Unsustainable business practices and detrimental environmental effects on land, water, biodiversity, and climate change are linked to the production and supply networks of these commodities. The production and supply chains of these commodities exhibit notable business risks and adverse environmental consequences concerning land, water, biodiversity, and climate change. CDP Forests takes initiative on behalf of more than 746 investors, encompassing assets totaling over US$136 trillion, and over 280 large purchasing companies. It offers a strategic framework for companies to gauge and control forest-related risks and opportunities, transparently report their advancements, and pledge proactive measures for forest and ecosystem restoration.
Furthermore, starting in 2019, we initiated the collection of data pertaining to biodiversity impacts, risks, and opportunities within the mining sector.
Companies may identify and efficiently manage risks and opportunities associated with forests with the help of CDP Forests, which offers a comprehensive framework. The project supports proactive promises to restore forests and ecosystems as well as open reporting of progress.
Forests hold a central position in both our economy and the environmental challenges we confront. Neglecting to manage deforestation risks could lead to significant revenue losses for companies and financial institutions. In 2022, 60% of companies disclosing through CDP acknowledged some level of forest-related risks. The potential financial impact of these risks averaged $330 million per disclosing company, while the projected costs of mitigation were considerably lower, at an average of just $17 million per company.
Taking action to manage these risks is crucial for companies and investors. Failure to do so could result in substantial financial losses over the next decade. Recent analysis suggests that deforestation could become a significant financial risk, akin to the risks associated with coal in financial institutions' portfolios. Exposure to companies contributing to deforestation could leave them vulnerable to considerable financial, regulatory, and reputational risks.
For further information visit CDP Official website.