Hundreds of companies have pledged to purge deforestation from their supply chains, but research by Climate Focus, TFA 2020, and the Forest Trends Supply Change initiative have long indicated that few companies will meet their targets and most will fall woefully short. Now new research from Forest 500 reiterates those findings.
21 March 2019 | Major corporations that have committed to eradicating tropical deforestation from their operations by 2020 are not going to meet their self-imposed deadline, a report says.
The Global Canopy’s “Forest 500” report assesses the 350 most influential companies in forest-risk commodity supply chains and the 150 financial institutions that support them, focusing on four commodities: cattle, palm oil, soy, and timber (including pulp and paper).
With tackling deforestation seen as an important part of the fight against climate change, nearly half of the 500 assessed companies have made commitments to eliminate deforestation from agricultural supply chains by 2020 or earlier, in line with high-profile collective commitments such as the Consumer Goods Forum and the New York Declaration on Forests.
But as the deadline nears, none of the companies and financial institutions assessed in 2018 is on track to eliminate commodity-driven deforestation from their supply chains and portfolios by next year, the Global Canopy report says.
“The most powerful companies in forest-risk supply chains do not appear to be implementing the commitments they have set to meet global deforestation targets,” Global Canopy supply chain researcher Sarah Rogerson, the lead author of the report, told Mongabay.
The report, released March 20 for International Forest Day, concluded that the 2020 goal simply couldn’t be met.
“With just one year left to the 2020 deadline, it is clearer than ever that even companies with strong commitments will not be able to assert that their supply chains are deforestation-free by that deadline,” it says.
However, Rogerson says this doesn’t mean companies shouldn’t give up on cutting out deforestation from their operations, noting that “it is crucial that companies raise their ambition and address the stark gap between the promises they have made and activities on the ground.”
“As well as being home to much of our global biodiversity, forests are our best technology for mitigating climate change,” she said. “It looks unlikely that we will stay below the target of 2 degrees [Celsius, or 3.6 degrees Fahrenheit] global temperature rise — achieving that gets even harder without forests.”
The commodities that the Global Canopy report focuses on are collectively responsible for the majority of tropical forest destruction driven by agricultural expansion around the world today. Agricultural expansion itself is the main driver of global deforestation, accounting for 27 percent of all forest loss, or 50,000 square kilometers (19,300 square miles) per year, primarily in Latin America and Southeast Asia.
In Latin America, row cropping and cattle grazing are responsible for the bulk of deforestation, while in Malaysia and Indonesia the chief culprit is the cultivation of oil palms.
The Global Canopy report says the number of companies with commitments to protect forests has increased since 2014. In 2018, 57 percent of the assessed companies had a commitment to protect forests for at least one of the commodities they’re exposed to, up from 50 percent in 2014.
But that also means 43 percent of companies don’t have any commitments in place to address deforestation.
“Far too many of the most influential companies in these supply chains still have no commitments at all, or commitments that are too weak to deliver change on the ground,” the report says. “Over 40 percent of the most influential companies are not doing anything to tackle deforestation that they are linked to.”
And the commitments already in place haven’t necessarily translated into real action. Twenty-nine percent of the companies that have made such commitments don’t appear to be taking any action to implement them, the report says. “Even companies with ambitious commitments are not putting these into practice,” it adds.
To better understand the implementation gap, the Global Canopy updated its methodology to distinguish between those companies that have set ambitious commitments without plans for implementation, and those that have.
The new indicators assess key actions that companies should be making to implement their commitments, such as monitoring and verifying their suppliers against their own commodity commitments and engaging with non-compliant suppliers.
Because of these new indicators on implementation, nearly 70 percent of the 228 companies assessed in 2017 and 2018 scored lower in 2018 than in the previous year.
“This reflects an implementation gap — companies are not executing their commitments,” the report says.
Even top-scoring companies in the Forest 500 assessment — such as Unilever, Mars, Marks & Spencer and Ikea — lost points despite having made strong commitments, because they’ve failed to consistently report strong implementation across all of their supply chains.
The report found that 50 of the assessed companies reported some activities to implement zero-deforestation commitments for all the commodities they’re exposed to. “Other companies need to follow the example of these leading companies,” it says.
These leading companies, it says, are those that have time-bound and measurable commitments to protect forests in their supply chains. They report against these commitments, and report on activities they are doing to implement them.
But even for the companies categorized by the report as “leading,” challenges still remain.
For ones, many companies have businesses involving more than one of the commodities, making it more difficult for them to achieve a zero-deforestation supply chain for all commodities. Some companies might show significant leadership in some commodities but haven’t applied the same rigor to other commodities.
For instance, Unilever scores 81 percent for its palm oil commitment, but only 48 percent for its commitment on soy.
“The majority of companies are not tackling all of the deforestation they are exposed to,” the report says. “By either focusing commitments on some commodities or regions, they remain exposed to deforestation in other geographies or supply chains. Companies should have commitments that cover all of their supply chains.”
Scrutiny on Palm Oil Paying Off
In general, palm oil is the commodity that has prompted the strongest commitments from companies to end deforestation.
Forty-two percent of the Forest 500 companies involved in palm oil have a zero-deforestation commitment, while just 16 percent of companies sourcing beef and other cattle products from tropical forest countries had a deforestation commitment in place.
“Over the last five years, more companies have made commitments on palm oil than for any other commodity,” the report says. “These have also consistently been the strongest, scoring higher than other commodity commitments.”
Rogerson attributed this to the extra scrutiny placed on palm oil by environmental and consumer advocacy groups around the world.
“It’s difficult to get evidence of what motivated a company to develop a commitment,” she said. “But we think it’s likely because there is more attention on the palm oil sector — there is more consumer awareness of the issue and there have been more campaigns targeting companies for palm oil than other commodities such as soy or cattle.”
The presence of a well-known and credible certification scheme like the Roundtable on Sustainable Palm Oil (RSPO) might also have helped, as it gives companies a framework through which to meet their commitments, Rogerson said.
Eighty-seven percent of companies with a palm oil zero-deforestation commitment this year used RSPO certification in some form and to some extent to meet their commitments.
There’s still room for improvement, however, as most companies, including the leading ones, don’t report on protecting high carbon stock forests or peatlands, a major criticism for the palm oil industry, according to the report.
Rogerson said companies in the palm oil sector without any commitments to ending deforestation need to follow the leaders in setting and implementing strong commitments.
“This will help avoid a two tiered market where some companies continue to deforest to supply demand which does not ask for deforestation-free palm oil,” she said.
Role of Governments and Banks
The importance of ending tropical deforestation should also be impressed on the governments of the countries in which the Forest 500 companies operate, says Khalisah Khalid, a spokeswoman for the Indonesian Forum for the Environment (Walhi).
Most are headquartered in developed countries, including Nestlé (Switzerland), L’Oréal (France) and PepsiCo (U.S.), whose governments Khalisa said had a duty to ensure that domestic demand wasn’t fueling deforestation abroad.
“We’re questioning world leaders on their commitments to save forests,” she told Mongabay. “Developed countries are expanding into [developing] countries like ours. And companies often hide behind regulations made by world leaders, such as free trade agreements. That’s why world leaders are also actors of deforestation and they should put the brakes on deforestation done by their companies.”
She said deforestation didn’t just exacerbate climate change, by releasing carbon stored in vegetation and soils into the atmosphere, but it also robbed local communities and indigenous peoples of their lands. This is especially the case in countries like Indonesia, where agricultural expansion has sparked a litany of social conflicts.
“Saving forests also means saving the lands of indigenous peoples,” Khalisah said. “The guardians of the forests are indigenous communities, not companies.”
Global Canopy’s Rogerson said financial institutions had an important role to play in ending deforestation. The 2018 assessment ranks 150 financial institutions, selected and scored based on their role in financing the 350 companies involved in forest-risk supply chains.
Two-thirds of the financial institutions assessed in 2018 didn’t have any policies on deforestation, despite growing concerns that deforestation and related climate impacts poses a financial risk.
“Financial institutions need to look at the companies in their portfolios and recognize that some of these companies are driving deforestation and could pose a financial risk,” Rogerson said. “Banks and investors can minimize these risks by engaging and screening the companies in their portfolios.”
What’s at stake if these companies fail to eradicate deforestation from their operations isn’t just their reputation, Rogerson said, but also the future of the planet.
“Even without the 2020 deadline, the need to act on deforestation is urgent,” she said. “The planet, the climate and the companies themselves face significant risks to their business models if they continue to rely on commodities linked to deforestation in their supply chains. Companies need to recognize this and act with urgency even if they are going to miss the 2020 deadline.”
Please see our Reprint Guidelines for details on republishing our articles.