Green Hotelier Talking Point: Supply Chain Deforestation Risk

Can you see the wood for the trees in your supply chain?

Can you see the wood for the trees in your supply chain?

Green Hotelier Talking Point: Fair Trade and Sustainable Supply Chains.

Continuing our Talking Point theme exploring supply chains, ITP's Fran Hughes looks at the challenges of reporting on a high but hidden risk; deforestation.

Launched in 2009, the CDP (Carbon Disclosure Project) forests disclosure programme acts on behalf of investors to collect information from companies on the risks and opportunities resulting from their exposure to deforestation. Deforestation accounts for 10-15% of global CO2 emissions – equivalent to the entire transport sector.

Global demand for agricultural commodities is the primary driver of deforestation, as timber is extracted and land is cleared to produce beef, soy, palm oil and biofuels. These ‘forest risk commodities’ are the building blocks of millions of products traded globally and feature in the supply chains of countless companies, including hotels. Palm oil for one could be in anything from ice cream to shower crème.

Whilst there has been a marked increase in companies reporting under the CDP forests programme compared to previous years – a 40% increase for the hotel, restaurant and leisure sector alone - the number of disclosing companies remains low with just three hotel groups responding to the request to disclose; Whitbread, Millennium Copthorne and Sun International. (The majority of the 40% increase is coming from restaurants and leisure companies.)

Why is reporting on forest risk in the hospitality sector so low? Senior Account Manager at CDP Forests Katie McCoy says; “There is a surprising lack of knowledge about where companies’ exposure to deforestation risk is to be found. Significant risks to brands, particularly in restaurants, have not been articulated clearly which is surprising given the high profile scares around traceability this year. If traceability of these commodities has not been established, there are implications far beyond deforestation, including Health and Safety, GMO and fraud.”

So what is stopping hotel companies looking at their exposure to forest risk? There are potentially high risks in the provenance of, for example, toilet paper, construction materials and catering supplies. However, tracing the origin of these products through several layers of a supply chain could be challenging to the point of deterring a company from reporting. In the case of palm oil it is not always clear which products even contain it. Some large companies are rising to the complex challenge of tracing the supply chain back to the producer. Nestle engages with all of its 600,000 cattle suppliers and Unlilever has committed to tracing every gram of its major products to the site of production by 2020, proving it can be done, but is not something that can be achieved overnight.

A simpler option could be to source products which have already been independently verified to conform to certain standards of forest stewardship, such as those certified by the Rainforest Alliance, Forest Stewardship Council (FSC), PEFC (Programme for the Endorsement of Forest Certification) or Roundtable for Sustainable Palm Oil (RSPO), but even this is not without difficulty.

The 2013 CDP Global Forests Report notes that sourcing and availability of certified sustainable materials, at the right price and quantity required, are highlighted as real barriers for business. Companies anticipate that increases in the availability of these commodities and falling costs are likely to make a big difference in the management of forest risk commodity issues.

Despite the challenges, many companies are finding real business value from disclosing under the CDP Forests Programme. British Airways’ Environment Manager, Alessandra Cuzzoli, commented; “Participation for the fourth year running in the [forests programme] is educating our risk assessment process through making BA increasingly aware of the commodities we use, where they are sourced from and the wider implications [including risk].” And CDP stress that there are significant opportunities for companies performing well in this sector to communicate their global stewardship to consumers.

Explaining the rationale for Whitbread Group participating in the programme, Ben Brakes, Environment Manager at Whitbread Group, says; “Having made strong progress on our internal sustainability initiatives we wanted to look further into our supply chain. And when we looked, deforestation seemed to pop up everywhere.”

Part of the rationale for disclosing to CDP was to help shape and focus the company’s strategic approach to forest risk in the supply chain – were they asking the right questions of the right people and how could they make the process of data gathering over several departments as painless as possible? The benefit has been improved learning, reporting and ultimately improving sustainable procurement across the company’s brands.

Ben is very clear that this has not been easy but that the perfect should not be the enemy of the good when it comes to tracing and reporting on supply chains. His words of advice to other companies considering reporting? “Don’t be afraid to leave blanks! You’ll know where to go for information next time and your reporting and understanding of the issues, will improve year on year.”

For more information on the CDP forests programme, visit the CDP Forests page.


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