Corporates risk $941bn due to deforestation failure, CDP warns

A new study from CDP shows that almost nine in 10 (87%) publicly listed companies identify at least one risk from deforestation related to commodities such as timber, palm oil, cattle and soy.

And while nearly a third (32%) of the 201 companies surveyed are already experiencing impacts from those risks, including restricted market access and reputational damage, only 13% have made time-bound pledges to zero-deforestation, the report found.

Released today (21 November), the CDP study reveals that nearly four out of five (77%) companies do not disclose how they are affected. CDP is calling on investors to engage with firms to improve disclosure and performance, to protect against the looming risk of ‘stranded assets’.

“With deforestation accounting for around 15% of global emissions and putting almost a trillion dollars of listed equity turnover at risk, protecting forests has become a pre-requisite for both a stable climate and a stable economy,” CDP director of forests Morgan Gillespy said.

“We call on investors to ramp up their engagement and demand greater levels of disclosure from companies.”

Board oversight

CDP insists that more companies must gain boardroom-level oversight of deforestation. More than one in three (36%) do not assign their boards with responsibility for addressing the issue, according to the survey.

This contrasts with the likes of L’Oreal, Tetra Pak and Unilever, whose boards are cited as pioneering efforts in tackling deforestation. Indeed, only last week in Bonn, Unilever’s chief executive Paul Polman championed the role of forests in creating “resilient growth and climate justice”.

The report demonstrates a growing concern among investors about the impact deforestation could have on their portfolios, with 380 investor signatories currently signed up to CDP’s forests programme, more than double the number in 2013.

With greater access to information, investors can not only assess risks, but also potential opportunities, CDP claims. The report highlights a growing market for deforestation-free commodities, citing a Tropical Forest Alliance figure which puts the investment opportunity at $200bn by 2020.

Joint action

The study comes exactly a week after the UK Government announced two new projects worth £62m which will help tackle deforestation across Latin America.

Last month, 23 global companies including Marks & Spencer (M&S), Tesco, Unilever and Walmart committed to take shared action to confront soy-driven deforestation in Brazil.

That partnership arrived on the same day that a joint report from WWF and the RSPB claimed that an overseas area the size of Greece would be needed by the UK to produce key imported consumer products including cocoa, palm oil, pulp and paper, rubber, soy and timber.

George Ogleby