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Time for change: delivering deforestation-free supply chains

There is no solution to the growing climate and nature crisis the world faces without a solution to deforestation. Currently, two thirds of tropical deforestation is driven by agricultural expansion to produce commodities such as soy, palm oil, timber, and beef.

Over the last decade leading companies, financial institutions and governments took on ambitious commitments to address deforestation in their supply chains and financing by 2020.

But by the start of 2020 – the year the problem was to have been all but resolved – even the leaders have fallen well short of their targets, and tropical primary forest loss had increased by 44% since the signing of the landmark New York Declaration on Forests, announced by the Secretary General at the UN General Assembly in 2014.

Since that time, Forest 500 has annually assessed the 500 most influential companies and financial institutions in key forest-risk supply chains on the strength and implementation of their voluntary commitments and policies to address deforestation, including their reporting on progress.

2021 can be a decisive year for action on market driven deforestation - despite the recent failure of the private sector to achieve the high-profile 2020 global goals.

The Forest 500 assessment finds that 43% of the 500 companies and financial institutions in forest-risk supply chains do not have a commitment on deforestation.

There is momentum behind due diligence legislation to address market-driven deforestation in major markets. This is vital and is in the interests of companies that have led the way through voluntary action as it creates a level playing field, raising the bar for the poorest performing companies.

Financial institutions also have huge influence over the global supply chains driving deforestation. Yet the great majority – including some who make high-profile claims to be leaders on climate change – have remained silent on this issue.

$2.7 trillion of financing into the most influential high-risk companies comes from Forest 500 financial institutions with no deforestation policy.

You can find more on the Forest 500 selection methodologies and scoring methodologies

    Map 1: The proportion of financial institutions headquartered in each region with no deforestation policies for any of the high-risk commodities.

    Key findings

    • 43% of the Forest 500 companies and financial institutions do not have any deforestation commitments for any of the forest-risk commodities they are exposed to. The finance sector is particularly lagging behind, 63% of the 150 assessed by Forest 500 do not have any deforestation policies. And 81% (122/150) have not published a deforestation policy covering all four high-risk commodity groups.
    • $2.7 trillion of financing into the most influential high-risk companies comes from Forest 500 financial institutions with no deforestation policy. 
    • While 66% of the 350 companies assessed have at least one deforestation commitment, only 25% have published a deforestation commitment for all of the high-risk commodities they are exposed to.
    • 34% of companies with at least one deforestation commitment have not reported on their progress towards the commitment in the last two years.

    Global Canopy calls on:

    • Exposed financial institutions and companies, as an absolute minimum to publish a strong deforestation policy or commitment covering all of their exposure to deforestation by the end of 2021. Those in the Forest 500 that position themselves as leaders on climate change at meetings like the forthcoming Climate Summit (COP26), cannot be taken seriously if they have no policy on deforestation.
    • Those with policies already in place to focus on robust engagement with portfolio companies and suppliers, with the threat of divestment or exclusion for those not making progress.
    • Consumer governments to introduce due diligence laws, recognising that existing proposals need to be strengthened and accelerated. Due diligence legislation needs to have clear requirements and sanctions; covering standardised reporting, conversion of all ecosystems, human rights, and the finance sector.
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