The world’s leading consumer goods companies will miss the 2020 target for zero net deforestation in key commodity sectors (soy, cattle, palm oil, paper and pulp/timber), set by the Board of the Consumer Goods Forum, says not-for-profit charity CDP.
The CDP Consumer Deforestation Report “No Wood for the Trees” ranks 22 companies on how well they are addressing deforestation issues, including Food Manufacturers, Personal & Household Goods Manufacturers, and Fast Food Retailers. Due to their proximity to the consumer, these companies face reputational risks from commodities linked to deforestation with potential risks to revenues. They also face operational risks from disruption in the supply chain, especially in Asia (where 90% of global palm oil production is concentrated) and South America.
Only eight of the companies analysed were found to be using comprehensive forest and land-use management practices. Just three achieved 100% certification in palm oil and just one in timber.
Companies leading the way in tackling deforestation risks include Unilever, L’Oréal and Mars who are “driving competitive advantage through product innovation and by establishing sustainable agricultural practices direct with small holder farmers”. Also, McDonalds performs significantly better than other fast-food retailers, by actively engaging with its suppliers and by having robust risk management systems in place.
Restaurant Brands, Tyson Foods and Kraft Heinz languish at the bottom of the ranking due to their exposure to land-intensive cattle and weak performance on forest risk commodities disclosure.
Carole Ferguson, Head of Investor Research, CDP commented: “Revenue exposure due to palm oil can be significant. 45% of companies reported revenue dependencies of at least 20% on palm oil. But leading global consumer goods companies need to look closer at all the hidden risks they are running across their supply chains and scratch below the surface. As we approach our planetary boundaries much more needs to be done upstream. These companies are well placed in the value chain to act and fast. That starts with full and deep transparency of supply chains for companies to hold producers to account and provide consumers with full sourcing and product visibility.”
View an executive summary and download the report in full: https://www.cdp.net/en/investor/sector-research/consumer-goods-report-2019