Supply chain policies need work to save forests-think tank - TRFN

By Megan Rowling

BARCELONA, Feb 11 (Thomson Reuters Foundation) - G overnments, companies and investors still have significant work to do if they are to stop global supply chains causing deforestation and worsening climate change, a tropical forest think tank said on Wednesday.

A new ranking of 250 companies, 150 investors and lenders, 50 countries and regions, and 50 other powerful players showed only a small minority have comprehensive policies in place to tackle the problem.

At the current rate of progress, international goals to end deforestation will not be met, the Global Canopy Programme (GCP) warned.

"Whilst some powerbrokers are leading the way in addressing global forest loss, many are failing to take the action required," it said in a report on the "Forest 500" (www.forest500.org).

Over the last decade, growing global demand for food, animal feed and fuel has been responsible for more than half of deforestation in tropical and sub-tropical regions, according to the report.

Deforestation and changes in land use today cause more than 10 percent of global greenhouse gas emissions, undermine water security and threaten the livelihoods of over 1 billion people worldwide, it added.

Progress on curbing tree losses and emissions has been made, including last year's New York Declaration on Forests, signed by businesses, governments and indigenous peoples. It aims to cut natural forest loss in half by 2020 and end it by 2030.

A separate pledge to achieve net zero deforestation by 2020 - meaning any lost forest is replaced - has been made by the Consumer Goods Forum (CGF), a global coalition of companies, including major manufacturers and retailers.

CHINESE, INDIAN FIRMS LAG

In the Forest 500 analysis of corporate policies, CGF members - which include Unilever (NYSE: UL - news) , Nestle (VTX: NESN.VX - news) and Danone (LSE: 0KFX.L - news) - scored 80 percent higher than those outside the alliance.

But across the 250 companies assessed, just 7 percent had zero deforestation policies in place that covered all their operations and commodities.

Home care, cosmetics and personal care businesses performed best, while the animal feed industry lagged behind.

About 60 percent of companies in timber and palm oil supply chains had deforestation commitments, compared with just 26 percent in beef and leather, and 20 percent in soya.

Thirty companies, many based in Asia and the Middle East, scored zero points, as did numerous investors.

"Company policies in India and China are still far behind, and it's difficult to see how we can address this problem (of deforestation) when companies in two of the key importer countries don't have policies and haven't started coherently developing them," said Mario Rautner, manager of the GCP's programme on drivers of deforestation.

But public interest in environmental sustainability is growing in China, and "no deforestation" pledges already made by major Asian palm oil traders such as Wilmar may have a positive impact, he noted.

"When you have key suppliers and traders change like Wilmar ... it means that what they supply to China will be sustainable, and it will then become easier for Chinese companies to have these policies," Rautner said.

INVESTOR RISK RISING

Among countries, Latin American forest nations - such as Brazil, Colombia and Peru - scored well in the Forest 500 analysis, while the Netherlands and Germany came top among countries that import commodities.

States with poor policies included China, Myanmar and Russia.

Rautner predicted investors, who have been slower to act than companies to stem deforestation, would likely catch on, led by banks, as they try to limit exposure to commodity losses.

"With climate change and weather effects, the investment risk into those commodities is just going to go up," he added.

International goals to end deforestation, together with scrutiny by green groups and consumers, provide a good system to track whether governments and businesses deliver on their commitments, Rautner said.

Increasingly, companies are thinking through their policies carefully and most are not making promises they will be unable to meet, he said.

"The reputational risks, once you have committed to this, are quite high," he added. (Reporting by Megan Rowling; editing by Laurie Goering)