17 February 2023

4 out of 10 companies have made no commitment against deforestation


According to Global Canopy 201 of the 500 companies and financial firms most exposed to deforestation have taken no action to address the problem. Financial institutions perform worse than non-financial companies

by Matteo Cavallito


More than a third of the firms that contribute the most to deforestation have yet to develop a plan to reduce their impact on the phenomenon, the latest report by the NGO Global Canopy has found. The study, which looked at the initiatives of the 350 companies and 150 financial institutions most exposed to the problem through their supply chains and investments, drew a troubling picture.

None of those surveyed had eliminated their contribution to deforestation, “and 40% (201 companies and financial institutions) haven’t set a single policy on deforestation,” the authors explain. “Ending deforestation is essential to achieving urgent global goals on climate, nature and human rights”. La distruzione degli ecosistemi “impacts global temperatures, emissions, biodiversity, rainfall, displacement of communities and food security.”

Fewer than one in three companies committed to all raw materials

Conducted now for 9 years, the survey known as Global Canopy’s Forest 500 has focused on half a thousand entities by assessing their concrete policies and initiatives. The latest edition of the study shows that 100 of the 350 companies monitored have made a deforestation commitment for all raw materials purchased and processed along the supply chain. Another 141 (40 percent of the total) have disclosed a plan to tackle the problem but only for a portion of the highest-risk forest resources they are exposed to.

At the same time, the research explains, “38 companies, despite being included in the Forest 500 every year since 2014, still don’t have a single deforestation commitment in place.”

Commitment varies by industry. Nearly 3 out of 4 companies have taken initiatives not to contribute to deforestation in the palm oil sector; more than half have taken similar initiatives in the timber and paper sectors. At the same time, “Only 28% (20/71) of companies assessed for leather have a deforestation commitment for leather and only 30% (29/96) of companies assessed for beef have a deforestation commitment for beef.” Data are also disappointong for soybeans, “with less than half (43%) (83/192) of companies with a deforestation commitment in place.”

Banks provide strong support to deforestation

The situation appears even more problematic for observed financial institutions which, to date, provide $6.1 trillion in financing to companies in forest-risk supply chains. Of the 150 companies observed, “Only 16 (11%) have policies for all four commodities that are assessed”. At the same time, “39% (58 financial institutions) have at least one deforestation policy for any of the forest-risk commodities they are exposed to in their portfolios.”

Moreover, “92 (61%) of the financial institutions that are most exposed to deforestation do not have a deforestation policy covering their lending and investments”. Queste ultime, rileva lo studio, “provided $3.6 trillion in finance to the companies with the highest exposure to deforestation risk.”

The research offers further confirmation to a problematic overall picture. In recent months, a study by the NGO Forests & Finance has found that since the signing of the Paris Agreement in 2015, global major banks have provided $267 billion credit to just 300 commodity companies at risk of deforestation operating in the world’s three largest tropical regions.

The impact on human rights

The partial or total lack of commitment to addressing deforestation, Global Canopy researchers explain, “is often inextricably linked to human rights abuses.” Indeed, deforestation fueled by growing demand for raw materials “can result in conflicts between companies and dispossessed communities.” In this scenario, unfortunately, “action on the human rights abuses associated with deforestation is failing across the board.”

The study, in particular, came up with new indicators such as the respect for the rights of communities historically established on the territory and the ability to counter threats and violence against environmental activists.

The analysis “found that companies were not keeping up with the best practice for companies in forest-risk supply chains, and the average company’s score on associated human rights fell by 7 percentage points with the addition of new indicators.” Even companies engaged in protecting other fundamental rights are not taking adequate action against forest-related rights violations, the study concludes.