Most of the top 500 companies and financial institutions that profit from commodities most closely linked to the destruction of the world’s forest have made no commitments to curb deforestation, says a new report by the UK-based non-profit Global Canopy.
Of the 350 firms whose financial bottom lines rely on “forest risk” commodities like beef, palm oil, soy, and timber, about one-third have made no commitments to combat forest destruction, writes Inside Climate News. Of those that have, nearly three-quarters have focused only on the commodities they rely on the least.
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“Only one quarter of food manufacturers, retailers, and restaurant chains have pledged to eliminate deforestation from the beef, soy, and palm oil in their supply chains, while only half the agribusiness commodities companies have done so,” Inside Climate adds.
Global Canopy also looked at 150 financial institutions that collectively “provide US$2.6 trillion in financing for companies that rely on commodities linked to deforestation,” writes Inside Climate. The group found that 93 had no deforestation policies that would apply to investing in or lending to companies with forest risk commodities in their supply chains.
Deforestation turns out to be big business, Inside Climate adds. An October 2021 report by Global Witness estimated that financial institutions made $1.74 billion in interest, dividends, and fees from forest-destroying agribusiness deals between the signing of the Paris Agreement in 2015 and the end of 2020.
“It’s really disappointing that there are still so many companies and financial institutions that haven’t set any deforestation policies at all,” Global Canopy co-author Emma Thomson told Inside Climate News.
Such failures are a big problem for the global climate. “Fifteen per cent of carbon emissions come from deforestation,” Thomson added. “There is no solution to the climate crisis without a solution to deforestation.”
At the COP 26 climate summit late last year, more than 130 countries signed on to the Glasgow Leaders Declaration on Forests and Land Use, while some 30 financial institutions pledged to shift their portfolios away from agricultural commodity-driven deforestation by 2025. But Global Witness and other forest advocates say voluntary commitments don’t work.
What is needed, said Thomson, is legislation similar to what is now on the books in the UK, and under consideration in the United States and the EU, requiring companies and financial institutions to disclose climate risk. So far, equivalent legislation requiring disclosure of how much a portfolio depends on the degradation and destruction of forests remains over the horizon.