Nigel Topping, High Level Champion for Climate Action at COP26, said: “The time to ratchet up our collective global ambition to deliver on the Paris Agreement is now.
“Halting agriculture-driven deforestation to halve emissions and reverse biodiversity loss by 2030 is not an option but a necessity for companies credibly committed to net zero in order to fulfil their science based commitments.
“There is no pathway to keep 1.5C within reach without that. Companies that interact with the food system across the value chain need to address deforestation to safeguard their future business and make a difference in protecting forests, and wildlife and the communities that depend on them, contributing to the system shift towards a nature-positive future.”
The report assesses and ranks the 350 companies that produce, use, trade or sell the largest amounts of these commodities, and the 150 biggest banks, institutional investors and pension funds that finance them.
It monitors whether they publish a clear policy for each forest-risk commodity they are exposed to in their supply chain or portfolios, and how they implement and report on their commitments.
Many ignore soy, which can be a hidden ingredient in meat, fish, dairy and eggs, because it is commonly used in animal feed. Brands with no deforestation policy for soy include Häagen-Dazs ice cream, made by General Mills, Heinz mayonnaise (Kraft Heinz) and Hershey bars (Hershey’s).
Companies face direct threats to their business because deforestation exacerbates climate impacts, drives biodiversity loss and affects water supplies, which in turn affect growing conditions for commodity crops, impacting supplies and prices.
The report also makes the link between deforestation and human rights abuse, with Indigenous peoples and local communities often losing access to their land. None of the companies assessed have a comprehensive approach to protect human rights.
Financial institutions are providing a total $5.5 trillion to the 350 companies with the most exposure to deforestation-risk in their supply chains, but they are not using this leverage to drive change.
Nearly two thirds have no commodity-specific policy to address deforestation risks in their portfolios, including the world’s three biggest asset managers, BlackRock, Vanguard and State Street.
Even financial institutions committed to climate action are failing to recognise the link with deforestation and undermining their targets. The report found that 22 of the 150 had made net zero climate pledges but all continued to finance companies with no commitments to end deforestation, supporting them with a total $66.9 billion.
Governments are now introducing a requirement for companies to carry out checks to ensure there is no illegal deforestation in their supply chains. In November 2021, the Environment Act made this law in the UK and the government is consulting on the full scope of the measures. Similar due diligence legislation is in the pipeline in the European Union and the US.
Leaders from 141 countries that are home to over 90 percent of the world’s forests signed a declaration launched at COP26 in Glasgow committing to “halt and reverse forest loss and land degradation by 2030.”
Speaking at the climate summit, European Commission President Ursula von der Leyen, said: “European voters and consumers… no longer want to buy products that are responsible for deforestation or forest degradation.”
At COP26 more than 30 financial institutions pledged to use best efforts to eliminate commodity-driven deforestation from their portfolios by 2025. Yet the report reveals that only four of these are among the 150 with most influence on the sector: Fidelity International; Legal & General Investment Management; Schroders; and Sumitomo Mitsui Trust Asset Management.
Brendan Montague is the editor of The Ecologist. This article is based on a press release from Global Canopy.