Companies must put money where their mouths are to fight nature loss, says CDP’s forests chief

7 minute read

A wild orangutan of Sumatra hangs on a tree at the Soraya Research Station in the Leuser Ecosystem Area, Subulussalam, Aceh province, Indonesia March 14, 2021. Picture taken March 14, 2021. Syifa Yulinnas/Antara Foto via REUTERS. ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY THIRD PARTY. MANDATORY CREDIT. INDONESIA OUT.

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  • Companies are under increasing pressure from regulators to report on their biodiversity impacts
  • The Task Force on Nature-related Financial Disclosures recently produced draft guidance, 'the closest we've got to agreed best practice', according to CDP's Thomas Maddox
  • Efforts by governments, environmental groups and companies to address deforestation in landscapes, such as Mato Grosso in Brazil, are showing promising results
  • But only a quarter of buyers of commodities are investing enough in tackling deforestation in supply chains

August 4 - Dial back to Glasgow. It’s November 2021 at the COP26 climate conference. The leaders of 140 countries have just put their names to a landmark pledge to reverse forest loss and land degradation by 2030. On offer is a pot of £5.3 billion in private money (to accompany public funding of £8.75 billion) between now and 2025.

The world’s forests should be cheering, but Thomas Maddox isn’t so sure. As global director for forests and land at the transparency non-governmental organisation CDP, he is all too aware that over 11 million hectares of tree cover are still being lost every year, a third of which derive from tropical rainforests.

Yet, this former hands-on conservationist remains determinedly optimistic. He points to CDP’s latest forest management survey, which, among other highlights, indicates that more than half (52%) of the 865 participating businesses now integrate forest issues into their business strategies.

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“Even though it can be pretty depressing at times, you've always got to be optimistic to work in this space,” he says.

Among the emerging trends feeding his optimism is the gradual move towards mandatory reporting. Top of his list, he cites moves afoot by the European Commission to impose non-financial reporting obligations that contain elements linked to biodiversity.

Thomas Maddox is global director of forest and land for CDP. Handout via REUTERS

Likewise, momentum is building behind a reporting framework similar to that devised back in 2017 by the Taskforce on Climate-related Financial Disclosures (TCFD), which has since gone on to influence a raft of reporting regulation.

The Task Force on Nature-related Financial Disclosures (TNFD) published its first draft framework in June, with guidance for companies on how to meaningfully disclose their exposure to risks linked to deforestation and other nature-based issues.

“TNFD is not going to be mandatory in itself but, as with TCFD, different jurisdictions might pick it up and make it mandatory. Either way, it will be the closest we've got to an agreed best practice.”

Similarly, he says, CDP is “watching closely” the development of similar reporting rules by international accounting bodies, particularly the International Standard-Setting Board (ISSB) and the U.S. Securities and Exchange Commission.

While the focus of both is primarily on climate at present, Maddox holds out for a widening of scope. Regarding the ISSB specifically, he reports receiving a “strong indication” that biodiversity ecosystems will soon be integrated into the organisation’s purview.

Regulators will also have an eye to the U.N.-backed Global Reporting Initiative’s new Accountability Framework, which expands its voluntary reporting requirements from just deforestation to wider land use issues and the conversion of natural ecosystems.

In addition, the new framework expands from a narrow set of agricultural commodities to all farm produce, notes Maddox, thus making the guidance “more comprehensive and relevant to more of the value chain”.

A truck lines up to be loaded with soybeans in a farm in the city of Primavera do Leste in the central Brazilian state of Mato Grosso January 29, 2013. REUTERS/Paulo Whitaker

Also feeding his confidence is the growing adoption of “landscape” (or “jurisdictional”) approaches to sustainable land management. Such multi-party strategies see companies working with non-business actors, such as government agencies, conservation groups and local communities, to implement a coordinated response to land-use threats.

“Individual action by companies is often not enough. If it (a business) is the only one within a landscape taking action, it doesn't really have an impact. … When governments bring together businesses and NGOs (non-governmental organisations), it is much more powerful.”

He gives the example of Mato Grosso in Brazil. Home to three of the country’s most biodiverse biomes (Amazon, Cerrado and Pantanal), the nature-rich state is also the site of the intense production of soya and other agricultural commodities.

Working through a “trifecta” of U.N.-backed, governmental and corporate protocols, a multistakeholder group has been working together for the last seven years to create a coordinated strategy for deforestation-free commodities.

Led by the regional government of Mato Grosso, the initiative seeks to promote its goal through the use of a robust governance structure for decision-making, participatory planning, cross-sector financing and ongoing evaluation and monitoring, among other measures.

While a recent assessment of the approach concedes that there remains much to be done to reduce deforestation rates, it judges the short-, medium- and long-term benefits of such an approach – especially when led by sub-national governments – as “undeniable”.

In that vein, CDP is now planning to introduce a new set of questions for its corporate respondents regarding its vision for, and investment in, landscape-based approaches.

The move has gained endorsement from the Consumer Goods Forum, which is advocating for a similar approach under the banner of its Forest Positive initiative. Launched in 2020, with the stated goal of removing deforestation from “key commodity supply chains”, the initiative brings together 21 retailers and manufacturers valued at a combined $2 trillion.

Back in 2010, the forum’s 400 members committed to eradicate deforestation from their supply chains by the end of the decade. They demonstrably failed.

“You maybe wouldn't have been too surprised if they (the Consumer Goods Forum) had just kept quiet about it,” notes Maddox. “But they didn't. Instead, a subset of them got together and said, ‘Well, why didn't we hit the targets? How can we do better? How are we going to respond?’”

All remain hard questions to answer. Ironically, the attention now being shown to climate issues could see valuable time and energy steered away from addressing today’s land-use crisis.

A bird sits on a surviving tree in a field cleared for planting crops, in Valle Nuevo, Campeche state, Mexico, May 1, 2021. Around 8,000 sq km of forest, nearly a fifth of the state's tree cover, has been lost in the last 20 years, with 2020 the worst on record, according to Global Forest Watch. REUTERS/Jose Luis Gonzalez

The current stasis surrounding the U.N.-led negotiations for a revised framework on protecting biological diversity provides a case in point. Read more. Compared to the litany of high-level commitments at the last U.N. climate summit, lack of progress in efforts to strike a global agreement to halt nature loss at the upcoming U.N. biodiversity summit, known as COP15, in Montreal in December is “rather depressing”, says Maddox.

“The frustrating part of the process at the moment is that the really interesting bits, we're not really getting to yet. It’s all still very much at the conceptual level.”

Likewise, he worries that business might become similarly diverted. He recalls a similar trend back in the early 2000s, when extractive companies suddenly shifted from being “very hot on biodiversity” to prioritising climate. “Literally, funds were being switched from one to the other,” he states.

Even for large companies with bona fide commitments to protecting nature, bringing their supply chains along with them represents a huge hurdle. Nearly two-fifths (38%) of CDP’s recent survey respondents, for example, say they have no source data for at least half of the commodities they buy.

Obtaining such information is only half the battle, however. For direct suppliers and smallholders to adopt responsible land-use management measures takes technical or financial assistance, Maddox adds – something only one quarter of large buyers currently provide, according to CDP’s latest survey findings.

“Cascading is not working desperately well,” he says. “Companies will engage with the next level down, but further down the supply chain there's very little important engagement, money, training, capacity building and so on.”

The time to resolve such challenges is fast disappearing. Business should expect growing pressure to act from regulators and investors, Maddox warns. One outcome that is expected from COP15 is final sign-off of the U.N.’s revised global biodiversity framework (Target 15). Maddox says this will have a galvanising effect, with companies made to publicly account for their contribution to safeguarding biodiversity.

“For a long time, the question was, ‘Is it going to happen?’ At least now, we can be fairly sure it will.”

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Ethical Corporation Magazine, a part of Reuters Professional, is owned by Thomson Reuters and operates independently of Reuters News.

Oliver Balch is an independent journalist and writer, specialising on business’s role in society. He has been a regular contributor to The Ethical Corporation since 2004. He also writes for a range of UK and international media. Oliver holds a PhD in Anthropology / Latin American Studies from Cambridge University.