Experts are clear that net-zero cannot be achieved without ending deforestation; yet progress on the latter remains desperately slow. Nick Hughes reports.
“Deforestation remains one of the least requested areas of information asked of us, or of our clients.” So said Carolyn Ball, director for delivery of net-zero at Compass Group UK & Ireland, in a Footprint article in December.
Her words feel even more prescient in light of new research by Global Canopy which found snail-like progress among global food companies in taking action to tackle deforestation in supply chains.
The NGO’s ninth annual Forest 500 report, which assesses companies across a range of indicators from deforestation commitments to action on associated human rights abuses, found that 31% of the 350 companies with the greatest influence on tropical deforestation risk through their supply chains do not have a single deforestation commitment for any of the commodities – beef, leather, soya, timber, pulp and paper, and palm oil – to which they are exposed. Of the 100 companies that do have a deforestation commitment for every commodity, only half (50%) are monitoring their suppliers or sourcing from regions in line with their deforestation commitments.
The picture was bleaker still for the financial sector: only 16 (11%) of the 150 financial institutions most exposed to deforestation have policies for all commodities assessed, according to the report.
Global Canopy describes 2023 as “a watershed year for action on deforestation”. It says inaction “is a risk to finance, a risk to business and a risk to life”, and yet the companies and financial institutions with the most influence on deforestation continue to take “insufficient action”.
Why is the pace of change so slow and is there any hope that future deforestation targets will be met?
Red FLAG
Emissions from the forest, land and agriculture sector (FLAG) represent about 22% of net anthropogenic GHG emissions in tonnes of CO2 equivalent (CO2e), with about half from agriculture and half from land use, land-use change and forestry. That’s according to new guidance developed by WWF on behalf of the Science Based Targets initiative (SBTi), which sets out best practice for net-zero aligned target setting in the FLAG sector, including for food businesses.
There are signs that the world’s power brokers are beginning to join the dots between deforestation and climate change. The subject has edged up the agenda at recent COP climate summits to the point where there is now widespread recognition that the Paris climate goals can only be achieved by protecting the tropical forests, savannahs, peat bogs and other ecosystems that act as vital carbon sinks – and conversely release stores of carbon when they are converted to agricultural land. At last year’s COP27 summit in Egypt, a UN high-level expert group report demanded that “by 2025, businesses, cities and regions with significant land-use emissions must make sure that their operations and supply chains don’t contribute to deforestation, peatland loss and the destruction of remaining natural ecosystems”.
Preventing deforestation is not just a climate issue; it’s key to the preservation of plant and animal species that support healthy, diverse ecosystems and is often linked to abuse of human and indigenous rights, according to Global Canopy.
Still, the NGO is clear that “there is no net-zero without ending deforestation and conversion as soon as possible”. That stands for corporate as well as country net-zero targets. The latest Forest 500 assessment, which features the likes of McDonald’s, Starbucks and Domino’s Pizza, found that just 2% of companies with net-zero and 1.5C aligned commitments scored sufficiently high in relation to their work tackling deforestation to be on track to meet those net-zero commitments due to its crucial role in reducing emissions.
Low-hanging fruit
Businesses working towards stretching near-term net-zero targets can often achieve more immediately impactful climate wins by starting closer to home. As part of its net-zero by 2030 commitment, Compass UK & Ireland has established a target for no deforestation for deforestation-linked commodities by 2025 in line with the latest SBTi guidance. However in its recently published (and first ever) climate impact report the business openly shared that out of six focus areas it has initially concentrated efforts “on the three areas that represented the biggest opportunity for immediate action and maximum material impact”; these being carbon, biodiversity and waste. It added that in the three remaining areas – plastics and packaging, deforestation and water stewardship – “we have encountered significant challenges”. Ball says that this doesn’t reflect deforestation being deprioritised as a sustainability issue within the business but rather a desire to be open and transparent about where challenges lie.
Compared with other climate impact mitigation measures like switching to renewable energy, sourcing deforestation-free commodities presents huge difficulties for businesses. “The complexity and opacity of commodity supply chains have long stood as excuses for inaction,” writes Global Canopy.
Coordinated action
A key barrier to achieving deforestation and conversion-free commodity supply chains is that it requires coordinated action from across the value chain – from retailers and foodservice operators to manufacturers, traders and producers – rather than unilateral action by an individual business. It’s relatively easy to decide you’re going to switch your entire fleet of company cars to electric vehicles; less so to ensure that palm oil that has passed through multiple hands across multiple continents has been sustainably produced.
In fact, efforts to remove deforestation from palm oil supply chains have proved relatively successful when set against other forest commodities. According to Global Canopy, palm oil and timber are the commodities with the greatest number of deforestation commitments made by companies with beef and leather lagging at the foot of the table.
WWF, meanwhile, in its first report on the impact of the UK shopping basket on climate and nature found that 62% of palm oil in retailer supply chains was verified deforestation and conversion-free, compared to just 6% of soya.
WWF’s target is for retailers to achieve 100% deforestation and conversion-free agricultural commodity supply chains by 2025. To underscore how difficult this will be to achieve, the charity found that retailers have yet to identify any soya or palm oil importers who are committed solely to handling deforestation and conversion-free material across their entire supply chain. It added that while some traders have signalled their intention to make such a move “none have so far provided a strategy that aligns with the retailers’ commitment post 2025”.
Commitments that concern globally traded commodities are also subject to changes in the geopolitical landscape. In its climate impact report, Compass noted how an original target to achieve 100% sustainable palm oil by the end of 2021 (it is currently at 95%) had to be pushed back to the end of 2023. It explained that pressure on global oil supplies due to the war in Ukraine coupled with the delay in a contract renewal for one of its remaining suppliers that uses uncertified palm oil following Indonesia’s temporary ban on palm oil exports in June 2022 were in part responsible for the target being missed.
2025 target
Back in 2010, the New York Declaration of Forests and the Consumer Goods Forum set a target to end deforestation in global supply chains by 2020. A failure to do so has seen 2025 emerge as the new target date by which commodity-linked deforestation must end.
There are reasons to believe that the latest wave of deforestation targets have a greater chance of being met than those set back in 2010. One reason is the growing willingness of national governments to use regulatory levers to drive change. A new EU law comes into effect later this year that will make it obligatory for companies to verify that goods placed on the EU market have not led to deforestation and forest degradation anywhere in the world.
In the UK meanwhile, a new law contained in the Environment Act 2021 prohibits the use of illegally produced commodities in UK commercial activities unless relevant local laws were complied with. It’s a start, although campaigners have warned that as well as being difficult to implement and enforce the measures risk having limited effect since the law stills allows products that result from legal deforestation to be sold in the UK.
Businesses, meanwhile, continue to make ambitious deforestation pledges despite a track record of failure to meet them. A coalition of 38 leading UK food companies including retailers and foodservice operators marked the first anniversary of the UK soya manifesto by announcing a new set of actions for ensuring all soya used in animal feed in the UK is deforestation free by 2025. These included a commitment to produce a quarterly soya deforestation risk register for UK imports.
Some companies are making greater headway than others. Manufacturing giants Nestlé and Unilever were among only four companies to be awarded a rating of four (out of five) in Global Canopy’s Forest 500 assessment. Yet none of the 350 have eliminated deforestation entirely from their supply chains despite many having made the original 2020 commitment.
We’re already two months into 2023 and those 2025 deadlines are beginning to loom large on the horizon. Businesses will need to act fast to prevent the deforestation can being kicked down the road all over again.
