In 2010, CDP started requesting companies to disclose their forests-related impacts and risks.
The reason? Deforestation accounts for 10-15% of global greenhouse gas emissions, and from a business perspective, deforestation carries significant risk for companies and investors.
CDP’s work with forests has gone from strength to strength, with a record number of 687 disclosures in 2020. In 2016, CDP began the Power of Procurement project, a five-year initiative supporting companies to eliminate deforestation within their commodity supply chains, focusing on the journey from forests in Latin America to Chinese and European markets.
The project results were presented at the CDP Europe Forests Summit 2021, which brought together corporates, investors, and policymakers, to get insights and share experiences on the tangible ways to halt deforestation.
Here are the five key takeaways from the event:
- Forests play a key role in climate mitigation. But they are disappearing at an alarming rate.
The science is clear – all pathways to keep us below 1.5 degrees Celsius require the active removal of carbon from the atmosphere. Forests absorb emissions from the air, acting as a ‘carbon sink’, and they could provide 24-30% of CO2 reductions needed to keep global warming below 2 degrees Celsius.
While forests could save as many emissions as the switch to renewable energy, deforestation is on the rise. An assessment by the New York Declaration on Forests (NYDF) shows that the annual rate of gross tree cover loss increased 43% between 2000 and 2018. In 2019 alone, there was a 30% increase in Amazonian deforestation.
- Corporate supply chains of forest-risk commodities are complex: collaboration must be strengthened.
The supply chains for the four main drivers of tropical deforestation - soy, palm oil, cattle and timber - are complex. For retail companies at the end of the value chain, the ability to influence upstream agricultural supply chains is different from that of a manufacturer. It requires collaboration at all levels, to drive transparency, and map the details of the supply chain to understand where commodities are being sourced.
Collaborative engagement is fundamental at an industry level. Initiatives, such as the Consumer Goods Forum Forest Positive Coalition (led by 18 companies with a market value of US$1.8 trillion), can bring together big retailers and manufacturers to develop collaborative roadmaps of actions. This collaboration can support the vertical integration and coordination of supply chains going from the ground to the retailer.
Equally, companies must work together with smallholder farmers and those depending on forests for their livelihoods. Environmental and social issues are inextricably linked – and sustainable change must involve the people at the forefront of the deforestation crisis.
Investor collaboration is similarly important. Several CDP Investor Signatories have launched a new Investor Policy Dialogue on Deforestation (IPDD), to engage with governments and industry-associations in countries with deforestation hotspots.
- Halting deforestation requires a variety of tools and approaches.
Certification plays a key role, but it is just one part of the puzzle. There is no single solution to tackling deforestation, it is not just the audits, certification or satellite imagery or any type of third-party partners on the ground. Companies need to combine them all and have a toolkit of solutions to tackle the different situations and commodities.
During the summit, we heard several examples, such as the “Beef on Track” tool, developed by Imaflora, which links producers, meatpackers, retailers and more and provides data, information, and training resources to support an ethical and deforestation-free beef supply chain in the Amazon. Lastly, companies can also move towards not just tackling deforestation, but have positive impacts on forests, which can be done through initiatives such as ecosystem restoration and agroforestry.
After completing an assessment of tools for assessing deforestation risks, investors similarly noted gaps and cited that a combination of tools is needed to work effectively.
- EU policy can support in creating a level-playing field.
Deforestation-free products in the EU must become the norm. While there are ambitious goals to reduce emissions and become carbon neutral by 2050, the EU has a global role to play. From 1990-2008, the EU imported and consumed 10% of the production of crops and livestock productions associated with deforestation.
The European Parliament have proposed a new law, which, if enshrined, will ensure any company who wants to put products on the European market must prove the entire supply chain does not include products or services that are linked to deforestation. Companies that strive to be sustainable should no longer be put on a competitive disadvantage.
The keynote speaker at the summit, Member of the European Parliament Delara Burkhardt outlined the key recommendations of this legislation. Among them included: a framework for mandatory due diligence, a law that protects other valuable ecosystems, to ensure that companies will be held liable under civil law, the inclusion of banks and financial institutions involved with harmful agribusiness, and partnerships with producing countries to create conditions for sustainability.
A number of investors and businesses are backing this law. Aiming to be deforestation-free by 2022, Nestlé say that mandatory due diligence will enable companies and governments to work together to identify risks, report and learn together, and bilateral agreements with producer countries will be critical.
- Disclosure is key: more data is needed
In the first step in the fight against deforestation is disclosure – you cannot manage what you do not measure. Disclosure supports companies to understand the risks and opportunities in their supply chains, allowing them to turn that information into action. Equally, this data can be used to reshape the financial industry and shift financial flows away from forest degradation.
While the challenge to halt deforestation in Europe is significant, progress in EU policy, disclosure, technology, and collaboration shows we are moving in the right direction. Together, we must stand for a forest-positive future.