- Since 2014, transparency and environmental, social and governance (ESG) reporting has significantly declined among the world’s 100 leading timber and pulp companies, a new analysis shows.
- An assessment by the Zoological Society of London shows the average score for these 100 companies dropped from 37.1% in 2017 to 24.1% in 2024, despite most companies’ stated commitments to responsible and sustainable production.
- This decline indicates systemic issues in the industry, which could undermine efforts to achieve sustainable forestry and responsible sourcing.
- More than half of the 100 assessed companies have commitments to zero deforestation, up from a third in 2017, according to SPOTT data; however, evidence of actual implementation remains sparse, with minimal progress in monitoring deforestation.
JAKARTA — An analysis of eight years’ worth of data by the international conservation charity the Zoological Society of London (ZSL) reveals a troubling decline in transparency and the environmental, social and governance (ESG) reporting of the world’s 100 leading tropical timber and pulp companies.
Since 2014, ZSL has been assessing ESG policies of these 100 most-significant timber and pulp companies through its corporate transparency initiative called the Sustainability Policy Transparency Toolkit (SPOTT).
“Together, these top 100 companies manage forests almost the size of France — so their actions impact a significant area of the world’s forests,” said Sam Ross, ZSL’s sustainable business project analyst, who led the assessment.
In 2024, the average score for these companies dropped from 37.1% in 2017 to 24.1%, indicating a significant lack of transparency and accountability in their ESG practices.
This is despite most of the assessed companies having committed to responsible and sustainable production on the back of growing pressure to halt deforestation worldwide by 2030. Halting deforestation is a key element of combating climate change as cutting down trees, particularly those in tropical forests, release vast amounts of the warming gas CO2.
“We have seen small signs of progress, but the overwhelming story has been one of inertia,” Ross said. “Despite years of pressure and attempted engagement, our data shows many tropical forestry companies continue to fail in reporting even basic ESG data.”
This decline in average score indicates systemic issues in the industry, which could undermine efforts to achieve sustainable forestry and responsible sourcing.
One core problem is a lack of engagement on key ESG issues such as deforestation, biodiversity loss and Indigenous peoples’ and local communities’ (IPLCs) rights, according to ZSL.
Therefore, it’s urgent for timber and pulp companies to take proactive steps toward enhanced accountability and transparency, such as making their sustainability policies publicly available and regularly reporting on their progress toward meeting their commitments, Ross said.
It’s also important for buyers to demand companies to take such steps, he added.
These buyers include some of the world’s largest consumer goods manufacturers, such as Nestlé, Mars Inc., The Hershey Company, PepsiCo, Colgate-Palmolive and Procter & Gamble, all of which have been identified by SPOTT to be sourcing pulp and paper for packaging from SPOTT-assessed companies.
“After eight years of research, it’s clear that transparency is unlikely to come from the tropical forestry sector alone,” Ross said. “Given their significant market presence and influence through sourcing and investment decisions, buyers and financers must play a crucial role by requesting detailed data, demanding transparency and pushing for accountability within the sector.”
While there are already regulations that require producers to implement sustainable principles in their operation, such as the incoming EU Deforestation Regulation (EUDR), those alone might not be enough, he pointed out. For instance, the EUDR doesn’t mandate companies importing to EU markets to disclose evidence to the public that their products are deforestation-free, Ross said.
This is why it’s important for consumer goods brands to step up and demand greater supply chain transparency, as this could “provide a layer of accountability that complements regulations such as the incoming EU Deforestation Regulation,” he added.
But even when timber and pulp companies are being transparent about their operations, policies and commitments to ESG and thus have high SPOTT scores, it doesn’t automatically mean they’re environmentally and socially responsible.
This is because what SPOTT evaluates are the quality of policies and commitments, not the companies’ impacts on the ground.
Therefore, buyers should go beyond demanding greater transparency of their suppliers.
They should also be more proactive in detecting unsustainable practices by their suppliers, such as deforestation, by consistently monitoring supplier progress and cross-referencing data, Ross said.
One source of data that buyers could use as reference is SPOTT media monitoring, which tracks media coverage of company activities, he said. These media reports provide context on implementation and infer risks associated with reported operations on the ground.
This way, buyers could be aware whenever their suppliers violate their ESG policies, even when they have high SPOTT scores.
Deforestation and Traceability Challenges
Deforestation is one of the key ESG issues for the timber and pulp industry.
In 2024, more than half of the 100 assessed companies have commitments for zero deforestation, up from a third in 2017, according to SPOTT data.
However, evidence of actual implementation remains sparse, with minimal progress in monitoring deforestation.
The percentage of companies actively monitoring deforestation has only slightly increased from 13.6% in 2019 to 14.3% in 2024, indicating a lack of urgency in addressing the issue and “widespread inaction” among the companies operating in these forests, ZSL said.
Another key ESG issue is traceability and transparency, which remains a significant issue.
Only nine out of 93 companies report procedures to trace their supply to forest management units, which are areas of state forest designated for commercial timber harvest.
Furthermore, only seven companies report that they could achieve 100% traceability.
Even among companies that report efforts to trace their supply chain, most fail to be transparent about their supply chain.
For instance, only one out of 88 timber companies published georeferenced maps of all forests they source from.
And only one out of 85 companies disclosed the names and locations of all their supplying mills.
“Many of the issues around unsustainable practices in the tropical timber forestry sector are compounded by opaque supply chains — most companies do not report who they are sourcing from and even fewer disclose where their suppliers are located,” Ross said.
This opacity is one of the main barriers to the investigation and verification of ESG claims, he said.
“This void of information can make it incredibly difficult to identify links between companies and increases the risk of companies sourcing from bad actors in the supply chain without being held accountable,” Ross said.
Social and sustainability commitments
Most assessed companies also fail to uphold their social commitments, with minimal progress in the number of companies committing to acquiring free, prior and informed consent (FPIC) of local communities before operation.
Only 29.5% of companies commit to FPIC by 2024, up from 20.8% in 2017.
While the commitment to FPIC saw modest improvement, the percentage of companies publicly disclosing details of their FPIC process has dropped, from 12.5% to just 7.4% during the same period.
These companies’ commitments to tackle climate change by reducing greenhouse gas emissions and adopting more sustainable policies have also been weakening.
The percentage of companies with time-bound commitments to reduce greenhouse gas emissions intensity has sharply declined from 21% in 2017 to 10% in 2024.
The share of companies publishing comprehensive sustainability policies has also fallen significantly, from 54.2% to 33% over the same period.
Banner image: An aerial view of illegally logged timber in Chhaeb-Preah Roka Wildlife Sanctuary that was documented on a patrol in April 2023 by members of the Prey Preah Roka Community Network – a grassroots activism group made up of communities around the wildlife sanctuary. Image by Andy Ball / Mongabay.
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