Business Not Yet Doing Enough to Stop Commodities Destroying Forests

BARCELONA, Dec 5 (Thomson Reuters Foundation) – Global companies that produce and use commodities such as palm oil and soy are moving too slowly to cut deforestation, suggesting international goals to protect forests will not be met, groups that monitor business efforts said on Monday.

Agricultural products – including beef and paper – account for over two thirds of tropical deforestation worldwide, said the Global Canopy Programme.

Its third annual assessment – tracking the policies of 500 companies, governments and financial institutions that have the most influence on tropical forests – suggests that ambitious 2020 and 2030 goals to protect those forests are unlikely to be achieved.

“More needs to be done to increase the rate of change, and uptake of these policies,” said Tom Bregman, who manages the “Forest 500” project. “You’re not even getting to the policies being in place, let alone implementation by 2020, so clearly there is still a long way to go.”

The 2014 New York Declaration on Forests set a goal to at least halve the rate of loss of natural forests globally by 2020, and strive to end it by 2030.

The declaration also pledged to help the private sector eliminate deforestation from the production of agricultural commodities by 2020.

The results of the 2016 Forest 500 assessment show that 57 percent of the 250 companies tracked have either weak policies or no policies at all to curb deforestation in their operations.

In the last three years, the number of companies with policies to cut deforestation in the production of each forest-related commodity they use increased by only 5 percent.

Bregman said that unless more companies apply such broad policies, “you’re not going to get to the holistic, deforestation-free planet we desire”.

Loopholes must be closed that displace deforestation to places with less stringent regulations, and allow companies that clear forests to sell to buyers without environmental standards, the Global Canopy Programme said.

Supply Chain Risk

A separate report, also released on Monday, revealed that multi-nationals such as Colgate-Palmolive, L’OrĂ©al and McDonald’s depend on palm oil, soy, timber and beef products for nearly a quarter of their revenues, on average.

That means up to $906 billion in annual turnover is at risk for those companies listed on the stock exchange if the commodities cannot be produced sustainably into the future.

CDP, which gathers data from companies on their actions to combat climate change, said 72 percent of the 187 companies that disclosed information on deforestation this year were confident they would be able to source supplies securely and sustainably in the future.

“But when you delve down into the responses and data, we have reason to believe that this confidence could be misplaced,” warned Katie McCoy, head of forests at CDP, formerly the Carbon Disclosure Project.

For example, fewer than half of companies have evaluated how the availability or quality of agricultural commodities will impact their growth over the next five or more years, CDP said. And only 30 percent can trace the commodities they produce or use back to the point of origin.

CDP said the risks to business profits include the impacts of climate change on the supply and price of commodities, the potential tightening of regulation, and brand damage as scrutiny of commodity-sourcing practices by media and citizens grows.

Some four-fifths of agricultural producers said they had experienced substantial deforestation-linked problems in the last five years, such as drought hitting beef production in Brazil or consumer pressure for greener palm oil supply chains in Southeast Asia.

“These supply chain impacts will increasingly be felt,” McCoy told the Thomson Reuters Foundation. “Companies are not really doing enough to manage those risks in a way that will mean they will have (a) sustainable supply going into the future.”

The two groups urged investors and governments, in both exporting and importing countries, to step up support for companies to achieve deforestation-free supply chains.

“We do face an uphill battle if companies are left to do this alone,” said Bregman. “We need better market signals from the finance sector as well as countries, on the demand side in particular.”

Some of the largest importers of soy, palm oil, timber and cattle products – such as China and India, as well as European countries and the United States – have yet to put in place strong commitments to reduce deforestation linked to their use of the products, said the Global Canopy Programme.

Meanwhile, only 3 percent of financial institutions assessed in the Forest 500 have committed to remove deforestation associated with all four commodities from their portfolios, while a quarter have a lending or investment policy for some, but not all, commodities, it added.

Reporting by Megan Rowling, editing by Laurie Goering for the Thomson Reuters Foundation, the charitable arm of Thomson Reuters.