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New data published today by Global Canopy reveals that, despite some pockets of progress, voluntary private sector action has failed to generate meaningful progress on commodity-driven deforestation.
Over the last 10 years, the Forest 500 project has gathered 1.3 million data points on the 350 companies and 150 financial institutions with the most influence on commodity-driven tropical deforestation, assessing the strength and implementation of their deforestation and human rights commitments.
The 10th edition of the Forest 500 reveals that almost a quarter (23%) of the companies that have featured in each of the 10 annual assessments have still not published a single commitment on addressing deforestation.
These companies include Europe’s biggest shoe manufacturer, Deichmann Group, the second-largest Chinese food and beverage company, Bright Food, and one of the world’s largest investment companies, Vanguard.
‘There is no solution to climate change without ending deforestation. Almost every country in the world has committed to join in efforts to urgently address and reverse deforestation. Yet, after a decade of being in the spotlight and numerous engagement attempts, it is remarkable that this group of highly exposed companies has failed to produce a single publicly available deforestation commitment. Ignorance has long since ceased to be a defence.’
NIKI MARDAS
Executive director of Global Canopy
Of the companies that have set commitments, nearly two-thirds (63%) – including Adidas, Starbucks and Gap – are failing to publish adequate evidence of their implementation.
For example, despite having commitments for timber, leather, pulp and paper, leading home furnishing brand IKEA has not published adequate evidence of implementing its leather or paper commitments.
For leather, it has not published processes to monitor and improve compliance with this commitment.
This is a minimum expectation for implementation, which hinges on carefully monitoring suppliers and committing to a time-bound threat of exclusion if they do not become compliant following engagement.
Louis Dreyfus – one of the world’s largest agri-commodity traders – has published adequate evidence of implementation for its commitment on palm oil, which includes having a publicly available process to monitor its suppliers and its production or primary processing operations.
However, it has failed to match this for soy – despite being one of the world’s largest soy traders. It is unclear what proportion of its soy volumes are deforestation or conversion free, which is essential information to demonstrate effective implementation.
‘Commitments are not worth the paper they are written on if action is not taken’, noted Niki Mardas, executive director of Global Canopy, adding that just 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.
The 10th edition of the Forest 500 reveals ‘10 lessons from 10 years of data’. Chief among them is the need for regulation – both for corporates but also for financial institutions, due to the influence they can exert over companies.
‘Voluntary action alone doesn’t cut it; regulation is the only way to make the vital shift to the system as a whole that the world so urgently needs.’
NIKI MARDAS
Executive director of Global Canopy
Regulation for companies is now in place in the EU, with the EU Deforestation Regulation (EUDR) coming into force in December this year. Companies that fail to comply will not be able to trade deforestation-linked products on the EU market.
Global Canopy argues that other key markets, including the US and UK, must urgently follow the EU’s lead.
The 2021 Environment Act committed the UK to introducing due diligence regulation that would ban the import of commodities linked to illegal deforestation.
Yet two years later, the UK government has yet to introduce the secondary legislation that would implement this commitment.
‘While we welcome the EUDR and the UK’s proposal, both laws need to go further, the EUDR, for instance, is in danger of allowing a significant amount of deforestation because of its narrow definition of forests, which should be expanded to include the conversion of all natural ecosystems. And neither law covers the human rights abuses that go hand in hand with deforestation.’
HELEN BELLFIELD
Director of Policy at Global Canopy
Global Canopy also criticised the UK Environment Act’s narrow focus, targeting only large companies and only including the prevention of illegal deforestation.
The organisation warned that focus on legality could create perverse incentives for countries to reduce their legal protections for forests in order to avoid exports being blocked from entering the UK market.
Just 1% of the companies assessed in 2023 had a publicly available commitment in place for all of the human rights commitments across at least one of the highest risk commodities they’re assessed for. None had this for all commodities.
28 companies that have been continuously assessed since 2014 have scored 0 for human rights in the Forest 500 every year. This includes Darmex Agro, one of Indonesia’s largest palm oil cultivation, production and exporting groups.
Despite being the largest single driver of deforestation worldwide, cattle products are seeing the lowest levels of corporate action.
70% of the companies assessed for leather, and 65% of those assessed for beef, have still not set a single publicly available deforestation commitment for the commodity.
Only one company (Kering) has reported that at least 50% of its leather volumes are deforestation free and only one company (McDonalds) has done the same for beef.
‘We’ve just seen Brazil deliver the first leather cargo from 100% traced cattle’, Niki said. ‘Progress can and must be made.’
Nearly two-fifths (37%) of companies have evaded scrutiny by staying under the radar, publishing a deforestation commitment for at least one commodity but not for all of the commodities they’re exposed to.
For example, Inditex, the biggest fashion group in the world and owner of brands including Zara, Bershka and Pull & Bear, has a commitment for timber, but does not have a public commitment for leather, the key commodity it has exposure to and influence over.
Other major companies in this group include Aldi, Carrefour, Domino’s Pizza and Walmart.
In 2014 just 11% of financial institutions in the Forest 500 had published a deforestation policy. 10 years later that figure has risen to 45%.
This means that the majority (55%) of financial institutions with the highest exposure to deforestation in their portfolios are still yet to set a single policy, including BlackRock, Vanguard and T. Rowe Price.
85% percent of financial institutions still do not have a publicly available policy for all the four highest risk commodities, which drive two-thirds of tropical deforestation.
As such Global Canopy argues that emerging deforestation regulation must be strengthened to extend beyond corporate to financial institutions.
The need for additional regulation for financial institutions will be formally reviewed by 2025 as part of the EUDR review mechanism. The 150 major financial institutions in the Forest 500 are collectively providing $6.1 trillion in active finance (shareholding, loans, underwriting and bonds) to the 350 Forest 500 companies.
The top three providers to companies without a single publicly available deforestation commitment are JP Morgan ($27bn), Bank of America ($23bn) and Mitsubishi UFJ Financial ($21bn).
‘With their immense power to shift companies towards nature-positive outcomes, we urge financial institutions to set ambitious public policies for all high-risk commodities, and engage with high-risk companies in their portfolios. Effective engagement, with a time-bound threat of redirection of finance, is a critical tool financial institutions can use to help move the needle on deforestation, conversion of natural ecosystems and associated human rights abuses.’
EMMA THOMSON
Forest 500 and Tracking Lead at Global Canopy
Despite the overall lack of progress in halting commodity-driven deforestation, the example of palm oil proves that this is a solvable crisis.
Palm oil was once one of the largest global drivers of deforestation, but high-profile investigations and campaigns, as well as the creation of the RSPO (Roundtable on Sustainable Palm Oil) in 2004, has accelerated corporate action to address the crisis.
As a result, 76% of Forest 500 companies now have a palm oil policy and 55% report at least 50% of their volume being deforestation or conversion free.
This has had significant real-world results. Between 2018 and 2020, deforestation linked to palm oil in Indonesia – the largest producer of palm oil – was at just 18% of its peak between 2008 and 2012, showing a remarkable reduction.
Global Canopy argues that similar pressure must now be applied to all high-risk commodities, especially cattle products, to ensure that companies address deforestation, conversion and associated human rights abuses in their supply chains and portfolios – a critical pillar for tackling both the climate and nature crises.
‘We can’t avoid dangerous climate change if we lose our tropical forests. It is clear from this report that voluntary action by business isn’t working, and we need regulation to stop the destruction of forests that are home to indigenous peoples and many endangered and iconic species.
‘The UK government is two years overdue on promised action to take illegal deforestation out of UK supply chains. They could implement these measures immediately and could go further to take all commodities that cause deforestation from our shelves and not just those linked to illegal deforestation.’
MIKE BARRETT
WWF’s executive director of science and conservation
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