Most of the companies driving tropical deforestation are failing to address their impacts, with one-third lacking commitments and almost two-thirds showing little evidence of implementing them, a study has found.

That’s according to the annual Forest 500 report published by UK-based non-profit Global Canopy, which charts the progress of the 500 companies and financial institutions with the greatest impact on deforestation worldwide, spanning at-risk sectors such as palm oil, soy, beef, leather, timber, and pulp and paper.

As many as 63% of companies that have set commitments on deforestation – including Adidas, Starbucks, Gap, and IKEA – fell short of implementing them, the report found.

“Commitments are meaningless without effective implementation. We have a handful of years to rapidly transform supply chains and drive change on the ground,” Emma Thomson, Forest 500 and tracking lead, told Carbon Pulse.

“Positive change will only happen when these powerbroker companies step up and ensure that their supply chains are compliant with their deforestation commitments.”

Effective implementation hinges on carefully monitoring suppliers and sourcing regions, and committing to time-bound threats of removal from the supply chain if non-compliance continues, Thomson explained.

“We need to see evidence of this reported transparently, including the volumes that are deforestation- or conversion-free. Without this, it’s challenging to know what progress companies are truly making on tackling this urgent issue.”

Niki Mardas, executive director of Global Canopy, said that only 5% of companies with deforestation commitments are publicly reporting that at least 50% of their commodity volumes are compliant with their deforestation and conversion-free standards.

BIG NAMES

According to the report, another 30% of companies have not yet addressed deforestation in their supply chains for any of the high-risk commodities they’re exposed to.

These include Europe’s largest shoe manufacturer, Germany-based Deichmann Group; the second biggest Chinese food and beverage company, Bright Food; and US-headquartered agricultural company Land O’Lakes, whose CEO Beth Ford was featured in the latest TIME100 Climate list for her contributions to sustainability.

Overall, as few as 6% of the firms committed to reducing deforestation have implemented policies for all highest-risk commodities.

“This is nowhere near good enough,” Global Canopy said in the report. “If the last chance saloon commitment by countries to end and reverse deforestation by 2030 is to be achieved, the market, which is linked to over 90% of tropical deforestation, has to ramp up meaningful action today.”

“While some leaders are willing to make progress on these issues, a significant group is unwilling to act on a voluntary basis. Without regulatory pressure, companies will not act at the speed and scale needed.”

Last year, the European Parliament adopted the bloc’s new EU Deforestation Regulation (EUDR). The law – which will come into force on Dec. 30, 2024 – aims to ban the trade of commodities products on deforested lands.

As well, under the 2021 Environment Act, the UK pledged to prohibit the import of commodities linked to illegal deforestation, though the government has yet to implement this commitment.

“Both laws must be strengthened but, crucially, regulation must follow in other jurisdictions too. Currently, they only apply to companies operating in, or placing products on, the EU and UK markets.”

NOT ENOUGH

The EUDR also sparked criticism for not covering the finance sector, even though financial institutions lag behind companies on deforestation commitments, according to the report.

Over the past decade, the number of financial institutions with a deforestation policy has increased, reaching 45% this year, up from 11% in 2014.

However, despite this progress, most institutions, including major players like BlackRock, Vanguard, and Wells Fargo, still don’t have a single publicly available deforestation policy, and 85% lack a comprehensive policy approach on deforestation across their portfolios.

“A large number of major companies and financial institutions are persistently ignoring their role in driving the problem,” the report said.

“To avoid catastrophic consequences, we need to see significant progress over the next five years. Those who have not yet woken up to acting on this issue should finally pay attention.”

By Sergio Colombo – sergio@carbon-pulse.com

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