Executive Briefings

Deforestation Holds $906Bn Supply Chain Risk

The value of global products and services that depend on commodities linked to deforestation has been calculated at $906bn. In a report the Carbon Disclosure Project (CDP) said this revenue was at risk because the commodities in question - timber, palm oil, soy and cattle - are not sustainable when they lead to deforestation.

The report said firms needed to improve their risk assessment and procurement processes and work more closely with their suppliers and peers. It said company boards needed to take more responsibility for managing deforestation risk.

In the survey, CDP asked firms what percentage of their revenue depended on timber, palm oil, soy or cattle products. It then calculated the financial value based on public annual revenue reports. It said these four commodities are carrying the most responsibility for deforestation.

CDP said it sent questionnaires to 821 firms and received 201 responses from companies including Unilever, Nestlé and L’Oréal. It said many firms were overconfident in the sustainability of deforestation-risk commodities.

Almost three quarters (72 percent) of respondents said they had identified a sufficient sustainable supply of commodities across the four at risk areas. However, CDP said firms closest to the top of the supply chain were already experiencing the affects of deforestation.

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The report said firms needed to improve their risk assessment and procurement processes and work more closely with their suppliers and peers. It said company boards needed to take more responsibility for managing deforestation risk.

In the survey, CDP asked firms what percentage of their revenue depended on timber, palm oil, soy or cattle products. It then calculated the financial value based on public annual revenue reports. It said these four commodities are carrying the most responsibility for deforestation.

CDP said it sent questionnaires to 821 firms and received 201 responses from companies including Unilever, Nestlé and L’Oréal. It said many firms were overconfident in the sustainability of deforestation-risk commodities.

Almost three quarters (72 percent) of respondents said they had identified a sufficient sustainable supply of commodities across the four at risk areas. However, CDP said firms closest to the top of the supply chain were already experiencing the affects of deforestation.

Read Full Article