New ‘forest footprint’ disclosure programme aims to tackle deforestation

The Forest Footprint Disclosure Project (FFDP) was launched yesterday with £75,000 start-up funding from the Government. It is free to join and aims to help companies identify and manage the amount of deforestation caused directly or indirectly by their organisation or products. It is also intended to help investors identify the valuation risk caused by the forest footprint of their portfolios.
    
There is mounting international pressure to bring an end to deforestation. It causes 18 per cent of all greenhouse gas emissions – more than the entire global transport sector – and the cost of the problem in terms of the destruction of eco systems, is estimated to be between £1-£3 trillion annually.

The FFDP wants to raise awareness about the financial risks caused by deforestation to investors and investment portfolios in terms of new regulations (a new global deal on climate change to be hammered out in Copenhagen in December is likely to include a mechanism to reduce emissions from deforestation), but it also wants to bring home to business the environmental and reputational risk of being directly or indirectly linked to deforestation.

There is mounting evidence that many of our major brands are connected in one way or another with the problem. A three-year investigation by Greenpeace into Brazil’s booming cattle industry, published earlier this month, revealed that brands, such as Tesco, Eurostar and Clarks, were implicated in the deforestation of the Amazon rainforest.

Speaking at the official launch of the FFDP, its chair Andrew Mitchell, an international expert on tropical forests, said: “Deforestation is a global emergency, the importance of which the business world needs to wake up to. Billion dollar funding mechanisms and new regulations are being put in place by governments to curb emissions from forests and agriculture. Calls are being heard from world leaders, major businesses, and influential NGOs to halt deforestation now and this is going to have a material impact on the way business can act in the future.”

The FFDP takes its lead from the more established Carbon Disclosure Project (CDP), which is also voluntary and free to join, but addresses climate change risk more generally and is said to not overlap in its functions or objectives with the new disclosure programme. 

In one of the first measures to get companies to tackle their impact on deforestation, the FFDP is asking companies in the Fortune 500, as well as 50 other companies with a high potential forest footprint, to answer a questionnaire it has compiled. Based on the findings of the questionnaire, the FFDP will publish its first annual report in January 2010, in which it will identify companies that are ‘best in class’, those that have identified innovative strategies for managing their risk, and those that declined the request to disclose their forest footprint.

A number of institutions in the city are said to have already given their backing to the FFDP. They include Triodos, Aviva, Hermes Equity Ownership Services, Generation Investment Management and The Cooperative Asset Management.