Inaction on deforestation undermining corporate net-zero commitments, report finds
An assessment of the forest-related policies and performance of 350 big companies has found that 98% net-zero targets risk not meeting them due to their deforestation links. The researchers have pointed the finger at firms including Ikea, Amazon and Starbucks.
The assessment, the Forest 500, has been published today (15 February) by NGO Global Canopy. It tracks the deforestation-related policies – and performance against them – by 350 corporates in the forest commodity value chain. It also assesses action to tackle deforestation by 150 major financial institutions.
The headline conclusion is that financial institutions are lagging “woefully behind” corporate players on implementing deforestation policies. Just under one-third (31%) of the corporates assessed still have no deforestation commitments for any of the forest commodities to which they are exposed. This is concerning, but Global Canopy has noted improvement year-on-year. 29% of corporates now have a deforestation commitment for all relevant commodities.
For financial firms, however, 61% have no deforestation policies for any commodities. There is only a slight improvement on 2022, when the proportion stood at 63%. The report noted an “impressive” increase in score by Schroder’s, but little movement in the main. Just 11% of the financial firms have a deforestation policy for all commodities, up slightly from 7% in 2022.
The big three asset managers – BlackRock, Vanguard and State Street – are accused in the report of having no policies in place.
Global Canopy estimates that the 150 financial institutions assessed through its Forest 500 work collectively provided $527bn of funding to companies with no deforestation commitments at all in 2022. This is equivalent to almost one-tenth of all of their financial flows to companies.
Schroder’s is singled out as a positive example of change. In 2021, Global Canopy gave the firm an overall score of just 4% for efforts to eliminate deforestation from its portfolio. But, in October 2022, it pledged to eliminate commodity-driven deforestation from investment portfolios by 2025. This pledge and the supporting policy resulted in an uptick in overall score to 50%.
Spotlight on corporate net-zero targets
While most of the 350 corporations assessed for Forest 500 have at least one deforestation commitment, and almost one-third (29%) have commitments covering all commodities to which they are exposed. Global Canopy has found gaps in implementation.
It states that only half of companies with commitments are actively monitoring their suppliers and/or sourcing regions to track whether activity is aligned with their policies.
Moreover, 31% of the companies have no public deforestation commitments that are commodity-specific at all, including Europe’s largest shoe retailer Deichmann Group; US-based manufacturer Ashley Furniture Industries, North American food conglomerate Land O’Lakes and automaker VW Group.
Global Canopy is warning that this lack of policy-setting by some corporates, plus weak implementation by the majority of others, risks undermining corporate climate commitments.
Of the 350 companies assessed, 145 have a public commitment to reach net-zero by 2050 or sooner. Global Canopy has documented a fivefold increase in these commitments over three years. Of these 145 companies, Global Canopy believes that 98% could miss their net-zero targets without stronger action on deforestation.
“It is remarkable that while a great many of the companies in the Forest 500 have ambitious net-zero targets, almost all of those risk missing them because of inaction on deforestation,” said Global Canopy’s executive director Niki Mardas.
“The Global Biodiversity Framework agreed in Montreal [in December 2022] represents huge progress. But those companies now putting up their hands to lead on tackling nature risk cannot be taken seriously if – as so many are – they are already failing to act on deforestation.”
The report is the latest in a line of research shining a spotlight on pitfalls in corporate net-zero commitments and strategies. Earlier this week, the ;latest Corporate Climate Responsibility Monitor from the New Climate Institute and Carbon Market Watch warned that the decarbonisation targets of 24 corporates viewed as “climate leaders” are “mired by ambiguity”. It highlighted a particular failure to support long-term net-zero aspirations with shorter-term efforts to cut emissions.
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But there is a tralnload of money in chopping down trees.