Firms Underestimating Risks of Deforestation
London-based non-profit Carbon Disclosure Project released a report earlier this month—produced on behalf of 365 investors representing $22 trillion in funds—which analyzes data disclosures by 187 companies regarding their deforestation risk management strategies.
CDP’s analysis found that these global corporations, including consumer companies like Colgate Palmolive, L’Oréal, McDonald’s Corporation and Marks & Spencer, as well as major global commodities traders such as Archer Daniels Midland and Bunge, rely on the four main deforestation-linked agricultural commodities (cattle products, palm oil, soy and timber products) for nearly a quarter of their revenues, Mongabay reported.
Although a significant share of their income is dependent on agricultural commodities, just 42% of the companies surveyed by CDP evaluated their supply chains to determine how their growth strategies for the next five years will be impacted by the availability or quality of those raw materials.
In its third annual ranking of what it calls the “Forest 500”, the UK-based think tank Global Canopy Program determined that, given the current rate of progress, ambitious deforestation targets for 2020 and 2030 such as those committed to by the Consumer Goods Forum and signatories to the New York Declaration on Forests are not likely to be met.
“Companies need to address the sustainability of products that drive deforestation quite simply to protect their balance sheets,” Katie McCoy, the head of forests at CDP, said in a statement.
“Supply chains are like rows of dominoes: If unsustainable commodities enter the top of a supply chain, the effects will cascade throughout. Failing to address deforestation will have knock-on reputational impacts, manifesting themselves as consumer boycotts, community opposition and increased regulatory scrutiny. Business growth is at risk.”