Deforestation-free supply chains

Roadmap from commitments to action

Making a corporate commitment to a deforestation free supply chain is the first step on the journey and critical for addressing climate change. There is an urgent business imperative for these commitments to be translated into action. Moving from commitment to action can be challenging but companies can follow the steps of the below roadmap.

Importantly, businesses can realize opportunities from partaking in the journey, recognizing that action on deforestation goes beyond managing risk and can add value to their business.

Unlocking opportunities »

89% of companies recognize opportunities
associated with the sustainable sourcing of at least one of the commodities they produce or use.

1 Commitments » 2 Risk assessment » 3 Targets » 4 Implementation » 5 Leadership »

Despite the considerable momentum around corporate
commitments on deforestation over the last year, our data shows
a number of inconsistencies concerning corporate action on this
journey, both across commodities and supply chains.

Commitments

Making a deforestation commitment »

The first step for companies is to make a public commitment
to remove the commodity-linked deforestation embedded
within their global supply chains.

Inconsistency across commodities:
% of reporting companies with commodity specific policies
Inconsistency across supply chains:
Average % of reporting companies with commodity specific policies

0 20 40 60 80 100

Producers, Processors & Traders
Manufactures & Retailers

90%
69%

 

Risk assessment

Identifying exposure to deforestation risk »

Understanding how your company may be exposed to the risks
associated with deforestation is a critical scoping exercise
and one that should be reviewed on a regular basis.

Inconsistency across commodities:
% of companies identifying material reputational risks
Inconsistency across supply chains:
% of companies identifying material operational risks associated with soy

0 20 40 60 80 100

Producers, Processors & Traders
Manufactures & Retailers

83%
35%

Ultimately, I want to understand
whether management understands
its impact. Do they understand their
supply chain and its contribution to
deforestation? Do they understand
the risks they face, and the risks they
are creating? I think any investor,
regardless of their ultimate concern, is
going to want to know the answer to
that question.

Adam Kanzer
Managing Director
and General Counsel,
Domini Social Investments
 

Targets »

Effective implementation of a deforestation commitment
requires a roadmap of specific, interim targets.

Inconsistency across commodities:
% of companies with a quantified procurement target for third party certified material
Inconsistency across supply chains:
% of companies with a quantified procurement target for cattle products

0 20 40 60 80 100

Producers, Processors & Traders
Manufactures & Retailers

83%
55%

As investors we look for a
company to clearly define its
expectations for sustainable
production and to report
regularly on progress in
upholding those standards
throughout the supply chain.

Lucia von Reusner
Shareholder Advocate,
Green Century
Capital Management
 

Implementation

and continuous improvement »

Acting to achieve corporate deforestation targets
is an iterative process and can differ depending on
the company concerned. Typically companies use
a combination of:

Certification
Supply chain engagement
Traceability







Barriers and challenges »
Government regulation
Market demand
Collaboration
Standards and certification
Supply chain organization
Internal organization
Corporate drivers
Inconsistency across commodities:
% of companies reporting engagement in capacity building activities in their supply chain
Inconsistency across supply chains:
% of companies reporting engagement in capacity building activities for palm oil in their supply chain

0 20 40 60 80 100

Producers, Processors & Traders
Manufactures & Retailers

100%
68%

Traceability down to the level of the
plantation is critical - we become
very concerned when companies
are not able to identify where their
palm oil is coming from or verify
the conditions under which it was
produced...certification can be a tool
that companies use, but in some
cases companies will need to go
beyond certification to meaningfully
address risks related to deforestation.

Lucia von Reusner
Shareholder Advocate,
Green Century
Capital Management
 

Leadership »

Companies should be striving for leadership in their work
towards removing commodity-driven deforestation, which will
help unlock the many opportunities available to those working
on sustainable commodities.

The hallmarks of leadership:
1. Ambitious commitment across all forest-risk commodities;
2. Comprehensive assessment of risks;
3. Strong targets supported by interim targets;
4. Quality work to build capacity in the supply chain and clear supplier improvement plans;
5. Work with the wider supply chain; and
6. Engaging customers to create demand and differentiate their products.
Sector leaders 2014
Sector grouping
Company
Agricultural Products
Cargill
Food & Staples Retailing
J Sainsbury Plc
Hotels, Restaurants & Leisure
Sodexo
Household & Personal Products
SCA
Industrials & Autos
Dai Nippon Printing Co. Ltd
Materials
UPM-Kymmene Corporation
Media
Reed Elsevier Group
Packaged Foods & Meats /
Brewers and Soft Drinks
Nestlè*
 
Packaged Foods & Meats /
Brewers and Soft Drinks
Unilever plc*
 
Retailing
Marks and Spencer Group plc
Textiles, Apparel & Luxury Goods
LVMH
Transportation
British Airways

* Joint sector leaders

 

At Green Century we believe
companies that act to reduce
their role in deforestation could
reduce key risks and enjoy
competitive advantages.

Lucia von Reusner
Shareholder Advocate,
Green Century
Capital Management

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