CDP research highlights deforestation risk in consumer goods supply chainsCDP
- Commodity producers, relied upon for consumer staples, need to step up their performance on deforestation.
- Cattle farming sector characterised by extremely weak traceability among suppliers.
- Soy supply chains remain largely unmapped and at high risk of sourcing from areas where deforestation has occurred.
- Historic spotlight on palm oil has led to better performance for this commodity than for cattle and soy, but much more work is required to end deforestation.
- Minerva Foods (Brazil), JBS (Brazil) and Glencore Agriculture (UK) score worst in management of deforestation related to cattle and soy.
London, 28 October 2020: Industry commitments to net zero deforestation in the Consumer Goods sector are unlikely to be met, unless commodity producers in the supply chain rapidly improve their management of deforestation risks and opportunities, according to CDP’s new Investor Research report “Zeroing-in on Deforestation”.
The report, which follows on from CDP’s 2019 Investor Research on Consumer Goods companies and deforestation, ranks 27 of the largest and highest impact palm oil, timber, soy and cattle traders and producers on how they are managing deforestation risk and opportunities within their supply chains.
It finds that companies in four Forest Risk Commodities (FRC) sectors – cattle, soy, palm oil and timber, responsible for 80% of deforestation globally – are not employing practices to prevent ongoing deforestation. In particular, soy and cattle producers including companies such as Glencore Agriculture, Minerva Foods and JBS, the largest meat processor in the world, fare very poorly. Among the cattle producers assessed, the report finds that there is almost no visibility on where their cattle are bred or reared, and just three major soy suppliers can fully map their supply chains, which is prohibiting them from reducing the risk of sourcing from areas impacted by deforestation. In the case of both soy and cattle, companies’ innovations are failing to tackle deforestation at scale.
CDP’s Zeroing-in on Deforestation report also highlights the importance of holding companies to account against third-party sustainability standards within the palm oil and timber sectors. It is also notable that there are no existing third-party deforestation certification standards for cattle producing companies at all.
Of the companies covered in this report, 68% of total timber supply and 47% of land managed for the cultivation of palm oil can claim to meet deforestation standards. However, certification alone is not enough, and companies must combine this with other initiatives, such as providing education and financing to promote sustainable agriculture and demonstrating strong policy commitments to end deforestation.
Although palm oil companies appear to be making incremental improvements to their practices, with 50% now engaging in multi-stakeholder partnerships to tackle illegal deforestation and some also delivering against the Roundtable on Sustainable Palm Oil’s rigorous standards in recent years, they too could be doing more.
Carole Ferguson, Head of Investor Research, CDP commented: “The companies assessed in this report are key suppliers to the Consumer Goods sector covered in our previous report. What is clear from this research is that if FMCGs are relying on this part of the supply chain to meet their net zero deforestation ambitions – a lot more work needs to be done. Bold and urgent action from these producers is the critical first step in tackling deforestation throughout the supply chain.”
Ling Sin Fai Lam, Lead Analyst on the report commented: “FRC companies face unique risks and opportunities since their distance from end-customers, compared to FMCGs, means that they are somewhat insulated from changes in consumer preferences. However, their proximity to the land itself means they have a significant responsibility to take action. With countries like the UK looking to regulate supply chains further, the group of companies in this report will now be in the spotlight, and by addressing issues within their own supply chains, they can improve the sustainability of commodity production and tackle deforestation at the ground level.”
Consumer goods giant Unilever recently unveiled a new set of sustainability commitments, including to end its contribution to deforestation, amongst other pledges. Meanwhile, the Consumer Goods Forum – representing the world’s largest Consumer Packaged Goods brands – has announced a fresh push to tackle deforestation with its Forest Positive Coalition of Action. This push by some of the world’s most influential FMCG companies underlines the importance of immediate action across the broader supply chain.
For more information, or exclusive interviews, please contact:
Sara Firouzyar, CDP, tel. +44 (0) 2038 183 973 | email: [email protected]
CDP is a global non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors and working with institutional investors with assets of US$106 trillion, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 8,400 companies with over 50% of global market capitalization disclosed environmental data through CDP in 2019. This is in addition to the over 920 cities, states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP is a founding member of the We Mean Business Coalition. Visit cdp.net or follow us @CDP to find out more.