by Ewelina Łukasik-Morawska, Engagement Manager at GES
For any company operating in the global trade in soy, palm oil, timber or cattle products, deforestation has become a crucial business issue. The production of these forest-risk commodities can contribute to habitat loss, greenhouse gas emissions and social conflict causing exposures for suppliers and customers alike. Between 1990 and 2015, tropical forest cover decreased by more than 195 million hectares, over 76% of which occurred in South America, South-Southeast Asia, and Central-West Africa. The four commodities were responsible for about 113 million hectares of forest loss in tropical regions between 2000 and 2012.
Governments, private sector companies, and civil society organizations have tried to address the situation by endorsing the New York Declaration on Forests which sets an ambitious goal of ending natural forest loss by 2030, with a 50% cut by 2020. In the Amazon, Colombia aims to achieve zero net deforestation by 2020 and Brazil commits to eliminate illegal deforestation by 2030. In addition, more than 45 tropical countries are developing programmes to decrease emissions from deforestation and forest degradation (REDD+).
These commitments to forests are essential. The emissions reductions that can be achieved by ceasing deforestation and improved forest management and reforestation are vital in preventing global warming. Forests are also essential for humans to build climate resilience in order to leave the globe better prepared for future climate change impacts. These also include non-carbon climate benefits like sustaining livelihoods and ensuring water and food security. Sustainable forest management also contributes to the success of the Sustainable Development Goals giving an opportunity to eliminate deforestation, improve agricultural productivity, and reduce poverty.
Moreover, the alteration to deforestation-free agricultural commodities can create new investment opportunities while mitigating reputational and stranded asset risks. Still, investment in sustainable production is often hindered by unfamiliar risks and a limited understanding of regional characteristics. The costs and risks of the transition toward better management and sustainable agricultural practices can be collectively addressed by impact investors, governments, and private sector companies. To achieve success, enhanced action and collaboration among sectors and various supply-chain actors are needed as fewer than two years remain until 2020, the date by which the commodity production from forests is due to be transformed.
 Keenan et al. (2015). Dynamics of global forest area: Results from the FAO Global Forest Resources Assessment 2015. Forest Ecology and Management, 352. 9-20.
 Henders, S., Persson, M., & Kastner, T. (2015). Trading forests: land-use change and carbon emissions embodied in production and exports of forest-risk commodities. Environmental Research Letters, 10(12), 1-13. Retrieved from http://iopscience.iop.org/article/10.1088/1748-9326/10/12/125012/pdf