Forest 500 annual report 2018

Our growing global appetite for consumer goods is driving the loss of the world’s tropical forests. Yet these forests are essential to address climate change, provide crucial habitat for biodiversity and enhance water security. Five years ago, companies and governments signed up to the New York Declaration on Forests, committing to eliminate deforestation from agricultural supply chains by 2020.

As the 2020 deadline approaches, not one of the Forest 500 companies and financial institutions assessed in 2018 is on track to eliminate commodity-driven deforestation from their supply chains and portfolios by next year. Yet nearly half have made commitments to do so by 2020 or earlier. 

The Forest 500 ranking assesses the 500 most influential companies and financial institutions in forest-risk commodity supply chains, focusing on palm oil, soy, cattle and timber products. Each year, the Forest 500 ranking assesses their policies and commitments to address deforestation, holding them to account for their impacts on forests. 

These 500 companies and financial institutions have the greatest potential to prevent tropical deforestation. Despite the commitments that have been made, evidence shows that rates of commodity-driven deforestation have not decreased [1]. 

In recognition of this gap between company commitments and impacts on the ground, the Forest 500 methodology was updated in 2018 to better distinguish between companies who have set commitments, and those that have taken the next step towards implementation. This new methodology has meant that many companies have received lower scores this year. 

This report identifies the leaders, both overall and for each commodity assessed, and looks at progress among companies and financial institutions, identifying where common gaps lie. It also shows that there is an urgent need to prioritise deforestation in agricultural commodity supply chains. The 2020 goal cannot be met, but action is still needed.

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Key findings:

● The 2018 assessment shows that some leading companies have strong commitments which do include actions on implementation. Fifty of the 350 assessed companies report some implementation activities for all of the commodities they
are exposed to. Other companies need to follow the example of these leading companies. 

● Every year the number of companies with commitments to protect forests increases. In 2018, we found that 57% of companies had a commitment to protect forests for at least one of the commodities they are exposed to, up from 50% in 2014. 

● Many of the companies with commitments are not tackling all of the risks they are exposed to. Thirty seven percent of companies have a commitment for one or more but not for all of the forest-risk commodities in their supply chains. 

● Even companies with ambitious commitments are not putting these into practice. Of the 228 companies assessed in 2017 and 2018, nearly 70% scored lower this year than last year, due to the new indicators on implementation. This reflects
an implementation gap – companies are not executing their commitments. 

● Far too many of the most influential companies in these supply chains still have no commitments at all, or commitments that are too weak to deliver change on the ground. Over 40% of the most influential companies are not doing anything to tackle deforestation that they are linked to. 

● Palm oil remains the commodity with the greatest action – companies are more likely to have strong commitments and report on implementation for palm oil than for any other commodity. But there is still room for improvement: most
companies, including the leading companies, do not report  protecting High Carbon Stock forests or peatlands. 

● Cattle products are still overlooked. Only 16% of companies have a forest-related commitment for beef or leather that they produce or source. 

● Financial institutions are behind companies in setting commitments and policies on deforestation. Of the 150 financial institutions assessed, nearly two thirds had no financing policy for any of the four key forest-risk commodities.
Of the 53 that do, none score 4 or 5 out of 5 for their policies. 

Key asks:

● Companies need to assess their exposure across forest-risk commodities, and set and implement strong commitments that address each commodity.

● Companies must put more focus on implementing their commitments with clear action plans, including monitoring supplier and producer compliance, and detailing policies for dealing with non-compliance. 

● Action plans should include realistic time-bound milestones which are monitored and reported against. These plans must tend beyond 2020 and remain ambitious, with all aspects of the commitments reported on, to ensure companies
themselves and others can measure progress against their milestones. 

● Financial institutions need to do more to recognise and act on the material risk that deforestation poses. They should require their portfolio companies to adopt and implement policies that mitigate these risks.

Read the full report here

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