Why Addressing Deforestation Makes Good Business Sense

Deforestation can be detrimental and have serious effects on businesses. It can lead to resource depletion which can impede the generation of products and services. It can also aggravate the effects of natural disasters such as hurricanes, floods and heatwaves. Furthermore, stakeholder confidence is known to decrease for companies whose operations contribute to deforestation as stakeholders are more inclined to patronize a sustainable firm.

Deforestation can be detrimental and have serious effects on businesses. It can lead to resource depletion which can impede the generation of products and services. It can also aggravate the effects of natural disasters such as hurricanes, floods and heatwaves. Furthermore, stakeholder confidence is known to decrease for companies whose operations contribute to deforestation as stakeholders are more inclined to patronize a sustainable firm.

Deforestation in Supply Chains

If businesses are to effectively address deforestation, they must first check if their supply chains are contributing to the problem. CDP claims that almost 24 percent of global companies are dependent on the following deforestation-linked commodities:

• Timber – The World Bank reports that illegal logging costs the global market USD10 billion each year. Governments also lose an additional USD5 billion in revenues to the practice annually.
• Palm Oil – The World Wildlife Fund for Nature claims “[the] equivalent of 300 football fields of rainforest is destroyed every hour to [build] palm oil plantations.” In addition, 40 percent of deforestation in Indonesia is the result of palm oil plantations.
• Soy – The world’s growing demand for meat is a main factor behind the rise in global soybean cultivation.
• Beef – Cattle ranching is responsible for about 80 percent of deforestation in the Amazon River countries, with global beef consumption expected to grow from 1.48 billion pounds in 2016 to 130.96 billion pounds in 2017.

The continued dependence of businesses on deforestation-linked commodities can result in several other sustainability issues aside from deforestation:

• Climate change – Forests serve as carbon sinks: they absorb carbon from the atmosphere, cooling the planet. Without forests, the planet’s temperature can rise to the point of causing droughts and heatwaves.
• Land-related conflicts – Demand for deforestation-linked commodities can drive large agricultural and meat companies to search for more land to plant on or for cattle to graze. Some of these businesses may resort to land grabbing or illegally obtaining land owned by small farmers or indigenous groups.
• Water pollution – Cutting down trees can lead to soil erosion. Without tree roots to hold soil together, it can easily be swept into freshwater bodies.

What Can Businesses Do?

Steps businesses can take to eliminate deforestation-linked commodities include:

• Achieve full supply chain transparency – Businesses must fully specify the materials that they use in their products, as well as where these materials came from. Companies must likewise require their suppliers to disclose their supply chains.
• Prioritize the elimination of deforestation-linked commodities from supply chains – Business executives must make it clear to suppliers, partners, employees and consumers that they are working towards eliminating deforestation-linked commodities from supply chains. They need corporate support to implement sustainability measures such as supplier audits and the use of technology solutions that monitor forest activity in real time.
• Forge partnerships with other stakeholders – Multi-stakeholder partnerships allow businesses, civil society and governments to pool their resources and manpower to create innovations that can effectively eliminate deforestation-linked commodities from supply chains.

Eliminating Deforestation-Linked Commodities from Supply Chains: An Effective Way for Businesses to Address Deforestation

Consumers can be quite discerning of businesses’ commitment to sustainability. Greenwashing has resulted in more educated consumers who may not be easily won over by eco-friendly events and unverified ‘green’ labeling. Eliminating deforestation-linked commodities from supply chains, on the other hand, sends a clear and sincere message for companies that are serious about addressing the issue. By focusing on the root cause of deforestation—dependence on deforestation-linked commodities—businesses have the opportunity to save trees on a larger scale. Consumers reward brands that they feel invested in with support and loyalty.

ADEC Innovations is a leading provider of ESG solutions, with expertise in delivering fully-integrated consulting, software and data management services including successfully supporting companies who respond to CDP’s Forests Disclosure. We help organizations improve their performance by helping them monitor, account for and report on the social and environmental impacts of their supply chains.  To stay current on global sustainability issues, subscribe to our monthly newsletter, GreenWatch.