The Southeast Asian region holds approximately 30% of the world’s coral reefs, one-third of the world’s mangroves, and nearly 15% of the world’s tropical forests, making the implications of not addressing deforestation significant.
The latest Global Forest Report from CDP, the world’s largest environmental disclosure platform, shows that a record of 1,043 companies disclosed through CDP’s forests questionnaire last year.
Asian companies outperformed other regions when setting deforestation policies, setting deforestation targets, traceability, and focusing on ecosystem restoration.
The figures represent a 300% increase over the past five years, a sign that companies are beginning to recognise and disclose their impact on forests, although only 35 of these companies are from Southeast Asia.
However, despite an increase in companies recognising the risks of deforestation, there remains a lack of action against commitments leading to an increase in forest-related risks, with only about 1 in 10 companies disclosing sufficient action to stop deforestation.
The governments and policymakers in Southeast Asia have taken steps to show their commitment to net zero, in part by setting targets to reduce emissions coming from the forests and land use sectors, as well as managing deforestation and seeking collaboration from non-state actors including private sectors.
Urgent Action is Needed
Some of the implemented initiatives include the enhancement of Nationally Determined Contribution (NDC), the development of green taxonomy measures, and disclosure requirements on ESG. The CDP report supports this given that Asian companies are considered more compliant with the law compared to companies from other regions.
However, despite the progress being made, the challenges faced by companies sourcing commodities from Southeast Asia and their impact on biodiversity remain a concern.
In 2022, there were 28 companies (increased from 21 in 2021) in Southeast Asia that disclosed through the forests questionnaire, with 10 companies from Indonesia, 7 from Malaysia, 6 from Singapore, 4 from Thailand, 1 from the Philippines, and none from Vietnam.
To put an end to deforestation the report outlines key actions companies must take including conducting comprehensive risk assessments, enhancing deforestation/conversion-free compliance, and disclosing their progress in achieving deforestation-free and conversion-free supply chains.
CDP disclosure for corporates and the financial services sector allows for transparent reporting of progress against good practice frameworks and standards.
The report finds that globally, companies are still not acting to mitigate the risks effectively and are risking nearly US$80 billion in total as a result. From 10 companies in Southeast Asia alone, the total risk reported is US$2.3 billion.
Thomas Maddox, Global Director, Forests and Land Use at CDP said: “It was a record-breaking year for companies disclosing their impacts on forests, which is encouraging for transparency. The results show companies are becoming ever more aware of the risks and opportunities addressing deforestation represents, but we continue to see a gap between commitments and tangible actions.”
“The eradication of deforestation from commodity supply chains makes economic and environmental sense but requires appropriate financial and policy incentives to prioritise action. Deforestation has no place in the net-zero, nature-positive world science and society are demanding. Achieving it is a matter of ‘when’, not ‘if’. Companies acting now will reap the benefits of the opportunities. Companies acting later will face the highest costs.”