The world lost 12 million hectares of tropical tree cover in 2018, equivalent to 30 football pitches every minute. Globally, loss of tropical forests has continued to increase, with the commercial production of cattle, soy, palm oil, and timber products being the largest drivers.
These commodities are used as key ingredients in an enormous range of sectors and everyday products, from burgers to lipstick to construction materials and car seats.
Along with the negative consequences for climate change, biodiversity and local communities, deforestation is significant underestimated risk for business. Stakeholders are increasingly taking notice – with public attention on environmental issues sharpening. The School Strikes for Climate movement has seen millions of youth in 128 countries going on strike and marching to draw attention to climate breakdown.
Ending deforestation is critical to addressing the climate crisis. Even with all other anthropogenic emissions phased out, 'business as usual' deforestation alone could still drive global heating above 2C by 2100. Conversely, halting deforestation and allowing restoration and recovery of degraded forests can contribute up to 30% of global mitigation potential.
Never has it been so crucial for a business to differentiate itself by demonstrating it is part of the solution rather than the problem.
The fires of the Amazon
In recent weeks the world’s gaze has been fixed on the flames raging in the Brazilian Amazon where the number of cumulative fire hotspots is the highest since 2010, darkening the skies over a thousand miles away in Sao Paulo.
Scientific evidence suggests that these fires link directly to new areas of deforestation. They are the result of forest degradation and unsustainable land management clearing the land. Fires do not occur naturally on this scale in healthy rainforest ecosystems during years of normal rainfall.
In response to the business risks of leather in their supply chain, global fashion retailers H&M and VF Corp have suspended contracts with sources from Brazil until sustainable assurances are met. Meanwhile KLP, Norway’s largest pension fund announced it will be divesting from transnational commodities traders operating in Brazil that fail to ensure sustainable supply chain standards are met.
What does this have to do with your business?
There are a few myths that need to be dispelled. Number one is that “deforestation is only driven by food and packaging value chains”. In fact, deforestation risk can be found in many value chains covering a large number of sectors. For instance, rubber, timber and leather for cars or palm oil and soy for chemicals.
If deforestation commodities are in your supply chain, you need to start asking questions about where it comes from and its sustainability credentials.
1. Start asking the right questions
Companies are slowly starting to wake up to the deforestation risk lurking in their supply chains. New 2019 CDP data shows this year 334 suppliers responded to their customers’ requests to disclose forests data through CDP. That’s a 64% response rate, up from 58% last year.
One critical piece of information collected in our questionnaire is whether suppliers are sourcing from the Amazon. New 2019 CDP data shows 35% of suppliers responding to CDP’s forests questionnaire are sourcing from one or more of the 9 countries touching the Amazon rainforest. Of these, just 18% have a commitment to ‘no land clearance by burning or clearcutting’.
Talk to your buyers and suppliers to find out what you know about your supply chain impacts. CDP works with corporate purchasers to help them take action in their supply chains. 14 corporations including McDonalds, Walmart, and L’Oréal engage their suppliers, increase their awareness, build capacity and identify opportunities for collaborate.
2. Acknowledge the impact and commit to take action to change it
60 multinational companies have endorsed the New York Declaration on Forests (NYDF) to set a goal of “eliminating deforestation from the production of agricultural commodities” by 2020. Hundreds more, have made high-profile commitments to eliminate deforestation from their supply chains by 2020.
But as we approach 2020, the Amazon fires and increased global deforestation are alarming signs of how far we are from achieving these commitments.
All companies sourcing forest risk commodities need to take urgent action to work with their direct and indirect suppliers to ensure they are not driving deforestation and are working collaboratively to promote sustainable production when operating in high risk areas.
3. Collaborate with suppliers to cascade action and change business as usual
From what we’ve seen engaging with suppliers on deforestation there is an encouraging appetite to collaborate with customers.
In 2018 over 100 suppliers proposed 157 mutually beneficial forests-related collaborative projects to their customers through CDP’s questionnaire.
Certification was the most popular project category, with over 20% of proposed projects focused on increasing the coverage of certified products with some targeting specific products to increase demand in niche markets. These proposals also include investment in long-term projects to provide more assurance to customers with on-site technologies for tracking and monitoring.
As the impacts of deforestation become an increasing concern to consumers and investors worldwide, the true level of companies’ commitment will be tested. Those that can’t demonstrate meaningful action will be exposed to reputational and financial risks.
Learn more from supply chain engagement champions
We are delighted that some of the biggest global brands are engaging their supply chains through CDP to turn commitments into action.
This includes leading household and personal care companies L’Oréal and Kao, the world’s best-known fast food chain McDonald’s, and (closer to the rainforests) Brazil’s biggest paper producer Klabin. And these companies are using the data they collect from suppliers through CDP to drive transparency and action.
For example, Manabu Shibata, Manager of ESG Promotion at Kao Corporation says: “We picked out questions from the CDP forests questionnaire to improve our action on traceability and assess each suppliers’ answers to these questions. Based on that assessment we provide feedback to each supplier to encourage them to improve their management of these commodities.”
Join our webinar ‘Tracking progress on corporate commitments to reduce deforestation by engaging your supply chain’ on 16 October to learn how companies are mitigating risk and capturing opportunities with zero-deforestation commitments. You will hear from Morgan Gillespy, Global Director of Forests at CDP and Rachael Sherman, Director Global Sustainability at McDonald's Corporation.