, IDH's next funding cycle does not include a dedicated landscapes program, not because the work is complete, but because landscape approaches are now embedded across IDH's value chain programs. The model has become part of how IDH works, rather than a separate workstream within it.

Enabling conditions: governance, regulations and investment

Sector infrastructure and landscape platforms create the conditions for collective action. What they cannot reach, on their own, are the structural conditions that determine whether change in a specific place is durable: the land tenure systems that govern who has rights over forest land, the governance capacity of local and national institutions, and the capital conditions that determine whether investment reaches the farming systems and landscapes where it is needed. These are the preconditions for program outcomes to last.

IDH’s landscapes approach, Production, Protection and Inclusion (PPI), is built around this. It works through sustained engagement with national and local governments, building governance architecture with public institutions rather than around them. In 2025, several results of that work came into focus.

In Vietnam, we worked with the Ministry of Agriculture and Rural Development to develop, endorse and hand over a national EUDR database covering approximately 150,000 hectares of coffee plantations across the Central Highlands. This was built on existing government relationships and is now managed as the official platform for compliance monitoring. In Pará state, Brazil, a cooperation agreement with the state Environmental Secretary and the establishment of producer support centres made IDH a direct partner of state government in the beef sector, supporting environmental regularisation at source. In Kenya's South West Mau Forest, the multi-stakeholder coalition was institutionalised as the Stawisha Mau Charitable Trust. It now has an independent legal structure with the capacity to manage funding and continue convening after IDH stepped back from the lead role.

Where that governance infrastructure was already in place, regulatory pressure translated into action. In Malaysia, IDH and Solidaridad convened federal and state authorities to agree to the country's first unified deforestation monitoring methodology for palm oil, a prerequisite for credible EUDR compliance across smallholder supply chains. In Cameroon, Barry Callebaut linked its landscape investment directly to EUDR due diligence requirements. Regulation created the business case for investments that years of voluntary commitment had not delivered. Where governance infrastructure was not yet established, the delays and revisions to CSRD and CSDDD reduced some of the pressure that had been driving company engagement.

Building governance infrastructure and aligning regulatory frameworks creates the conditions for change, but does not fund it. In every landscape where IDH worked to shift governance and regulatory conditions, the same question followed: where does the capital come from to make the transition viable at scale for the farmers and businesses that need to make it? The core challenge in mobilising investment for sustainable land use is a shortage of landscapes and businesses that are ready to receive capital, not a shortage of capital itself.

The Agri3 and &Green funds, both for which IDH is managing the Technical Assistance Facility (TAF), integrate jurisdictional risk perspectives into their investment strategies.

What we have seen over the years it that governance progress in a landscape directly shaped where their capital was deployed. IDH's Revive Hub, which became fully operational in 2025, engaged 84 organisations, produced 24 investment roadmaps and built a finance network of over 20 institutions. It created the investment readiness pipeline that blended finance vehicles need but rarely find ready-made in these markets.

Across the Better Environment portfolio, governance, regulation and investment do not work in sequence, but together. Each creates the conditions the others depend on. IDH's role has been to identify where leverage exists in each sector and landscape: which level of the system needs to move, and what it takes to move it. That means working across farm, sector and landscape simultaneously, with different actors, on different timescales, and through different mechanisms. What the 2021–2025 cycle confirmed is that this systemic approach is starting to produce the coherence it was designed for with visible progress and business cases that drive private sector action at company and sector level. Enabling the enabling conditions helped markets to begin shifting as a result.

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IDH 2025 Annual report: Better Environment