The most influential financial institutions and corporations are doing little or nothing to tackle deforestation, a new report has found.
the Forest 500 report warns that these organizations are undermining global climate goals by not addressing the problem. A third of the 350 companies surveyed had no policies in place to ensure their products did not lead to deforestation.
“We ran [the report] since 2014 and unfortunately it shows really disappointing results. That progress is still lacking, there hasn’t been much change in the last year,” says Sarah Rogerson, program manager for the Forest 500 report.
“We’ve seen a lot of private sector engagement over the last 10 years, but clearly they’re not working. Deforestation continues to increase.
Nearly two-thirds of these financial institutions also have no specific policies in place to address the problem in their portfolios. This includes three of the world’s largest asset managers, BlackRock, Vanguard and State Street.
Together, they provide a total of 4.4 trillion euros to the companies most exposed to deforestation in their supply chains.
Rogerson adds that with deforestation contributing 15% of global carbon emissions, addressing this issue should be an important part of any company’s climate commitments.
“What we are trying to convey is that there is no solution to the climate without a solution to deforestation.”
Which companies are lagging behind on deforestation?
To produce the annual report, Global Canopy examines which raw materials cause the most deforestation around the world. This includes crops like palm oil, soybeans, beef, leather and timber.
They then trace them through the supply chain to find the top 350 contributors and the 150 financial institutions that fund them.
“That means we have a lot of companies that you won’t recognize by name,” says Rogerson.
“These are producers who don’t have any sort of consumer-facing presence, but they will be in the supply chain of those we recognize and or they will have a loan from a financial institution that we see at the top. . street too. »
However, it also contains well-known names, especially when it comes to “hidden ingredients” such as soy. Commonly used in animal feed, brands with no deforestation policy for soy include Häagen-Dazs ice cream, Heinz mayonnaise and Hershey chocolate bars.
What can be done to prevent companies from undermining climate goals?
Leaders from 141 countries signed a declaration at COP26 to “halt and reverse forest loss and degradation by 2030.”
“Governments are now introducing an obligation for companies to carry out checks to ensure that there is no illegal deforestation in their supply chains,” says Nigel Topping, High Level Champion for Action climate change at COP26.
“In November 2021, the Environment Act enacted this law in the UK and the government is consulting on the full scope of the measures. Similar due diligence legislation is in the works in the European Union and the United States.
Those who don’t act now, the report warns, will struggle when these new due diligence requirements come into effect.
More than 30 financial institutions with nearly €8 trillion in assets also pledged to do their best to eliminate commodity-induced deforestation from their portfolios at COP26. . But, as the report reveals, only four of them were among the 150 with the most influence on the sector.
Rogerson says that’s why the Forest 500 report turned its attention to the financial sector, “as a way to add more pressure on companies to take action.”