Finance and consumer goods giants ‘ignoring deforestation risks’ despite a decade of warnings

Published by NGO Global Canopy, the ‘Forest 500’ report analyses how 350 companies involved in forest-risk industries, plus 150 of their biggest financiers, are strategically acting to halt deforestation and forest degradation.

This report is published annually and, after ten years of work, Global Canopy has stated that it is “inexcusable” that 30 finance firms and 39 other companies have failed to publish a single deforestation commitment or policy within a decade.

Global Canopy described this group as “continual laggards” and stated that they are “willfully ignoring” deforestation-related risks and demands for greater ambition and action from key stakeholders.

Continual laggards in finance include BlackRock, Vanguard, Janus Henderson, State Street, Prudential Financial, AIG, Wells Fargo and Macquarie. Firms from North America and the Asia-Pacific region are represented in this cohort to a far greater degree than their European counterparts.

Taking into account companies that have not been included in all 10 Forest 500 reports and looking solely at this year’s list, 55% of finance firms have not got any deforestation-related commitments. This is a decrease from 89% in 2014 but Global Canopy continues to express concerns about a forest “blind spot” for the majority of the sector.

Moreover, of the financial firms with deforestation commitments, only 15% of them ensure that these commitments are comprehensive and cover all of their forest-risk commodities.

Firms named as leading in this respect include Schroders, Rabobank and BNP Paribas.

Beyond finance

Looking at the 350 companies involved in forest-risk industries, three in ten of those included in the Forest 500 for 2024 do not have any deforestation-related policies or targets.

Laggards include shoe company Deichmann, North American dairy and agri-food conglomerate Land O’Lakes and Indonesian palm oil players Darmex Agro and Japfa Ltd.

Of the businesses with commitments, two-thirds are not providing evidence of progress which Global Canopy deems “adequate” – provided annually, publicly, covering all key commodities. Included in this cohort are Louis Dreyfus, Adidas, Ikea, Gap and Starbucks.

A key reporting gap was found to be reliance on data relating to a small proportion of total commodity volumes. Just one in 20 of the companies publicly report that at least 50% of their commodity volumes are compliant with their deforestation and conversion-free standards.

Policy shift

Global Canopy’s executive director Niki Mardas said only regulation can help to turn these trends around. He said: “Almost every country in the world has committed to join in efforts to urgently address and reverse deforestation. Yet, after a decade of being in the spotlight and numerous engagement attempts, it is remarkable that this group of highly exposed companies has failed to produce a single publicly available deforestation commitment.

“Voluntary action alone doesn’t cut it; regulation is the only way to make the vital shift to the system as a whole that the world so urgently needs.”

The EU is widely regarded as a global leader on anti-deforestation regulation. Its EUDR policy package requires large businesses to prove that they have deforestation-free global value chains, a mandate that will take effect from the end of December 2024. Companies failing to provide adequate information will not be able to trade forest-risk products on the EU market.

An initial €70m is being provided by the EU to coordinate and expand forest data collection and to provide expertise to SMEs in commodity supply chains.

Global Canopy maintains that EUDR can and should go further by covering not only forests but all natural ecosystems, and embedding principles relating to the human rights abuses that can stem from ecosystem conversion or degradation.

The NGO has also rapped the US and UK for failing to follow the EU’s lead.

The UK’s Environment Act, ratified in 2021, does include a commitment to ban the import of commodities linked to illegal deforestation. But progress to implement that ban have proven slow amid two changes in Prime Minister in 2022 and with a general election on the horizon.

Green charities have long been calling on Ministers to expand the UK’s ban to cover deforestation that is technically legal in other countries.

Related article: How is sustainable finance faring against economic headwinds and the anti-ESG movement? 

Related article: Deforestation has gotten worse despite landmark international pledge, WWF warns

Comments (1)

  1. Richard Phillips says:

    I would consider that it was obvious from the start that the objective for the participants was to make as large a profit as possible, and within the law.
    Commercial undertakings are benevolent institutions, never have been, and never will be.

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