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Data to increase accountability in forest-risk supply chains

A lack of transparency in forest-risk supply chains is hindering action to address deforestation. Our Forest 500 assessments show which companies have committed to action, and highlight the gaps where companies are still not reporting

By Emma Thomson

While progress to address deforestation in forest-risk supply chains has been lamentably slow, there is a growing awareness of the urgent need for action in the face of the climate and nature crisis. Good quality data is crucial for effective action, allowing companies and financial institutions to identify where the risks lie. It also supports greater accountability, allowing others to see what is being done.

Global Canopy’s Forest 500 project helps to support action to end deforestation in supply chains by identifying the most influential companies and financial institutions in forest-risk supply chains and shining a light on what they report they are doing to address the problem. This is crucial information for financial institutions and others seeking to understand which companies are acting to minimise the risks.

While our assessments reveal that some companies have made strong commitments to ensure their supply chains are not linked to deforestation, they also show too many companies are not taking responsibility for their impacts on deforestation. This failure to act is driving calls for tighter legislation in many countries - with proposals for due diligence legislation intended to ensure companies address deforestation risks.

Global Canopy: Data for nature

Forest 500

Forest 500 identifies the 350 companies and 150 financial institutions with the greatest influence on tropical deforestation, and assesses them on the strength and implementation of their deforestation commitments. Assessments are based on the information each company makes available on its website - rewarding companies and financial institutions who are transparent about their activities.

The latest Forest 500 assessment found that two thirds of the companies had made a commitment to remove deforestation from their supply chains for at least one of the forest-risk commodities they were exposed to (covering soy, palm oil, cattle, timber, pulp and paper). Just one in four (87 companies) had a deforestation commitment for all commodities.

But are these commitments being implemented? According to the latest assessment, one in three companies with a commitment had not reported on their progress in the last two years. 

Even when companies do report on this information, they tend to provide different data - which can mean it is difficult for others to compare the level of risk between companies. This can be an issue for financial institutions wanting to compare the risks faced by different companies in their portfolios.

How does Global Canopy data help?

Global Canopy is working to close the data gap and bring greater transparency to forest-risk supply chains. Forest 500 does this by publishing the results of our assessments of corporate action on deforestation on our website for anyone to access and download

Forest 500 data allows companies to compare their approach to deforestation to that of their peers, but also to look at the publicly available commitments made by the companies who might be further up in their supply chains.

NGOs, campaigners, consultancies and financial institutions can use this data to drive forward progress to deforestation-free supply chains.

Encouraging standardised data

Global Canopy is also working to develop standardised approaches to data, making it easier to compare progress between companies. We are working with the Accountability Framework initiative to develop a standard set of metrics for reporting, with support from government and companies for this standardised approach.

Global Canopy’s new Aligned Accountability project will build on the Forest 500 dataset and connect to other publicly available datasets to provide assessments of corporate performance on deforestation at scale. This will provide comprehensive data for financial institutions and Environmental Social Governance (ESG)  providers which can better inform financing activities. Through this project Global Canopy will also work with the Accountability Framework Initiative and other assessment initiatives to improve the metrics used to assess corporate performance, working towards assessing the true impact of companies in forest risk commodity supply chains.

Data for deforestation-free supply chains

Greater transparency and better data can help companies and financial institutions address deforestation, but action is needed across deforestation-risk supply chains if forests are to benefit. This is why Global Canopy is urging governments in consumer countries to bring in due diligence legislation to require companies to remove the risk of deforestation in their supply chain. 

Due diligence measures are being considered in the UK and the European Union, and there are also proposals for legislative measures in the US. 

To be effective, due diligence legislation must cover all forms of deforestation, and must demand standardised reporting. To comply, companies will need access to better data. Standardised approaches to data reporting will lead to greater transparency and accountability - helping make deforestation-free supply chains and financial portfolios a reality.

Find out more about the companies and financial institutions assessed in the latest assessment report

Image: Kanenori, Pixabay

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