The idea for the Forest Footprint Disclosure project was born in 2008, when the director of the Global Canopy Programme, Andrew Mitchell, attended a Carbon Disclosure Project (CDP) event and mentioned to its CEO that, while deforestation accounts for around 15–20% of global carbon emissions, it was not being accounted for in the CDP disclosure framework.  As the CDP was about to launch its water programme, it was agreed that Global Canopy would initiate a forest disclosure project with CDP’s help and so, in 2009, the first cycle of forest footprint disclosure requests began.

Four years after that initial suggestion, the Forest Footprint Disclosure (FFD) Project and the CDP are to merge, bringing together corporate disclosure around the earth’s atmosphere, water and forests, resulting in the world’s largest and most comprehensive natural capital disclosure system.

From next year, the programmes will all be run by the CDP, with the FFD team joining CDP to continue managing the project. We are excited by the potential of the merger, both to simplify and integrate the disclosure process for companies as well as to create broader corporate environmental impact data for investors to analyse.

The FFD disclosure request acts on behalf of investors to collect information from 450 companies on their exposure to deforestation risks through the use of five commodities: timber, palm oil, soy, beef and leather, and biofuels.

These investors recognise that firms which handle these commodities within their supply chains are exposed to operational and reputational risks which are increasing with concerted government intervention in the management of the world’s forests. On top of this, they are also exposed to the impacts of population growth and climate change on commodity prices and security of supply.

The disclosure request is supported by 75 investors with more than $7 trillion of assets who wish to understand the exposure to deforestation within their portfolios. By reporting to FFD in a consistent manner, companies help these investors to manage their exposures. The disclosure process is also a chance for companies to communicate more effectively with investors and highlight proactive risk management.

Each responding company receives a personalised company-level report each year, which gives them an analysis of their performance, in terms of strengths, weaknesses, opportunities and threats, comments on the performance of their sector, and a benchmark of their performance against their sector and against the whole FFD company dataset.  Most disclosing companies have found the process of analysis very helpful in assessing their own risks and developing timely solutions to potential problems.

Read more: Forest Footprint Disclosure

Environmental Finance