CDP: Most businesses yet to disclose forest impacts accurately

This is according to disclosure platform CDP, which has this week released new data on how businesses reported their forest-related impacts for activities in 2023. The Accountability Framework Initiative (AFi) assisted CDP with this project.

2023 marked the first year in which businesses could disclose the methods they were taking to reduce deforestation in a standardized format through CDP. The organisation also added guidance on reporting progress.

In total, 638 businesses used these features. While one-third of the disclosures were high-quality, CDP found fault with the remaining two-thirds, stating that they were not “clear and appropriate”.

A failure to report on the entirety of the forest footprint was a common pitfall. Many businesses excluded some activities, products or regions from their disclosures. There was an understanding that some firms are still building out their monitoring and data collection capacity.

Another key issue uncovered by CDP is the over-reliance on third-party certification schemes. Some firms do not conduct their own monitoring and are instead relying on others, with varying degrees of accuracy.

However, 82% of the firms did state that they have begun directly engaging suppliers.

CDP’s head of land Tomasz Sawicki said: “We recognise that many companies were transparent about the extent to which their supply chains are free from deforestation and conversion, but the latest analysis tells us that the majority of companies remain far from achieving deforestation-free and conversion-free supply chains by 2025, which is the immediate target.”

Only 64 of the 881 companies which disclosed forest data for at least one commodity supply chain have achieved zero deforestation and conversion and proved this with high-quality disclosures. That’s less than 8%.

The report from CDP and the AFi acknowledges that setting a public commitment to end deforestation can accelerate action and enhance disclosures for businesses. But it cannot be the end of the journey.

The organisations are urging businesses to “respond comprehensively and accurately” to disclosure requests in the future. They note that communicating directly with suppliers and better researching the limitations of certification schemes can assist with the collection of relevant, quality data from effective monitoring and control systems.

There is also a call for businesses to better understand the risks associated with deforestation and ecosystem conversion. This is becoming simpler with tools such as the Taskforce for Nature-Related Financial Disclosures (TNFD) framework.

Previous PwC research found that more than half of the market value of listed corporates on 19 major stock exchanges are exposed to physical nature risk. It described the potential impacts of nature’s decline on the global economy as “far-reaching”.

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