Most major companies failing to report on deforestation risks

ShutterstockYL chayakorn

A large majority of leading companies are failing to report on the risk of deforestation in their supply chains, despite many of their business activities potentially posing a major threat to the survival of the world's forests.

That is the stark conclusion of a new report released by CDP, which reveals that 70 percent of the 1,500 listed companies approached by the investor-backed NGO for information on their forest-related impacts failed to provide data on their performance.

Although some companies, such as beauty giant L'Oreal and German consumer goods manufacturer Beiersdorf AG, do boast ambitious sourcing policies, particularly on palm oil, CDP warned the vast majority of firms which pose a threat to forests are failing to meet even basic transparency requirements.

Many firms asked to report by CDP source commodities that drive deforestation, such as palm oil for food products, leather for clothing and accessories, paper for pizza boxes and timber for furniture. Yet just 306 companies of the 1,500 contacted reported back to CDP in 2018, a 30 percent disclosure rate which lags well behind disclosure rates on other environmental issues such as water security and climate change that are also monitored by CDP.

"The silence is deafening when it comes to the corporate response to deforestation," said Morgan Gillespy, global director of forests at CDP. "For too long corporations have ignored the impacts of their supply chains on the world's forests and have not taken seriously the risks this poses — both to their business and the world."

According to WWF, the Earth loses 18.7 million acres of forests per year — equal to 27 soccer fields every minute. As well as providing habitats for countless endangered plants and animals, forests play a crucial role in the fight against climate change by acting as carbon sinks soaking up greenhouse gas emissions from the atmosphere. 

Even those companies which reported to CDP are not taking tough enough action to solve the problem of deforestation, the organization said. A quarter of firms are either taking no or very limited action on deforestation, while more than a third are not yet working with their suppliers on the issue. CDP warned the approach adopted by many firms reveals a "critical gap," as deforestation is "almost always" a supply chain issue.

Moreover, the vast majority of firms with deforestation targets in place only have goals for up to 2020, with just 14 percent extending beyond that date. The focus on 2020 risks corporate action on deforestation "falling off a cliff" next year, CDP warned. 

But Gillespy predicted firms will come under increasing pressure from their customers and investors to prove their supply chains are not harming forests or their wildlife.

"Companies are already telling us reputational risk is the top risk they see from deforestation and this is likely to become ever more prominent as sustainable consumption trends continue and the market shifts," she said.