- Global Canopy’s annual Forest 500 report reviews the top 350 most influential companies and 150 financial institutions exposed to deforestation risk in their supply chains and investments.
- While many entities have developed some policies on deforestation, they’re not keeping up with the best practices needed for improving forest-risk supply chains, the report said.
- However, a new deforestation supply chain law in the European Union could force many of the largest companies and financial institutions to implement stricter regulations moving forward.
There was hope, back in 2014, that the world would be able to halve deforestation rates within the following five years. The New York Declaration of Forests, a list of goals to protect and restore the world’s forests, had set a deadline for companies, financial institutions and the public sector. But the deadline came and went, and commodity-driven deforestation continued with only incremental improvements.
Now, 2025 has become the new target date for halting commodity-driven deforestation. A UN high-level expert group said last year that companies still have time to crack down on “deforestation, peatland loss and the destruction of remaining natural ecosystems.” The Glasgow Declaration of Forests and Land Use, established at COP26, set a similar deadline for 2030.
But those goals are in jeopardy, as well. While many companies and financial institutions have developed some policies on deforestation, they’re not keeping up with the best practices needed for improving forest-risk supply chains, according to a recent report from Global Canopy, a data-driven environmental group.
“While there have been pockets of progress,” its report said, “companies and financial institutions are not moving quickly enough and they are putting net-zero targets and global climate and nature goals at risk.”
For the last nine years, Global Canopy has published its Forest 500 report reviewing the top 350 most influential companies and 150 financial institutions exposed to deforestation risk in their supply chains and investments. They include controversial entities like Nestle, Colgate, Louis Dreyfus, McDonald’s, Johnson & Johnson, Bunge, Deutsche Bank, Fidelity International, Citigroup, JP Morgan Chase and Scotiabank.
These groups also have a unique opportunity, the report said, to develop innovative solutions to meeting Paris climate goals. “It is long overdue for companies and financial institutions with exposure to deforestation to put this basic building block in place.”
Whether they can get it right — and do it on time — could have global implications. They work with the commodities that most contribute to forest loss, including palm oil, soy, beef, leather, timber and pulp and paper. Regulation is essential to ensuring that global temperatures stay below 1.5° Celsius, or the temperature needed to prevent widespread change to global ecosystems.
Global Canopy assesses the companies through a wide range of factors, including their approach on deforestation, the ambitiousness of their goals, the traceability of their commodities, the strength of their commitments on human rights issues associated with deforestation and their approach to implementing their commitments through their supply chains.
Of the 350 companies on the Forest 500 list for 2023, only 55% have set deforestation reduction targets for 2025 or earlier. 201 of the companies and financial institutions deemed to have the most influence on tropical deforestation haven’t established a single policy at all.
Only 2% of companies with net-zero commitments are on track to meet their goals, the report said. That means 98% will fall short. One reason for that might be because only a handful of companies are actually monitoring their supplies or sourcing regions, the report said.
Financial institutions have given around $6.1 trillion to companies involved in forest-risk supply chains, the report said. But only 58 on the list have a deforestation policy covering their lending and investments.
There is some hope that companies and financial institutions will beef up their policies soon. Last December, the European Union banned the trade of commodities connected to deforestation and required companies to review whether imports came from cleared or degraded land. In theory, the law should force some of the companies on the Forest 500 to implement stricter regulations at the risk of paying steep fines once the law comes into effect by late next year or 2025.
Moving forward, Global Canopy recommended that governments in other parts of the world follow in the footsteps of the EU by adopting due diligence legislation aligned with Paris climate goals.
“We simply cannot rely on voluntary action anymore,” Eva Zabey, Executive Director at Business for Nature, said during the presentation. “We need regulation and mandatory requirements.”
Banner image: Aerial view of oil palm plantation in West Kalimantan, Indonesia. Photo courtesy of CIFOR.
FEEDBACK: Use this form to send a message to the author of this post. If you want to post a public comment, you can do that at the bottom of the page.
Credits
