The analysis, by CDP, and international NGO that focuses on sustainability, is based on disclosures from 152 leading businesses, including Cargill and Unilever, and reveals the business case for disclosing exposure to forest-risk commodities.
It found that nearly 90% of companies reported seeing business benefits, including securing access to new markets, from sustainably sourcing or producing at least one commodity.
“Different parts of the supply chain are moving at different rates to tackle this issue. What is clear is that leading companies, are those that are bringing their supply chains with them on this journey,” said Paul Simpson, chief executive of CDP, which “motivates” companies to disclose their impact on the environment.
High-profile deforestation pledges from businesses, such as the palm-oil sector giant Wilmar International, indicate growing corporate awareness. However the report shows there is much to be done for companies to move from commitment to action.
It states, for example, that companies are not set on recognising risks and taking action. “Across both commodities and supply chains, businesses are inconsistent in assessing and acting on risks and opportunities,” CDP said in a statement.
“Companies further along the supply chain are for example less likely to recognise operational risks to their business, with only 35% of manufacturers identifying operational risks associated with soy, when 83% of producers see that same risk.”
However, CDP did note that businesses are seeing opportunities in tackling deforestation, even if many have yet to realise a comprehensive strategy for tackling the issue. And those that are failing to act on deforestation risk lagging behind their competitors—and alienating their investors.
“As long-term investors, climate-related effects will structurally and systematically affect the markets in which we invest and therefore the underlying value of our portfolios,” said Freddie Woolfe of Hermes Investment Management.
“Climate change and its drivers, such as deforestation, must take centre stage for companies to ensure that investment decisions taken today will be relevant and value creative for the future.”