Firms reported the collective financial impact of deforestation could be $30.4bn © Khan/AFP/Getty Images
Firms reported the collective financial impact of deforestation could be $30.4bn © Khan/AFP/Getty Images

1,060 firms 'failing to act on deforestation'

A total of 1,060 global companies have been criticised for ignoring the impacts of their supply chains on the world’s forests.

Environmental reporting charity CDP said companies including Ikea, Sports Direct, Mondelez International, Gap, and Domino’s Pizza are failing to monitor the impact of their use of commodities on forests.

Morgan Gillespy, global director of forests at CDP, said: “The silence is deafening when it comes to the corporate response to deforestation. 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.”

CDP asked 1,514 companies to file a transparency report on four forest-risk commodities on its disclosure platform in 2018. Some 1,060 – or 70% – failed to respond, while 306 companies filed reports and 148 filed partial reports.

The CDP report assessed the corporate awareness of deforestation risks in their commodities supply chain and actions being taken to eliminate it. Deforestation risks were caused by timber, palm oil, soy or cattle products, due to forests being cleared for cattle ranching, plantations or agricultural space.

Some companies that disclosed transparency reports still lacked evaluation of how their supply chain impacted deforestation, as a third failed to include forest-related issues in their risk assessments, said the report.

CDP said there was an “awareness gap” that could be causing unknown financial losses. 

“Without assessing risk, it is impossible to implement an appropriate mitigation response, leaving these companies exposed and unaware,” said the report.

Companies dependent on forest-risk commodities reported potential collective financial losses of $30.4bn from deforestation, though CDP said under-reporting meant this figure was likely to be higher.

The report said 76 companies said growing demand for sustainable products, increased innovation and brand value could generate revenues of up to $26.8bn.

CDP found a direct correlation between awareness of risks and companies taking action against deforestation, such as setting targets to increase traceability, using certification, engaging with supply chains or participating in collaborative initiatives. 

The report recommended that companies ensure they have a “minimal awareness of commodities use” within supply chains.

CDP also identified an “execution gap”, where companies fail to begin the process of removing deforestation risks in their supply chain. While the majority of retailers and manufacturers (90%) reported they had begun to address deforestation risks, 28% of their suppliers had not.

Almost half of companies (43%) have failed to address exposure to deforestation within soy supply chains, and 29% within cattle products, compared to 15% for timber supply chains and 12% for palm oil.

Out of the companies that have set long-term goals, 83% end in 2020, which poses the risk of corporate action to end deforestation ending in the next year, said CDP.

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