The Business Case for Ending Deforestation
About 90 percent of companies see opportunities in shifting to sustainably sourcing key forest-risk commodities, according to a CDP report that makes the business case for ridding supply chains of deforestation.
The major driver of global deforestation comes from the demand for four critical agricultural commodities — cattle products, palm oil, timber products and soy — according to Deforestation-free supply chains: From commitments to action, CDP’s global forests report.
These commodities feature in the supply chains of countless companies across sectors varying from food to fuel. The resulting deforestation is itself a key driver of climate change, accounting for about 10 percent to 15 percent of the world’s greenhouse gas emissions.
The report looks at the disclosures from 152 companies from around the world, including Asia Pulp & Paper, Cargill and Unilever, representing a market capitalization of over $3 trillion.
It says high-profile deforestation pledges from businesses such as the palm-oil sector giant Wilmar International, which discloses to CDP’s forest program, indicate the growing corporate awareness. However the report shows there is much to be done for companies to move from commitment to action.
Companies are inconsistent in recognizing risks and taking action. Across both commodities and supply chains, businesses are inconsistent in assessing and acting on risks and opportunities. Companies further along the supply chain are, for example, less likely to recognize operational risks to their business, with only 35 percent of manufacturers identifying operational risks associated with soy when 83 percent of producers see that same risk.
Companies see opportunities in tackling deforestation. British Airways, for example, reports that increasing consumer awareness of environmental issues means acting to minimize deforestation could offer it competitive advantage.
Businesses failing to act on deforestation risk lagging behind their competitors. The 30 percent increase in the number of investor signatories demanding corporate disclosure through CDP’s forests program shows that investors are increasingly paying heed to these issues. Companies that do not disclose to investors and other stakeholders through CDP could have vulnerabilities in their supply chains and are at risk of lagging behind their competitors.
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