Forest 500 annual report 2019: the companies getting it wrong on deforestation

As we start a new decade, we face a climate emergency and a crisis in nature, illustrated all too vividly by the 2019 fires in the Amazon. Ending forest loss is essential to address these crises, yet the main driver of tropical deforestation is demand for agricultural commodities.

Major companies, financial institutions and governments signed up to ambitious goals to end deforestation in commodity supply chains by 2020, but these commitments have failed to galvanise meaningful action. In fact, some companies have quietly dropped previous commitments. The voluntary commitments to end tropical deforestation by 2020 have failed.

The Forest 500 annual assessment of the most influential companies and financial institutions in forest-risk supply chains finds that some leading companies have made progress towards removing deforestation from their supply chains. But the lack of any action by nearly half of these companies and financial institutions is preventing the necessary sector-wide change.

Too many companies are still not acknowledging the deforestation risks in their supply chains, or recognising their responsibility to act. Often hidden in complex supply chains, these companies can escape scrutiny simply by staying quiet. Companies that have been more transparent have faced greater pressure, yet many of these companies do not report on the progress they are making to achieve their commitments.

Key findings:

● 140 (40%) of the most influential companies in forest-risk supply chains, including internet retailer Amazon, Dutch supermarket chain SPAR and luxury fashion group Capri Holdings, owner of Versace, Jimmy Choo and Michael Kors, do not have any deforestation commitments.

● 75 (21%) companies, including Gap Inc, Starbucks and Adidas, have commitments for just one of the commodities they source or produce, but not for the others.

● Some companies, including Yakult and Danish Agro, have removed or weakened previous commitments. Of the 157 companies which had commitments to remove deforestation by 2020 or earlier, four removed their commitment completely, and 18 companies, including Nestle, removed the deadline from their commitments.

● Of 210 companies with commitments, 100 (or 48%) do not report on progress for all implementation, including Unilever, McDonald's, Nike and Vans owner, VF Corp.

● The finance sector is ignoring the problem: 102 (68%) of the financial institutions assessed, including BlackRock, Aviva and the Bank of New York Mellon, have no deforestation policies.

Given this voluntary commitment failure, civil society, legislators, and even some leading companies have called for regulatory action to ‘level the playing field’ and force action by companies on deforestation risks. While moves towards this in the EU are welcome, action in all major markets is needed to avoid leakage and drive sector wide transformation.

Financial institutions also have a responsibility to address their exposure to deforestation risks in their portfolios. Despite high profile collective statements, including in response to the Amazon fires, the majority of the most influential financial institutions in the Forest 500 still do not publicly recognise deforestation risks within their investments or portfolios. All of these institutions are exposed to deforestation risks, but even those that have made statements do not necessarily have public policies in place for the companies they finance.

While the latest Forest 500 assessment shows voluntary commitments are falling short, they remain an important tool to eliminate commodity-driven tropical deforestation. They can raise the bar higher and faster than legislative measures, and in places where environmental governance is weak or being rolled back, as in Brazil, they can be critical in reducing deforestation.

But if commitments are to be effective over the coming decades, we will need to see consequences for companies that fail to publicly acknowledge their exposure or responsibility to tackle deforestation, or that fail to be transparent on progress towards deforestation-free supply chains.

Note: The Forest 500 2019 assessments were carried out between 15 July and 22 October 2019.

Note 2: The report was updated on 24 February 2020 and 10 March 2020