image-for-printing

Agribusinesses key culprits behind global deforestation

10 Dec 2020

While big supermarkets and household brands have faced growing consumer pressure on their role in deforestation, suppliers have gone largely unscathed, charities warn.

The destruction of the world’s largest rainforests increased sharply in 2020. By October, deforestation of Brazil’s Amazon Rainforest increased by 50%, year-on-year, according to space research agency INPE. The destruction of the “lungs of the Earth” has accelerated exponentially since Brazil’s president Jair Bolsanaro took office in early 2019.

But the drivers are financial, rather than political. Agriculture and forestry sectors, such as cattle, soy, palm oil and timber, are responsible for 80% of deforestation globally. In turn, their business models are also exposed to significant transition risks, according to a report by environmental disclosure specialist CDP.

The report highlights that among others timber and palm oil companies have made relatively more progress, while cattle and soy industries have not yet come up with independent deforestation certificates and have failed to make progress on deforestation.

Another factor in controlling deforestation is who owns the land. Landownership or long-term leases tend to be more common among timber and palm oil businesses, giving them greater autonomy to manage deforestation risks, according to CDP.

In contrast, fewer soy or cattle companies directly own the land they work on, which restricts their ability to manage deforestation. With a third of all soy company supply chains unmapped, it is unclear whether future crops are dependent on grounds that have already been, undermining the sustainability of their business model.

Soy and cattle companies carrying the highest transition risk are Minerva Foods and JBS, followed by Glencore Agriculture and Marfrig, CDP claims. Among timber producers, US firms International Paper and Weyerhaeuser have been flagged by the environmental disclosure charity for having unsustainable business models. Palm oil producers FGV Holdings Berhad in Malaysian and Singapore firm First Resources also face high levels of transition risk.

More Articles

Newsletter

Magazine

Subscribe to Our Newsletter

Sign up to the portfolio institutional newsletter to receive a weekly update with our latest features, interviews, ESG content, opinion, roundtables and event invites.

Magazine Subscription

Institutional investors qualify for a free of charge subscription to portfolio institutional. Please fill in your details to request your copy.

Magazine

Magazine Subscription

Institutional investors qualify for a free of charge subscription to portfolio institutional. Please fill in your details to request your copy.

We use cookies to improve your experience on this website. For more information, please see our Privacy Policy.