How The Forest Act And Business Can Help Stop Deforestation Globally

Forests are under threat everywhere.

Global deforestation reached 6.6 million hectares in 2022, with primary tropical forest loss at 4.1 million hectares. These losses occurred despite governments from over 130 countries having signed a pledge at COP26 in Glasgow in 2021 to halt and reverse deforestation around the world by 2030.

The fact that the 2030 target was officially incorporated into the outcome of COP28 in Dubai in 2023 is a positive step, but this good news only has real legs if action is taken now to turn these words into a concrete response to continuing and, in some places, worsening, deforestation. We do not have the luxury of time to wait until forests are potentially at the centre of international climate negotiations at COP30 in Brazil.

The US Fostering Overseas Rule of Law and Environmentally Sound Trade Act, more commonly known as the “FOREST Act”, would require companies to trace where products come from and confirm they are produced legally. But policymakers cannot do this alone.

Companies increasingly recognize that deforestation in supply chains represents material physical, reputational, and financial risks. More than 250 companies reporting to environmental disclosure platform CDP estimate their financial risks from deforestation will top $80 billion. Another analysis suggests the financial risk of deforestation in supply chains in the United States could be as high as $115 billion.

And this week Unilever, Danone, Mars and Nestle released a statement demonstrating their support for legislation that meets the goals of the FOREST Act.

Forests are home to most of the world’s terrestrial biodiversity. They provide more than 86 million green jobs and resources such as food and fuel that support the livelihoods of billions of people. They are also critical for absorbing and storing carbon dioxide from the atmosphere. Yet, we seem obsessed by chopping them down in our never-ending conquest of nature.

Tackling the issue from the demand side, where products bought and consumed do not contribute to deforestation or degradation, has been fore-fronted by some regions, such as the EU. The US FOREST Act takes a similar approach. When initially proposed in 2021, the bill failed to advance and lacked Republican support in the Senate. However, its reintroduction, with various amendments, by a bipartisan group of US legislators during COP28 has reignited hope that it could be signed into law in the not-too-distant future.

It is important to draw attention to the bill today, on the UN designated International Day of Forests, as its adoption would have an immense impact globally, boosting the world’s chances of halting and reversing biodiversity loss by 2030.

Despite all the words that have been spoken about the importance of forests, the 4% increase in deforestation worldwide compared to the previous 12 months, as revealed by the annual Forest Declaration Assessment, means the world is dangerously off track to end deforestation by 2030.

Reversing this trend requires a dual-pronged strategy: providing financial support and technical assistance to tropical forest countries grappling with deforestation and implementing demand-side measures to restrict the entry of deforestation-linked products into the market.

The FOREST Act addresses both facets of this challenge by extending financial and technical assistance to nations struggling with deforestation control, while also prohibiting companies from importing forest risk commodities unless they can be proven to be free of illegal deforestation.

The latest iteration of the FOREST Act reflects substantial improvements over the previous version, stemming from collaborative efforts between the private sector, bill sponsors, and the conservation community. Among the changes are the introduction of a 'trusted trader' programme, which would streamline access for commodity importers with robust anti-deforestation policies and infrastructure. Such a programme would foster a "race to the top" across industry, while reducing the administrative burden for high-performing companies.

The bill now also includes provisions that will encourage a more targeted enforcement approach, mitigating concerns about disruptive measures that blunt-instruments could have on supply chains and minimising unintended adverse impacts on sourcing regions.

It also calls for an advisory committee, now with enhanced representation from the private sector, that will ensure that the voices and perspectives of businesses are reflected during the implementation of the FOREST Act. There is no stakeholder group with more direct experience in addressing commodity-driven deforestation than the private sector, and elevating their perspectives will help make this law a success.

A carryover from the original version of the FOREST Act is a provision to provide technical and financial support to tropical forest countries as they implement deforestation action plans. In effect, this will leverage both the US and supply-side governments as new critical allies in establishing more climate and financially resilient supply chains for the private sector. A win-win for governments, farmers, and the companies that rely on their products to stay competitive.

The backing for the FOREST Act from Republicans and Democrats in both the House and the Senate underscores the growing consensus about the US's responsibility to address its marketplace's role in driving illegal deforestation worldwide, and the bill’s likelihood of passage.

The FOREST Act is a rare legislative opportunity to advance environmental goals with bipartisan support in the US, but more companies will need to take the opportunity to speak up and out to voice their support in order to get the bill over the line.

Source: Forbes‍