Food and beverage firms failing to act on deforestation, CDP finds

By William Dodds

- Last updated on GMT

An area the size of Switzerland was removed from the world’s rainforests in 2022
An area the size of Switzerland was removed from the world’s rainforests in 2022

Related tags deforestation Sustainability Agriculture Food security Environment Finance

Food and beverage firms are struggling to meet deforestation related key performance indicators (KPIs) set by environmental disclosure not-for-profit CDP, new data has shown.

CDP’s annual Forest Report showed that only one of the 15 KPIs had been met by more than 50% of the food, beverage and agriculture (FBA) organisations that disclosed.

A total of 1,043 companies reported actions taken to manage deforestation during 2022, the highest number CDP has recorded. They were spread across FBA, manufacturing, materials and retail, with each industry judged against the 15 KPIs.

The FBA industry had the lowest levels of deforestation governance out of the four industries, while also performing poorly against the implementation, policy and risk assessment KPIs. However, FBA firms had the second highest proportion of ambitious targets already in place.

The results come less than a year after the World Resource Institute calculated that an area the size of Switzerland was removed from the world’s rainforests in 2022.

Financial losses from deforestation

The report also separated the 50 different risk types that were disclosed into four categories: physical, reputational, technological and regulatory.

A total of 269 companies estimated the potential financial cost of forest-related risk to be $80bn (£63bn), which averages out at $300m (£235m) in losses per firm.

Meanwhile, a further 342 companies calculated that the cost of responding to the risks identified would be $5.9bn (£4.6bn), or $17.4m (£13.7m) per firm.

Thomas Maddox, CDP global director, forests and land use, said that the results show how companies acting now will “reap the benefits​”, while those that are slow to act will face the “highest costs​”.

“The results show companies are becoming ever more aware of the risks and opportunities addressing deforestation represents, but we continue to see a gap between commitments and tangible actions,” ​Maddox added.

Brand image impact

The value of reducing the risk of deforestation was attached to brand value for 227 of the firms that disclosed, while 151 noted an increase in demand for products made using certified materials.

CDP believes the risks of deforestation extend to financial institutions, which face reputational risk if they invest in businesses that damage the environment.

“Financial institutions driving this action now will be future-proofing portfolios for what is inevitable,” ​Maddox said.

“Financial institutions acting later will miss out on opportunities and risk stranded assets and significant financial losses.”

In related news, more than 60% of UK shoppers do not fully trust carbon footprint packaging claims​.

Related topics Regulation & safety Sustainability