Landscape Finance Approach Emerges as Key to Halting Supply Chain Deforestation

Deforestation and resulting emissions worsened in 2022 despite widespread corporate pledges, according to the latest Forest Declaration Assessment, highlighting the limits of individual company action. A landscape approach — engaging multiple stakeholders across entire sourcing regions — is emerging as a necessary complement to supply chain traceability and commodity certification.

Only 12% of reporting companies claim to be close to removing deforestation from their supply chains, while two-thirds report some level of forest-related risk through CDP. Risks span reputational and market exposure, regulatory liability under the EU Deforestation Regulation, and physical risks from droughts, fires and floods. CDP's latest Global Forests Report notes that the financial impact on companies of failing to address deforestation outweighs the cost of proactive response, making collective action economically rational as well as environmentally necessary.

The Science Based Targets Network's Land methodology and the TNFD framework both explicitly require companies to engage in multi-stakeholder landscape initiatives as part of credible nature targets. In 2023, 192 companies disclosed support for more than 200 landscape initiatives through CDP, providing investors and buyers with data on deforestation progress. The Business Case for Collective Landscape Action — a partnership of CDP, Clarmondial, Rainforest Alliance and Conservation International funded by USAID — is developing investment solutions to unlock finance for these initiatives and support supply chain transitions.

Financing landscape approaches requires blended capital structures combining grants, microfinance, debt and equity, often including concessionary public funding alongside private capital. The EU Deforestation Regulation, the proposed Green Claims Directive and the Corporate Sustainability Due Diligence Directive are all increasing compliance costs for companies sourcing from high-risk geographies, accelerating demand for shared risk and cost-sharing mechanisms. Clarmondial's research indicates that long-term landscape finance can be structured effectively for all parties when risks are distributed transparently across smallholders, companies and investors.

Key figure — 192 companies supported over 200 landscape initiatives in 2023