Companies can improve transparency on deforestation. Here’s how.

Leah Samberg of the Accountability Framework initiative (AFi) and Tomasz Sawicki of CDP outline six steps companies can take to better understand and disclose their progress towards achieving deforestation- and conversion-free supply chains.

Companies can improve transparency on deforestation. Here’s how.

Pictured: Deforestation near Stutterheim, South Africa

The 2024 CDP questionnaire recently launched. Through this, companies can report on progress towards eliminating deforestation from their agricultural and forestry supply chains. Investors and other stakeholders look to these disclosures to determine company performance on near-term climate and nature goals.

However, recent analysis indicates that most companies remain far from achieving deforestation- and conversion-free supply chains even as they approach deadlines for climate and nature targets, and regulatory mechanisms such as the EU Deforestation Regulation (EUDR)

Better data needed

2023 was the first year companies disclosed their methods and progress towards deforestation- and conversion-free supply chains in a standardised format through CDP using indicators developed in partnership with the Accountability Framework initiative (AFi). The AFi and CDP analysed those disclosures in the recent report Time for Transparency: Deforestation- and conversion-free supply chains.

The analysis found that two-thirds of company disclosures on progress towards deforestation- and conversion-free commodity sourcing had issues that undermined the reliability or interpretability of the information disclosed.

Issues included disclosures with inconsistent or missing information, or excluded activities, products, regions, suppliers, or volumes. Additionally, some disclosures relied on certification models that do not provide sufficient assurance, and others demonstrated limited company understanding of the capabilities of risk assessment and monitoring tools.

Six steps to transparency

The first two essential steps towards disclosure relate to clear communication.

1) Regardless of the amount of progress companies have made towards achieving no-deforestation and no-conversion, they should make accurate and comprehensive disclosures. Disclosing using standardised and commonly used reporting tools that use or align with AFi metrics ensures that companies use indicators that support clear and consistent information. All companies that produce or source agricultural or forestry commodities operating at any stage of the supply chain should disclose this information.

2) Companies should also communicate publicly through commitments, and directly to suppliers, their intentions to achieve deforestation and conversion-free supply chains. Corporate commitments and policies support internal buy-in for action and provide an essential baseline from which to measure progress towards meeting goals. Additionally, to achieve compliance with policies throughout their supply chains, companies must engage, support, and monitor their suppliers.

The next three steps focus on becoming informed users of available tools and approaches.

3) Companies should work to understand the capabilities and limitations of certification programmes and chain of custody models, as not all can be used to support claims of deforestation- and conversion-free. Some require additional monitoring and due diligence processes to provide assurance.

4) Companies should also adopt an informed approach to selecting and using risk-based assessment systems. They should use only those that can ensure that materials produced in specified sourcing areas are free of both deforestation and ecosystem conversion. Some tools, for instance, consider deforestation only, without including the risk of conversion of other natural ecosystems. Before using this method to determine deforestation- and conversion-free status, companies should gather information about the methodologies each system uses.

5) When setting, monitoring, and disclosing on deforestation- and conversion-free commitments, companies should consider their impacts on forests as well as their impacts on all other natural ecosystems, such as grasslands, savannahs, and wetlands. Further, companies should monitor compliance with their no-deforestation and no-conversion commitments at both the level of the production unit and the level of the sourcing area.

The final step has to do with digging deeper into supply chains to better understand and communicate impacts.

  1. Companies should understand and disclose on highly transformed commodities in their supply chains, which are known as embedded volumes. This is particularly relevant for companies that purchase or source animal products like dairy, eggs, farmed fish, and meat as the animals have likely been given feed containing soy or palm oil. The 2024 CDP questionnaire includes new questions about embedded soy volumes that allow companies to detail the actions they are taking and the progress they are making on this type of indirect commodity sourcing.

Companies have until 2nd October 2024 to report through CDP, giving them the opportunity to provide clear and accurate information to their stakeholders. This transparency is a vital step in the transition to deforestation- and conversion-free commodity production and trade.

Leah Samberg is lead scientist for global policy at Rainforest Alliance and Tomasz Sawicki is head of land at CDP. 

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