Forest Footprint Disclosure Annual Review 2010

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Forest Footprint Disclosure Project John Krebs Field Station Wytham Oxford OX2 8QJ United Kingdom Tel: +44 (0) 1865 240090 Email: info@forestdisclosure.com Web: www.forestdisclosure.com The Forest Footprint Disclosure Project is a special project of the Global Canopy Foundation Š 2001. All rights reserved. Registered UK Charity (No 1089110), incorporated as a Company Limited by Guarantee (No. 4293417), incorporated in England with registered address: John Krebs Field Station, Wytham, Oxford OX2 8QJ.

Forest Footprint Disclosure Annual Review 2010

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Citations

Thanks to Endorsers FFD also thanks gratitude to the following financial institutions that have endorsed the project, each of which has indicated their commitment to understanding deforestation risk in their potential investments.

© Global Canopy Foundation 2011 The Forest Footprint Disclosure is a special project of the Global Canopy Foundation. Registered UK Charity (No 1089110), copyright 2001. All rights reserved. Incorporated as a company limited by guarantee (No. 4293417), incorporated in England with registered address John Krebs Field Station, Wytham, Oxford OX2 8QJ.

FFD Endorsers

Invesco Perpetual

Active Earth Investment Management

The Local Authority Pension Fund Forum (LAPFF)

Amundi Group

The Nathan Cummings Foundation

APG Asset Management

Natural Capital Funds Management

Authors Tracey Campbell, Liz Crosbie, Katherine McCoy and Andrew Mitchell.

Aviva

Nelson Capital Management

AXA Investment Managers

Newton Investment Management

FFD would like to acknowledge the contributions of F&C, Co-operative Asset Management, Hermes Equity Ownership Services, Christian Brothers Investment, The National Wildlife Federation, The Prince’s Rainforests Project, Profundo, The Timber Trades Federation, The Forest Legality Alliance and all the staff at Strategic Environmental Consulting.

Benchmark Asset Managers

Norges Bank Investment Management

Boston Common Asset Management

NEI Investments

The Children’s Investment Fund management (UK)

Pax World Management

Christian Brothers Investment Services

Pictet & Cie

Climate Change Capital

Portfolio 21 Investments

Colonial First State Global Asset Management

Rathbone Greenbank Investments

Connecticut Retirement Plans And Trust Funds

Robeco

The Co-operative Asset Management

Royal London Asset Management

Dexia Asset Management

SAM (Sustainable Asset Management)

Domini Social Investments

Bank Sarasin & Co

EBG (Environmental Business Group) Capital

Santander Brasil Asset Management

Ecclesiastical Investment Management

Schroders

Environment Agency Active Pension Fund

Solaris Investment Management

ETICA

Statewide Superannuation

F&C Investments

Storebrand

First Affirmative Financial Network

Sustainable Development Capital

Generation Investment Management

Threadneedle

Groupe Investissement Responsable Inc.

Trillium Asset Management Corporation

Hazel Capital

Triodos Bank

Henderson Global Investors

VicSuper

Hermes Equity Ownership Services

Walden Asset Management, a division of Boston Trust & Investment Management Company

Designed by The Good Agency 1st Edition January 2011 To be cited as: Campbell, K.T., Crosbie L., McCoy K., Mitchell A. (2011) The Forest Footprint Disclosure Annual Review 2010, Global Canopy Programme, Oxford.

Forest Footprint Disclosure is a special project of the Global Canopy Foundation.

Initiated in 2008 the project is designed to improve corporate understanding of a ‘forest footprint’ generated by the use of key forest risk commodities: soy, palm oil, timber, cattle products and biofuels. FFD designed a disclosure request asking about company policy on sustainable supply chains for these products and in June 2010 sent it out to 285 international companies worldwide. Each company participating receives a feedback report to encourage higher scoring in future years. This second Annual Review describes the findings of the disclosure request based on responses from 78 participating companies and provides some context on the current issues and concerns for forest risk commodities.

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Impax Asset Management Interfaith Center on Corporate Responsibility

Zevin Asset Management

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Contents

Foreword and Donor List

4

Key Challenges

5

Cancún Comment

6

Chairman’s Foreword

7

The UK Investor Perspective

8

The US Perspective

9

The Road from Issue to Legislation

10-11

What is a Forest Footprint?

12-13

Engaging the Private Sector

14-15

FFD in 2010

16

Introduction to the 2010 Cycle Results

17

Regional Response Overview Leaders in 2010 Disclosure Request Responses by Industry Sector

18-19 20 21-42

Forests and Regulation

43

The Código Florestal in 2010

44

The U.S. Lacey Act

45

Changing EU Legislation

46-47

The Competition for Boreal Forest Assets

48-49

Deforestation and Renewable Energy Policy

50-51

2010 Timeline for Natural Capital Events

52

2010 Timeline for Timber

53

2010 Timeline for Cattle

54

2010 Timeline for Soy

55

2010 Timeline for Biofuels

56

2010 Timeline for Palm Oil

57

Thanks to Steering Committee and National Wildlife Federation

58

Thanks to Endorsers

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Foreword “Increasing demand for agricultural commodities is one of the key drivers of global deforestation. In the last 50 years, the world has lost a third of its tropical forests and continues to lose some 13 million hectares of tropical forest every year. Forests are the lungs of the earth, providing vital carbon stores in addition to supporting more than half of the world’s biodiversity. They are also critical to the survival, jobs, incomes and livelihoods of the 1.5 billion people who live in extreme poverty around the world.

Forest conservation has a significant role to play in helping to tackle climate change.

Deforestation accounts for around 20% of global Greenhouse Gas emissions – more than the entire global transport sector. Curbing deforestation is a high priority in international efforts to tackle climate change.

The Forest Footprint Disclosure Project is an innovative initiative that can help to catalyse a change in private sector supply chain management, by helping businesses assess their impact on the world’s forests, which could affect their future value. The private sector has a key role to play in working with governments to help improve the way forests are governed.

Although a young initiative, it is already receiving broad support from the private sector. For the disclosure cycle of 2010, the project has extended its reach to emerging markets. The number of companies that have disclosed how they are impacting positively on forests and, through their investments reducing deforestation, has doubled in the past year.

This British initiative, with minimum added regulatory and bureaucratic burden, promotes business leadership globally and enables investors to identify the sustainable businesses of the future. It champions sustainable and sound business practice, focusing on five key forest-risk commodities: soy, timber, cattle products, palm oil and biofuels. Investors who endorse the initiative are able to demonstrate publicly how they are improving their risk management policies and reducing their deforestation footprint. The risk that this initiative is self-selecting is countered by the increasing level of investor endorsement that the Forest Footprint Disclosure Project has already attracted. This is a strong signal to many companies that not being able, or choosing not, to demonstrate the sustainability of their business models carries significant risk of investors potentially marking down the value of those businesses. Being part of this initiative is an effective way of managing this avoidable corporate risk – as well as encouraging better business.”

Stephen O’Brien, Parliamentary Under Secretary of State, Department for International Development

Donors This report has been produced with the generous support of the UK Department for International Development (DFID), The Esmée Fairbairn Foundation, The Rufford Maurice Laing Foundation, The Climate and Land Use Alliance and the Waterloo Foundation.

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Š: GCP/Katherine Secoy

Key Challenges

The private sector is a willing participant in projects designed to reduce deforestation pressures but needs a clear regulatory framework to manage the risks of changing their business model, particularly in terms of land title and trade regulations. This is the challenge for government.

Corporate leaders identified by the Disclosure Request show that efforts to reduce a forest footprint do not compromise commercial success.

The challenge for buyers is to make the demand for more responsibly produced product clear so that producers are willing to invest in delivering against that demand.

The second challenge for companies is to develop an understanding of the issues of land use change for forest-risk commodities in advance of the REDD+ market developing so that opportunities are not missed.

Even if company managements feel that deforestation is only a social concern, the endorsers of the FFD Project are showing that, as investors, they take the risk that continued deforestation may pose to their investment results seriously. The challenge for investors is to raise the discussion about forest-risk commodity usage from the level of the CSR department to the Executive Board.

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Cancún Comment

Sagarika Chatterjee Associate Director, Governance & Sustainable Investment, F&C Management Limited

Forests - investors call for government and company action Without concerted action to protect forests, the goal of climate stabilisation will be almost impossible to achieve.

Curbing deforestation is one of the cheapest and quickest ways to cut greenhouse gas emissions. Forests are also critical to protecting biodiversity, to regulating rainfall, which is crucial for agricultural crops, and to preventing soil erosion, which can trigger devastating floods. The value of a forest left standing in terms of the multiple benefits it affords to the global economy far exceeds the value of its timber and agricultural production – yet right now, the economics of protecting forests do not add up: protecting forests simply doesn’t pay.

Investors and companies recently sent a strong message to governments, calling for financial incentives to curb deforestation. Although governments have yet to tackle the elephant in the room – a global post-Kyoto Protocol agreement – they did agree to action on forests at the UN climate change summit in Cancún, in early December 2010.

Through a landmark new international agreement, REDD+, developing countries can access funds to keep existing forests standing and to restore degraded forest areas. Governments must still overcome many hurdles, including finding the funding for results-based rewards for countries that protect forests, weak governance issues, and legacy problems relating to land rights. Nevertheless, REDD+ is a key step towards better valuing forests.

Government action will not, on its own, solve deforestation. Leading companies are not waiting for governments to take action, but are already looking for ways to drive change across the commodities chain. Corporate action will deliver results if more companies join business leaders in protecting forests. If investors, companies and governments take action together, we will succeed in protecting the planet’s lungs.

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Chairman’s Foreword

Andrew Mitchell Steering Committee Chair and Founder, Forest Footprint Disclosure

“One of the positive outcomes of the UN climate summit in Cancun last December was an international commitment of US $100 billion to 2020 for a governmental climate fund. Prime Minister Jens Stoltenberg of Norway reiterated at the meeting, that the largest, quickest and cheapest means of cutting CO2 emissions would be to reduce deforestation now. There was also broad agreement on a mechanism for Reducing Emissions from Deforestation and Forest Degradation in developing countries (REDD+) which could make their forests more valuable alive than dead, through creating a financial value for ecosystem services provided by natural forests, including the storage of carbon.

Global momentum to reduce deforestation has important implications for business across many sectors, from agriculture to timber to renewable energy. Until now, businesses have not had to report their impact on forests in their balance sheets. But as natural resources such as forests and carbon start to acquire real economic value, it is clear that a sound, sustainable business model must now take natural capital into account.

Businesses should not only be focussing on the costs that new legislation and regulation will bring.

Forward-thinking investors would be wise to take advantage of the vast opportunities that this new economic landscape will generate. The annual value of the ecosystem services sustained by forests is estimated at between US $1.5 to 4.5 trillion annually, according to the recent UNEP report on The Economics of Ecosystems and Biodiversity (TEEB).

The Forest Footprint Disclosure project aims to shed light on the importance of forests as natural capital, and the extent to which corporate supply chains and their operations impact on deforestation. This year’s annual review offers encouraging evidence that a growing number of companies wish to understand the way in which ‘forest risk commodities’ can have a negative impact on forests – and, ultimately, on their bottom lines. In its second year of operation, the number of respondents to the Forest Footprint Disclosure Request has more than doubled.

Investors endorsing disclosure now represent over US $5 trillion in assets under management.

Integrating the cost of environmental degradation into global economics is not a new concept, but it could not be more timely. Last October in Nagoya, Japan, World Bank President, Bob Zoellik said “The natural wealth of nations should be a capital asset valued in combination with its financial capital, manufactured capital and human capital…We plan to pilot ways to integrate ecosystem valuation into national accounts and then scale up what works to countries around the world". Businesses should do the same.

An example from Brazil may help to explain why this is a matter of urgency. In 2005, Amazonia suffered extreme drought - almost unprecedented in a rainforest. In 2010, it happened again, but worse. Fish died on riverbanks, cows died on land, children starved in villages. The giant soy barges of Mato Grosso were grounded. Farmers were forced to buy water for the first time. Fires closed airports and filled hospitals with workers suffering smoke inhalation. The enormous costs to business, both in Brazil and beyond, are still being calculated.

Scientists expect such phenomena are likely to occur with greater frequency and intensity as climate instability proceeds. With demand for food production predicted to increase 70% by 2050, according to the FAO, maintaining a balance between food, economic and environmental security will be a growing challenge. However, protecting standing forests need not limit economic growth and business development. It is perfectly possible to achieve higher yields in agricultural production with modern techniques on existing cleared or degraded land without converting natural forests for crops or pasture. In fact, global food, energy and climate security all depend on maintaining the ecosystem services that intact forests provide.

By engaging in Forest Footprint Disclosure, businesses can learn how to navigate these uncharted waters and to deliver more sustainable growth in the decades to come.”

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The UK Investor Perspective FFD asked both of the investment institutions that serve on the Steering Committee of the project to give their perspective on why deforestation matters to an investor.

By Freddie Woolfe, Hermes Equity Ownership Services Limited

“Deforestation is a key risk for long-term investors for a number of reasons. The first is that deforestation is responsible for around a fifth of global carbon emissions. The links between carbon and climate change are well understood, but without addressing the unsustainable practices that lead to deforestation, we will never be able to tackle climate change effectively. For long-term investors such as pension funds, climate-related effects will structurally and systematically affect the markets in which we invest and therefore the underlying value of our portfolios.

In order for fund managers to properly serve the interests of their beneficiaries, they must strive to understand the impact of long-term risks to their clients’ portfolios. This includes an understanding of the forest footprints of the companies in which they have invested client money.

The second fact is that forests are currently the cheapest method of carbon capture and storage.

Forests are also key in perpetuating the water cycle, and completely free for us to use. This is a clear issue for the long-term investor: for a heavily diversified universal asset owner, destruction of such a valuable ecosystem with no comparable alternative makes no sense. Other externalities from deforestation include impacts on biodiversity, land use and related social and ethical issues.

One of the core problems for investors looking at deforestation risk within their portfolios is lack of information. Increased transparency means that investors are able to make more informed decisions and are better able to compare performance.

Enhanced disclosure also means that companies are able to share best practice in a more informed way and set up more effective industry collaborations such as the commodities round tables. Equally, often through the process of compiling data, companies are forced to understand and integrate their own practices better, and new areas of risk and opportunity are revealed.”

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By Benjamin McCarron, The Co-operative Asset Management

“There are a number of reasons why deforestation is an investor issue. First, as investors we prefer to operate in a context of long-term economic stability and this is only possible if environmental and social challenges, including climate change, are suitably addressed. This in turn requires dedicated action in support of forests.

Aside from the broader economic issues, forests matter directly and through supply chains to many of the companies in which we are invested. In the context of tightening legislation and a vocal civil society, forests are also moving up company managements’ agendas.

This includes purchasing managers, who have to ensure continuity of supply of forest commodities in volume and at an appropriate price, reputation managers where business impact on forests can damage brands, and increasingly boards that have to ensure appropriate governance procedures are in place to manage the associated risks and that innovation is fostered to find new opportunities.

Consequently, our fund managers and analysts are looking forward to reading the responses to the Forest Footprint Disclosure Request reports to gain insight into management quality.

Finally, given the importance of forests to biodiversity, which is under such pressure, as well as to the livelihoods of many poor and particularly indigenous people, we believe using our influence to help protect forests is simply the right thing to do.”

The US Perspective

By Julie Tanner Assistant Director, Socially Responsible Investing, Christian Brothers Investment Services, New York

“In creating a tool that helps companies to disclose how their operations and supply chains impact forests worldwide, The Forest Footprint Disclosure Project is helping global investment firms, like Christian Brothers Investment Services, better understand a company’s forest footprint.

While many companies are able to evaluate aspects of their environmental performance using well-developed tools and frameworks, far less is available to companies to help them identify and manage risks from deforestation. Investors are beginning to become more aware of the presence in global supply chains of the relevant commodities thanks to the disclosure provided by companies through FFD. With this transparency, shareholders are able to more accurately measure corporate exposure, gauge progress, and encourage companies that are striving to implement best practice.

Through our engagement with companies, we are encouraging companies to establish robust, substantive and frequent disclosure to shareholders.

We look forward to working with FFD as we encourage companies to take a leadership role as they face the next generation of environmental and social challenges. Christian Brothers believes that FFD can help companies lay a strong foundation that can help to strengthen valuable brands and enhance shareholder value.”

By Nathalie Walker, Manager, Climate Change, Deforestation & Agriculture Project, The National Wildlife Federation

“We’re delighted that working together with FFD, we have increased the US participation from two companies last year to twelve this year. This demonstrates an increasing interest among major business leaders in the value that FFD brings to both their organization and the environment. Within this cycle, we were able to attract several important new participants, including major suppliers of household products.

We were pleased that a large number of company representatives attended our webinar and “launch events” in Chicago and New York. It is clear that more outreach to US companies is essential, to explain both the FFD Project and the relevance of forest risk assessment to their industries. Several companies were still in the phase of developing their supply chain management departments so getting agreement to disclose was often challenging. However, they recognized that there has been an increase in demand from consumers to know where products are sourced from, and that the FFD process could be useful in developing their sustainability efforts. There was an even larger number of corporate representatives interested in learning about the inititative, however as the project and reporting method were relatively new, they would defer participation to the coming year.

As we begin the 2011 cycle, we anticipate even greater engagement with major US companies, particularly since the release of this report showcases the participation of global industry leaders. This positive feedback demonstrates to us a growing recognition among American businesses that they have a “forest footprint” and receptiveness to the idea of disclosing their progress on this key challenge via the FFD project. This is very encouraging for the future success of FFD and greater participation across a range of industries.”

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The Road from Issue to Legislation

Tracey Campbell Director, Forest Footprint Disclosure

Back in the 1970s, it was not unusual for a British child to be driven home from a smoke-filled pub by a tipsy parent who wasn’t wearing a seat belt. Everyone was aware that these activities weren’t very smart, but it was perfectly normal behaviour and socially acceptable because ‘everybody does it’. Today, British pubs are strictly non-smoking and all passengers have a responsibility for monitoring the designated driver’s alcohol consumption. Anyone can be prosecuted for driving drunk or failing to wear a seat belt. Regulation to ensure higher standards of behaviour has crept up piece by piece, and now punishments are meted out when these standards are breached.

International concerns such as climate change, water scarcity, rural poverty, and food security have become increasingly high profile in recent years but there is no formal regulation in place on a global scale. The world’s environmental resources continue to be depleted with profligacy and for free. Does anyone imagine this squandering of our finite natural capital, free of charge, can continue indefinitely? No - even junior school children ask sensible questions about why the world’s resources can’t be managed better.

So how can we move from recognising that a problem exists to changing and enforcing different patterns of behaviour on a global scale? How can we move beyond encouraging best practice to legally binding legislation?

Initially, public awareness of an issue is usually raised by activists and campaigners who adopt a ‘name and shame’ strategy. By publicising breaches of ‘acceptable behaviour’, campaigners seek to persuade

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the offender to change their ways. However, ill-judged railing against corporate activity or government policy can too easily become background noise. Focussed arguments directed at the most appropriate audience can change the way that societies and stakeholders deal with an issue. However, one effective method of changing bad habits is by demonstrating better practices in action.

NGOs, industry players and trade organisations often put forward voluntary codes of conduct, but the architects of this self-regulation tend to propose practices that reflect their own special interests. This often leads to a proliferation of voluntary codes with conflicting priorities. This generates confusion for the smallholders, suppliers and buyers who have to decide which standards they should strive to meet using their constrained resources.

With the emergence of meta-standards for voluntary codes, such as ISO and ISEAL, which insist on multistakeholder engagement and several iterations of consultation, the likelihood of one group being able to design a system that disadvantages all or many of the others is reduced. However, multi-stakeholder roundtables that lay claim to particular commodities have not necessarily acted quickly enough to keep up with the demand for guidance on better practice from their members. For example, greenhouse gas emission metrics have typically lagged far behind the demand for members to promote sustainability.

The advantage of having several voluntary codes and negotiating with other stakeholders is that each of the parties involved becomes educated in the constraints

of the others. It may be that only a second-best solution for each party can be achieved, since these are not simple issues. However, taken as a collective plan for action they can result in an improved process which is workable in real life. Even a great code of conduct is only as effective as the signatories who put it into practice: the willing may find that their markets are commercially disadvantaged by the activities of the unwilling, leading them to press for formal regulation to ensure a level playing field.

For good quality regulations that apply to natural capital, three crucial elements must be in place: the scientific argument for regulatory change must be robust; national regulations must take account of the global good, not just the local electorate; and the possible repercussions of the implementation of the law for all stakeholders must be thoroughly assessed.

Pages 43-51 of this document offer a more detailed discussion on the current and proposed regulation of forests.

Converting voluntary codes into binding regulation – whether at the local, national, regional or global level requires political commitment. This may derive from public pressure from the electorate or from an ideological commitment by a political party. It may take the form of blacklisting (‘do not buy timber that was illegally logged’) or whitelisting (‘you are mandated to buy a percentage of renewable energy’). Well-designed regulation will take multi-stakeholder discussions into consideration. However, in many instances, national regulation only covers a few of the stakeholders involved: for instance, countries in Europe and North America are chiefly buyers of tropical products, while Brazil is an important primary producer. Overdependence on national regulations can thus produce a patchwork of standards that must be applied to a product along the supply chain, from grower to consumer. Short-term thinking can produce regulation that has unintended consequences: sustainability was disengaged from the original EU Renewable Energy Directive (although welcome revisions are now well in process).

In its formative years, the primary purpose of the Forest Footprint Disclosure is to inform key audiences about the current campaigns, codes and regulations that apply to forest-risk commodities (timber, cattle products, soy, palm oil and biofuels). The aim is to ensure that investors and corporations are better prepared to address emerging regulation, to capitalise on new market opportunities and to understand the risks involved in continuing to conduct ‘business as usual’. The mandate is to ‘name and fame’ those companies who are raising the bar in terms of corporate behaviour. Voluntary best practice today could well be standard practice in the future.

It must be acknowledged that many of the respondents are at the very early stages of a stepwise programme to reduce the deforestation pressures implicit in their existing business strategy but even this early engagement beats no effort at all. What forward-thinking investors want to see now are the management teams who can deliver commercial success while acting as guardians, rather than vandals, of our priceless natural capital.

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What is a Forest Footprint?

Liz Crosbie Technical Adviser to FFD and Founder of Strategic Environmental Consulting

A forest footprint is the impact of a person or business’ activities on forest cover and loss through land conversion. Consumption of any forest risk commodity may potentially lead to forest loss but how do we separate the good from the bad producers? It would be simple if one could say with certainty that one bar of chocolate represented the loss of half a tropical tree but in reality these calculations are extremely difficult.

Commodities are traded as uniform products today but in reality they are grown by many individual producers to different standards. They are then merged for bulk transport to reach their markets as blends before being made into many different ingredients. Individual manufacturers then use different recipes for their products so any ‘product footprint’ is entirely individual. Any estimate of a product’s forest footprint involves a huge number of assumptions at each level of the supply chain and to compare like with like will require the development of international standards.

New standards to help companies understand where they they sit in relation to others will take time. In the meantime companies can concentrate on finding out the volumes of material they use and how they are connected to other businesses, to create a supply chain map. Third party certification and verification services can then help establish the provenance of what is bought and give assurances that the product meets certain standards.

International trade impacts on product life cycles, for example most of the sizeable imports of soy into Europe are used as animal feed but the resulting meat and processed products travel across international borders with a ‘Made in Europe’ designation.

International labelling regulations need to be clarified and origin made more transparent to avoid misleading both businesses and consumers. Allowing palm or soy oil to be labelled ‘vegetable oil’ does not help anyone recognise the forest footprint implicit in their purchase decisions.

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Consumers are at a very early stage of playing their part in using deforestation information to influence corporate behaviour: buying only sustainably sourced products gets a message across very clearly. But how can they identify better products? Forestry has various certification scheme badges and soon they will be joined by the RSPO’s certified palm logo. However, for multi-commodity products - given the complexity of issues involved and the pre-existing level of clutter on pack - this means that responsible sourcing really needs to be identified in the consumer’s mind at brand or company level. Creating trust in the company’s ‘choice editing’ policy means that consumers can develop a set of purchasing preferences which drive higher sales to more responsible companies.

At present there are multiple agencies who certify production processes for a single commodity at grower level to show that they meet certain sustainability criteria. Beyond the grower an equivalent process shows that the chain of custody is also responsibly managed. However, layering these processes for multiple commodities will create much additional costly work which must be paid for by someone in the supply chain. What would be more helpful to industry participants would be the mutual recognition and/or standardisation of procedures for monitoring raw material sustainability claims. Sharing experience between the round tables on standards at grower level would also be helpful since many important lessons already learnt have relevance to more than one commodity.

If it is at present hard to establish a precisely quantified forest footprint, it is less difficult to recognise measures that could be taken to reduce the impact of any given product. Using research conducted by Profundo, a Dutch consultancy, and interviews with industry participants, FFD has developed the table opposite to illustrate how each level of the supply chain could act now to reduce deforestation pressures.

How to reduce a Forest Footprint?

Supply Chain Level

Action for soy

Action for other forest-risk commodities

Consumers

Find out from your retailer if they have any feed or Forest Risk Commodity (FRC) policy

Be informed about the origin of the products you buy and find out the policy on sourcing of your favourite brands

Eat meat less regularly and reduce waste

Don’t buy excessively packaged products and recycle where possible

Ask your poultry supplier how they make their feed and are they using certified soy?

Seek out ingredients with other certified elements e.g. RSPO certified palm oil, MSC fish oils

Ask for clearly labelled inputs to your own supply chain

Use certified paper and board for packaging

Label your own products transparently

Move to biomass and renewable, local sources of energy such as waste

Check your feed formulations and bought in ingredients and undertake a risk assessment for FRCs

Check for use of palm oil in feed and ask for RSPO certified materials

Example: Buying chicken in a ready meal

Ready meal manufacturers

Poultry suppliers

Use certified soy feed from sustainable sources

Feed suppliers

Use local renewable energy sources (such as biogas) rather than biofuels based on deforestation.

Use best available husbandry techniques and breeds to maximise conversion ratios

Work on using recycled or certified packaging or returnable packaging systems

Develop traceability systems so you can meet your customers need for sustainable materials

Keep other forest-risk commodities to a minimum in pre-mix by opting for alternative edible oils or cereal inputs and ask for sustainable, certified ingredients where possible.

Keep sustainable soy feeds segregated so that customers’ have traceability Buy material only where existing voluntary codes have identified reliable sourcing

Use recyclable packaging where possible

Observe the soy moratorium in force Growers & Land Owners

Produce according to accepted credible soy certification systems Build up yields on already cleared ground through use of best possible seed and soil improvement schemes

By increasing yields on one crop, land may be freed up to produce other forest-risk commodities without further land clearance, such as adding cattle to an arable farm

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Engaging the Private Sector

Jack Gibbs Director of the Prince’s Rainforests Project (PRP)

The Prince’s Rainforests Project (PRP) has been an active participant in discussions about reducing deforestation with some of the world’s largest agricultural producers in tropical countries.

Jack Gibbs, Director of the PRP, outlines below the results of meetings convened in 2010. The full report and research materials can be accessed at www.rainforestsos.org/private-sector-proposedsolutions-to-reduce-agricultural-expansion-into-forests/ “In November 2009, His Royal Highness The Prince of Wales convened a meeting of agribusinesses active in rainforest countries. There was general agreement that it would be possible to increase agricultural production, without further deforestation, by increasing yields, rehabilitating degraded land and reducing waste along the supply chain. In order to develop these ideas at the local and individual commodity level, eight regional meetings were held during 2010, bringing together representatives from the private sector, NGOs and government.

Slowing deforestation will only be achieved if all the important stakeholders in rural communities are engaged in transforming the current business model. Agriculture - as the main employer, the primary source of private sector investment, and a driver of deforestation - must therefore be party to any solution.

What was so reassuring from our meetings, research and conversations was the willingness of agriculture companies operating in rainforest nations to be part of that solution. Indeed many of them had already conducted pilots, assisted by NGOs, of the ideas they brought forward – so much of what was discussed could potentially be taken to scale quickly.

In Brazil, the focus was on cattle ranching – one of the chief drivers of deforestation – in the Amazon and

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Cerrado regions and finding ways to intensify cattle production in non-forested areas. It should be possible to increase the typical stocking rate of 0.38 head of cattle per hectare found on degraded pastures to 1.18 animals per hectare, which would reduce the need to expand into the forest while still allowing for growth in the national herd. Intensification could be achieved by restoring the quality of degraded pastures with fertilisers and planting higher quality forage crops, by using grains as supplementary animal feed to accelerate fattening, and by developing integrated crop, livestock and forestry systems.

In Southeast Asia, the focus was on strategies to increase palm oil production without further deforestation, specifically in Indonesia and Malaysia.

Two proposals have been developed. The first is to expand production on degraded, non-forested land.

This is currently difficult for companies to access because of land titling uncertainty. Expansion on degraded land is often just as economically attractive to companies as expansion on forested land, and does not require major financial incentives, so long as infrastructure access and clear title can be provided by the government. The second proposal examines how the large base of smallholder farmers might increase their yields – in Indonesia, increasing from the current average of 3 tonnes per hectare to 5 tonnes per hectare (well within technical limits) could spare the need to develop two million hectares of new land.

The Africa regional meetings focused on three key commodities – cocoa, palm oil and cassava. The rehabilitation of ageing cocoa farms, combined with the adoption of improved varieties and improving soil health, could lead to a tripling of cocoa yields. Palm oil yields in Africa have remained stagnant over the last few decades. Adoption of improved varieties and

replanting of ageing plantations have the potential to respectively triple and double yields. Adoption of improved cassava varieties could increase yields four-fold, whilst the rehabilitation of a quarter of the region’s estimated Imperata grasslands through the planting of the leguminous cover crop Mucuna would reduce the need to expand cassava production into forests.

In many cases, these projects would generate positive economic returns for the private sector and would not require long-term, large-scale public subsidies. But public finance could play a catalytic near-term role to make the perceived risks and rewards attractive to farmers. Governments could also help create other enabling conditions, such as financing extension services, organising farmers, carrying out spatial mapping and making that data widely available.

The latter would reduce business risk by clearly identifying where expansion is or is not desirable, exactly which owners and tenants need to be engaged, and where efforts to increase productivity should be targeted. This includes clearly identifying degraded land that needs to be restored. Governments should also invest in targeted extension services to build the capacity of farmers to implement the suggested proposals. Existing subsidy and credit lines could be earmarked for agricultural intensification and fiscal incentives could be introduced. For example, the BNDES (Brazilian National Development Bank) already spends approximately US$10 billion annually within the agricultural value chain.

It is worth noting that several countries and states have already incorporated agriculture in their REDD+ strategies or low-carbon development plans. These

include, amongst others, the Democratic Republic of Congo, Guyana, Brazil, Indonesia, the State of Acre, the State of Mato Grosso and East Kalimantan Province. At the time of writing, Ghana, Indonesia, Mexico and Peru have also indicated that they will include investments to enhance agricultural productivity that aim to reduce pressures on forests in their investment strategies under the Forest Investment Program (FIP).

As repeatedly identified through the proposals presented to the Prince’s Rainforests Project, the private sector can play an important role in terms of providing the knowledge, capacity, credit and inputs required by producers to increase productivity.

Companies active in other parts of the agricultural value chain can reduce the risk for producers by providing forward purchasing contracts and professional distribution capabilities.

In 2010, a year when substantial international funds have been pledged to slow deforestation, the private sector has demonstrated its willingness to work with governments and NGOs to find ways to increase production and to contribute to economic development, while at the same time limiting tropical deforestation. Channelling the committed funds into identified project opportunities remains the challenge for 2011. Climate change trends indicate that we need to get it right this time – we may not get another chance. Fortunately, two reassuring conclusions have come out of these multi-stakeholder regional consultations: increasing agricultural productivity without further forest destruction is technically possible and it can align with business interests. We therefore have no reason not to take action.”

15

FFD in 2010

The 2010 cycle started with the first ever launch of the FFD Annual Review at an event in the City of London on February 10th. An audience of 180 people from the corporate world, financial institutions and civil society heard presentations from Jeremy Oppenheim of McKinsey & Co. and Roberto Smeraldi of Amigos da Terra in Brazil as well as members of the FFD team. After the event, Steven Ripley organised a workshop to elaborate on the current issues of supplying sustainable beef, timber and palm oil with contributing presentations from Scott Poynton of The Forest Trust, Judson Valentim of Embrapa and Don Grubba of IOI Group.

In order to emphasise the international nature of the project, the second cycle of the Disclosure Request was launched in São Paulo, Brazil in June. The previous day FFD also arranged a workshop entitled ‘An Update on the Timber Market’ in conjunction with the World Resources Institute and the Timber Trades Federation. Speakers included Adam Grant and Andrea Johnson from the Forest Legality Alliance, Rachel Butler of the Timber Trade Federation, Xavier Andrillon of The Forest Trust and Flavio Guiera of Precious Woods.

At the event to launch the second Disclosure Request cycle on June 8th the audience heard from Jan-Kees Vis of Unilever and Jose Penida, the CEO of Fibria. Freddie Woolfe from Hermes EOS also gave a speech about why deforestation should be considered as a business risk by investors.

The team at Forest Footprint Disclosure was particularly grateful to Banco Santander for hosting this event, especially since it culminated in their becoming our first Brazilian endorser.

In June, FFD also attended the Ceres conference to meet with US-based investors interested in all aspects of corporate sustainability. Over the summer the team participated in many webinars and conferences including a Paris event kindly hosted by IDEAM. The National Wildlife Federation provided much assistance in reaching out to US companies and also arranged two events at which we could meet potential participants: one in Chicago and one in New York.

We thank all of the companies who spoke about the project on our behalf very much indeed since hearing about participation in the project directly from their peers carries the greatest weight with companies. Weyerhaeuser, Carrefour, Northern Foods, British Airways, Henderson Global Investors and Hermes Equity Ownership Services deserve a special mention, as does The Co-operative Asset Management.

In November a metrics workshop was arranged and many NGO and corporate participants discussed the absence of a common metric for recognising the total forest impact of a product and the constraints to developing one.

Finally we should thank our indefatigable contractors: Liz Crosbie and her team at Strategic Environmental Consulting and Christoph Harwood of Marksman Consulting. Their contribution to delivering a successful project has been absolutely invaluable.

16

Introduction to the 2010 Cycle results

FFD would like to thank all 78 participants who engaged in completing this year’s Disclosure Request. It has been very encouraging to see the increasing reach of the project which added many more primary producers this year and significantly expanded engagement into the Americas.

The very high quality of supply chain policy commitments shown by many of the sector leaders is also encouraging and shows that the leaders in the private sector, often overlooked by policymakers, are also looking to build a more sustainable business model for the future.

It is nonetheless important to note that where we have identified sector leadership, this relates exclusively to a company’s disclosure of the management policy it has in place as regards the sourcing and use of our five ‘forest-risk commodities’: timber, soy, cattle products, palm oil and biofuels. While avoiding deforestation is an important part of building a new business model, it is not the only element required for a sustainable company: water footprinting, labour issues and carbon management on a broader scale are not within the remit of this project. FFD would therefore like to praise the sector leaders for their work on reducing the pressure on forests but would encourage investors to see the results of the project as a contribution to a more complex assessment of a company across a range of environmental, social and governance issues.

FFD does not undertake verification of company disclosures but relies on the fact that their statements on these issues are now available to endorsing investors.

In the listings on the following pages some conventions have been adopted to assist in reading the responses: Where a company reported on a subset of its total operations, that is marked with a ‘†’ and the region indicated in parentheses; Where a company did engage with FFD by sending relevant documents but did not complete the Disclosure Request the names are listed in the ‘Did not complete Disclosure Request’ columns but are also marked with ‘‡’.

Companies with a ‘ ’ by their name also disclosed in 2009.

*

All names in the tables of responses and lists of targeted participants are in alphabetical order, rather than in any scoring hierarchy; Sector allocations have been given on the basis of FTSE industry sector classifications.

Commodities are represented by symbols: for cattle products,

for palm oil,

for soya,

for timber and

for biofuels

17

Regional Response Overview In 2010 the number of companies targeted by FFD increased by 31%. Despite this the response rate increased from 16% to 27% but with wide variations by region.

UK Number of disclosure requests sent: 52 (42 in 2009) Number of responses received 2010: 27 (16 in 2009) Number of endorsers: 22 (20 in 2009) Response Rate: 52% (38% in 2009)

North America Number of disclosure requests sent: 88 (54 in 2009) Number of responses received 2010: 12 (2 in 2009) Number of endorsers: 17 (1 in 2009) Response Rate: 14% (4% in 2009)

Developing Markets Number of disclosure requests sent: 53 (43 in 2009) Number of responses received 2010: 10 (4 in 2009) Number of endorsers: 1 (0 in 2009) Response Rate: 19% (9% in 2009)

18

Š GCP / Katherine Secoy

Continental Europe Number of disclosure requests sent: 67 (58 in 2009) Number of responses received 2010: 26 (13 in 2009) Number of endorsers: 12 (10 in 2009) Response Rate: 39% (22% in 2009)

Mature Australasian Markets* Number of disclosure requests sent: 25 (20 in 2009) Number of responses received 2010: 3 (0 in 2009) Number of endorsers: 4 (2 in 2009) Response Rate: 12% (0% in 2009)

*Japan, Australia, New Zealand, Singapore, Hong Kong 19

Leaders in 2010

The leaders are the companies in each sector that scored most highly from a combination of their answers to the disclosure request plus the contents of any additional supporting documents sent to FFD.

Biofuels: Greenergy International Ltd. Basic Materials: Stora Enso Oyj Farming & Fishing: IOI Group Loders Croklaan Industrials, Construction and Autos: (joint leaders) Dalhoff Larsen & Horneman and Weyerhaeuser Company Food Products & Soft Drinks: Danisco A/S Personal Care & Household Goods: Kimberly-Clark Corporation Clothing, Accessories & Footwear: (joint leaders) adidas AG and Nike Inc Food & Drug Retailers: (joint leaders) Carrefour Group and J. Sainsbury plc General Retailers: Marks and Spencer plc Travel & Leisure: British Airways Plc Oil & Gas: Neste Oil Utilities: Drax group plc Media: Reed Elsevier

20

Biofuels Sector Leader: Greenergy International Ltd

This year, FFD elected to separate biofuel suppliers to businesses from the oil and gas industry who supply to the end consumer. The companies in this sector have a predominance of biofuel in their product mix but do not have a retail oil presence.

identify producers of biofuel who have publicly committed to provide sustainably sourced product and can thus commit to an identifiable chain of custody for their customers.

EU regulations state that biofuels should not be made from raw materials from tropical forests, recently deforested areas, drained peatlands, wetlands or high biodiversity areas.

The EU Renewable Energy Directive (RED) will require mandatory reporting of sustainable sourcing (see p50), which should encourage greater levels of public disclosure in 2011 from participants in this sector.

As the EU Renewable Energy Directive (RED) has an inbuilt escalator clause on the targets for greenhouse gas savings, the management of supply chain sustainability must be a key part of business strategy for this sector and many users of biofuels in industry.

For end users, the lack of transparency in product labelling makes it difficult to identify the feedstock included in the product. It is therefore helpful to

Biofuels Sector Response

“

Greenergy blends biofuel into all the fuel it supplies to meet UK and European legislative requirements and reduce greenhouse gas emissions. We strive to deliver the good in biofuels without the bad, using waste products wherever possible. For crop-based biofuels we choose suppliers that achieve the best greenhouse gas savings, while also conducting detailed supply chain checks to ensure the crops are grown on established agricultural land. In a risk-based approach, we prioritise our checks around those biofuels that could pose the greatest risk to the environment and we have established new third party sustainability audit programmes when required. We welcome the work of the FFD project in encouraging greater reporting in a form that is comparable across different sectors.

�

Tamara Earley, Director of External Affairs, Greenergy

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Scope 3: Impact of Customer Activities

Greenergy International Ltd.

2,800

Yes

Yes

Yes

Piedmont Biofuels

10

Commodities Reported

Yes

21

Basic Materials Sector Sector Leader: Stora Enso Oyj

This sector shows deep understanding of sustainability issues on both the supply and demand side given the focus on timber, which has the longest running certification schemes in place.

Both EU Due Diligence regulations and the US Lacey Act include paper and pulp, which will put pressure on all in this sector to provide evidence of legality and due diligence disclosure.

Increased costs for this – which will be in addition to any existing third party certification costs – need to be managed further down the supply chain. This will be particularly challenging for some respondents, with only part of their product certified.

It is encouraging to see greater internationalisation of the responses received.

The weakest areas identified through the disclosure process concern the development of capacity building for sustainable sourcing.

With only 26% of industrial roundwood currently certified and both the US and Europe putting pressure on companies importing timber to increase this share, more energy needs to be directed at working with boreal forest suppliers (such as those based in the Russian Federation) to support the transition.

Responses revealed some awareness of the challenges surrounding a secure supply of reasonably priced certified materials, as well as the threat posed by new competition from biomass and other sectors (see p48). The sector leaders are fully engaged in securing a sustainable supply chain, while others are not.

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Arauco

3,113

Yes

Yes

Asia Pulp & Paper

22

Scope 3: Impact of Customer Activities

Yes

Catalyst Paper Corporation Ltd.

1,052

Yes

Yes

Fibria

3,000

Yes

Yes

Holmen Skog

631

Yes

Yes

International Paper

23,366

Yes

Mondi plc

7,536

Yes

PaperlinX (Europe)

4,472

Stora Enso Oyj

12,470

Yes

Yes

UPM-Kymmene Corporation

11,120

Yes

Yes

Yes Yes

Yes

Commodities Reported

Basic Materials Sector Response Completed Arauco*

Did not complete †

CHL

AbitibiBowater Inc. CAN

M-Real FIN Nippon Paper Group JA

PaperlinX (Europe) AU

Asia Pacific Resources International Limited SI

Stora Enso Oyj* FIN

Cikel BRA

UPM-Kymmene Corporation FIN

Croda International UK

International Paper USA

Asia Pulp & Paper SI Catalyst Paper Corporation Ltd. CAN Fibria* BRA Holmen Skog† SWE

Mondi

plc*

SAF †

Olam International Limited SI

Domtar Corporation CAN

Samling Global HK

Grupo Empresarial Ence SP

Shandong Chenming Paper Holdings Limited PRC

Irani BRA Mohawk Fine Papers Inc. USA

“

Oji Paper Co JA

Sappi SAF

Sinopec PRC

At Stora Enso we believe that only sustainably managed forests and tree plantations secure the preservation of biodiversity and deliver valuable raw material for many products which can store carbon, replace more fossil intensive products, and therefore contribute to the mitigation of climate change. Responsible wood procurement throughout the whole supply chain is crucial and is a means to secure sustainable forest management.

We take action to make sure that our wood always comes from sustainable sources. We certify the forests and plantations we manage, we promote credible forest certification where possible, and give preference in our wood procurement to raw material from credible certified forests. We also promote third party verified certification along the supply chain and establish third party verified in-house traceability systems.

”

Herbert Pircher, Vice President Sustainability, Stora Enso

Basic Materials Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

23

Farming and Fishing Sector Sector Leader: IOI Group Loders Croklaan

Although it is encouraging that several high profile names in the primary producing segment have participated this year, the modest level of response from a long list of targets remains disappointing.

Major companies in this sector need to help manage the transition to sustainability: working with buyers to ensure that demand and supply are synchronised. For example, in the case of palm oil, the supply side beyond the refinery needs development, as chain of custody certification at ingredient level still needs implementation. Over the medium term, the number of very large buyers who have publicly committed to full sustainable sourcing by 2015 may result in price inflation if the volumes which can be made physically available and delivered through the system are not signalled in good time.

Since this sector is the most closely involved in land use change, the absence of proof of engagement is a limiting factor for all downstream users of forest-risk commodities.

The challenges of achieving certification vary between product categories. For instance, it is easier to achieve certification for plantation agriculture than for animal products where the standards are only just now under development.

24

Respondents demonstrated an above average understanding of the issues and are clearly adopting a strategic response.

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Grupo AndrĂŠ Maggi

2,371

Yes

Yes

IndependĂŞncia S/A

298

IOI Group Loders Croklaan

3,534

Yes

New Britain Palm Oil Ltd

323

Yes

Yes

Yes

Scope 3: Impact of Customer Activities

Commodities Reported

Farming and Fishing Sector Response Completed

Did not complete

Grupo André Maggi BRA Independência

S/A*

IOI Group Loders Croklaan* MAL New Britain Palm Oil Ltd UK

BRA

Agriterra Ltd UK

Coamo BRA

Nusantara INDO

Anglo-Eastern Plantations PLC UK

Frigorífico Mercosul BRA

PT Musim Mas INDO

Arantes BRA

Golden Agri-Resources SI

Ruchi Soya IND

ArreBeef ARG

Imcopa BRA

Sampoerna Agro INDO

Asian Plantations Ltd SI

KL Kepong MAL

SIPEF NV BELG

Asiatic Development MAL

KS Oils Ltd IND

Smithfield Foods Inc USA

Astra Agro Lestari INDO

“

M.P. Evans Group PLC UK

R.E.A. Holdings plc UK

Socfinal LUX

Bakrie Sumatera Plantations Tbk INDO

Margen BRA

Camellia PLC UK

Nutreco NV NETH

Caramuru BRA

Perkebunan

United Plantations Berhad MAL

Minerva BRA

IOI Group applauds the efforts of the FFD to increase transparency in the area of forest protection. Our efforts to enhance transparency are well aligned with FFD through our own CSR policies and programmes.

Additionally, our specific actions toward responsible palm oil cultivation are guided by the principles and criteria of the Roundtable on Sustainable Palm Oil. Currently, IOI Group has certified more than 33% of our holdings under the programme and we are on track to have 100% of our holdings audited by RSPO by the end of 2011. We are proud to be recognized by FFD as the leader in our category.

”

Donald C. Grubba, Adviser Sustainable Development, IOI Group

Farming and Fishing Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

25

Industrials, Construction and Autos Sector Joint Sector Leaders: Dalhoff Larsen & Horneman and Weyerhaeuser Company

Participation in this sector is growing, but most of the respondents are still European.

Leather for car seats would be just one segment where leadership from large volume buyers on sustainability issues would encourage suppliers to put in place the additional measures needed to minimise forest clearance.

As a major consumer of materials, this sector is both operationally and financially dependent on supply security and price stability. However, very few companies seem to have grasped the implications of a strategy to secure stable, regulated supplies of sustainable raw materials at reasonable prices.

Respondents who primarily use timber are considerably more experienced in risk and impact management than companies that rely on other commodities. Given the introduction of regulations that may result in prosecution, this preparation suggests that this area of business risk is being well-managed.

A low level of participation from the automobile and industrial sectors is a cause for concern.

It may be that the volume of forest risk commodities purchased by the target companies is low in comparison to the volume of metals purchased, but the scale of their operations means that their influence on the agricultural and timber commodity markets would be significant if they did elect to engage.

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

AB Volvo

28,717

Yes

BMW

70,447

Yes

Dalhoff Larsen & Horneman

683

DanzerGroup

26

The participation of Sime Darby, a major palm oil producer, was very welcome. It is to be hoped that this will encourage other conglomerates with commodity interests to disclose, even if only for a subset of total group operations, in future years.

Scope 2: Supply Chain Management

Scope 3: Impact of Customer Activities

Yes Yes

Yes

Yes

Saint Gobain (Building Distribution)

57,223

Yes

Skanska AB

18,015

Yes

Yes

Sime Darby Berhad

10,075

Yes

Yes

Travis Perkins plc

4,589

Yes

Weyerhaeuser Company

5,500

Yes

Yes

Yes

Commodities Reported

Industrials, Construction and Autos Sector Response Completed

Did not complete

AB Volvo SWE

Arup UK

Honda Motor Co JA

Porsche GER

BMW*

Barito Pacific INDO

Hutchison Whampoa HK

Renault FRA

Jardine Matheson Holdings Limited HK

Shaw Industries USA

GER

Dalhoff Larsen & Horneman DEN

Bunzl UK

DanzerGroup CH

Daimler GER

Saint Gobain (Building Distribution)† FRA

Eagle Ottawa USA

Kingspan Group PLC IRE

Ford Motor Company USA

Lafarge FRA

CRH‡

Sime Darby MAL Skanska AB SWE

IRE

General Motors USA

Peugeot SA FRA

Rougier FRA Toyota Motor JA Turner Construction Company USA Vicwood HK Volkswagen AG GER

Travis Perkins PLC* UK Weyerhaeuser Company* USA

“ “

DLH is very pleased to be recognised as joint sector leader in the Industrials, Construction and Autos sector: it shows that committed companies can achieve high standards in managing the important issue of deforestation.

”

Peter K. Kristensen, Vice President CSR & Environment, Dalhoff, Larsen and Horneman Weyerhaeuser continues to certify all of the forestland we own or manage in North America. All of our manufacturing facilities are certified to the Sustainable Forestry Initiative Certified Fiber Sourcing standard, under which we require legal compliance and use of best management practices. We are committed to increasing the certification capacity of our overseas operations in China and Uruguay. Emerging global biomass markets also bring opportunities to provide sustainable sources ourselves and to help others seek out sustainable supplies. We continue to develop suitable sourcing policies for these activities. We are pleased that our current policies continue to show sector leadership in the management of natural capital while running a successful business.

”

Cassie Phillips, Vice President, Sustainable Forests and Products, Weyerhaeuser Company

Industrials, Construction and Autos Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available 27

Food Products and Soft Drinks Sector Sector Leader: Danisco A/S

Participation in this sector continues to grow with increased engagement from the Americas, which is very encouraging. Given the proven reputational risks to brands operating in Europe, it is perhaps surprising how many targeted companies in the region have yet to respond.

In 2010, Greenpeace and the Rainforest Action Network did much to raise awareness of the widespread use of palm oil in food and drink products, so the lack of response from major palm oil users is particularly disappointing.

There are few signs that building capacity upstream is a priority for respondents. However, through longer term buying contracts for higher standard products, companies in this sector could help build a robust demand outlook for their suppliers and reduce the perceived risk of changing current business practices.

The responses indicate a low level of awareness concerning security of supply issues, although food companies do have flexibility to crosssubstitute one edible oil for another, should any interruptions be short term in nature.

“

28

Danisco was pleased to lead the Food and Soft Drinks Sector for the FFD project last year and during 2010 we have seen increased interest from our customers in the traceable, sustainable products that we produce.

”

Annette Hansen, Global Quality Manager, Danisco

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Cranswick Plc.

1,183

Yes

Yes

Danisco A/S

2,400

Yes

Yes

JBS

32,484

Marfrig Group

5,226

Nestlé SA

99,411

Yes

Northern Foods Plc.

1,559

Yes

PepsiCo Incorporated

43,000

Yes

Unilever NV

55,539

Yes

United Biscuits

1,980

Yes

Yes Yes

Yes

Scope 3: Impact of Customer Activities

Yes

Commodities Reported

Food Products and Soft Drinks Sector Response Completed Cranswick

Plc.*

Did not complete UK

AarhusKarlshamn SWE

ConAgra Foods USA

Kyodo Shiryo JA

Aceitera General Deheza (AGD Group) ARG

Dairy Crest Group UK

Mars Inc. USA

JBS† BRA

Del Monte Foods USA

Mayora Indah INDO

Marfrig Group BRA

Agrotech Foods IND

Fraser & Neave SI

Molinos Rio Plata ARG

Archer Daniels Midland USA

Fuji Oil JA

Nestle India IND

General Mills USA

Pilgrim's Pride USA

Goodman Fielder AU

Premier Foods UK

Groupe Danone FRA

Sara Lee Corporation USA

*

Danisco A/S DEN

Nestlé

SA*

CH

Northern Foods Plc.* UK

Aryzta SWIT

PepsiCo Incorporated USA Unilever NV* NETH United Biscuits UK

Associated British Foods UK

Gruppo Cremonini ITA

Brasil Foods BRA Britannia Industries IND Bunge USA Cagles Inc USA Campbells USA Cargill USA Charoen Pokphand Foods THAI

Heinz‡ USA

Stonyfield Farms USA

Hindustan Unilever Limited IND

The Coca-Cola Company USA

Indofood Sukses INDO

Tyson Foods USA

J-Oil Mills Inc JA

Vicentin ARG

Kellogg USA

Weight Watchers International Inc USA

Kerry Group IRE

Clif Bar & Company USA

Kraft Foods USA

Wilmar International SI

Food Products and Soft Drinks Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

29

Personal Care and Household Goods Sector Sector Leader: Kimberly-Clark Corporation

Another sector with increased participation from the Americas.

environmental standards do not preclude commercial success.

It is clear from the international leading brands represented by the companies that have engaged on this issue that the value of presenting consumers with a sustainability message is now being recognised.

This sector tends to use derivatives of palm oil which are not yet widely available in certified form: if the industry were to act in concert to demand such products there would be increased pressure on suppliers to segregate the full range of refined products and derivatives available.

The brand values that make companies in this sector so valuable also make them a target for sustained NGO campaigning. As awareness of the issues grow, companies with a history of poor practice will be increasingly vulnerable to reputational risk as their peers show that higher

30

Scope 1: Physical Operations

The sector’s scoring overall was above average compared to other sectors. In part, this reflects the quality of management systems within the group of respondents.

2010 Respondent

2009 Revenues $m

Scope 2: Supply Chain Management

Scope 3: Impact of Customer Activities

Avon Products, Inc.

10,382

Henkel AG & Co. KGaA

18,929

Yes

Yes

Kimberly-Clark Corporation

19,115

Yes

Yes

L'Oréal

24,283

Yes

Yes

Natura Cosméticos S.A

2,400

Yes

Yes

Yes

PZ Cussons plc

1,229

Yes

Reckitt Benckiser Group plc

12,138

Yes

Yes

Yes

SCA Skog

14,591

Yes

Yes

Yes

Commodities Reported

Personal Care and Household Goods Sector Response Completed

Did not complete

Avon Products, Inc. USA *

Henkel AG & Co. KGaA GER Kimberly-Clark Corporation USA L'Oréal*

FRA

Natura Cosméticos S.A BRA

Beiersdorf‡ GER

Kao Corporation JA

Colgate Palmolive India IND

McBride UK

Colgate-Palmolive Company USA

Revlon USA

Estee Lauder USA

PZ Cussons PLC UK

Procter & Gamble USA SC Johnson USA Seventh Generation USA

Johnson & Johnson USA

Reckitt Benckiser Group plc UK SCA Skog SWE

“

Kimberly-Clark has been integrating sustainability into all aspects of our business—from the design and manufacture of our products, to the serving of the communities where we operate and sell our portfolio of essential products. Sustainability is not only the right thing to do but a business imperative and a key component of our plan for growth.

We recognised early on that a reliable supply of quality fibre was going to be essential for the growth of brands like Kleenex and Andrex, so Kimberly-Clark has been at the forefront of adopting sustainable forestry practices.

It is this mindset that led us to industry leadership in 2003, when we became the first major tissue company to require our wood fibre suppliers to gain independent certification for their fibre activities.

Since that time we have continued to enhance our fibre procurement policy, incorporating new learning gained from positive relationshipswith leading NGO’s like WWF and Greenpeace. Recent enhancements to our sourcing standards include elevated goals for our North American business, a stated preference for FSC (Forest Stewardship Certification) standards and funding to map high value conservation forests in Brazil and Indonesia.

We are honoured to be recognised by the Forest Footprint Disclosure Project as it is a further testament to our sustainability credentials. We will continue to look for ways to increase our efforts and we expect our commitment will not only have a positive impact on our business, but also in making this planet a better place for future generations.

Suhas Apte, Kimberly-Clark’s Vice President of Global Sustainability

”

Personal Care and Household Goods Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available 31

Clothing, Accessories and Footwear Sector Joint Sector Leaders: adidas AG and Nike Inc

There was a good response from a sector with particularly challenging commodity issues, as leather from traceable certified supply chains is not yet readily available.

Establishing a supply base with sufficient capacity to offer and maintain sustainable raw materials will be a complex and time-consuming process. Few companies yet show a strategic vision as to how this might be achieved or invest in upstream capacity building with their suppliers.

The sector's performance is however erratic in terms of commodity coverage, as the majority of companies do not yet cover their full impacts. For example, packaging information is captured by some companies and ignored by others.

The co-dependency of these brands on key producing countries resolving their legal and infrastructure problems needs to be monitored.

Delays in registration of suppliers to the slaughterhouses in Brazil has been a particular disappointment in 2010, with most deadlines having to be extended significantly (see p54).

Reputational risks are greatest for brands with high exposure to social media, typically the younger consumer segments, so it is no surprise to see brands with a core youth proposition well represented among the respondents.

32

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

adidas AG

14,478

Yes

Burberry Group

2,043

Yes

C & J Clark International Ltd

1,255

Yes

Yes

Moet Hennessy Louis Vuitton S.A.

23,783

Yes

Yes

Nike Inc

19,014

The Timberland Company

1,285

Yes Yes

Yes

Scope 3: Impact of Customer Activities

Commodities Reported

Clothing, Accessories and Footwear Sector Response Completed adidas

AG*

Did not complete

GER *

Burberry Group UK C & J Clark International Ltd* UK

“

Geox ITA

Moet Hennessy Louis Vuitton S.A.* FRA

Jones Apparel USA

Nike Inc* USA The Timberland Company USA

Sustainability is a key issue for the adidas Group which we have been working on successfully for more than 10 years. In 2010, the adidas Group has been pleased to host a key meeting of the Leather Working Group in September with over 65 companies attending. This again underpinned our company’s commitment and track record in promoting collaborative efforts to drive sustainable development in our industry. The discussion focused on the Tannery Environmental Audit Protocol, published in November, which will help establish higher sustainability standards in the leather industry.

By working together in this way clear messages can be delivered to suppliers as to what standards they should aim to achieve.

”

Frank Henke, Global Director Social and Environmental Affairs, adidas Group

“

Nike has been working on reducing its environmental impact throughout its supply chain and via its products for more than a decade. Our Considered Design ethos is informing our designers about how to make the best performance product with while minimizing the environmental impact, by choosing environmentally preferred materials and reducing toxics and waste. We have also used the power of transparency and collaboration in our supply to help our suppliers and manufacturers incorporate high standards, traceability and transparency in how they source and make materials used in Nike product.

”

Hannah Jones, VP of Sustainable Business & Innovation, Nike Inc

Clothing, Accessories and Footwear Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

33

Food and Drug Retailers Sector Joint Sector Leaders: Carrefour Group and J. Sainsbury plc

There was a good response from the leading companies in the sector and welcome participation by more non-European companies.

Private label differentiation through sustainability is a concept gaining international recognition, as well as allowing for price stratification in own label offerings.

The majority of responses still come from Europe.

This may reflect concerns over brand risks as a result of NGO campaigns and media exposure, which are frequent in the region.

There is, however, little sign as yet that the largest global retailers recognise their important role in building capacity within their supply chains to ensure security of supply and stability of pricing over the longer term.

This is the most improved category in 2010. The sector leaders continue to make progress on traceability and improved management of their supply chain risks. Their leadership has encouraged more of their peers to manage their exposure to forest-risk commodities.

“

We’ve invested a great deal of effort in our palm oil sourcing policy this year, taking us further on our journey towards meeting our target of 100 per cent certified sustainable palm oil in our own brand products by 2014.

We are absolutely committed to maintaining a sustainable supply chain and our work in this area is a great example of how we are putting sustainability at the top of the agenda.

”

Judith Batchelar, Director of Sainsbury’s brand, J.Sainsbury plc

34

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Boots UK

10,071

Yes

Carrefour Group

121,864

Yes

J. Sainsbury plc

34,487

Yes

MIGROS Federation of Migros Cooperatives

25,000

Yes

Royal Ahold

38,946

Yes

Wm Morrison Supermarkets plc

24,168 Yes

Scope 2: Supply Chain Management

Yes

Scope 3: Impact of Customer Activities

Yes

Commodities Reported

Food and Drug Retailers Sector Response Completed

Did not complete

Boots UK UK *

Delhaize Group BELG

Safeway USA

Carrefour Group FRA

Edeka Zentrale GER

Sysco USA

J. Sainsbury plc* UK

George Weston CAN

Tesco UK

MIGROS CH

Greggs PLC UK

Royal Ahold NETH

Groupe Auchan FRA

Whole Foods Market Inc USA

Wm Morrison Supermarkets PLC UK

Kroger USA

Woolworths SAF

“

Louis Dreyfus FRA

Carrefour has long since been committed to preserving biodiversity and limiting greenhouse gas emissions from deforestation. The latest initiatives have been the launch in 2010 of FSC certified beverage cartons for some 100 million cartons of orange juice and milk and the commitment to certification of sustainable palm oil used for all Carrefour brands in France. In addition to purchasing Greenpalm certificates, we have developed and communicated pragmatic, practical guidelines to assist our suppliers in meeting our objective to source 100% certified sustainable palm oil in our private label products globally. Furthermore, we are contributing to the solid development of the Roundtable for Sustainable Palm Oil (RSPO) through our presence on the RSPO Executive Board. The Group is also putting more than 18 years of experience in developing food Quality Lines with farmers to develop a Carrefour Quality Line for palm oil in Indonesia.

”

Pierre-Alexandre Teulié - General Secretary, Carrefour

Food and Drug Retailers Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

35

General Retailers Sector Sector Leader: Marks and Spencer plc

It is encouraging that the new respondents in this sector are increasingly international in scope, with especially strong participation from the United States.

As the consumer-facing end of the value chain, this sector is hugely dependent on compliance and best practice in the manufacturing, processing, trading and growing parts of their supply chains. Lack of transparency elsewhere hits this group particularly hard, so efforts to build capacity upstream deserve particular credit.

Overall, the sector has a slightly above average score, which is particularly commendable given the full range of materials to which it is exposed.

The costs of compliance with new EU Due Diligence and US Lacey Act regulations do not appear to be well understood: if only legal timber and paper products can be sold, there is a real risk of shortage of eligible supply, which should encourage longer term buying arrangements with suppliers who can deliver traceable product rather than face spot market shortages and volatile pricing.

This sector is very much aware of both the risks and opportunities associated with forest risk commodities for brand reputation and positioning.

Companies in the sector who have made strong statements about supply chain sustainability elsewhere regrettably chose not to participate this year, but clearly the sector is increasingly sensitised to these issues.

36

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Best Buy Co., Inc.

49,604

Yes

Yes

Coop Genossenschaft

18,214

Yes

Yes

Kingfisher

16,900

Lowe's Companies, Inc.

47,200

Yes

Yes

Marks and Spencer plc

15,226

Yes

Yes

METRO Group

91,357

Yes

Yes

Next

5,355

Wesfarmers Limited (and its Divisions)

47,000

WH Smith plc

2,063

Yes

Yes Yes

Yes Yes

Scope 3: Impact of Customer Activities

Yes

Commodities Reported

General Retailers Sector Response Completed

Did not complete

Best Buy Co., Inc. USA Coop Genossenschaft CH Kingfisher* UK Lowe's Companies, Inc. USA

*

METRO Group GER

AEON JA

*

Macy's USA

Next UK

Barnes & Noble USA

Office Depot USA

Wesfarmers Limited (and its Divisions) AU

Brown (N.) Group UK

OfficeMax USA

Costco Wholesale USA

PPR FRA

WH Smith plc* UK

Debenhams UK

Sears Holdings USA

Home Depot USA

Seven & I Holdings JA

Home Retail Group UK

Staples USA

IKEA SWE

Target USA

J.C. Penney USA

Wal-Mart Stores USA

Marks and Spencer plc* UK

John Lewis UK

“

We know that deforestation is a serious problem, threatening biodiversity and communities and contributing to climate change. Forests are an incredibly valuable natural resource, helping to regulate the climate, water cycles and prevent soil erosion. It is vital that businesses play their role in protecting forests around the world.

The Forest Footprint Disclosure project is a fantastic way to raise awareness of deforestation and the important role that business can play in preventing it. We are delighted to take part, and hope that through sharing our experiences we can help inspire businesses and investors to take action.

To tackle our own impacts on forests, we have committed to sourcing all our palm oil, soy, cocoa, beef, leather and coffee from only the most sustainable sources by 2015, and sourcing all timber from sustainable sources by 2012. We have made some good progress, for example purchasing GreenPalm certificates for all of our palm oil supplies, and moving 72% of all our timber products to sources that meet our sustainability criteria. We are also working with organisations around the world who are helping us achieve our targets, including WWF, RSPO, and RTRS. With their help, we hope to eliminate all M&S impacts on forests by 2015.

�

Laila Petrie, Sustainability Manager, Marks and Spencer

General Retailers Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

37

Travel and Leisure Sector Sector Leader: British Airways plc

Clear difficulties exist in collecting the data from fairly independent subsidiaries and franchises within these groups, which suggests that measurement has not yet become a part of regular business reporting.

Companies in this sector showed a far greater willingness to respond in 2010 than in 2009, and so have been allocated their own category in this review.

Purchases range across fixtures and fittings, food and drink supply, fuels, napkins and printed paper products, so the impact of a commitment to more sustainable sourcing could be far-reaching and cover the full range of commodities covered in the Disclosure Request.

Several participants reported only on a subsector of the commodities to which they have exposure, but this can develop over time.

Companies in this sector need to take more proactive action to engage with their suppliers and indirect supply base. There will be some inevitable lag in the capacity to respond until other sectors improve, but by showing that a market exists for higher standards of supply these buyers can reinforce the will to change further up the supply chain.

Only European names responded this year, but FFD hopes that the geographical scope will broaden in 2011.

Given the importance of consumer branding in this sector, it is perhaps surprising that respondents lag far behind the retailer sector respondents. Standards for purchasing do not, in several instances, stipulate certified products.

38

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Air France

29,279

Yes

Yes

British Airways plc

12,790

Yes

Compass Group plc

21,048

Yes

Eurostar International Ltd

1.065

InterContinental Hotels Group plc

1,538

Yes

Millennium & 1,054 Copthorne Hotels plc

Yes

Yes

Yes

Sodexo

19,875

Yes

TUI Travel plc

21,597

Yes

Scope 3: Impact of Customer Activities

Commodities Reported

Travel and Leisure Sector Response Completed

Did not complete

Air France FRA

Accor Group FRA

Thalys International BELG

British Airways plc UK

Alsea of Mexico MEX

Kentucky Fried Chicken Japan JA

Compass Group plc* UK

Burger King Holdings Inc. USA

Kulim (Malaysia) Berhad MAL

Eurostar International Ltd UK

Carnival USA

Lufthansa GER

Thomas Cook Group UK

Continental Airlines USA

US Airways USA

InterContinental Hotels Group plc† UK

Darden Restaurants USA

Marriott Hotels International Ltd USA

Delta Air Lines Inc USA

McDonald's Corporation USA

Whitbread UK

Domino's Pizza UK & IRL plc UK

NH Hoteles SP

*

Millennium & Copthorne Hotels plc UK Sodexo FRA TUI Travel plc UK

SNCF FRA

Hyatt Hotels USA

The Restaurant Group UK

Wendys/Arbys Group USA Wyndham Worldwide USA Yum Brands USA

Southwest Airlines USA

Iberian Airlines SP

Starwood Hotels & Resorts USA

Jet Blue USA

“

The Boeing Company USA

As part of ‘One Destination’ – British Airways’ Corporate Responsibility programme – we are proud to have been one of the first companies, and indeed the first airline, to take part in the FFD programme. This participation marks a step change in the way we do business and is the beginning of a new journey to drive sustainability into our supply chain. There is still much to improve on but the FFD has been a superb arena to encourage companies to work with suppliers and other FFD participants to identify best practice and share knowledge and experience. This has already enabled us to introduce more sustainable working practices and adopt new policies that will have a significant impact on reducing our forest footprint.

”

Patrick Spink, Environment Executive, British Airways

Travel and Leisure Sector Profile of Materials Bought in (by Commodity) Risk Assessment Review of Your Supply Chain Public Commitments by Forest Risk Commodity Strategy Development Managing for Performance Improvement Sustainable Supply Chain Development and Support Scope and Coverage Public Reporting Governance Process Identifying Risks and Opportunities 0

10 20 30 40 50 60 70 80 90 100 Sector Average Score as % of Total Points Available

39

Oil and Gas Sector Sector Leader: Neste Oil

This year, FFD separated business-to-business biofuel suppliers from the oil and gas industry.

In a year when BP's offshore operations created one of the world's worst environmental disasters, it is to be hoped that companies in the sector will invest in developing their capacity to disclose on environmental practice.

Although discussions were held with companies targeted in this sector, the response rate has not improved. This is disappointing, particularly when compared to the millions of dollars spent by these companies to promote their renewable energy strategies to consumers. Marketing products as environmentally friendly is questionable when the back-up data is not forthcoming.

Neste Oil deserves recognition for a very thorough response. The company did not gain their sector leadership solely by virtue of being the only respondent.

Oil and Gas Sector Response Completed Neste

“

Oil*

Did not complete

FIN

BP UK

ConocoPhillips USA

Royal Dutch Shell NETH

Chevron USA

ENI ITA

Total FRA

China National Petroleum PRC

Exxon Mobil USA

Valero Energy USA

Petrobras BRA

Combating climate change calls for both reduction of greenhouse gas emissions and securing and even increasing the existing carbon sinks. In this respect, deforestation is a major challenge for all companies using forest risk commodities. The FFD Project plays an important role in sharing knowledge on deforestation pressures. Biofuels are a major contributor to reducing emissions, but only provided that the supply chain is sustainable. In fact, the biofuel industry is currently the forerunner among the commodity sectors, as European biofuel legislation sets strict sustainability criteria for the whole product chain in which the impacts of land use change are eliminated.

�

Pekka Tuovinen, Director, Sustainability and Regulatory affairs, Neste Oil

40

2010 Respondent

2009 Revenues $m

Neste Oil

13,394

Scope 1: Physical Operations

Scope 2: Supply Chain Management Yes

Scope 3: Impact of Customer Activities

Commodities Reported

Utilities Sector Sector Leader: Drax Group plc

FFD received a few quality responses in this sector but there is still little recognition of deforestation as a risk to business models across the target company list (see p50), even for companies who have put considerable effort into their sustainability policies.

incorporate wider issues of carbon and GHG management.

The lack of procurement management for biomass is worrying in view of national government and EU strategy in this area. The strategic risk of insufficient supply available from certified sources means that this sector has dependencies, which need management to avoid developing into risks to the viability of the business.

It is important, for this sector particularly to acknowledge that FFD focuses exclusively on deforestation. The scoring system does not

Utilities Sector Response Completed

Did not complete

American Electric Power USA

Chubu Electric Power JA

Group*

Drax

UK

State Grid PRC

Duke Energy USA

Energie BadenWürttemberg GER

Électricité de France FRA

Iberdrola SP

Vogen Energy UK

ScottishPower UK

W4BUK UK

National Grid plc* UK

“

Vattenfall‡ SWE

Drax has a clear strategic goal of reducing its carbon footprint through investments in biomass infrastructure and, in so doing, becoming a leading player in the development of sustainable, biomass-fired, generating plants. We have therefore implemented comprehensive sustainability criteria into our biomass procurement activities, aiming to assure both the availability and sustainability of biomass supplies. These include a set of seven principles committing Drax to clear sustainability standards for all biomass procurement and to progressively improving the sustainability performance of our suppliers. The sustainability standards include life cycle Greenhouse Gas savings; biodiversity protection and improvement; social factors; avoiding use of food and building materials; good agricultural and forestry practice. These criteria were designed, in the absence of national or international legislation, to meet or exceed any likely emerging standards across the whole sustainability spectrum of life cycle, social and environmental issues

”

Nigel Burdett, Head of Environment, Drax Power Limited

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

American Electric Power

13,500

Drax Group

2,310

Yes

National Grid plc

22,987

Yes

Scope 3: Impact of Customer Activities

Commodities Reported

41

Media Sector Sector Leader: Reed Elsevier

This sector received its own category for the first time this year.

As information providers, the importance of brand and reputation is well understood by respondents in this sector. All respondents recognised the value of CSR as an essential part of business strategy, but consumer labelling is comparatively low-profile in the end products and seems to be an underdeveloped opportunity.

It is hoped that increasing concerns about pricing and supply of certified volumes for paper will encourage broader participation in 2011. Systems to control paper risks are quite mature and widespread across companies with a key dependency on the product.

All respondents were from Europe.

Media Sector Response Completed

Did not complete

BSkyB UK

Bertelsmann GER †

News International UK

Time Warner USA

*

Reed Elsevier UK/NETH

“

Walt Disney USA

Sustainable sourcing activities have helped prepare us for increasing regulation related to paper purchasing and use. In particular, by working with others in our sector, we have been developing processes and systems to ensure we meet future legal and stakeholder requirements.

”

Mark Gough, Global Environmental Manager, Reed Elsevier

42

2010 Respondent

2009 Revenues $m

Scope 1: Physical Operations

Scope 2: Supply Chain Management

Scope 3: Impact of Customer Activities

BSkyB

9,264

Yes

Yes

Yes

News International

2,109

Yes

Yes

Yes

Reed Elsevier

9,504

Yes

Yes

Commodities Reported

Forests and Regulation

As discussed at the beginning of this report, the externalities of environmental concerns do tend to become part of legal codes over time, usually after the development of appropriate supporting evidence from NGOs and scientists and a degree of political will. This section provides a short overview of some of the most important regulations affecting forests and the timber and shows the increasing complexity of national and regional standards. The private sector has to manage this increasingly complex patchwork of regulation as part of its business model. However, for many management teams the first point of contact with the issue of deforestation comes only with the implementation of regulation, as the costs of non-compliance become clear. It is vital therefore that regulations, and their implications, should be well-considered from the perspective of many stakeholders and be based on known and acceptable practice, rather than being subject to repeated revisions or knee-jerk policy decisions. Enforcement also needs to be considered and resourced to ensure that the appropriate behaviour is maintained by all and the playing field is indeed level.

If all these elements come together, then regulation can be a genuinely effective method for protecting the important natural capital of the world’s forests.

43

The Código Florestal in 2010

Tracey Campbell Director, Forest Footprint Disclosure

During 2010 the reform of the Brazilian Forestry Code (Código Florestal) has been a subject of heated debate. Introduced as far back as 1934, this piece of legislation has offered a framework for protecting Brazil’s forests. The Code contains provisions for both legal reserves (RLs), which stipulate conservation measures within private property, and protected areas (APPs), which also directly affect privately owned land and expansion opportunities. In 1988 the new Brazilian Constitution gave force to federal and state environmental agencies, by allowing them to regulate and enforce these laws more effectively. In 2008 new policies were put in place to buttress the Code: the government limited state bank credits to farmers who didn't respect the Code in the Amazon and for the first time since 1965 a provision was made that landowners who hadn’t preserved the legal reserve could be fined.

Naysayers argue that, in practice, the problems of policing such a vast area and associated corruption meant that illegal logging and land clearance has continued in defiance of the law. However, with the development of modern spatial recognition technology the implementation of the provisions of the Code has become increasingly feasible and the development of national institutions to collate, publicise and crossreference this data have given increasing confidence that the data collected provides a basis for enforcement. Significant government investment in CAR – the Rural Environmental Registry - has allowed much greater clarity on which landowners should be called to account. Challenges to the Code have emerged on a regular basis, but this year has seen much greater momentum behind proposals that could allow destruction of large tracts of forest.

The last two Presidents of Brazil have raised the standards under the Código Florestal. Fernando Henrique Cardoso amended the code to increase the RLs – the amount of land on a privately-owned farm or settlement which must have its natural vegetation protected - from 50 to 80% in the amazon region.

During his subsequent seven year term, President Luiz Inácio Lula da Silva, brought the environment 44

to the forefront of Brazilian international relations: during his tenure domestic deforestation fell sharply (from 2.7 million hectares in 2004 to 0.70 million hectares by 2009). Commitments were also made in international meetings, such as COP15 in Copenhagen, that Brazil would reduce its greenhouse gas emissions very substantially.

It is no surprise that the current challenge has taken place in an election year. The completion in 2011 of five key bridges in the Western Amazon opens up a land-based sales route for agricultural products to China via Peru and has raised the rewards for producers who can claim farmland in the area. The current campaign to roll back the RL to 50% was spearheaded by Aldo Rebelo, a politician who characterises the concept of forest protection as a scheme designed by the developed world to restrict Brazilian economic progress. A second key change is a proposed amnesty of anyone guilty of illegal logging before July 2008, effectively allowing more than a decade-long backlog of non-compliance to be swept under the carpet. However, in the first round of the elections in October the Green candidate, Marina Silva, won just under 20% of the vote, forcing a second round. The eventual winner, Dilma Rousseff, Lula’s anointed successor was not known for her environmental concerns and was supported by the agribusiness lobby during the campaign. The strength of the first round vote has, however, raised the importance of this issue for the incoming administration which began on 1st January, 2011.

As this document goes to press the opportunity to vote under the outgoing administration has been deferred into the new term and it seems increasingly unlikely that the reversionary elements will be included in the package thanks to heavy lobbying from NGOs and scientists. However, investors in the region and users of downstream agricultural products would find it helpful to stay abreast of developments which could change the terms of reference for land use change in this important country.

The U.S. Lacey Act: Enforcement and Implementation Update

Anne Middleton on behalf of the Forest Legality Alliance

The Lacey Act, a century-old U.S. law, has been an effective means of curtailing illegal wildlife trade. It was amended in 2008 to cover products made from trees and other plants. Two prosecutions by the Department of Justice have already been made under the new provisions to date: In November 2009, U.S. federal agents raided Gibson Guitar Corporation’s manufacturing facility in Nashville, Tennessee as part of an investigation into the illegal trade of a rare wood species allegedly used in some of Gibson’s musical instruments.

Gibson is suspected of importing illegal Malagasy ebony via its European trading partner Theodor Nagel GmbH & Co KG. The investigation is ongoing.

Five months earlier, agents of the U.S. Fish & Wildlife Service in Tampa, Florida seized three pallets of wood as they entered the port of Tampa from Iquitos, Peru. The shipment contained some thirteen species of tropical wood, allegedly imported with stolen and forged documents. In this case, some of the alleged violations of Peruvian law may have included operating a business without a permit and using stolen and forged documents. The agents confiscated the wood. As the importer did not take all necessary steps to ensure that the products were properly declared, the forfeiture was upheld.

What you need to know: You do not need a certificate of legality to import wood products into the U.S. In order to guard against liability, you need to practice due diligence – termed “due care” under the Lacey Act. Some examples of demonstrating due care include: - Keep complete records of your efforts - Develop a company compliance plan - Document how you follow your compliance plan in business transactions - Train employees—they are your agents - Visit suppliers - Ask questions based on any specific concerns in the source material’s region

- Develop and follow industry standards - Ask your overseas supplier for genus/species information - Confirm validity of scientific names - Confirm geographic distribution - Confirm that source companies operate legally (licensed/certified) - Request pertinent plant protection laws from a government official in the country of harvest The Lacey Act is a fact-based, rather than a document-based, statute.

Documents are part of demonstrating due care and assessing legality, but they are not proof of legality. It is important to look behind the documents; checking out and trusting your suppliers and the wood they are providing is as important, if not more important, than paperwork.

Complying with the Lacey Act does not mean you should stop sourcing from high-risk countries.

There are examples of legal, responsible logging in every country. Yes, certain high-value species and countries with historically bad track records should get particularly targeted questions. But that means “do your homework,” not “don’t import from country X, Y or Z.” Individuals and companies in the U.S. aren’t the only people liable.

Numerous buyers and sellers around the world may be associated with a single source or product. If a U.S. importer is found to have illegal product that can be traced back or forward to you, you too are implicated in the crime. There is precedent for indicting and prosecuting foreign individuals under the Lacey Act. Certifications are not required by law, nor are they a get-out-of-jail free card.

Third-party sustainable forestry certification and/or legality verification schemes are good ways to demonstrate due care. You must still submit appropriate import declaration information for all products that appear on the phase-in schedule.

For more information visit www.forestlegality.org.

45

Changing EU Legislation: A Trade Perspective

Rachel Butler Head of Sustainability, Timber Trades Federation

Forestry and timber have long been the subject of much international debate and many campaigns.

That has caused conflict between the trade, governments and NGOs in many countries. In recent times in the UK these three key stakeholders united to lobby the EU to adopt a regulation incorporating an underlying prohibition to make it an offence to place illegal timber on the European market.

So why did we want that?

Other industries may think us mad, but the bottom line for the trade was to establish a level playing field. It has long been established that illegal logging depresses prices thereby undercutting what should be the real market value for those timber products. Many of those operators in the forestry and timber industry who have invested much time and money into doing the right thing have often found themselves outcompeted by cheaper products. Even though demand for timber from legal and well-managed sources has increased over recent times, as shown by the growth of certification, there is still a chunk of the market that is price driven and not interested in provenance. It is vital that this loop-hole is addressed and squeezed out.

A Chatham House report, published in July 2010, clearly concluded that illegal logging is significantly down - by 75% in countries such as Brazil. This is testament to the work the industry and customers have done, supported by Governments and NGOs, to address illegal logging and independently certify that forests are being well-managed.

The US Lacey Act has a number of cases already under investigation. The EU will see the Illegal Timber Regulation (ITR) operational by March 2013.

This may seem a lifetime away, but as a trade should we wait to act? The answer to that is quite simple, NO! Trees are being felled now that could end up in products that will be delivered post 2013.

The regulation will require all first placers of timber and timber products on the EU market to perform “due diligence� on their timber suppliers. Whilst the precise definition of first placer may appear to have some grey areas, in essence all domestic producers and importers will be obliged to do this. It takes time for any operator, big or small, to develop and pilot a new process so that it can be incorporated in standard business practice. Due diligence should be designed to mirror the structure of an ISO process: in essence an operator should review all suppliers, assess individual product risk and implement action plans for those that are deemed as carrying a high risk of containing illegal timber.

The Lacey Act and the EU Illegal Timber Regulation - Are they Different?

First of all there is no such thing as compliance!

The only automatic passport for the EU law is FLEGT licensed timber. What both of these regulations do is put the liability on the buyer to put in place adequate controls. Whereas before there were no repercussions to turning a blind eye, now if an operator is proved to be placing illegal timber on the market, it is a criminal offence.

46

Whilst there are differences between the US Lacey Act and the EU Illegal Timber Regulation, in practice producers and importers will need to implement the same systems. For instance, undertaking ‘due care’ for the Lacey Act is no different to undertaking ‘due diligence’ for EU buyers. To prove you have undertaken due care, the buyer will need to have undertaken some due diligence and, crucially, have the formal records to prove it.

So, for a producer, the buyers from the EU and US will be asking for the same information, such as species and forest origin. Ultimately, whilst proof of legality is not required for either Lacey or the EU ITR, a buyer with a liability will now be seeking that proof or information to conduct that risk assessment.

Can I just buy certified or verified legal?

Whilst these schemes are not automatic passports, they are good evidence of due diligence and in reality

we hope to persuade legislators that no further action is needed other than normal chain of custody checks. However, where issues have been raised with fraudulent use of certification certificates and/or labelling, clearly extra vigilance would be advisable. Under the Lacey Act a false label is an offence.

What about penalties?

Whilst yet to be established in detail, breaking the EU ITR law will be a criminal offence which will result in a fine and/or imprisonment and potentially loss of licence to trade. Breach of the Lacey Act is also a criminal offence (see p45).

The introduction of legal backing to trade calls for a level playing field are to be welcomed and support the case for doing as much as possible to support Governments, NGOs and the trade in addressing the issue of illegal logging.

47

The Competition for Boreal Forest Assets

Liz Crosbie Technical Adviser to FFD and Founder of Strategic Environmental Consulting

International attention is often focused on the threats to tropical forests. Regulations to protect these forested areas are increasing but we must remember that boreal forests also need protection as valuable habitats for wildlife, as carbon sinks and as a source of important raw materials for many international industries. Boreal forestsi represent the fourth largest terrestrial biome in the world, at 19.7m square kilometres.

Erosion of this important natural asset comes from both human encroachment and threats from nature in the form of pest infestations (such as the Canadian mountain pine beetle) or widespread forest fires, such as those in Russia in 2010. However, it is the use of biomass beginning to be seen as a viable alternative to fossil fuel raw materials in several sectors which could greatly increase demand and unsustainable levels of consumption. As a result there is the potential for significant price inflation in the traditional wood and fibre supply chains as competition increases for these valuable assets.

Even without new end-markets, the demand for wood and paper products globally is increasing in line with per capita income, particularly in the developing economies of the southern hemisphere. These economies have many industries where boreal products are particularly sought after. China has now overtaken the US as the world’s largest paper and paperboard consumer at 95m metric tonnes and the demand for pulp shows no sign of abating. China has shown a net timber deficit since the 1990s and the potential fibre-supply gap is projected to reach approximately 150 million cubic metres (roundwood equivalent) by 2015 - a volume greater than the entire Canadian timber harvest in 2009. Russia currently accounts for 85% of China’s softwood and hardwood log imports and this uncertified wood ends up being

48

exported out of China to other global markets as finished goods. Competitive pricing and cheap labour costs have fuelled China’s emergence as the world's largest furniture manufacturer and exporter. In the future the cost structure of these manufactured products will be affected by the additional costs of legal verification now required by law in key buying markets and some key suppliers may no longer be considered acceptable producers if the necessary paper trail is unsatisfactory.

Given the land areas involved and climate conditions, many of the largest areas of boreal forest are minimally monitored and civil society engagement is limited which makes for difficulty in building up credible verification systems on the ground (although remote sensing is starting to help). A lack of third party certification and verification is a particular threat to market access for producers in the coming years: Russia’s existing forestry management infrastructure neither complies with the US Lacey Act nor the proposed EU Due Diligence requirements. Yet the country is the world’s largest volume exporter of forest products and if it is excluded from key markets then price inflation for more acceptable materials is inevitable. In other exporting countries growers and processors are refusing to pay for the additional costs of verification as the market won’t pay the premiums the producers consider necessary. For example, the Latvian state forestry authority recently decided to withdraw from FSC certification. This poses difficulties for importers and others trying to rely on third party systems as supporting evidence of due care or due diligence.

Growth rates of boreal forest are slower than in tropical climes, leading in turn to slower rates of carbon storage, and the fact that these forests are currently excluded from REDD+ schemes also means that many

greenhouse gas reduction programmes tend to overlook the enormous carbon sequestration represented by standing trees and landscapes in the region. Carbon release from peatlands is much analysed in Indonesia, but the relationship with peatland in boreal forests has not been given the same publicity, even though large tracts of land fall into this category. Climate change mitigation schemes need to offer greater recognition of the huge carbon release potential from poor land management of these areas which can be found within the national boundaries of Belarus, Canada, Estonia, Finland, Iceland, Latvia, Norway and the Russian Federation.

Boreal forest extraction rates should not exceed natural regrowth levels. This makes the issue of long term landscape conservation particularly important and the fact that much of the land area involved is state-owned is a very clear opportunity for holistic regulation at the national level. Encouragingly a few public-private partnership ‘landscape level agreements’ that balance forest protection, ecosystem service provision and sustainable economic activity are beginning to emerge. In May 2010, 21 members of Canada’s forestry industry signed the Canadian Boreal Forest Agreement, a commitment to end new logging on almost 29 million hectares of the boreal forest this year, protect key conservation areas and to use mutually agreed best practice forestry management techniques. This agreement was co-signed by nine environmental organisations that had previously been vocal in their criticism of the private companies who are now their fellow-signatories. The full agreement covers a total of 72 million hectares of public forest

i

ii

licensed to members of the Forest Products Association of Canada and promises the highest standards of stewardship.ii Demand for biomass as a feedstock for the power and chemical industries is also a threat: moving from ‘black carbon’ fossil fuel raw materials to ‘green carbon’ plant resources, which have a shorter replacement cycle, has advantages, but only if land it is grown on is managed sustainably. As part of its climate change mitigation strategy, the EU has formulated Biofuel and Biomass Action Plans and in Canada and several parts of Scandinavia the use of biomass as a feedstock for power stations is rapidly increasing. If these new renewable fuels become commercially attractive - not least due to generous feed-in tariffs - the potential additional demand for fibre will be huge. This is already starting to have an impact in Europe. For example, paper mills are building biomass plants not only for their own use but to feed into national grids. Other mills have closed completely, as rising raw material prices have rendered their traditional business model uncommercial, and are now solely biofuel producers.

These risks to traditional buyers require companies who use fibre to build long term security of supply into their business models now. Companies that had reliable supply volumes when buyers held the upper hand, may not be able to continue these relationships in a more aggressive biomass demand scenario.

Without regulatory protection for traditional industry users it will be up to company managements to show that these risks are already incorporated into their long term thinking.

International Union of Forest Research Organizations (IUFRO) report ‘Forests and Society- Responding to Global Drivers of Change’ accessible on www.iufro.org/publications/series/world-series/worldseries-25/ www.canadianborealforestagreement.com/index.php/en/media/#media-kit

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Deforestation and Renewable Energy Policy

Tracey Campbell Director, Forest Footprint Disclosure

Demand for biomass is increasing, not least due to mandated increases in the demand for ‘renewable energies’ in western markets. There are several ways in which these regulations impact on forests: for transport fuels the key feedstocks of soy and palm oil are linked to tropical deforestation and for power generation the necessary biomass is likely to be substantially provided from forest thinnings and plantation agriculture of softwood and other fibre plants. New species are being cultivated to meet this demand, such as jatropha or elephant grass, but so far the areas covered by these alternatives are very limited. The primary sources of feedstock are from plants already cultivated at scale for supply to existing industries, whether food or paper production. There is therefore an implicit competition for these resources as a consequence of current renewable energy regulations.

In April 2009, the EU passed the Renewable Energy Directive (RED) which stated that by 2020, 20% of all energy used in the EU has to come from ‘renewable sources’ including biomass, bioliquids and biogas.

Each Member State can make its own selection of the most suitable feedstocks under the principle of subsidiarity. The RED is only a Directive outlining a framework, and the National Renewable Energy Action Plans (NREAPs) are what display the actual measures that countries will implement to ensure their targets are achieved. RED does oblige the Member States to achieve their own sub-target - as listed in the annex of the Directive - as well as show a growth prognosis for renewable energy development.

In addition, by 2020 each Member State must ensure that 10% of total road transport fuel comes from renewable energy. The vast majority of this is expected to be met from first generation biofuels given the current immaturity of second generation technologies viable at large scale. There are no sub-targets, no interim targets, and no provisions that the 10% target 50

will be reviewed. At the time of this announcement many NGOs and other civil society organisations made loud protests that this measure for cutting carbon emissions within the EU region could lead to a higher carbon release in the countries sourcing the necessary feedstocks since there were very limited environmental or conservation standards and no social criteria attached to the original RED mandate.

Verification schemes were also left extremely loose, largely based on self-reporting or voluntary certification schemes.

In response, in June 2010, a new set of guidelines for certifying sustainable biofuels was proposed by the European Commission to incorporate many of these missing features. The Commission will require that biofuel usage should result in a clear reduction in greenhouse gas emissions compared to mineral oilbased products. Biofuels should not be made ‘from raw materials from tropical forests or recently deforested areas, drained peatland, wetland or highly biodiverse areas’. Under the new guidelines the conversion of a forest to a palm oil plantation would now fall foul of the sustainability requirements.

Independent inspectors are also required to audit the entire production chain from the feedstock source to

the service station. All of this came into effect in December 2010. The voluntary roundtables for both soy and palm oil have both proposed that they offer an annex to their sustainability guidelines which would constitute an acceptable standard for export into the EU: the results of these applications to DG-Energy should be published in the first quarter of 2011 and give welcome clarity to producers as to what standards they should meet to be assured of access to this market.

In the United States, by contrast, it appears that the attention to ‘sustainability’ of renewable energy feedstocks is very limited: full carbon cycle calculations of the agricultural feedstocks appear to be dwarfed by domestic fuel security considerations as the prime motivator.

Civil society has raised substantial concerns about these renewable energy policies. In July 2010 the NGO ActionAid, which was primarily concerned about biofuels driving up the price of food, issued a report recommending that: • The USA should immediately remove all subsidies for corn ethanol production and revoke the targets for increased use of biofuels that are driving the current increase in corn and other biofuels feedstock prices.

• The EU should remove subsidies and targets that encourage the production of biofuels from food crops.

• G8 leaders should support a five year moratorium on the diversion of arable land into biofuel monocropping. Instead of subsidising biofuels the G8 countries should increase research, investment and incentives to scale up alternative renewable energy sources.

They were not the only ones: in June, the UK-based NGO EcoNexus called for ‘an immediate moratorium on EU incentives for agrofuels, EU imports of agrofuels and EU agroenergy monocultures’. This was endorsed by many producing organizations in developing countries. For references to both of these documents see the biofuels timeline on page 56.

There is therefore a growing backlash against the combination of such a large regulatory demand shock from western countries while only first generation biofuels are available to meet the new targets. Since these markets exist due to political will there is some uncertainty as to whether the current frameworks will really remain in place, particularly during an economic slowdown. Perversely it may be just the economic downturn which has reduced the intensity of feedstock competition near term, and a return to growth will present the greater challenge.

Assuming that the current regulations continue, renewable energy regulatory schemes set up with good intentions about preserving the planet have in fact exacerbated the pressures on forests in these early years. Second-generation biofuels remain in very short supply at present, so sourcing sustainablysourced product is all that a forward-thinking company can currently do to protect the environment while complying with local regulation. Supply chains to meet the demand for renewable energy feedstocks need to be as transparent as possible so that land clearance issues, and thus deforestation, can be recognised as part of the overall ecosystem impact rather than swept under the carpet.

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2010 Timeline for Natural Capital Events

January

The United Nations declared 2010 to be the International Year of Biodiversity.

April

With the support of many of the world’s financial institutions, CDP Water Disclosure asked more than 300 of the largest global companies to report for the first time on water use and other water-related issues, to increase the availability of high quality business information and raise awareness of water-related risk.

July

The Economics of Ecosystems and Biodiversity for Business report (TEEB) was launched at the world's largest private sector focused biodiversity conference. The report can be found at: www.teebweb.org/Portals/25/Documents/TEEBforBusiness/TEEBforBusExecEnglish.pdf

September

‘Carbon management is becoming a strategic business priority and competitive driver for the largest global companies, despite the lack of global agreement on climate change’ according to the CDP’s 2010 Global 500* report which can be accessed at: www.cdproject.net/CDPResults/CDP-2010-G500.pdf

October

Water Disclosure Project publishes results from its first year: of the 302 companies asked to disclose 150 did so with an additional 25 companies disclosing voluntarily. This indicates that water scarcity is becoming a risk factor recognised by a high number of corporate leaders. The Report can be found at: www.cdproject.net/CDPResults/CDP-2010-Water-Disclosure-Global-Report.pdf In Nagoya, Japan, the tenth meeting of the Convention on Biological Diversity (CBD) saw the final publication of the TEEB family of reports. The Economics of Ecosystems and Biodiversity. www.teebweb.org/LinkClick.aspx?fileticket=bYhDohL_TuM%3d&tabid=1278&mid=2357 UNDP launch ‘Latin America and the Caribbean – A Biodiversity Superpower’ detailing the value of their new report natural capital in a series of case studies across the region.

Global Canopy Programme launch ‘The Little Book of Biodiversity Finance’ detailing funding mechanisms for natural capital up to 2020. This can be found at globalcanopy.org/main.php?m=117&sm=225&t=1 A new CEO Briefing by UNEP FI ‘Demystifying Materiality: Hardwiring Biodiversity and Ecosystem Services into Finance’ is also launched. UNEP FI Co-Chair Richard Burrett said: “As the global financial sector recovers and moves into the post-financial crisis era, there is one notion that crystallises before our eyes more acutely than ever: we need to understand systemic risk in a genuinely holistic way.” www.unepfi.org/fileadmin/documents/CEO_DemystifyingMateriality.pdf

November

The Carbon Disclosure Project (CDP) announced the launch of the new CDP Cities program, which will provide a system for cities worldwide to report on their greenhouse gas emissions and climate-related strategies: London, Toronto and New York have already agreed to report.

December

COP 16 in Cancún: Reuters reports ‘Evidence of green business profits and more direct industry engagement may be needed to push U.N. climate talks out of stale rich-poor rivalries to a global agreement. More business engagement was the key to unlocking real progress, said Yvo deBoer, who stood down as the U.N.’s climate chief earlier this year, saying it was a ‘missing pillar.’

26 ‘Cancún Agreements’ are approved in Mexico, including on REDD+. Sub-national monitoring and reporting agreed and safeguards included. A REDD+ Partnership workplan is agreed. Long term finance target set at $100 billion annually to be delivered via a Green Climate Fund. According to UN REDD: ‘The COP16 agreement on REDD+ is expected to revitalize and increase funding flows to support REDD+ readiness and invigorate donor pledges for REDD+ that now amount to close to US $5 billion for early actions until 2012.’ www.unredd.org/NewsCentre/COP16_Press_Release_en/tabid/6595/Default.aspx New research commissioned by KPMG reveals that almost two thirds of companies globally already have "active" sustainability programmes in place. Early results from an Economist Intelligence Unit (EIU) survey ‘The Review of Corporate Sustainability in 2010’ of 378 large and medium-sized companies spread across 61 countries show that 62% already have an active sustainability programme, and 11% are currently developing one.

The International Year of Forests 2011 designation by the CBD Secretariat and UNFF Secretariat takes effect in mid-December. Further information at: www.un.org/en/events/iyof2011/index.shtml .

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Leading European retailers Carrefour Group, Kingfisher, Marks & Spencer and IKEA launch the Timber Retail Coalition (TRC) on 6 April 2010 to ensure minimum ethical standards for all timber and wood products sold in the European Union. For more details see: www.errt.org/uploads/TRC/TRC%20ToRs%20July%202010%20-%20final.pdf.

May

A unique collaboration between 21 major Canadian forest products companies and nine leading environmental organizations is announced as the ‘Canadian Boreal Forest Agreement’. This will protect more than 72 million hectares of forest from the provinces of British Columbia to Newfoundland and requires the implementation – in consultation with all parties to the agreement – of higher conservation and environmental standards. Environmental NGOs undertake to cease campaigns against companies involved in the agreement and from trying to discourage investors from having shareholdings in those companies.

Details can be found at: www.canadianborealforestagreement.com/index.php/en/media/#media-kit

June

Nestlé announces it has entered into a partnership with The Forest Trust (TFT) as a further step in its commitment to fight deforestation. The partnership starts with palm oil, but Nestlé is studying its supply chains to determine a similarly ambitious target for its pulp and paper supplies.

The Canadian Green Building Council confirms that all vendors selling wood-based products to LEED (Leadership in Energy and Environmental Design) projects must be FSC Chain of Custody (CoC) certified in order for the products to qualify for LEED Materials and Resources Credit 7 for Certified Wood.

Currently, the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating tool only recognizes wood certified to Forest Stewardship Council (FSC) standards although the Programme for the Endorsement of Forest Certification Schemes (PEFC) members are lobbying to have parallel recognition.

The International Union of Forest Research Organizations (IUFRO) publishes ‘Forests and Society – Responding to Global Drivers of Change’ a major international study of commerce, ecology and climate change issues in relation to the world’s forests. The report can be accessed at: www.iufro.org/publications/series/world-series/worldseries-25/

July

As a result of the impact of Greenpeace report ‘Pulping the Planet’, Tesco and French supermarket giant Carrefour announced they would be ridding their shelves of own-brand Asia Pulp & Paper (APP) products by the end of 2010. Moreover, Kimberly-Clark, Kraft, Nestlé and Unilever are all in the process of implementing global paper policies that will rule out supplies from APP, unless substantial changes are made by the company and its suppliers. www.greenpeace.org.uk/blog/forests/just-palm-oil-paperthreatens-indonesias-rainforests-too-20100706. Greenpeace are also asking certification scheme PEFC to drop the under-fire pulp and paper giant APP’, part of the Sinar Mas group often targeted for its palm oil involvement. PEFC say that they have asked an auditor to investigate APP.

August

The Norwegian Ministry of Finance confirms that its Council on Ethics “has assessed Samling Global, and concluded that the company’s forest operations in the rainforests of Sarawak and Guyana contribute to illegal logging and severe environmental damage.’’ The manager has therefore excluded the company from the Government Pension Fund Global’s investment portfolio.

October

Australian logging giant Gunns announces intentions to end logging of ancient forests in Tasmania in response to public pressure. The campaign against Gunns (the biggest producer of hardwood pulp in Australia) was not limited to domestic environmental groups. Gunns produces paper products which are exported to Japan, and Japanese consumers let it be known they were not happy with the company's deforestation record. This followed a campaign by Rainforest Action Network in Japan to educate consumers about Gunns’ contribution to forest destruction, biodiversity loss, and the causes of climate change. For detils see: www.guardian.co.uk/sustainable-business/australia-logging-deforestationgunns?INTCMP=SRCH

December

Kentucky Fried Chicken (KFC) come under fire and get bad press after being accused by a coalition of environmental groups – including Greenpeace US and Sierra Club - of greenwashing because the company insists on using SFI certification which they consider insufficiently strong. The NGOs would prefer the use of FSC certification.

2010 Timeline for Timber

April

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June

17 prosecutors from the Federal Public Prosecutors Office (MPF) in the Brazilian state of Pará propose a lawsuit against 21 ranches which were found to be non-compliant with environmental legislation and against 13 slaughterhouses that bought cattle from these ranches. Additionally, the MPF demands that 69 supermarket chains and additional industries should stop buying products of cattle-origin from the slaughterhouses that were buying from the 21 ranches.

Brazilian meatpacker Marfrig announces its 38th takeover in 3 years; that of US-based meat supplier Keystone.

2010 Timeline for Cattle

July

The original deadline for slaughterhouses in Brazil to provide the location of their suppliers, according to moratorium on deforestation organised by Greenpeace at the end of 2009, was the 5th July 2010.

The State Assembly of Mato Grosso, the state that hosts the largest cattle herd in the Brazilian Amazon, extends the deadline for ranchers to begin adoption of the Forest Code to 2012. (Source: Baretto and Silva 2010) The largest Brazilian slaughterhouses, JBS, Marfrig and Minerva announce they have 12,500 ranches mapped in Mato Grosso state, and that they have ceased purchasing cattle from 221 farms that are located inside indigenous lands, protected areas or near newly deforested areas in the Amazon. Yet another 1,787 ranchers were under investigation because they were within a 10 km radius of new deforestation or protected areas.

To make this process efficient and transparent, it is essential that the farms are in the Rural Environmental Register (Cadastro Ambiental Rural (CAR) in Portuguese). This tool is a database of rural properties which includes satellite maps showing each property’s borders, land uses and vegetation cover which makes it possible to carry out monitoring using satellite images and is a first step in compliance with Brazil’s Forest Code (Código Florestal).

August

Launch of the Standard for Sustainable Cattle Production Systems (Sustainable Agriculture Network). SAN is the international coalition of NGOs that establish criteria for the Rainforest Alliance Certified program and launched the Standard for Sustainable Cattle Production systems to ensure that economically viable beef and milk production is compatible with biodiversity conservation and worker welfare.

(Source: www.rainforest-alliance.org/agriculture/standards/san)

September

An audit by the Brazilian Federal Court rules that the national development Bank of Brazil (BNDES) had contributed to deforestation in the Amazon by investing 12.7 billion Reals in commercial meatpacker companies since 2005. The meatpackers that had received investment from BNDES were found to have purchased beef from farms that had been involved in illegal deforestation. A lack of co-ordination in the secretariat of the government is indicated as leading to the indirect financing of deforestation while at the same time the government was implementing regulation to address the issue of forest clearance.

(Source: www.prosaepolitica.com.br) Leather Working Group meeting in adidas village, Portland, USA. The meeting is attended by 67 representatives from brand owners, tanners and suppliers. Discussions center on the Leather Working Group Tannery Environmental Auditing Protocol Issue 5.1, which will go live in December 2010.

November

Walmart launches global sustainable agriculture goals committing itself by the end of 2015 to sustainably source key agricultural products. This includes sourcing beef from Brazil only if it does not contribute to deforestation.

A Global Conference on Sustainable Beef, Denver, Colorado, is jointly hosted by WWF, Cargill, Intervet/ Schering-Plough Animal Health, JBS and McDonald’s. The meeting is attended by over 300 delegates representing a wide range of stakeholders. Possible next steps for the cattle industry are identified and include: expanding local multi-stakeholder programs that are economically viable, environmentally sustainable and socially responsible and the creation of Regional Sustainable Beef Roundtables to guide the development of standards for sustainable beef production. (Source: www.sustainablelivestock.org ) Original deadline for compliance with the consent orders of Mato Grosso state expires. Slaughterhouses involved in the agreement will make no further purchases from ranches that are not registered on the state CAR. Meat packers must obtain confirmation that all direct suppliers have registered their farms using geographically referenced polygons. This has been postponed until December 16, 2012 by the Governor of Mato Grosso, Silval Barbosa.

December

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Release of the Leather Working Group Tannery Environmental Auditing Protocol Issue 5.1. Update of the protocol includes; ‘All processed materials will need to be traceable to the slaughterhouse; a separate rating will be awarded dependent upon the robustness and extent of traceability demonstrated’ (Section 2.2) (Source: www.leatherworkinggroup.com)

WWF Brasil reports that several key NGOs including Greenpeace, The Nature Conservancy, Amigos da Terra, Imaflora and the Amazon Environmental Institute have published a formal statement that they have not participated in the development of the criteria for the ‘Soja plus’ initiative, recently launched by ABIOVE, the local soy producers organisation which covers 72% of the soy volume produced in Brazil.

Soja plus does not include a prohibition on deforestation and did not incorporate multiple stakeholders in its development process. ABIOVE formally left the Round Table on Responsible Soy (RTRS) after the announcement of the Soja plus standards but many companies involved in the industry remain members of both groups.

June

The Fifth International Conference of the Roundtable for Responsible Soy is held in São Paulo.

The General Assembly which followed voted to approve the Principles and Criteria for Responsible Soy Production.

The strategic importance of the RTRS for the soy value chain was emphasized as a platform for participation and coordination of sustainable growth. As an example, Gustavo Grobocopatel (President of Grupo Los Grobo, Argentina) stated that “crop rotation and no-till farming are fundamental tools for environmental sustainability.”

July

Brazilian soy farmers have extended their moratorium on Amazon deforestation for another year. The moratorium was established in July 2006 in response to concerns among big soy buyers — notably McDonalds and Carrefour — that soy expansion was driving large-scale destruction of Earth's largest rainforest. Soy producers in the region have since registered their holdings in order to sell their product to major crushers and traders. Registered properties are monitored via satellite, airplane flyovers, and on-the-ground visits for compliance. Greenpeace says that improved forest monitoring this year led to 75 farms being caught and expelled from the system, up from 12 last year. These farms can no longer sell to major soy traders.

August

In order to obtain recognition of compliance with EU-RED from the European Commission, the RTRS creates a working group to prepare an annex to the generic RTRS Standard. The resulting biofuels annex is presented to the DG-Energy sub-committee of the European Commission. DG-Energy has begun the process of evaluation of voluntary standards and should take no longer than 6 months to evaluate this request from the RTRS for recognition. The biofuels annex contains all requirements of the directive and will be optional for those farmers that produce soy for biofuels meant to be exported into the European Union. From the producers´ perspective, once the biofuels annex is recognized as a voluntary standard complying with the EU-RED, RTRS certified soy can be exported to any of the European Union member states as input for biofuels.

September

The content of the RTRS Chain of Custody Model for the Mass Balance Module finalized in September includes two key features:

2010 Timeline for Soy

May

-Segregation: The RTRS certified soy product is kept separate from all other products throughout the supply chain, so that the product physically contains soy originated from an RTRS certified farm.

Segregation doesn´t specify which specific certified farm that soy came from.

-A module for non-GM RTRS certified soy: This module specifies the requirements for RTRS non-GM soy supply chains.

October

WalMart, the world’s largest retailer, has announced a new sourcing policy that aims to ensure that meat, soy and timber in its stores have not contributed to Amazon deforestation.

Schutter Argentina S.A. becomes the first certification body to be accredited. The company is thus able to start offering certification services for Chain of Custody producers or companies that wish to produce and/or commercialize RTRS certified soy.

November

Arla Foods Netherlands signs a cooperation agreement on sustainable soy with Solidaridad. Starting 1st November 2010 Arla supports small scale family farmers in Brazil in their cultivation of sustainable soy.

The amount of soy produced by those family farmers is the same amount of soyfeed Arla needs for the milk Arla uses for its dairy. For the rest, starting 2011 Arla will buy soy that complies with the Standard of the Round Table on Responsible Soy (RTRS).

Banco do Brasil, the main agribusiness financer in Brazil, joins the Soy Moratorium, and will not lend any more funds to producers that deforested land after 2006 in the Amazon Biome.

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2010 Timeline for Biofuels 56

January

Two working groups of the International Energy Agency (IEA) conclude that using biomass for energy could be ‘bad’ if no safeguards are placed against GHG emissions and loss of biodiversity from land use change, food insecurity, overuse of water, and mismanagement of soils. ‘Good’ biomass for energy could diversify energy supply at reasonable cost, improve trade balances, and provide rural income. For details see: www.ieabioenergy.com/LibItem.aspx?id=6476

March

The European Commission publishes a summary of national renewable energy forecast documents, indicating member states’ expectations of the national share of renewable energy in 2020. National forecasts show that the EU is on track to meet and even marginally surpass its overall 20% target by 2020 (20.3%).

June

UK NGO EcoNexus calls for ‘An immediate moratorium on EU incentives for agrofuels, EU imports of agrofuels and EU agroenergy monocultures’. This is endorsed by many organizations, including AG Kleinstlandwirtschaft (Germany), All Nepal Peasants' Federation, Andhra Pradesh Vyavasaya Vruthidarula Union –APVVU (India), Base Investigaciones Sociales (Paraguay), Biofuelwatch, Corporate Europe Observatory, FERN, Global Justice Ecology Project, GRAIN, Pro REGENWALD, the World Rainforest Movement, and others. For details see: www.econexus.info/call-immediate-moratorium-eu-incentives-agrofuels-eu-imports-agrofuels-and-euagroenergy-monocultur-0

July

NGO ActionAid releases the document ‘Cereal Offenders’ that charges that “G8 leaders are singlemindedly pursuing policies and practices around biofuels, agricultural aid and climate change that are fuelling the global food crisis.” and “the voracious demand for biofuels is largely a consequence of the targets and subsidies that the rich world has established to build energy security…The result of this is that around 260 million people are either hungry or at risk of hunger because of biofuels.”

For details see: www.actionaid.org.uk/doc_lib/g8report2_final.pdf A new IEA task force report collects information on 66 second generation biofuel projects that are being pursued currently, and provides details on the facility size, feedstock in use and technology applied.

Currently many facilities at the demonstration scale are under construction and will hopefully successfully demonstrate biofuels production from lignocellulosic raw materials in the near future.

For details see: www.ascension-publishing.com/BIZ/IEATask39-0610.pdf

August

The Round Table on Responsible Soy (RTRS) creates a working group to prepare an annex to the generic RTRS Standard which carries the title RTRS Biofuels Working Group. The European Commission (EC) has created a directive to regulate imports into Europe of raw material (like soy) for biofuels. Products need to meet a set of mimimal standards in order to be considered sustainable. The key requirements relate to: land use change; GHG calculations and Chain of Custody requirements. The DG-Energy should take six months to evaluate the request for recognition. The biofuels annex contains all requirements of the directive, and will be optional for those farmers that produce soy for biofuels meant to be exported into the European Union. From the producers´ perspective, once the biofuels annex is recognized as a voluntary standard complying with the EU-RED, RTRS certified soy can be exported to any of the European Union member states as input for biofuels.

November

Greenpeace Germany announces that it has tested biodiesel which is added to diesel sold at petrol stations across Germany for its palm and soybean oil content and published the results in a report. The report singles out Aral and Shell, which allegedly have particularly high percentages of soybean and palm oil in their respective biodiesel products.

In the UK a major BBC Panorama documentary ‘Dying for a Biscuit’ is shown which highlights the issues around palm oil production, land conversion and the threat to the orangutan’s survival. In researching the programme, Panorama asked the makers of the top selling products containing palm oil and major supermarket chains about their palm oil use and sourcing policy. 26 UK and global brands responded to their request for information. Unilever agrees not to source palm oil from Duta Palma due to concerns over the forest conversion mentioned in the Panorama broadcast. This follows on their delisting of product from PT Smart, part of the Sinar Mas Group, in December 2009.

March

Nestlé the world’s largest food maker drops the Sinar Mas Group as a supplier of palm oil, later followed

by Kraft and Burger King. Significantly these brands were then joined by Cargill, one of the world’s largest physical traders of palm oil.

April

The Round Table on Sustainable Palm Oil (RSPO) appoints its first Chain of Custody certification body – BM Trada – which allows supply chain companies to trace sustainable product beyond the refinery to achieve RSPO certification and make claims about their use of RSPO certified palm oil.

The Indonesian agriculture ministry indicates it plans to issue Indonesian Sustainable Palm Oil (ISPO) certification to cover the entire operations of the industry. These standards differ from those of the RSPO. Sinar Mas appoints two auditors, Control Union Certification and BSI, to carry out independent audits of Greenpeace’s allegations. Unilever confirms it will resume buying if the auditors clear Sinar Mas of the allegations or the firm can demonstrate it is addressing the environmental complaints covered.

May

The Brazilian government launches a national palm oil programme to provide credit for landowners, funds for research and increased technical assistance. Embrapa identifies zoning which will authorise production in 3.7% of the territory, including degraded areas in the Amazon and parts of the sugar cane region in the Northeast of the country. A law forbidding clearance of native vegetation for palm oil is proposed.

July

Greenpeace releases ‘How Sinar Mas is Pulping the Planet’ alleging that major brands like Wal-Mart, Auchan and Kentucky Fried Chicken (KFC) are linked to deforestation through their supply chain association with Sinar Mas’s palm oil companies, PT Smart and Golden Agri Resources. Carrefour stops buying from Sinar Mas.

August

Cargill commits to work with WWF to assess progress amongst its Indonesian suppliers to implement the RSPO standard. Cargill commits to report its findings early in 2011.

September

The RSPO’s Grievance Panel addresses non-compliances by PT Smart and Golden Agri Resources.

2010 Timeline for Palm Oil

February

General Mills announces a new commitment to sustainable palm, after months of robust campaigning by NGOs in the US.

November

The Eighth Roundtable on Sustainable Palm (RT8) is held in Jakarta. No votes are proposed relating to the contentious climate change and GHG issues that nearly split the RSPO in 2009.

Parallel to the opening of RT8 the Indonesian government announces the launch of its own mandatory palm oil industry certification scheme based on a legality standard. Some commentators see this as a rival to the RSPO as Indonesian companies have found it hard to achieve certification due to conflicts with Indonesian law and the strategic commitment of some local regions to convert even high-conservation forestry parts of concessions into palm oil production.

December

At the beginning of December the 21 plantation companies that have gained RSPO certification represent an annual 3.46 million tonnes of RSPO certified production. Of this 0.46m metric tonnes of physical oil was traded with an additional 1.03m metric tonnes traded certification through Greenpalm.

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Thanks to Steering Committee and National Wildlife Federation FFD would like to extend a special thank you to all the members of the FFD Steering Committee for their enthusiasm, support and commitment over the last 12 months. The continuing success of the project owes considerably to their time and effort, which was volunteered freely.

FFD Steering Committee Carbon Disclosure Project The Co-operative Asset Management UK Government Department for International Development FTSE Company Global Canopy Programme Hermes Equity Ownership Services

Marksman Consulting The Prince’s Rainforests Project Strategic Environmental Consulting UNEP Finance Initiative WWF UK UN PRI (observer status)

Forest Footprint Disclosure would also like to acknowledge the very generous assistance in outreach to US companies given during 2010 by the National Wildlife Federation, particularly Barbara Bramble, Nathalie Walker and Stacy Brown

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Citations

Thanks to Endorsers FFD also thanks gratitude to the following financial institutions that have endorsed the project, each of which has indicated their commitment to understanding deforestation risk in their potential investments.

© Global Canopy Foundation 2011 The Forest Footprint Disclosure is a special project of the Global Canopy Foundation. Registered UK Charity (No 1089110), copyright 2001. All rights reserved. Incorporated as a company limited by guarantee (No. 4293417), incorporated in England with registered address John Krebs Field Station, Wytham, Oxford OX2 8QJ.

FFD Endorsers

Invesco Perpetual

Active Earth Investment Management

The Local Authority Pension Fund Forum (LAPFF)

Amundi Group

The Nathan Cummings Foundation

APG Asset Management

Natural Capital Funds Management

Authors Tracey Campbell, Liz Crosbie, Katherine McCoy and Andrew Mitchell.

Aviva

Nelson Capital Management

AXA Investment Managers

Newton Investment Management

FFD would like to acknowledge the contributions of F&C, Co-operative Asset Management, Hermes Equity Ownership Services, Christian Brothers Investment, The National Wildlife Federation, The Prince’s Rainforests Project, Profundo, The Timber Trades Federation, The Forest Legality Alliance and all the staff at Strategic Environmental Consulting.

Benchmark Asset Managers

Norges Bank Investment Management

Boston Common Asset Management

NEI Investments

The Children’s Investment Fund management (UK)

Pax World Management

Christian Brothers Investment Services

Pictet & Cie

Climate Change Capital

Portfolio 21 Investments

Colonial First State Global Asset Management

Rathbone Greenbank Investments

Connecticut Retirement Plans And Trust Funds

Robeco

The Co-operative Asset Management

Royal London Asset Management

Dexia Asset Management

SAM (Sustainable Asset Management)

Domini Social Investments

Bank Sarasin & Co

EBG (Environmental Business Group) Capital

Santander Brasil Asset Management

Ecclesiastical Investment Management

Schroders

Environment Agency Active Pension Fund

Solaris Investment Management

ETICA

Statewide Superannuation

F&C Investments

Storebrand

First Affirmative Financial Network

Sustainable Development Capital

Generation Investment Management

Threadneedle

Groupe Investissement Responsable Inc.

Trillium Asset Management Corporation

Hazel Capital

Triodos Bank

Henderson Global Investors

VicSuper

Hermes Equity Ownership Services

Walden Asset Management, a division of Boston Trust & Investment Management Company

Designed by The Good Agency 1st Edition January 2011 To be cited as: Campbell, K.T., Crosbie L., McCoy K., Mitchell A. (2011) The Forest Footprint Disclosure Annual Review 2010, Global Canopy Programme, Oxford.

Forest Footprint Disclosure is a special project of the Global Canopy Foundation.

Initiated in 2008 the project is designed to improve corporate understanding of a ‘forest footprint’ generated by the use of key forest risk commodities: soy, palm oil, timber, cattle products and biofuels. FFD designed a disclosure request asking about company policy on sustainable supply chains for these products and in June 2010 sent it out to 285 international companies worldwide. Each company participating receives a feedback report to encourage higher scoring in future years. This second Annual Review describes the findings of the disclosure request based on responses from 78 participating companies and provides some context on the current issues and concerns for forest risk commodities.

2

Impax Asset Management Interfaith Center on Corporate Responsibility

Zevin Asset Management

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Forest Footprint Disclosure Project John Krebs Field Station Wytham Oxford OX2 8QJ United Kingdom Tel: +44 (0) 1865 240090 Email: info@forestdisclosure.com Web: www.forestdisclosure.com The Forest Footprint Disclosure Project is a special project of the Global Canopy Foundation Š 2001. All rights reserved. Registered UK Charity (No 1089110), incorporated as a Company Limited by Guarantee (No. 4293417), incorporated in England with registered address: John Krebs Field Station, Wytham, Oxford OX2 8QJ.

Forest Footprint Disclosure Annual Review 2010