Many major global firms and financial institutions directly or indirectly contribute to deforestation. Yet they do not have any policies in place to protect forests – increasing the risk for catastrophic nature loss. That’s the verdict of a report Global Canopy released on 15 February. It comes just months after countries reached a historic agreement to protect 30% of the world’s land and seas by 2030 at UN biodiversity talks late last year.
Companies dragging their feet on deforestation
Global Canopy is a nonprofit research group. It released new analysis about deforestation on 15 February. The Forest 500 report showed that hundreds of firms still have not set a single policy on deforestation. This is despite the high-level commitments seen at the UN biodiversity talks.
These companies are at risk – financially, reputationally, operationally – if they do not take steps to reduce their role in deforestation, the analysis said. Global Canopy director Niki Mardas explained:
While there have been pockets of progress, the majority of companies and financial institutions are living on borrowed time, putting climate and nature goals at risk.
The annual report assesses efforts to tackle tropical deforestation by hundreds of companies and financial institutions linked to the practice via their supply chains and investments. More specifically, it analyses 350 companies with the greatest stake in forest-risk commodities. These incude palm oil, soy, beef, leather, timber, and pulp and paper. The report also looks at the 150 financial institutions providing the most finance to these companies.
Insufficient action and commitments
Global Canopy’s report found that 201 of the 500 companies and financial institutions it tracks failed to set any deforestation policies. That was 40% of the companies it monitors. This was barely different to Global Canopy’s findings a year ago.
They included VW Group and Deichmann Group, Europe’s largest footwear retailer. In a statement to Agence France-Presse (AFP), Deichmann said it does not directly source any materials from countries “associated with the issue of deforestation”. Meanwhile, VW Group did not reply to AFP‘s request for comment.
The latest report further found that only 100 companies out of 350 have deforestation commitments in place for all of the commodities in their supply chains. This includes Unilever and Sainsbury’s. However, only half of these are actively monitoring their suppliers or sourcing regions in line with their own policies. In other words, few companies are “taking sufficient action to deliver on” their commitments, according to Global Canopy.
The report chimes with other analyses, such as the Forest Declaration Assessment. Its 2022 report showed businesses are falling far short of what’s needed to eliminate deforestation from their supply chains.
The Forest 500 analysis also revealed that just a fraction of financial institutions:
most exposed to deforestation are addressing deforestation as a systemic risk.
Of the 150 financial institutions assessed, 92 do not have a deforestation policy covering their lending and investments. They included major asset managers BlackRock, Vanguard, and State Street. Financial institutions provide $6.1tn in finance to companies in forest-risk supply chains, the report said.
Rights abuses linked to deforestation
Forests are essential parts of the earth system. Vast numbers of species call them home and they absorb carbon from the atmosphere. This makes them vital in tackling both the biodiversity and climate crises.
Alongside threatening the diversity of life on Earth and the climate, deforestation also endangers communities. Emma Thomson, the Forest 500 lead, said deforestation is linked to a host of abuses. These include violating land rights and consent, to violence and threats against land, forest and human rights defenders.
1733 defenders have been killed trying to protect their land and resources: that’s an average of one defender killed approximately every two days over ten years.
In its report, Global Canopy characterised inaction on human rights abuses by companies as “particularly concerning”. It said that action associated with deforestation is “failing across the board”.
The report also found that the average company’s score for respecting human rights linked to deforestation fell by seven percentage points with the addition of new indicators. The additions included criteria such as respecting indigenous peoples and local communities customary rights to land. Thomson warned that:
Deforestation cannot effectively be eliminated without addressing those human rights abuses.
Now is the time
Incoming legislation for the EU should tighten rules around trading commodities associated with deforestation. The UK’s Environment Act will bring in new rules too. However, organisations like Global Witness and Friends of the Earth have criticised its plans as insufficient to meaningfully tackle deforestation and associated human rights abuses.
Overall, Global Canopy said companies need to do better – and can do so with more data, tools, and guidance available than ever before. Thomson told AFP:
Really, 2023 is the best year there has ever been to act on deforestation
If companies and financial institutions act on deforestation, it is a really concentrated way to have a huge impact on both the climate crisis and the nature crisis
Additional reporting by Agence France-Presse
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