Ethical Performance
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‘Forest disclosure’ is next on the agenda

July 2009

A project has been set up to help investors understand the financial hazards of deforestation.

The Forest Footprint Disclosure Project (FFD) is modelled on the Carbon Disclosure Project, which encourages companies to report on greenhouse gas emissions.

Initially, a questionnaire has gone to all Fortune 500 companies, plus other businesses judged to have a high ‘deforestation risk’. The results will be offered to investors and summarized in the project’s first annual report, being produced next January.

The report will show ‘best in class’ companies with innovative strategies for managing deforestation risks, as well as those declining the request to disclose their forest footprint.

The FFD, which has been formed by the UK government’s international development department and several foundations, says businesses involved in producing beef, palm oil and biofuels contribute heavily to deforestation, and particularly need to increase their disclosure.

The new venture has backing from several institutional investors, including Aviva, F&C Asset Management and Hermes Equity. Karina Litvack, F&C’s head of governance and sustainable investment, said: ‘Protecting forests is shaping up to be one of the cheapest, most effective ways to curb climate change, and so we anticipate that the Copenhagen negotiations later this year will produce mechanisms to price forest loss into supply chains.

‘Companies that rely on forest products will therefore have to develop processes to manage this, just as they do to other cost factors. The FFD will help get them there.’

Forest Footprint Disclosure Project | Global | Transparency

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