Many major global companies and financial institutions that directly or indirectly contribute to deforestation do not have policies to protect forests, increasing the risk of catastrophic nature loss, a report said Wednesday.
The report comes just months after countries reached a historic agreement to protect 30 percent of land and seas by 2030 at UN biodiversity talks late last year.
At the same time, upcoming legislation for the European Union and the United Kingdom will tighten rules on trading commodities linked to deforestation.
Tropical deforestation
But a new analysis on Wednesday showed that hundreds of companies still have not set a single policy on deforestation despite these high-level commitments.
These companies are at risk – financial, reputational, operational – if they do not take steps to reduce their role in deforestation, the Forest 500 analysis by the non-profit research group Global Canopy said.
“While there are pockets of progress, the majority of companies and financial institutions are living on borrowed time, creating climate and natural risks,” said Global Canopy director Niki Mardas.
The report found that 201 of the 500 companies and financial institutions with the greatest impact on tropical deforestation – 40 percent of all companies assessed – failed to set deforestation policies, virtually unchanged from a year ago.
They include the VW Group and the Deichmann Group, Europe’s largest footwear retailer. Deichmann said in a statement to AFP that he did not directly source any material from the country “linked to the issue of deforestation”, while the VW Group did not respond to requests for comment.
Also read: Deforestation in the Brazilian Amazon reaches a record in January
The report evaluates the 350 companies with the largest shares in forest-threatening commodities: palm oil, soy, beef, leather, wood and pulp and paper. It also looks at the 150 financial institutions that provide the most finance to these companies.
It found that 100 companies have deforestation commitments for all visible commodities, including British consumer goods company Unilever and supermarket Sainsbury’s.
But only half of these are actively monitoring suppliers or sourcing areas in line with their own policies.
“Many companies have commitments, but few are taking sufficient action to implement them,” Global Canopy said.
– Violation of rights –
Deforestation – driven by commodity crops such as palm oil and soya, cattle grazing and timber exploitation – threatens the Earth’s climate, communities and the diversity of life.
Experts say containing deforestation is key to meeting climate goals.
Last year, around 330 companies wrote an open letter to world leaders asking for rules and regulations to reveal their impact on nature.
New laws in the EU and the UK should help those efforts, but Global Canopy says companies need to do better — and can use more tools and data guides than ever before.
Also read: The appetite of rich countries increases tropical deforestation
“Really, 2023 is the best year to take action on deforestation,” Emma Thomson, head of Forest 500, told AFP.
“If companies and financial institutions engage in deforestation, this is a very concentrated way to have a major impact on the climate crisis and the natural crisis,” he said.
The analysis also showed that only a small proportion of financial institutions “most affected by deforestation consider deforestation to be a systemic risk”.
Of the 150 financial institutions assessed, 92 do not have a deforestation policy that covers lending and investment.
Financial institutions, which include major asset managers BlackRock, Vanguard and State Street, have provided $6.1 trillion in financing to companies in the forest risk supply chain, he said.
The report also found that companies’ average score for respecting human rights related to deforestation dropped by seven percentage points with the addition of the new indicator.
Also read: The link between deforestation and pandemics
Thomson says deforestation is linked to a wide range of abuses, from violations of land rights and consent, to violence and threats against human rights defenders.
“Deforestation cannot be effectively eradicated without addressing human rights violations,” he said.