The message from the launch of the latest Forest 500 annual report couldn’t be clearer. Even as we hit 2020, the ambitious deadline set by many companies to remove deforestation from their supply chains, almost half of the most influential companies and financial institutions in these ‘forest-risk’ commodity supply chains do not have a public policy on deforestation.
This lack of progress is highlighted in the report’s 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.
102 (68%) of the financial institutions assessed, including BlackRock, Aviva and the Bank of New York Mellon, have no deforestation policies.
It is widely recognised that without action by these companies, it will be very hard to achieve the industry-wide shift needed to achieve the 2020 commitments. Yet the proportion that are laggards has scarcely improved since the previous Forest 500 assessment in 2018.
In this context, 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 a two-tier market where the EU has deforestation free supply chains but little else changes on the ground.
Despite their shortcomings, voluntary commitments can also raise the bar higher and faster than legislative measures. In places where environmental governance is weak or being rolled back, as in Brazil, they can be critical in reducing deforestation.
The response by a number of companies and investors to halt purchases or investments in Brazil following the 2019 fires in the Amazon sent a powerful message to the agricultural sector in Brazil. It also highlights the critical role of the media and finance sector champions in encouraging action by companies.
The 86 Forest 500 companies which do have a specific commitment for each of their forest-risk commodities also send a strong message to companies without commitments that they can and should be addressing this issue.
Some good news is that more major companies are coming to the table. The 2019 assessments show 25 companies introduced new commitments for specific commodities, including Glencore, Schwarz Group (the owner of Lidl), and Restaurant Brands International (the owner of Burger King and Tim Hortons).
Most recently, Tyson Foods, the largest food company in the US and one of the Forest 500 with no existing deforestation policy, announced that it will work with supply chain experts Proforest, with support from Global Canopy, to undertake a deforestation risk assessment of its supply chains. Their goal is to introduce a first policy on forests this year.
This is exactly what is needed. For powerful companies to signal that this is no longer an issue that can be ignored, and then to follow up with action, bringing their influence to bear across their supply chain.
The more this happens, the more those who fail to act will stand out. But, sooner or later, a combination of consumer pressure, legislation and litigation will catch up with them. These companies are already on borrowed time.
Whatever it costs companies today to invest in cleaning up their supply chains, the price of inaction will ultimately be much, much higher.