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From risk to revenue: The investment opportunity in addressing corporate deforestation

21 Nov 2017

CDP’s 2017 Global Forests Report draws on the disclosures from 201 companies that responded to the investor request for information on the risks and opportunities linked to four commodities responsible for the majority of deforestation and forest degradation: cattle products, palm oil, timber products and soy. It makes a clear business case for investor action, highlighting both the material risks that come with deforestation, and the opportunities emerging for those financial institutions that are acting against it.

 

Key findings

1. The lack of engagement and accountability surrounding deforestation masks corporate risk, which cascades directly to investors - Less than a quarter (23%) of the companies approached by CDP on behalf of investors this year responded to the information request, showing that disclosure on forests is still not the norm.

2. Companies recognize that the environmental and social impacts of deforestation threaten to reduce profits and increase risks - 87% of companies recognize at least one risk – and 32% have already experienced impacts – associated with the production or consumption of forest-risk commodities.

3. Developing sustainable sources of forest-risk commodities creates opportunities for companies – and therefore investors – to generate attractive, stable long-term returns - 87% of companies identify opportunities related to the sustainable production, marketing or sourcing of at least one of the commodities.

4. Leading companies are taking meaningful steps to remove deforestation from supply chains, but corporate action has not yet reached a tipping point - Of the companies disclosing in 2017, only six achieved an ‘A’ grade.