Global companies using or producing commodities such as cattle and palm oil estimate the cost of action against deforestation at just 12% of the financial risks from it.
In a report released earlier this month, climate-disclosure platform CDP assessed disclosed data from 553 companies on how they are managing deforestation.
206 companies put the cost of action against deforestation at $6.6 billion. This is only 12.4% of the $53.1 billion that 151 of them estimated they could be hit with if no action was taken.
“Companies play a key role in ending deforestation because their revenues depend on commodities that cause it,” said the London-based CDP.
The businesses that disclosed data include global companies involved in halal, such as Charoen Pokphand Foods, JBS, Nestlé, Mars, McDonald’s, Minerva Foods, Tyson Foods, and Unilever.
CDP said progress against deforestation has been slow and the majority of the market is falling short of the ambition needed.
The non-profit gave its findings of the global businesses with exposure to seven commodities responsible for the majority of agriculture-related deforestation: palm oil, timber products, cattle products, soy, natural rubber, cocoa, and coffee.
The study mapped companies’ performance against each of 15 KPIs including items such as board-level oversight, policies, and traceability.
“Taking steps to eliminate deforestation is becoming the market norm – 93% (515) of all companies who reported through CDP in 2020 are taking at least one industry-accepted action to address deforestation.
“However, most of these companies are taking insufficient action – 82% of companies (453) are at the developing stage, incorporating between one and eight industry-accepted measures for at least one commodity,” said CDP.
CDP said 81 companies showed a mature or best practice approach to tackling deforestation for at least one commodity, meaning they were addressing more than eight KPIs.
Four companies—Essity, L’Oréal, Mars, and Tetra Pak—have adopted nearly all KPIs for one commodity, leading the way on the action to half deforestation.
Forest-related opportunities make for good business, said 131 of the companies that disclosed data. They valued forest-related opportunities at $35.6 billion.
One example was Unilever Oleochemicals Indonesia that gave $179.2 million as the maximum potential financial impact of better brand value after it shortened its supply chain and improved traceability, reduced cost and better integrated smallholder farmers into its value chain.
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