An assessment of the forest-related policies and performance of 350 large companies has found glaring deforestation blind spots in many policies that threaten to undermine their ability to achieve net zero.
The research, from data-driven not-for-profit firm Global Canopy, found 98% of net zero targets were at risk due to their deforestation links. The researchers have named large companies including Ikea, Amazon, and Starbucks in their report.
Companies and financial institutions have more data and advanced tools than ever to help eliminate deforestation from their supply chains, yet 40% of those most linked to tropical destruction have put their net zero goals at risk due to inaction.
That is according to the latest edition of Global Canopy’s Forest 500 report, which assesses the progress 350 companies and 150 investors have made in eliminating deforestation from their supply chains and financing activity.
The corporations were selected based on their high exposure to forest-risk commodities, which the researchers believe provides them with a huge opportunity and responsibility to drive change through their supply chains.
It found 201 of the 500 companies and investors surveyed still haven’t set a single policy on deforestation, despite these firms having the opportunity to drive change through forest-risk supply chains and having ambitious net zero targets in place.
The report, published on 15th February by the NGO, revealed 109 firms, including automotive giant VW Group and Deichmann Group, Europe’s largest shoe retailer, have no deforestation commitments in place at all. 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.
The study states inaction on deforestation is threatening to undermine corporate net zero targets. Of the 350 companies assessed, 41% have a 2050 net zero target in place, including British firms such as Sainsbury’s and Unilever. But 98% of these companies (142) are on track to miss their target due to insufficient action on eliminating deforestation from their supply chains.
“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.”
Clear lack of investment
The majority of investors surveyed were 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 Mitsubishi 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.”
‘Living on borrowed time’
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.”
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 were putting the world’s 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.”
A spokesperson for Deichmann, meanwhile, refuted the report’s findings and claimed the firm had not been provided with an opportunity to review or respond prior to the 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% 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 does 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.”
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