A climate wake-up:
but business failing to
hear the alarm on
deforestation
The urgent need to protect nature and end deforestation was at the centre of plans to deliver on global climate targets at the UN climate conference in Glasgow in 2021. Governments, companies and financial institutions all pledged significant action.
While we have seen commitments like this before, the Glasgow Leaders Declaration on Forest and Land Use has the potential to be a turning point. The sheer number of countries and organisations represented, multi-sector buy-in, as well as the recognition of the need to support Indigenous peoples’ rights and leadership are all critical prerequisites for success in protecting the world’s forests.
The Forest 500, now in its eighth year, tracks the policies and performance of the 350 most influential companies and 150 financial institutions linked to deforestation in their supply chains and investments.
The ranking provides vital data on organisations that have made commitments, and highlights the many companies and financial institutions that are still ignoring the issue altogether.
The Glasgow commitments will come under greater scrutiny than any similar commitments that have come before. The more established ecosystem of transparency initiatives, including Forest 500, which were not in place a decade ago will enable more effective monitoring of progress, and it is essential that accountability measures are also quickly put in place to do so.
In the meantime, the latest Forest 500 ranking shows that too many companies are ill prepared for the regulatory changes coming down the track.
Another year of non-performance by companies
This year’s Forest 500 assessments follow the trends of the last eight years. Far too many the companies that are most exposed to deforestation are still not doing enough:
- Nearly three out of four (72%) of the 350 companies do not have a deforestation commitment for all of the forest-risk commodities in their supply chains.
- One-third (117/350) of companies have no deforestation commitments at all – a small decrease on last year.
- While 28 companies published a new commitment to address deforestation since last year, just 11 of these have a deforestation commitment for all of the commodities they are exposed to.
- Many companies with commitments are failing to provide evidence of how they are implementing them, particularly for soy, beef and leather supply chains.
- None of the companies assessed had a comprehensive approach to human rights.
Finance sector continues to lag behind
The financial institutions identified in the Forest 500 provided more than US$5.5 trillion in finance to companies in forest-risk supply chains. But, they are doing little to ensure they are not driving deforestation:
- 93 of the 150 financial institutions most exposed to deforestation do not have a deforestation policy covering their investments and lending to companies in key forest-risk commodity supply chains.
- The 93 financial institutions without deforestation policies provide US$2.6 trillion in finance to the companies with the highest exposure to deforestation risk.
- Just 23 of the financial institutions with a deforestation policy reported on their progress towards implementing their policy.
- Few financial institutions recognise the human rights risks linked to deforestation.
Legislation still needed to bring up the laggards
Ultimately only mandatory action and reporting will drive market-wide change at the scale required.
The new political space created at COP26 can pave the way for stronger and more broadly applicable legal frameworks. Important first steps are already being taken with potentially ground-breaking legislative proposals in the UK and the European Union. But these proposals could be strengthened, and must be enforced, with clear accountability and penalties for breaches.
Regulation is also needed for the finance sector – and critically other nations and trading blocs must follow this lead.
Recommendations
Forest 500 companies and financial institutions:
set and implement strong deforestation commitments and policies, covering deforestation, conversion, and associated human rights abuses. Join multi-stakeholder efforts to raise awareness and enable cross sector collaboration.
Governments:
develop and implement legislative frameworks to ensure action across the private sector in your jurisdictions.
Civil society:
track and hold signatories and others accountable, focusing the greatest pressure on those that have not made commitments and are still not acting. In particular, those most influential laggards identified by the Forest 500.
How are we contributing to accountability?
Global Canopy will continue to identify the most influential players who need to act on deforestation, and publicly rank their approaches.
Going forwards, we will also carry out additional assessments to cover the organisations that have made commitments in Glasgow, and help ensure accountability for their delivery.
