2Sustain

Back in August, in my post “Do You Know Your Forest Footprint?,” I mentioned that the Forest Footprint Disclosure (FFD) Project planned to release an annual report of “best-in-class” corporations in early 2010.

Well, those results are in, and they show –for the first time ever –how 35 different companies are tackling the issue of sustainable sourcing of Forest Risk Commodities (FRCs), such as palm oil, soy, timber, beef, leather and biofuels. (Read the full 64-page report here.)

The FFD Project sent its disclosure request was sent to 217 high profile international companies, selected by Fortune 500 status and exposure to FRCs. The questionnaire asked for information in 11 key sections, including Risk Assessment, Sustainable Supply Chain Development and Support and Governance Process. All told, 35 companies –including global leaders such as British Airways, BMW, Travis Perkins, L’Oréal, Weyerhaeuser, Kingfisher, Adidas, Nike, Mondi and Unilever –disclosed in response to this first approach.

“This is a very promising start in our first year”, says Tracey Campbell, Director of FFD. “We have raised the profile of the links between deforestation and commodities, informing the business community about the issue, and we plan to build on this initial engagement in future years.”

In fact, several respondents admitted that they had not been looking for this data prior to FFD’s request, and a number of non-responding companies in 2009 have already indicated that they intend to participate in the 2010 survey.

Here are The Best Performers by Sector:

Oil and Gas: Neste Oil, Finland
Food Products and Soft Drinks: Danisco, Denmark
Personal Care and Household: L’Oréal, France
Food and Drug Retailers: J. Sainsbury plc, UK
Farming and Fishing: IOI Group, Malaysia
General Retailer: Marks and Spencer, UK
Basic Materials: Mondi plc, UK
Industrial and Auto: Weyerhaeuser, USA
Utilities Drax: Group, UK
Other Consumer:1 Reed Elsevier, NL

Kudos to the FFD Project for taking this first step and working to build awareness –in the business community, with investors and among broader consumer audiences –about the issues surrounding the concept of a Forest Footprint. Remember, as remarkable as it sounds, analysts believe deforestation is responsible for more carbon emissions than the entire transportation sector. Plus, as the FFD Project points out, “peak deforestation” creates three specific  valuation risks for your company and its associated investment portfolios:

1. Regulatory risk –New regulations can threaten supply, increase compliance risk, and increase costs.
2. Environmental risk –Peak deforestation will have directly impact commodity yields.
3. Reputation risk –Poor performing companies risk losing market share as consumers become increasingly aware of forest footprints.

One more thing: stay tuned.FFD is scheduling a second disclosure request cycle for June 2010, and a US launch is planned for later this year to raise awareness of the concept of the Forest Footprint among more investors and potential corporate respondents.