Deforestation: The $53bn threat to agri-businesses

Deforestation and extreme weather are two of the risks that could lead to losses for firms, a survey of 500 firms found.

Destruction of forests poses huge risks to climate, nature and the economy, says climate-disclosure platform CDP [File: Ulet Ifansasti/Getty Images]

Global businesses sourcing commodities such as cattle, soybeans or rubber stand to lose some $53 billion due to deforestation unless they take action.

In a survey of more than 500 global businesses, climate-disclosure platform CDP identified risks such as extreme weather, changes in consumer preferences, as well as market and reputational impacts from commodity-related forest loss. It would cost $6.6 billion in the coming years to address those risks, the London-based nonprofit said in a report Monday.

“The destruction of the world’s vital forests poses huge risks to the climate, nature, the economy, and also increases the risk of future pandemics,” Sareh Forouzesh, CDP’s associate director of forests, said in a statement. “There is a solid business case for companies sourcing commodities sustainably and taking steps to protect forests.”

While more companies report their carbon footprint and make emission-reduction pledges, action on deforestation has lagged behind, partly because of the opaque supply chains for some commodities.

CDP assessed 553 companies in 2020 with exposure to seven key commodities against 15 performance indicators of what firms can do to tackle deforestation. Those measures include board-level oversight, ambitious targets and robust supply-chain controls. While there’s been some progress, only 1% demonstrated what CDP deemed to be best practice in addressing forest loss.

Companies using soy or cattle products such as meat or leather trailed those with exposure to palm oil or timber in setting up traceability and certification targets.

Source: Bloomberg