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Supply Chain
2020 Deforestation Goals Are Unlikely to Be Achieved; Companies Need More Help

The 2016 results from the Global Canopy Programme’s (GCP’s) ‘Forest 500’ have been released, and they don't bring good news. The deforestation policy analysis of the world's most influential powerbrokers, including companies, financial institutions, and countries, reveals that targets for 2020 and 2030 are unlikely to be met at the current rate of progress.

GCP claims that the 500 powerbrokers included in the assessment collectively have the ability to decouple the production of palm oil, soya, cattle products, and timber products from deforestation. These “big four” commodities alone are responsible for 40 percent of deforestation. Similarly, their contributions could be crucial towards the ‘zero net deforestation by 2020’ target set by the Consumer Goods Forum (CGF) and similar goals under the New York Declaration on Forests.

Unfortunately, while 11 percent of companies have established new deforestation policies or improved existing ones, 57 percent of companies in the Forest 500 have either weak policies or no policies at all. Progress has been slow, especially in regards to considering all of the commodities a company is involved with: the number of companies with policies for all their relevant commodities has only increased by 5 percent over the last three years, GCP reports.

“Despite growing momentum in the number of commitments across key supply chain actors, the Forest 500 reveals that many of these commitments lack the teeth to make meaningful change in the sustainability of commodity production,” said Sarah Lake, Head of the Supply Chains programme at GCP. “While they appear ambitious on face value, company policies need to close loopholes that simply relocate environmental and social impacts to new geographies, or sequester them into less sustainable supply chains.”

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GCP assessed and ranked 250 companies, 150 investors and lenders, 50 jurisdictions including 25 commodity-producing countries that account for 85 percent of tropical and subtropical forest cover, and 50 other influential actors in the space. They found that where there are policies in place, they fail to holistically address sectors and impacts in their supply chains. For example, only 26 percent of the companies operating in cattle supply chains have a policy to address environmental impacts from the production, trade, or sourcing of cattle products (beef and leather). Of the 11 companies with cross-commodity gross zero deforestation policies, 57 percent had policies limited to a specific geography or only a portion of a company’s supply chain.

Three companies did make encouraging progress: Colgate-Palmolive, Marks & Spencer (M&S), and Norwegian consumer goods company Orkla Group strengthened their deforestation policies and achieved the maximum 5 out of 5 points available. A further three – Estée Lauder, Louis Dreyfus, and Tesco – improved their scores by one point or more in this set of rankings, as well as in the previous year.

“We have a collective responsibility to act,” commented Ellen Behrens, the VP of Corporate Responsibility at Orkla ASA. “The Forest 500 reveals that in order to preserve rainforests and fight climate change, it’s important that more companies establish no-deforestation policies with clear time-bound targets.”

The report also found that strong policies from a small number of leading financial institutions are yet to be matched by their peers, clients and investee companies: 3 percent of the financial institutions assessed have committed to remove deforestation associated with all four Forest 500 commodities from their portfolios, while a quarter have a lending or investment policy for some, but not all, commodities. Yet even among those financial institutions with deforestation policies, many continue to finance clients and investees without aligned policies indicating a lack of policy implementation. The 2016 assessment finds that 75 percent of lenders with deforestation policies have made loans - totalling over $64 billion - to producers, processors, or traders that do not have aligned policies. Deutsche Bank joined HSBC and BNP Paribas in scoring the maximum 5 points, owing to an improved policy that lays out the expectation for clients to make their own zero net deforestation commitments and protect land with high ecological, cultural, or social value.


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