May 17, 2017

Dear Colleagues,

CDP is pleased to be writing to you as a guest contributor to this newsletter. CDP runs the largest global system for voluntary corporate environmental disclosure. We have partnered with Supply Change over the past three years to foster increased transparency around the management of corporate deforestation.

Addressing the complex challenges of global deforestation requires new forms of multi-stakeholder discussions. Last month, CDP convened 60 corporate representatives and investors for a first-of-its-kind workshop focusing on best practice in water and deforestation management. The links between deforestation management and water stewardship run deep, and both topics offer significant opportunities for companies to make their businesses more sustainable and resilient.

Investors see water and forests disclosure as an emerging marker of best practice. Building on their long history integrating environmental, social and governance (ESG) aspects into their practice, Neuberger Berman hosted CDP’s Water & Forests Workshop and joined other investors in calling for increased water and forests disclosure. Transparency is the “lifeblood” of many aspects of investing, one investor said, highlighting the need for more complete information-sharing.

Practitioners at CDP’s workshop discussed the unique challenges posed by water and forests management and shared their experiences driving progress. Supply chain alignment was identified as critical for meeting zero-deforestation commitments and ensuring an adequate supply of deforestation-free commodities.

CDP and Supply Change participated in a joint session focused on the business case for deforestation management. The evidence is clear. CDP Forests disclosures demonstrate that a substantial share of corporate income depends on commodities linked to deforestation risk – nearly a quarter of the revenues of 187 companies that were analyzed by CDP in 2016.

Meanwhile, many companies are overlooking how deforestation-related risks will impact growth. CDP finds that confidence in the security of future supply is undermined by the fact that only one in five companies assess risks associated with deforestation beyond a six-year horizon. This is troubling, and given the increased scrutiny over impacts on forests, companies can no longer afford to continue with business-as-usual.

Encouragingly, more companies are making progress towards deforestation-free supply chains. Supply Change recently reported that transparency around public deforestation commitments is beginning to gain steam. Progress information is publicly available for over half of commitments tracked by Supply Change over a two-year time frame – a dramatic increase from a year ago, when only one in three commitments were backed by transparent progress.

Companies that disclose publicly through CDP on deforestation policies and commitments, management activities, and progress against targets, see their Supply Change profiles updated regularly, allowing for direct dissemination of their progress to a wide variety of stakeholders.

Increasing disclosure on deforestation management benefits investors, customers, and reporting companies. Transparency helps to make visible the risks that are hiding in plain sight, as well as highlight continuous improvement. We’ve all heard the mantra, “what gets measured gets managed.” Conversely, by failing to communicate its approaches of management, a company may overlook opportunities for ending deforestation.

Jillian Gladstone, Senior Manager of CDP’s Forests Program


CDP, formerly the Carbon Disclosure Project, runs the largest global system for environmental disclosure. We partner with over 800 institutional investors to motivate the world’s largest companies to reduce deforestation and carbon emissions, and protect water resources. The data we collect enables investors to make better informed decisions in line with a sustainable economy. CDP knows firsthand the importance of disclosure and action around deforestation.

Email us for more information about this partnership, or about how to disclose to CDP this year.

More stories about changing supply chains are summarized below, so keep reading!

- The Supply Change team



Upcoming Events

12th Round Table on Responsible Soy Annual Conference (RT12): Zero deforestation- Transparency and Scale
Lille, France, 31 May - 1 June 2017

RT12 aims to encourage participants to share ideas and solutions for achieving continuous improvement in the soy sector. In particular, discussions will focus on mapping deforestation risks in supply chains, tools for improving transparency, pathways for scaling up sustainable production, and collaboration among different soy certification schemes.

Learn more about the RT12 here.



Recent News

Who’s NEXT!?!

Last month, Daabon Group, a Colombian palm oil producer, became the first company in the world to achieve the Roundtable on Sustainable Palm Oil (RSPO) NEXT Certification. As the dominant sustainability group and standard setter for the industry, the RSPO released this voluntary add-on module for leading companies to push beyond the RSPO’s existing Principles and Criteria. The RSPO NEXT certification addresses a heap of issues which many in the environmental community feel are underserved by the current Principles and Criteria, and includes an assessment of: no deforestation practices, no development on peat, no fires, and no human rights violations.
Read more from the Roundtable on Sustainable Palm Oil


Strength through Unity

Earlier this month, palm oil companies and environmental groups backing two competing standards agreed on a common approach for putting no-deforestation policies into practice. This comes after two years of discussions between supporters of the High Carbon Stock Approach and the High Carbon Stock Science Study for how companies should classify and prioritize protection of High Carbon Stock (HCS) areas– land whose vegetation holds vast amounts of sequestered carbon. Consequently, the consolidation of the HCS concept represents an important milestone for supporting consistent and comparative reporting on pledges to preserve HCS areas. Companies committed to protect HCS areas have no excuse for non-compliance now that there is clear implementation guidance, argues Deborah Lapidus, the director of the environmental watchdog Mighty Earth.


Rewarding good behavior?

Greenpeace recently suspended its environmental campaign against one of the world’s largest palm oil traders and plantation owners, IOI group. In the past twelve months, the Malaysian conglomerate has made “meaningful steps” toward addressing documented instances of deforestation and exploitation in its supply chains, explains Kiki Taufik, Greenpeace’s Indonesian Forest Campaign lead.  After being expelled from the RSPO for these transgressions back in 2015, many large buyers dropped IOI as a supplier, but since then the company has established detailed implementation plans, which convinced RSPO leaders to reinstate the company’s membership. Other large palm oil traders need to establish plans for verifying supplier performance with labor standards and peatland protection as IOI has done, argues Taufik.
Read more at the Guardian


Out$ourcing forest monitoring

Under the new administration, Brazil’s Environmental Ministry is preparing to outsource satellite monitoring of deforestation in the Amazon.  Environmental researchers fear that this decision, when paired with drastic budget cuts for legal enforcement of the forest code, will decrease the effectiveness of the agency and complicate the determination of national deforestation rates. Existing monitoring programs led by Brazil’s National Institute of Space Research are already used as a transparent way of verifying Ministry performance in safeguarding forests. (Supply Change also finds that a number of companies rely on this system for selecting suppliers in compliance with their commitments). Researchers worry about conflicts of interest which may arise from the agency paying ($25 million) to companies responsible for collecting remote sensing data used for evaluating ministry performance.
Read more at Science



Monthly Insights from the Supply Change Desk

Each month, the Supply Change team reviews hundreds of corporate commitments to reduce deforestation in commodity supply chains. Monthly Insights shines a spotlight on companies that deserve recognition for their diligence or innovation at crafting, implementing, or reporting upon their commitments.


Abierto o Cerrado?

Out of nearly 450 companies profiled by Supply Change to have commodity commitments, The China National Cereals, Oils and Foodstuffs Corporation (COFCO Agri) remains the only company headquartered in China, and is also one of the first out of 77 companies with soy commitments to aim to avoid procuring soy linked to the destruction of the Brazilian Cerrado. Many company commitments explicitly aim to protect the Brazilian portion of the more famous Amazon biome, and researchers have documented declines in soy-based deforestation in Brazil’s Amazon biome, which is in part attributed to the Soy Moratorium. Unfortunately, much of the deforestation pressure has relocated to the Cerrado, which is more vulnerable with fewer restrictions and less oversight.
Read more from COFCO Agri


PREP-ped and ready

Manufacturers seeking to reduce deforestation risk from their commodity supply chains may find it difficult to identify and implement best practices without industry collaboration. The publishing mogul, Pearson, joined forces with several competitors to found the Publishers Database for Responsible Environmental Paper Sourcing (PREPS) Initiative, which offers members an opportunity for pre-competitive collaboration for securing responsible paper sourcing. Pearson relies on the PREPS database to preselect suppliers for their compliance with its wood-based fiber commitment. All suppliers in the database have been graded for their environmental performance using several metrics including forest and tree cover change (drawing from several remote sensing data sources). Also, in pursuit of its climate neutrality goal, Pearson also buys forest-based carbon credits to offset unavoidable greenhouse gas emissions.
Read more at Pearson

Forest Trends CDP WWF GEF UNEP