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Tracking Corporate Commitments to Deforestation-free Supply Chains 2016

Type of Publication: Progress Report

Date of Publication: June 2016

Organizations: Supply-Change, project of Forest Trends

A new report from Forest Trends’ Supply Change project tracks progress on 579 public commitments from companies around the world who have pledged to remove forest destruction from their supply chains. These businesses depend on the “big four” agricultural commodities – palm oil, wood products, soy, and cattle – that are found in nearly every aisle of the grocery store but are also responsible for more than a third of tropical deforestation each year.

Supply Change: Tracking Corporate Commitments to Deforestation-free Supply Chains, 2016 looks at 566 companies representing at least US$7.3 trillion in market capitalization who were identified as having deforestation risk tied to these four commodities within their supply chains. Of these companies, 366 have made coinciding commitments to shift to sustainable sources.

Launching at the Global Landscapes Forum in London, the report is the latest response to growing demand for accessible, high-quality information on private-sector commitments to delink businesses from commodity-driven deforestation. High-profile actions involving Nestlé and Kellogg’s to reduce forest destruction linked to palm oil, in particular, have helped raise awareness and urge more businesses to take action. Meanwhile, historic private-sector pledges announced during the Paris climate talks were a timely reminder that leadership from businesses is no less important than government action – particularly when it comes to preventing the loss of carbon-rich tropical forests.

“Negotiators from nearly 200 governments adopted the Paris Climate Agreement in December, and they did so with massive support from the private sector backed by hundreds of pledges to end practices that destroy forests for the sake of palm, soy, cattle, and timber & pulp,” said Forest Trends’ Founding President and CEO Michael Jenkins. “Now comes the hard part: keeping those pledges. But resources like Supply Change are empowering consumers and investors to monitor progress – and to hold businesses accountable for making good on their sustainability promises.”

“Ambitious corporate action is a critical prerequisite to achieving deforestation-free commodity agriculture,” added Jenkins. “But ambition alone is no substitute for accuracy and transparency, and commitments count the most when companies publicly disclose progress toward achieving them.”

Despite notable progress on cutting deforestation out of commodity supply chains, there’s much more work to be done. The report highlights a number of concerning global trends as well as the current limitations of voluntary commodity commitments.

Key findings include:

  • Companies are most likely to make commitments toward palm, and timber & pulp. Of companies active in palm, 61% have adopted pledges, compared with only 15% and 19% of those companies active in cattle and soy, respectively. The disparity is alarming because it is estimated that cattle production causes 10 times more deforestation than palm.
  • Large public companies are more likely to make commitments than small private ones, possibly as a result of pressure and higher standards for disclosure from financial institutions. Many of these large companies are consumer-facing entities headquartered in North America and Europe, far away from the environmental damage caused by commodity agriculture.
  • Companies that operate “upstream” (producers, processors, and traders) are more likely to make commitments than their “downstream” counterparts (manufacturers and retailers) – and their pledges are potentially more impactful. Upstream actors represent just 26% of tracked companies, but 80% have made a commitment, compared with 62% of downstream companies.
  • Current disclosure is insufficient as companies have only reported quantifiable progress toward one in three commitments. Even among pledges whose target dates have already passed, companies have disclosed progress on fewer than half.

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