Comprehensively analyzes corporate and financial sector commitments to eliminate deforestation from global supply chains over the past decade. The report highlights the progress, gaps, and challenges in achieving deforestation-free supply chains, focusing on the role of companies and financial institutions linked to forest-risk commodities such as palm oil, soy, beef, leather, and timber.
Key Findings
- Lack of Progress: Despite growing awareness of deforestation’s environmental and social impacts, only 50% of the companies assessed by Forest 500 have established policies to address deforestation risks. This figure has remained stagnant over the past decade.
- Financial Sector Inaction: Financial institutions have been particularly slow to act. Only 30% of the assessed institutions have policies addressing deforestation risks in their portfolios, leaving significant gaps in accountability for funding linked to forest destruction.
- Policy Gaps: Even among companies with deforestation commitments, many policies are incomplete or lack sufficient detail. For instance, only 25% of companies with commitments include all relevant forest-risk commodities in their policies.
- Missed Deadlines: Many companies and financial institutions set 2020 as a target year for eliminating deforestation from their supply chains but failed to meet these goals. The report underscores that these missed deadlines reflect a lack of urgency and accountability.
- Transparency Issues: Companies and financial institutions often fail to disclose sufficient information about their supply chains or investments, making it difficult to assess progress or hold them accountable.
Recommendations
The report calls for urgent action from the private sector and governments to address deforestation effectively. Key recommendations include:
- Strengthening Commitments: Companies and financial institutions must adopt comprehensive policies covering forest-risk commodities and enforcing strict no-deforestation standards.
- Improving Transparency: Public disclosure of supply chain data and investment portfolios is essential for tracking progress and ensuring accountability.
- Government Regulation: Governments should implement robust legislation to mandate deforestation-free supply chains and ensure compliance through enforcement mechanisms.
- Collaboration: Multi-stakeholder collaboration is needed to align corporate actions with global climate and biodiversity goals.
Overview
Lesson One
It raises serious concerns about the effectiveness of voluntary corporate commitments in fighting deforestation. Notably, 30% of Forest 500 companies still lack public deforestation commitments for their highest-risk commodities despite increased scrutiny of their environmental impact. While corporate commitments grew significantly between 2014 and 2019, progress has stagnated. The percentage of companies with at least one deforestation commitment increased from 49% in 2016 to 70% in 2023—a modest 19-percentage-point gain that signals a concerning lack of momentum.
The findings show that voluntary actions alone cannot drive the systemic changes needed to halt deforestation. Without regulatory requirements, many companies remain passive. Advocates for robust regulations that require companies to address deforestation risks in their operations. Without such oversight, companies will likely continue to delay meaningful action, undermining global efforts to combat deforestation and its impact on climate change and biodiversity.
This analysis conveys the message that voluntary commitments are insufficient. Real progress in fighting deforestation requires both practical implementation and regulatory accountability.
Lesson Two
Emphasizes that regulatory measures targeting the finance sector are essential to combat deforestation. Financial institutions shape corporate behavior and heavily influence supply chain sustainability. However, voluntary commitments have proven inadequate, as many institutions neither properly assess nor address deforestation risks in their investment and lending practices.
Without regulatory frameworks that require financial institutions to consider environmental impacts—including deforestation—they lack incentive to change their practices. Advocates for regulations requiring institutions to disclose their exposure to deforestation risks and implement sustainable investment policies. This regulatory oversight is crucial for driving systemic change in the finance sector and directing capital toward environmentally responsible practices.
The findings stress the need to integrate environmental considerations into financial decision-making and call for stronger regulations to hold institutions accountable for their role in deforestation. Such an approach would foster a more sustainable financial ecosystem that supports efforts to reduce deforestation and its environmental impacts.
Lesson Three
Emphasizes how human rights must be integrated into corporate and financial practices addressing deforestation. The connection between deforestation and human rights violations is frequently overlooked, though companies and financial institutions must address both issues in their operations and supply chains.
Deforestation profoundly affects local communities through land rights violations, forced displacement, and destroyed livelihoods. Therefore, companies must adopt sustainable practices while protecting affected communities’ rights. This requires thorough due diligence to evaluate human rights risks throughout their operations and supply chains.
Advocates incorporating human rights policies into corporate governance and decision-making. It stresses the need for transparency and accountability, calling companies to report publicly on their human rights impacts and risk mitigation strategies. Including human rights in sustainability, planning can create more equitable outcomes for communities affected by deforestation.
This reminds us that deforestation is both an environmental and human rights issue. Advocates for a holistic approach recognizing how environmental sustainability and social justice interconnect. It calls on companies and financial institutions to proactively protect human rights in their operations and investments.
Lesson Four
Emphasizes the critical need for sustained pressure on all companies to combat deforestation. While some companies have made meaningful commitments and shown progress, many continue to lag, failing to implement effective measures in their supply chains.
Emphasizes that public scrutiny and stakeholder engagement are vital for corporate accountability. Pressure from consumers, investors, and civil society organizations can compel companies to adopt stronger deforestation policies. This influence manifests through advocacy campaigns, shareholder resolutions, and public reporting on corporate environmental performance.
It also stresses that transparency is fundamental to accountability. Companies must openly disclose their commitment to deforestation, progress, and challenges. This openness helps build stakeholder trust and demonstrates a genuine commitment to sustainability.
This is a clear call to action for all stakeholders to engage with companies and consistently press them to prioritize deforestation issues. Emphasizes that collective action and accountability are essential for driving systemic change and achieving real progress in combating deforestation.
Lesson Five
Emphasizes that commitments to combat deforestation are meaningless without concrete actions and implementation strategies. While many companies have made public pledges to address deforestation, most fail to provide evidence of progress.
Reveals that nearly two-thirds (63%) of companies with deforestation commitments lack sufficient proof of implementation. This stark gap between promises and action severely undermines the credibility of their pledges. Making commitments isn’t enough—companies must actively integrate these promises into their business practices and supply chains.
To remedy this, it advocates for stronger accountability mechanisms to track and verify the implementation of deforestation commitments. Companies should set clear targets, measure progress, and report outcomes publicly. These steps would demonstrate a genuine commitment to sustainability and build stakeholder trust.
The message is clear: commitments must be backed by tangible actions and accountability. Urges a shift from empty promises to measurable progress in addressing deforestation and its environmental and community impacts.
Lesson Six
Transparent reporting is critical in the fight against deforestation. This transparency builds trust among stakeholders—consumers, investors, and civil society—and holds companies accountable for their deforestation-related commitments and actions.
Many companies currently lack proper mechanisms to report their progress on deforestation commitments. Without transparency, stakeholders cannot effectively assess corporate actions or understand how supply chains impact deforestation and human rights. Urges companies to implement reporting best practices, including clear metrics, regular updates, and comprehensive disclosures about their supply chain practices and sustainability outcomes.
Companies should provide detailed reports covering their commitments, actions, challenges, and lessons learned. Companies can strengthen accountability and foster stakeholder collaboration to drive progress by offering honest, thorough accounts of their efforts.
Transparent reporting forms the foundation of effective deforestation strategies. It calls for enhanced corporate reporting practices to give stakeholders the information they need to evaluate performance and maintain accountability in the fight against deforestation.
Lesson Seven
Highlights the necessity of recognizing deforestation as a central issue within the broader climate agenda. It argues that deforestation significantly contributes to greenhouse gas emissions and climate change, making it imperative for companies, governments, and civil society to prioritize it in their climate strategies.
While many organizations and stakeholders are increasingly aware of the links between deforestation and climate change, more integrated approaches that simultaneously address both issues are still needed. It emphasizes that effective climate action must include robust measures to halt deforestation and promote sustainable land use practices.
Additionally, it calls for greater collaboration among various sectors, including agriculture, forestry, and finance, to develop comprehensive strategies that tackle deforestation and climate change. This includes aligning policies, investments, and practices to ensure that efforts to combat climate change do not inadvertently lead to increased deforestation.
Serves as a call to action for all stakeholders to recognize the critical role of deforestation in the climate crisis. It advocates for integrated approaches that address deforestation and climate change, urging companies and policymakers to prioritize these issues in their strategies and actions to achieve meaningful progress in environmental sustainability.
Lesson Eight
Public pressure plays a vital role in driving corporate action against deforestation. When consumers, investors, and civil society advocate for sustainable practices, companies typically respond by implementing meaningful changes in their operations and supply chains.
Showcases successful public campaigns and advocacy efforts that have influenced corporate behavior, resulting in more substantial commitments to eliminate deforestation from supply chains. Public awareness and activism make it urgent for companies to act, as they risk reputational damage and financial consequences if they fail to address deforestation.
Emphasizes the need for continued stakeholder engagement to maintain pressure on companies. This means consumers make informed choices, investors prioritize sustainability in their portfolios, and civil society organizations hold companies accountable for their environmental impacts.
Public pressure remains a powerful force for promoting corporate accountability and action against deforestation. Ongoing stakeholder advocacy ensures companies prioritize sustainability and take concrete steps to address deforestation.
Lesson Nine
Focuses on the need for increased attention to the cattle sector in the context of deforestation. It highlights that cattle ranching is one of the leading drivers of deforestation, particularly in tropical regions. It calls for more targeted efforts to address the environmental impacts associated with this industry.
While progress has been made in addressing deforestation linked to commodities like palm oil and soy, the cattle sector has not received the same scrutiny or action. It emphasizes that without significant intervention, the expansion of cattle ranching will continue contributing to habitat loss, biodiversity decline, and greenhouse gas emissions.
To tackle this issue, it advocates for implementing sustainable cattle ranching practices, improved supply chain transparency, and more substantial commitments from companies involved in the beef industry. It also calls for collaboration among stakeholders, including governments, NGOs, and the private sector, to develop and promote solutions that can mitigate the environmental impacts of cattle production.
Highlights the urgent need to focus on the cattle sector as a critical area for action in the fight against deforestation. It urges stakeholders to prioritize sustainable practices and collaborative efforts to reduce the environmental footprint of cattle ranching and protect vital ecosystems.
Lesson Ten
Explores how the finance sector can drive rapid progress in addressing deforestation. Several financial institutions are leading the way by implementing meaningful policies and practices that promote sustainable land use and combat deforestation.
The finance sector significantly influences corporate behavior through strategic investment and funding decisions. Financial institutions can catalyze industry-wide changes by implementing strong anti-deforestation policies and engaging companies on sustainability issues.
Other financial institutions must follow these leaders’ example by adopting similar commitments and practices. It stresses that collaboration and knowledge sharing between financial institutions are essential for maximizing their collective impact on reducing deforestation.
The findings conclude on an optimistic note, emphasizing that rapid progress is achievable—especially when the finance sector takes decisive action. Advocates maintaining this momentum and strengthening collaboration to ensure financial practices align with sustainability goals, ultimately contributing to the broader mission of halting and reversing deforestation.
