What do beef, soy, palm oil, timber and bio-fuels have in common? What might appear to be the innocuous contents of an emergency survival kit for campers, is arguably, the most powerful set of commodities in the world. From hamburgers and chocolate chip cookies to shampoo and toilet paper, the Big Five and its derivatives are found in hundreds of common-place products on supermarket shelves. Growing demand for these commodities has a profound effect on global commerce and presents a tremendous opportunity for developing nations to generate wealth. To satisfy the global appetite for these products, developing countries are channeling the one free resource they still possess – forests. It is estimated that the Big Five play a significant role in the destruction of nearly 13 million hectares of tropical forests every year. To put it in perspective, that is an area the size of Greece. Who is responsible for this rapacious trend? In the second post in the series, Chalk It Up, we will examine new methods to chart out the impact of commodity trade on forests and try to understand if these metrics can help save the most valuable living resources we have left on our planet.
One initiative that has generated a lot of interest this year is the Forest Footprint Disclosure (FFD). Modeled after the Carbon Disclosure Project, this project from the Global Canopy Programme is getting corporates to share data on ‘forest risks’, based on their business exposure to the Big Five; beef, soy, palm oil, timber and bio-fuels. The incentive: investors see value in standardized reporting and are backing the project with nearly $7 trillion in capital. Companies that complete an extensive questionnaire receive feedback on their performance in comparison to others within the same industry. These results are compiled as an annual report that FFD publishes in the public domain. Let’s take a closer look at the methodology.
The FFD questionnaire covers 10 sections; Deforestation Risk, Traceability & Supplier Engagement, Public Commitments, Standards Settings Process, Targeting & Improvement, Capacity Building, Coverage, Reporting, Governance and Risks & Opportunities. Questions in each section are in a yes/no format. An example query, “Is there a formal system to identify the point-of-origin of high-risk commodities?”, is reflective of the FFD’s approach. From the data gathered, FFD creates snapshots of different industries, as seen below.
Overall, the Forest Footprint Disclosure tells the public whether a business is evaluating its forest-risk sourcing. It tell us if the company has systems in place to evaluate its supply chain. What the FFD does not reveal in the public domain is an actual Forest Footprint. It is unclear to what extent Nike, Sainsbury, Kimberly-Clark or Nestlé (identified as industry leaders in their groups) contribute to deforestation. While the Carbon Disclosure Project and its sister initiative, Water Disclosure Project, use a similar approach, they are grounded in actual numbers. What is missing from the Forest Footprint Disclosure is the concrete link between each business and the x hectares of deforestation linked to its activities. In addition, there is no common platform to measure across industries. Does Nestlé contribute more to deforestation than Nike? At this point, there is no way of knowing. However, the FFD represents a significant step in establishing accountability within the corporate world by bringing the subject of deforestation into the boardrooms of giant multinationals and investors alike.
Forest Footprint Disclosure represents one approach to measuring the impact of corporate policies on our fragile ecosystems. This is a nascent field and there is a long way to go before deforestation issues are integrated into annual reports. Unfortunately, when that happens, it might be too late for our natural world.