Almost three out of four companies with a significant footprint on the world’s forests have failed to provide data on their impact on global deforestation in 2018, according to a study published by environmental non-profit organisation CDP on Tuesday (16 July).
Investors and large purchasing organisations requested more than 1,500 companies with a high impact on forests to disclose data through CDP’s reporting platform but 70% of companies did not comply. The companies were asked to provide data on timber, palm oil, cattle and soy.
Among those who failed to provide information were major food companies like REWE Group, Auchan Holding, Oetker-Gruppe, Parmalat and Louis Dreyfus, but also furniture maker IKEA, the report says.
According to CDP, these companies drive deforestations as forests are cleared to use timber for furniture or to make space for plantations, agriculture or cattle ranching.
Corporate transparency on deforestation remains low compared to other environmental issues. Whereas 30% of companies disclosed their impact on forests, 43% of corporations communicated date on climate change and water security.
“The silence is deafening when it comes to the corporate response to deforestation,” says Morgan Gillespy, global director of forests at CDP. “Environmental concern is at an all-time high, and companies are being demanded to be transparent and take decisive action to protect forests.”
Of those who disclosed information, a quarter showed no or limited action to reduce deforestation, the report says. And those who act are too few.
However, consumers are demanding changes, says Morgan Gillespy. They “increasingly want to know that their shopping basket isn’t driving the destruction of the Amazon, extinction of the orangutans and the climate crisis.”
“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.”
The companies that communicated data reported a potential US$30.4 billion in losses due to brand damage, regulatory change and physical damage like forest fires and crop failure.
The deadline to end deforestation by 2020 set by nearly 450 companies and 50 governments will be missed since action taken by the industry is not enough, according to CDP.
Every year, five million hectares of forests is still being lost, equivalent to 15 football pitches every minute. Fighting deforestation is crucial to address the climate crisis, the non-profit stresses, since forests are carbon sinks.
Corporations are missing out on business opportunities by not addressing their footprint on the world’s forests, the report says.
In 2018, companies reported business opportunities valued at $26.8 billion to the CDP which could materialise through increased brand value and product innovation.
“The hundreds of high-impact companies that have not disclosed through CDP and therefore not been analysed in this report could be missing out on lucrative opportunities,” says Gillespy.
The lack of transparency on the big companies’ impact on deforestation makes it difficult to judge whether that is really the case.
“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,” Gillespy said.
[Edited by Zoran Radosavljevic]