A large majority of major corporations are failing to be transparent about their impacts on global deforestation and many are taking inadequate steps to tackle it, according to a recent report released by environmental non-profit organisation CDP.
Over 1,500 companies deemed to have a significant impact on deforestation or to be susceptible to deforestation risk were requested by investors and large purchasing organizations to disclose forests data through CDP’s reporting platform in 2018, but 70% failed to do so.
Morgan Gillespy, Global Director of Forests at CDP, commented: “Environmental concern is at an all-time high, and companies are being demanded to be transparent and take decisive action to protect forests. Consumers increasingly want to know that their shopping basket isn’t driving the destruction of the Amazon, extinction of the orangutans and the climate crisis.
Companies are asked to disclose on four commodities linked to deforestation: timber, palm oil, cattle and soy.
Over 350 companies have declined to respond for the last three years, including major brands like Dominos, Next, Sports Direct, Mondelez and Rimbunan Hijau Group. These companies use commodities that drive deforestation.
The new report – The Money Trees finds that corporate transparency on forests (30% disclosure rate in 2018) lags behind other environmental issues such as climate change and water security (both 43%).
Businesses that want to maintain market share need to listen to the calls from their customers, investors and consumers – or they could face a backlash. Companies are already telling us reputational risk is the top risk they see from deforestation and this is likely to become ever more prominent as sustainable consumption trends continue and the market shifts”.
A total of 306 companies disclosed forest data to CDP in the previous year, yet it is revealed that the level of action is insufficient to solve the problem of deforestation. Around a quarter (24%) of companies are either taking no or limited action on deforestation. Over a third of companies are not yet working with their suppliers to reduce deforestation.
Gillespy added: “Our data shows companies are not doing enough to end deforestation. Meanwhile the hundreds of high-impact companies that have not disclosed through CDP and therefore not been analyzed in this report could be missing out on lucrative opportunities. They could also be sitting on a black box of risks that their investors, customers and end consumers are not aware of, but are increasingly demanding transparency on”.
Companies report a potential US$30.4 billion in losses due to the impacts of deforestation risks, such as brand damage, regulatory change and physical impacts like forest fires and crop failures.
Oppositely, CDP data shows that for the companies willing to move the needle on forests, there are major opportunities up for grabs. 76 companies reported business opportunities – such as increased brand value and product innovation – valued at US$26.8 billion, more than half of which are rated highly likely or virtually certain.
