Nestlé, Mars, Marks & Spencer, Danone and Kellogg top scorers in Forest 500 report; ocean plastics backlash grows; EU probes IKEA tax affairs
There is something about the end of a decade that makes it ripe for corporate commitments. It is little wonder, therefore, that dozens of sustainability initiatives have pinned their aspirations to 2020. The deforestation movement is a prime example. Back in 2014, signatories to the New York Declaration on Forests, for instance, pledged to halve the rate of global forest loss and eliminate deforestation from the production of agricultural commodities by 2020. At the start of this decade, meanwhile, the Consumer Goods Forum said its 400 corporate members would achieve zero net deforestation by the same emblematic date. Businesses backing the Sustainable Development Goals also face an interim target (under SDG 15) of implementing management steps to halt deforestation and restore degraded forests within the next 24 months.
Yet not a single company is on track to meet its 2020 commitments, the statistics suggest. Non-profit organisation Global Canopy has been tracking corporate efforts to curb deforestation in their supply chains since 2014. Its latest Forest 500 report, published this month, finds that only one in five (20%) of the 150 finance institutions surveyed have specific lending or investment policies in place for palm oil or timber firms – two of the biggest causes of deforestation. Even fewer have policies for companies working in the cattle (9%) or soya (11%) sectors.
Of these four commodity areas, cattle-raising for beef and leather is identified as the biggest cause of deforestation. Yet only 17% of the 250 companies tracked by Global Canopy have policies designed to protect forest for cattle production or procurement. Worryingly, four companies have dropped forest policies for cattle products since 2014. Companies performed better on palm oil and timber, with 61% and 49% having specific forest policies respectively.
The companies and financial institutions covered in Forest 500 are chosen because of their influence on the state of the world’s forests. Each is given a score out of five for all four commodity areas. Only 18 companies scored 5/5. Appearing highest among these top performers are Nestlé, Mars, Marks & Spencer, Danone and Kellogg. No financial institution is in this top group, although plenty (65 in total) can be found at the bottom with a score of 0/5.
According to the United Nations, forests are home to more than 80% of all terrestrial species of animal, plants and insect. Around 1.6 billion people also depend on forests for their livelihoods, with 300 million counting forests as their home. Many of this latter group are under threat from land grabs and other illegal activities by businesses looking to expand the agricultural frontier. A new report by environment group Greenpeace, for example, finds a spike in violence against indigenous people and rural workers in the Brazilian Amazon. Last year, 49 people were killed in struggles over land in the Amazon, the report states. It pinpoints the state of Rondônia as one of the most affected regions. Around 40% of the state’s forests are protected by law, yet farm expansions have made it one of the most deforested parts of the Brazilian Amazon.
The Imazon Institute, a Brazilian research group, makes the point that the Amazon has 10 million hectares of poorly used or abandoned pastureland, making further deforestation unnecessary. With political will, it is possible to solve the problem. Government measures implemented between 2005-2012, for instance, saw deforestation rates in the Amazon drop by 70%. Rates have since picked up by 38%. Uncontrolled, the rate of deforestation could reach annual levels between 9,391 km² and 13,789 km² until 2027, the Imazon Institute warns.
Plastic: not so fantastic
SUDDENLY, everyone is talking plastic, especially ocean plastic. In an unprecedented move, the UN Environment Assembly agreed to a global effort on preventing ocean plastic. If unchecked, ocean plastic could weigh more than the oceans’ entire fish population by 2050, a recent calculation indicates. Delegates at a UN conference earlier this month pledged to set up a taskforce to advise on how to solve the problem of marine plastic litter and microplastics. Although the taskforce’s recommendations will not be legally binding, the move is already sending ripples through the business community.
According to the United Nations, more than 8 million tonnes of plastic leak into the oceans every year, equivalent to dumping a truck-load of plastic garbage every minute. Meanwhile, as many as 51 trillion microplastic particles litter our oceans and seas. Plastic pollution is harming more than 800 marine species. An estimated 40% of marine mammals and 44% of seabird species are affected by marine debris ingestion.
A number of governments have taken measures to prevent the use of plastic, as well as to improve its collection and recycling. To date, more than 40 other countries have banned, partly banned or taxed single-use plastic bags. The list includes China, France, Rwanda, the UK and Italy. The most stringent measures were adopted in August 2017 by Kenya, where citizens risk imprisonment or fines up to $40,000 for producing, selling or even using plastic bags. The UK government has pledged to adopt a specific action plan to deal with over-consumption of plastic in early 2018. According to Michael Gove, the Environment Minister, the plan aims to cut the total amount of plastic in circulation, as well as facilitating recycling by reducing varieties of plastic and simplifying kerbside recycling.
As yet, few major companies have made public commitments on plastic waste. One exception is a handful of firms that have voiced public support for the Ellen MacArthur Foundation’s New Plastics Economy Initiative. They are Mars, Marks & Spencer, PepsiCo, Coca-Cola, Unilever and Werner & Mertz (a German manufacturer of cleaning products). Each company has pledged to use 100% reusable, recyclable or compostable packaging by 2025 at the latest. In October, meanwhile, 150 organisations endorsed a worldwide ban on oxo-degradable plastic packaging. Among the signatories are the British Plastics Federation Recycling Group and the Chemicals Association.
Corporate tax: EU investigates IKEA
IKEA is the latest major company to face an investigation by European regulators into its tax affairs. The Swedish retailer’s Dutch division, Inter IKEA, has become the subject of a probe by European Competition Commissioner Margrethe Vestager. Vestager is the official who led an investigation against Google for an antitrust case, resulting in the issuance of a $2.7bn fine this summer, the largest of its kind ever imposed by the EU on a company.
Inter IKEA has earned the attention of the competition authorities for its suspected receipt of unfair tax advantages by the government of the Netherlands. EU rules prevent member-states giving exclusive tax benefits to specific multinational groups. Inter IKEA, which operates the franchise business of IKEA, is charged with collecting royalties from other parts of the group and then paying minimal tax on the proceeds. The charge dates back to a deal struck with the Netherlands in 2011, which allegedly allowed the IKEA division to shift a “significant part” of its profits through Liechtenstein, an infamous low-tax jurisdiction. In October, Amazon was ordered to repay €250m in illegal state aid to Luxembourg after an EU investigation brought a similar scheme to light. Ever active, Vestager’s team is currently threatening the Irish government with legal action if it fails to collect €13bn in unpaid taxes from Apple. Fiat and Starbucks are two other multinationals that have had their tax affairs come under close inspection by the EU in recent months as well.
It comes as little surprise, therefore, that a new study by the Institute of Business Ethics should find that tax is at the top of a list of ethical concerns about business. The findings, which are based on a survey of more than 2,000 British adults, show that nearly two in five (38%) believe that business must urgently tackle tax avoidance. The next highest-ranking ethical issue for business is executive pay, which 30% of UK adults felt was in need of redress. In general, however, more than half (52%) of the British public believe that business behaves ethically. This is up on last year (48%), but substantially down on 2015 levels (59%).