Are businesses really cutting deforestation from their supply chains?

More companies are making commitments to limit their supply chains’ adverse effects on the world’s forests, but a new report by a watchdog group found many still fail to act on their pledges and that one in three companies has at least one “dormant” commitment.

With forest loss estimated to be responsible for 15 percent of global greenhouse gas emissions, and commercial agriculture the driver of at least two-thirds of tropical deforestation, companies are feeling pressure to limit their exposure to deforestation-linked commodities, notably palm, timber and pulp, soy, and cattle.

A growing number of firms are making voluntary commitments to delink their supply chains from forest-related activities by 2020 and 2030 through the Consumer Goods Forum and New York Declaration on Forests, which pledged to cut natural forest loss in half by 2020 and end it completely by 2030. But progress is slow and the majority of companies still have weak, incomplete policies dedicated to the issue, or no policy at all, as Devex has previously reported.

The new report backs up that scenario. The Supply Change report looked specifically at public data from 447 companies that have already made commitments to cutting deforestation from their business activities and revealed that, while there was an overall increase in the rate of progress reporting, in 20 percent of cases it is impossible to tell whether a company is achieving its targets, since no progress data is available, target dates are past due, or were never set in some cases.  

This lack of progress data can harm a company’s reputation, according to Stephen Donofrio, senior advisor to the Supply Change project.

"Companies are increasingly being held accountable by their stakeholders, and that comes with a greater expectation of and need for transparency. When commitments aren’t accompanied by a transparent progress update — referred to as “dormant" commitments in the report — stakeholders are left to their own devices to determine how the commitment is doing,” he said.

Forest experts and corporations leading the way in forest commitments shared their views during a webinar about why so many companies are keeping quiet about progress in meeting targets. Here are five strategies to reverse the trend.

1. Some commitments are harder to measure than others.

Companies tend to report more frequently on certain types of commitments than others, the report found. Reporting rates were especially high against commitments around certification — such as the percentage of a commodity a company uses that is from a sustainably certified source; these rates grew by 66 percent. Progress reporting for non-certification-based commitments, such as zero deforestation in the supply chain, grew by less due to the fact there is no universally accepted standard for measuring and assessing zero deforestation.

“Some commitments have obvious metrics to be able to gauge progress — for example, certification — whereas others lack a straightforward and universally accepted standard for tracking and reporting, such as zero net deforestation,” Donofrio explained.  

In complex cases, companies should set a baseline when their commitment is announced, saying what they are trying to achieve and then provide updates based on that, he suggested.  “It’s about having quantifiable targets and clarity on how to report on them,” he said.

Setting interim milestones for deforestation commitments and potentially readjusting targets where necessary can also help companies report more and prevent underperforming commitments from becoming dormant, according to Katie McCoy, who heads the forest program at CDP, a nonprofit that collects environmental data.

“We need to encourage all companies to be ambitious and in a time-bound way, and so it’s essential to set milestones and review and track progress,” she said.

A greater recognition that different commitments require different timelines and reporting techniques can also help companies communicate better about progress as well as failure, according to Anita Neville, vice president of corporate communications and external affairs at Golden Agri-Resources, which was one of the first agri-businesses to develop a forest conservation policy in 2011.

2. Fear of failure prevents many companies from making or reporting on their sustainability targets.

Many companies are reluctant to provide public information about their progress against sustainability commitments for fear of persecution and “being hammered” in the public domain, Neville explained.

“When you see leading companies like my own still getting hammered in the public domain for gaps we still have to address in these quite ambitious policies, I think people get scared about putting their heads above the parapet,” Neville said.

However, others stressed the importance of reporting, even when the results are negative. Donofrio pointed out that a company’s silence could lead outside viewers to assume the worst.  

Unilever Senior Global Advocacy Manager Hannah Hislop recommended “having an honest and open dialogue with stakeholders about why things are challenging and writing that up on your website rather than just leaving them.”

3.  The conversation needs to be reframed to reflect producers’ interests, not just those of end users.

The narrative around achieving the 2020 deforestation targets for palm oil, soy, beef, and paper and pulp supply chains needs to change to one that is more positive and forgiving toward companies that have made commitments, Neville said.  

She pointed to a disconnect between the interests of those creating deforestation commitments, and those applying them: “Many of these commitments were created by end-users looking at the world in a very different way than it looks from the producer end, where we have to actually get this stuff done,” she said.

As a response, GAR’s own deforestation commitments across all palm oil it produces, sources and trades was deliberately framed as a forest conservation policy, and not as a no deforestation policy, which Neville said increased the chances of “real engagement” and success.

4. Lack of capacity is driving poor performance.

Too few people with the necessary technical expertise and “sociological skillsets” are available to help companies meet their deforestation targets, Neville said, and this is slowing the rate of change, especially among smaller organizations.  

“As much as there is technical expertise that we need to bring to bear to solve these problems, there is also cultural and behavioral change, sociological skillsets that are needed really to change the behavior in practical terms of the many players,” she said.

Perhaps if GAR had “front loaded” more of this behavior change work earlier on, they might be closer to “hitting the 2020 milestones,” she said.

There is also a “lack of meaningful capacity” on the technical side, which is slowing progress, Neville said, specifically High Conservation Values licensed assessors and people who can carry out free, prior and informed consent with forest communities.

Marco Albani, director of TFA 2020, agreed capacity is limited, especially in middle income and developing countries: “We do have limited capacity, there are very few people who fully understand … what is needed,” he said.

5. Multi-stakeholder groups can help drive commitments but are “elitist.”

Being part of cooperation platforms and multi-stakeholder groups such TFA 2020, the High Carbon Stock Steering Group, and Tropical Forest Trust can help drive improvements within companies, experts said. Companies that are part of such groups tend to move “faster” and “better” in moving “commitment to action,” Albani said. The Supply Change report also found that at least 95 percent of companies participating in such groups made sustainability pledges.

However, Neville said such alliances were often closed to smaller companies. “Seeing better performance when people are part of a club, part of a gang, I get that. But many of those clubs and gangs are still elitist,” she said.

Greater investment in inclusive multi-stakeholder approaches to building capacity at the “ground level” is needed to boost commitments and “bring the smaller players along with us,” she said.

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