Nestle. Unilever. Walmart. Kellogg’s. Colgate-Palmolive. What do these companies have in common? They’re just a few of the global companies that have committed publicly over the last few years to work towards ridding their supply chains of raw agricultural commodities that directly cause deforestation.
Global deforestation is responsible for roughly 12 percent of world-wide greenhouse gas (GHG) emissions (IPCC)—more than double those generated by the entire U.S. electricity sector (EIA). In addition, deforestation is the greatest driver of biodiversity loss in the world, displaces indigenous populations and can drive major regional changes in weather patterns. Agricultural production drives 85 percent of global deforestation (Union of Concerned Scientists).
You may be thinking, “Why should that concern my company? We aren’t in a sector tied to agriculture or buy, sell or use commodities from countries engaged in deforestation.” That may be true if you only consider your company’s direct operations. If your company, however, produces or sells personal care or food products, or uses paper packaging, chances are high that deforestation causing commodities like soy, palm oil, timber, cattle, or derivative products of them are part of your supply chain.
The challenges of not only identifying, but also addressing these impacts built into a company’s supply chain led us to develop a new resource, “Food Without Destruction: Eight Strategies to Overcome the Environmental Impacts of Global Agricultural Commodity Production,” which synthesizes the literature on actions that companies, investors, non-profits and governments are taking to address deforestation and other environmental impacts from agriculture.
Why are all these companies taking on sustainable sourcing commitments? Pressure from the likes of Greenpeace, which has launched major consumer campaigns, is one reason. A recent campaign against Nestle resulted in over 1 million views on YouTube and over 200,000 petitions from consumers, asking the company to stop sourcing palm oil connected to deforestation.
More recently, investors have also pressured companies, emphasizing not only the reputational but also the systemic risks associated with sourcing commodities that directly cause deforestation. The Norwegian Pension Fund, the largest in the world, made waves last year when it announced its divestment of holdings in numerous companies whose activities were connected to deforestation. Shareholder resolutions from sustainable investment funds and institutional investors like the New York Pension Fund have successfully convinced companies like Dunkin Donuts and Kellogg’s to commit to sustainable sourcing policies.
It isn’t only individual companies that are making commitments: the Consumer Goods Forum, with 400 member companies and combined sales of around $3.5 trillion, pledged in 2010 that it would help its member companies achieve zero-net deforestation by 2020.
Leading companies that are taking action are not just seeing unsustainable commodity sourcing as a reputational risk: they are also viewing it as an opportunity for leadership.
They understand that as a growing global population and changing diets increasingly drive demand for these agricultural commodities, pressures on forests are projected to significantly increase. .
If you’re wondering how to get started, EDF’s new white paper can help your company better understand what strategies it can consider to alleviate pressure on forests and promote sustainable production in its operations.