Companies should 'wake up' to forest commodities risk

7 February 2012

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7 February 2012 | Paul Snell

Companies need to urgently consider their ‘forest footprint’ and take action to prevent deforestation, a report has urged.

According to the Forest Footprint Disclosure Annual Review 2011, businesses should see the value of reporting on their footprint - which is made up of their exposure to five ‘forest risk commodities’; timber, soy, cattle products, palm oil and biofuels – to work with suppliers and boost the resilience of their supply chains.

These commodities represent a potential regulatory, reputational and supply risk because deforestation often occurs in order to make way for these more lucrative fields of business.

“More companies need to wake up to the risks deforestation presents in their portfolios,” said Andrew Mitchell, chairman of Forest Footprint Disclosure. “Who wants to finance the destruction of life on earth, especially when it undermines wealth creation itself?"

The review pointed out the benefit of understanding this area of the supply chain in more detail. “Building closer ties through the value chain may improve the quality and price of products and help secure supply and reduce price volatility during crises,” it said.

It also highlighted the potential reputational damage to brands, such as Mattel which was targeted by campaign group Greenpeace over claims about the company’s sourcing of packaging for Barbie dolls. The toy manufacturer subsequently published a sustainable sourcing plan and targets for its packaging.

This year’s review, published today, names the sector leaders (a full list can be found below) – those organisations that are best at disclosing their supply chain activity in this area.

“Given the growing concern around security of supply for commodities in the coming decades of resource scarcity, the disclosure process offers companies space to work with their suppliers and customers to identify potential problems in a timely manner, and help to improve the resilience of their supply chain,” said Theodore Roosevelt IV, managing director at Barclays Capital and chairman of the Pew Center on Global Climate Change.

Forest Footprint Disclosure – Sector Leaders 2011

Basic minerals: Stora Enso

Clothing, accessories and footwear: Nike

Food and drug retailers: Sainsbury's

Food products and soft drinks: Nestlé

General retailers: Marks & Spencer

Industrials, construction and autos: Dalhoff Larsen & Horneman

Personal care and household goods: Kimberly-Clark

Travel and leisure: British Airways

Farming and fishing: Grupo André Maggi

Oil and gas: Greenergy International

Utilities: Drax Group

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