Urgent progress is needed to prevent deforestation, a key climate change driver presenting real business risks.
Yet in 2020, over 400 companies with major impacts on deforestation are set to fail on key pledges. Commercial agriculture continues to drive deforestation and the loss of tropical tree cover increases annually.
Companies need to be more transparent about how they are using timber, soy, cattle and palm oil, not only to manage the business risks, but to enable deforestation embedded in global supply chains to be publicly tracked.
Supporting companies to achieve zero deforestation
A growing number of companies are seeing the benefits of disclosure and voluntarily reporting their forests-related risks and impact through CDP. With the world’s largest dataset on corporate environmental performance, companies use CDP to benchmark performance against peers and build the internal business case to measure and manage environmental impacts across their value chains.
Over 200 of these companies, including HP Inc., TetraPak and Unilever, benefit from membership of CDP Reporter Services. With one-on-one support and a suite of data tools, including interactive analytics, members gain strategic insight on best practices to improve their environmental reporting and performance. Based on data provided to CDP by over 180 companies – including L’Oréal, Danone and UPM – the tool allows companies to assess actions currently underway to reduce forest losses.
Insights from peers leads to effective prioritization
When companies compare how their actions stack up against their peers, they are best placed to identify and prioritize next steps.
For instance, having a thorough and robust risk assessment procedure is a critical step to identify forests-related risks. Our tool shows companies that forest-related risk assessments are now commonplace and undertaken by 85% of their peers; this is a clear signal to internal stakeholders that their efforts are behind the curve.
The insights also reveal the financial impacts of deforestation. Asia Pulp and Paper are paying the for the costs of fires spread by activity outside their concessions, whilst apparel store Inditex reported huge costs resulting from shifts in demand for more sustainable materials.
Preparing for deforestation policy
Policymakers in regions importing and exporting commodities such as palm oil and timber are introducing increasingly stricter laws as consumers become more aware and demand that companies “get deforestation off our plates”. In some regions, new laws are coming into effect soon – while in other areas, introductions of restrictions are likely to be longer-term.
By evaluating risk assessments through CDP data, companies can gain better oversight of relevant short- and long-term risks for their sector, and build a resilient risk assessment process.
Figure 1. Time horizons for assessing forest-related risks: This graph shows the extent to which companies are including long term risks (likely to materialize in more than 6 years) in their risk assessment processes.
Meaningful action needs meaningful targets
Setting ambitious, verifiable and time-bound targets is critical in a company’s fight to halt deforestation, and to meet stakeholder demands.
CDP Reporter Services members are able to explore best practice targets set, and progress made, by market leaders, helping them develop their own strategies and action plans.
Danone, for example, has achieved its target of 98% certified segregated palm oil, providing traceability all the way to its plantations, while L’Oréal reports having achieved 82% Roundtable for Responsible Soy (RTRS) Chain of Custody certification for its soy-bean oil.
Figure 2. A snapshot of CDP’s forests targets data: In 2019 companies reported over 100 traceability targets across 4 commodities. Reporter Services members can export the full list, details, and compare systems used.
Tackling deforestation with disclosure and data
7 billion metric tons of CO2 can be removed from the atmosphere every year by tackling deforestation. That’s the equivalent of the emissions of 1.5 billion cars – more than all the cars in the world.
But globally, deforestation continues to increase, largely driven by the commercial production of cattle, soy, palm oil and timber products.
Companies play a critical role in reversing the trend, and we need to see significantly more ambition. Step up in the fight to halt deforestation, and start measuring and managing your risks.