Over the last decade, hundreds of global companies have made public commitments to eliminate deforestation from their operations and extended supply chains, largely by targeting the “big four” forest-risk commodities: cattle, palm oil, soy, timber and pulp. These companies span sectors from food, retail and consumer products, to footwear and apparel brands, to the largest agricultural commodity producers and traders operating on the ground in growing regions.
While nearly 500 global companies have made commitments to deforestation with varying degrees of specificity, only a handful disclose their quantitative progress toward achieving them and eliminating tropical forest loss from their commodity supply chains. Many hundreds more are still exposed to deforestation risk, and have yet to set public commitments or take specific actions to address it, let alone report on their progress.
Our research indicates that of the 484 companies that have set commitments to source forest-risk commodities more sustainably, only 72 have set zero and zero-net deforestation commitments. Of those 72, only 21 —or just 29 percent—have disclosed quantitative disclosure towards a zero or zero-net deforestation deadline, which is essential data for institutional investors looking to evaluate and mitigate deforestation risk.
This alarming gap between commitment and action exposes companies and institutional investors to significant financial risks. Institutional investors increasingly recognize that deforestation creates material market and reputational risks for companies, and is also a source of systemic risk across investment portfolios given its contribution to climate change. Effective corporate reporting on no-deforestation commitments is essential for investors seeking to understand, analyze and mitigate risk within their portfolios.
This investor brief, undertaken in partnership with Forest Trends’ Supply Change, assesses the state of public corporate commitments around deforestation and lays out the case for elevating two key reporting metrics from companies as we head into 2020 reporting deadlines.