- A new research report from CDP — formerly the Carbon Disclosure Project — found global CPG companies won't meet the Consumer Goods Forum's zero net deforestation goals by next year and are not on track to achieving sustainable consumption and production by 2030.
- "No Woods for the Trees," the report from the U.K.-based environmental nonprofit and investment research company, said global CPG companies with the strongest governance of deforestation risk are Danone, Nestlé and Unilever. Ranking near the bottom are Tyson Foods, Kraft Heinz and Conagra.
- CDP analyzed 22 companies for the report — food manufacturers, personal and household goods makers and fast food retailers. The group said these firms face risks to their reputation from commodities linked to deforestation and operational risks from supply chain disruptions, especially in Asia and South America.
These report results could draw attention from the food and beverage industry because sustainability factors can impact prices. In addition, more consumers pay attention how brands are dealing with sustainability, deforestation and transparency before making purchases. According to Label Insight, companies adopting total transparency can enjoy a rate of consumer loyalty of around 94%.
Palm oil has been the focus of deforestation efforts to date, CDP noted, but other commodities such as soybeans, cattle and paper — which it calls "Forest Risk Commodities," or FRCs — also have potential to disrupt global supply chains. The group said certification and traceability efforts have not been effectively tackling the issue, adding "urgent action is required by consumer goods giants upstream."
According to the study, 45% of companies report at least a fifth of their revenue depends on palm oil. And up to 40% of procurement costs can be swallowed up by some of these commodities, the report said.
Companies doing relatively well in the rankings are facing these risks, innovating with products and working with small holders on more sustainable agricultural practices, the report said. Danone pledged to source 100% sustainable palm oil by 2015. The yogurt giant has reached that goal, according to the World Wildlife Fund, which keeps score.
But despite a high ranking in this report, companies may not be meeting sustainability targets. Nestlé, which is ranked No. 2 in the report, has already acknowledged it will not meet the 2020 deforestation goal.
Tyson and Kraft Heinz ranked poorly due to land-intensive cattle exposure and FRC disclosure, CDP said. Tyson has indirect exposure to soymeal via animal ingredients, but other manufacturers may have the same issues. There is insufficient labeling of animal derivatives in consumer goods, the report said.
Tyson is making an effort to improve. The meat giant recently said it is partnering with the Proforest sustainability nonprofit to identify any deforestation risks in its global agriculture supply chain and will be looking at sourcing for cattle, palm oil, soy, timber, pulp and paper.
CDP's findings are not unique. A Greenpeace report published earlier this year looking at more than 50 CPG firms, retailers and producers found none of them had demonstrated "meaningful effort to eradicate deforestation from its supply chain."
Whether a manufacturer's deforestation goals really matter to consumers is hard to assess. Some consumers undoubtedly research companies and products and read labels to see whether firms are walking the talk. Others may not care and buy the brands they always have regardless of sustainability practices.
Still, global CPG companies should be aware they're assessed more often on how they're doing in this area, and that the results — positive or negative — will become public. That alone may change how they do business when it comes to deforestation risks.