Global Canopy research finds glaring deforestation blindspot in many company policies that threatens to undermine their ability to achieve net zero
Companies and financial institutions have never had better data, more advanced tools or more detailed guidance to help them eliminate deforestation from their supply chains, yet 40 per cent of those most linked to tropical destruction putting their net zero goals at risk due to inaction on deforestation.
That is according to the latest edition of Global Canopy's Forest 500 report today, which assesses the progress 350 companies and 150 investors have made on eliminating deforestation from their supply chains and financing activity.
The exercise found that 201 of the 500 companies and investors surveyed still haven't set a single policy on deforestation, despite these firms having the greatest opportunity to drive change through forest-risk supply chains and, in many cases, having ambitious net zero targets in place.
The report, which was published today by the NGO Global Canopy, finds that 109 firms, including automotive giant VW Group and Deichmann Group, Europe's largest shoe retailer, have no deforestation commitments in place at all.
And, of the 100 firms that do have deforestation targets in place, only half have followed up these goals with action, such as active monitoring of suppliers or sourcing regions, it states.
Such inaction on deforestation is also threatening to undermine corporate net zero targets, according to the report. Of the 350 companies assessed, 41 per cent have a 2050 net zero target in place, including British firms such as Sainsbury's and Unilever. But 98 per cent of these companies - 142 firms - are on tack to miss their target due to insufficient action on eliminating deforestation from their supply chains, it claims.
Large companies in particular are failing to factor in deforestation into their net zero targets, according to the report, which points to Amazon, Carrefour, Starbucks and IKEA as being among a group of companies that are at risk of missing their "ambitious net zero targets" due to inaction on deforestation.
"It is now universally accepted that ending tropical deforestation is pivotal to meeting vital global goals on both climate and nature," the report notes. "It is remarkable that while a great many of the companies in the Forest 500 have ambitious net zero targets, almost all of those risk missing them because of inaction on deforestation."
The picture among the 150 financial institutions assessed in the report is even starker, with the majority of investors surveyed found to have no deforestation policies in place for any commodities, including the world's biggest asset managers, BlackRock, Vanguard and State Street.
Global Canopy said as much as $6.1tr flowed from ‘Forest 500' investors into ‘Forest 500' companies last year, of which $527bn came without a single deforestation commitment attached. JP Morgan, Bank of America and Mistubishi UFJ Financial were the most prolific funders of companies without deforestation commitments, collectively providing $72bn in finance, the report found.
"The financial institutions that provide the investment to [‘Forest 500'] companies can exert powerful influence to change the behaviour of the companies being financed," the report notes. "Unfortunately, our assessments over the years have shown very slow progress and to date, many companies and an even greater number of financial institutions still have no commitments or policies in place to stop the destruction."
The report adds that while there is "some optimism to be found in stories of small progress", most of the change is "only partial", with the "finance sector as a whole woefully behind".
The findings come just two months after the vast majority of governments around the world pledged to halt and reverse nature loss by 2030 and to more closely link climate and nature goals at the COP15 Biodiversity Summit in Montreal. Meanwhile, due diligence legislation aimed at banning the trade of commodities associated with deforestation or illegal deforestation is being introduced in the EU and UK, respectively, which could place a greater onus on firms to take action to drive out deforestation in their supply chains.
Niki Mardas, executive director at Global Canopy, said the companies and financial institutions found wanting on deforestation in the report were "living on borrowed time" and world's putting climate and nature goals at risk. However he expressed hope that 2023 could "be a year of rapid progress".
"More than ever before, the global architecture, with the UK and EU legislation, and the Global Biodiversity Framework , is pushing in the same direction; and excellent tools, guidance and data are freely available," he said. "There are no more excuses - inaction is a risk to finance, a risk to business and a risk to life."
BusinessGreen reached out to a number of the firms named in the Forest 500 report for their responses to the findings, most of which had not responded at the time of going to press.
However, a spokesperson from investment giant Vanguard pointed to its membership of the CDP Forests programme, an initiative that asks publicly-listed firms to disclose their material deforestation risks, as evidence of its efforts to combat the issue.
"On behalf of Vanguard's internally managed equity funds Vanguard's Investment Stewardship team engages with portfolio company boards and executives to understand how they oversee, address, and disclose financially material risks, including environmental risks such as deforestation," the spokesperson said. "Our engagement with portfolio companies is part and parcel of promoting long-term value creation for investors."
A spokesperson for Deichmann, meanwhile, refuted report's findings and claimed the firm had not been provided with an opportunity to review or respond prior to publication today. The spokesperson said the shoe company was "actively engaged with deforestation" as part of its membership to the Leather Working Group (LWG), which has a mutual goal for leather that is 100 per cent free from forest destruction and conversion.
"We have noticed the following upon first review: firstly, the currently available information on Deichmann on the Global Canopy website do not correctly represent our endeavours on this topic," the spokesperson said. "Furthermore, we do not directly obtain any product materials from the countries that are associated with deforestation."
"We are firmly aware of the importance of this topic," the firm added in a statement. "We will of course comply with the recently published legislation on deforestation in the EU. However, not all details have been published yet. What the practical implementation of this could look like for businesses is therefore not entirely clear just yet. Notwithstanding this, we are already working with our supply chain partners towards solutions."
* This article was originally published here