US$53 billion at risk from deforestation, yet only 1% of companies taking ‘best practice’ action

• Analysis of 550+ high-impact companies across seven commodities show business world too slow to act on deforestation.
• Cattle products identified as the worst performing commodity while palm oil was the best, following recent improvements.
• Almost all companies (93%) taking at least one out of 15 key actions to protect forests, but only four pioneers (1%) were taking nearly all relevant actions: Essity, L’Oréal, Mars and Tetra Pak.
• Companies reported US$53.1 billion in risks from deforestation, with the total cost of response estimated at US$6.6 billion.
• Record levels of transparency as companies disclosing on forests impacts grows 27%.
• 10 million hectares of forests have been lost every year since 2015¹, posing increased risk of future pandemics and dangerous climate change.

The business world is finally waking up to deforestation, but progress is too slow and ambition too low, with just 1% of companies demonstrating best practice, according to new data released for International Day of Forests by CDP - the global non-profit that runs the world’s environmental disclosure platform.

The disclosing companies identified a total of US$53.1 billion of risks from deforestation, such as increased severity of extreme weather and shifts in consumer preferences. Companies estimated it would cost a total of only US$6.6 billion to address these risks, showing a strong business case for action.

The report, The collective effort to end deforestation, assesses the sample of 553 disclosing companies against 15 key performance indicators (KPIs) that companies should be taking to tackle deforestation. These include board level oversight; setting a robust public policy on no-deforestation; ambitious targets; a robust system to control, monitor and verify compliance with related policies; and engaging suppliers on sustainable production methods.

Overall action is too low, but 93% of companies analyzed are now taking at least one industry-accepted measure to protect forests, such as having board-level oversight of forest-related issues by key decision-makers. CDP notes that this is welcome but not enough to end deforestation.

Sareh Forouzesh, Associate Director of Forests at CDP said: “We’ve lost 10 million hectares of forest every year since 2015. The destruction of the world’s vital forests poses huge risks to the climate, nature, the economy, and also increases the risk of future pandemics, as human activity encroaches on wildlife habitats and comes into contact with zoonotic viruses. The risks are great, but there is a solid business case for companies sourcing commodities sustainably and taking steps to protect forests. A handful of companies are leading the way - now we need all their peers to follow.”

Hundreds of companies worldwide are requested to disclose through CDP because of their involvement in the production or sourcing of seven key commodities that drive the most agricultural deforestation globally: Timber products, palm oil, soy, cattle products, rubber, cocoa and coffee.

Comparisons between commodities shows that cattle and soy generally perform worst out of the commodities that cause the most commercial tropical deforestation, across the 15 KPIs. For example, while 18% of companies using palm oil are making progress towards sufficiently ambitious traceability/certification targets or have achieved them and 15% do so for timber, this drops to 9% and 8% of companies for cattle and soy respectively. Additionally, no companies are classed as best practice (taking nearly all relevant actions out of the 15 KPIs) for cattle or soy.

Action has been strongest among companies producing or using palm oil, where 98% of companies are taking at least one industry accepted measure to address deforestation. Palm oil has been the subject of public campaigns by civil society groups and consumers in recent years which could have contributed to the progress, as companies see palm oil linked to deforestation as a reputational risk.

Only 1% of disclosing companies were identified by CDP as taking ‘best practice’ action to protect forests in their supply chains. This amounts to just four pioneering companies: Swedish personal care and hygiene firm Essity; French global cosmetics giant L’Oréal; American multinational confectionary company Mars; and Switzerland-based food processing and packaging firm Tetra Pak.

Kevin Rabinovitch, Global VP Sustainability, Mars commented: “Global supply chains are broken. Bold and transformative action is needed to tackle environmental challenges such as deforestation and climate change, and to protect the health of our planet and global communities.

At Mars, we’re accelerating the transformation of our extended supply chains to eliminate deforestation and the conversion of natural ecosystems. For example, through our Palm Positive Plan, we’ve significantly reduced the number of mills we source from, taking us from over 1,500 to less than 100 this year. This focus allows us to reward the suppliers that share our values, and makes monitoring and response less complex and more effective. We are proud to have achieved a deforestation-free palm oil supply chain as a result.

These are complex, systemic challenges, but that doesn’t mean they can’t be addressed if the right collaborators come together and agree to bold actions. It’s never been more critical that we work together to drive change at scale.”

Magnus Groth, CEO and President of Essity said: “As a global hygiene and health company providing products and services to hundreds of millions of people every day, Essity has a responsibility to contribute to a positive change in the fight against forest degradation and deforestation. We are committed to sourcing fresh wood-based fiber originating from responsibly managed and certified forests and will continue to work together with both suppliers and customers to reduce our environmental impact”.

Markus Pfanner, Vice President Sustainability, Tetra Pak, added: “Preventing deforestation has a significant role to play in mitigating the increasing impacts of climate change and biodiversity loss. That’s why we work closely with our suppliers and other actors along the value chain to promote responsible and sustainable forest management. Tetra Pak is a major user of paperboard, and so it is our responsibility to ensure the forests are managed in a socially, environmentally, and economically sound way.”

The number of companies disclosing data on their forests impacts has grown substantially by 27% in 2020, at the demand of investors and customers. The report is based on the 553 companies that disclosed on at least one commodity through CDP’s forests questionnaire in 2020.

-Ends-

¹ FAO, Global Forest Resources Assessment 2020: http://www.fao.org/3/CA8753EN/CA8753EN.pdf

The full report can be downloaded from CDP’s website from 00:01 GMT March 22, 2021 at: https://www.cdp.net/en/research/global-reports/global-forests-report-2020

About CDP
CDP is a global non-profit that runs the world’s environmental disclosure system for companies, cities, states and regions. Founded in 2000 and working with more than 590 investors with over $110 trillion in assets, CDP pioneered using capital markets and corporate procurement to motivate companies to disclose their environmental impacts, and to reduce greenhouse gas emissions, safeguard water resources and protect forests. Over 10,000 organizations around the world disclosed data through CDP in 2020, including more than 9,600 companies worth over 50% of global market capitalization, and over 940 cities, states and regions, representing a combined population of over 2.6 billion. Fully TCFD aligned, CDP holds the largest environmental database in the world, and CDP scores are widely used to drive investment and procurement decisions towards a zero carbon, sustainable and resilient economy. CDP is a founding member of the Science Based Targets initiative, We Mean Business Coalition, The Investor Agenda and the Net Zero Asset Managers initiative. Visit cdp.net