An “unprecedented” number of firms made deforestation commitments in 2014 but there is inconsistency in work to address risk, according to CDP.
CDP - a not-for-profit organisation that holds climate change, water and forest-risk data self-reported by firms - produced the report based on disclosures from 152 companies. It said deforestation was driven by demand for four commodities – cattle products, palm oil, timber and soy – but the percentage of firms reporting commodity-specific policies varied from 53 per cent for soy to 85 per cent for timber.
According to the report, Deforestation-free supply chains: From commitments to action, the percentage of companies with commodity specific policies around palm oil was 82 per cent, for cattle products it was 61 per cent and for biofuels it was 65 per cent.
CDP said overall, three quarters of companies recognise at least one business risk associated with the commodities connected with deforestation, while almost 90 per cent reported seeing business benefits, such as accessing new markets, from sustainably sourcing at least one commodity.
“While companies have been making progress in recognising these risks, action on commodities such as soy is lagging behind the progress being made on timber and palm oil,” said CDP.
“Across both commodities and supply chains, businesses are inconsistent in assessing and acting on risks and opportunities.
“With 13 million hectares of forest lost annually in the past decade, companies have an imperative to act now to help break the link between commodities, deforestation and climate change if we are to stay within the goal of limiting global warming to no more than 2°C.”
CDP said deforestation commitments and progress should be “transparently disclosed in a standardised format to investors and broader stakeholders”.
Paul Simpson, chief executive officer at CDP, said: “Companies that regularly respond to CDP's forests programme are now identifying many more of the opportunities available to them, including securing their supply chain against the risks associated with deforestation and commodity sourcing. This in turn is helping to secure shareholder value.
“Different parts of the supply chain are moving at different rates to tackle this issue. What is clear is that leading companies are those that are bringing their supply chains with them on this journey.”
CDP sector leaders 2014:
Agricultural products – Cargill
Grocery retailers – J Sainsbury
Hotels and leisure – Sodexo
Household and personal products – SCA
Industrials and autos – Dai Nippon Printing
Materials – UPM-Kymmene Corporation
Media – Reed Elsevier Group
Packaged food and drink – Nestlé and Unilever
Retailing – Marks and Spencer
Textiles – LVMH
Transport – British Airways