Global supply chains are facing growing disruption from climate volatility, resource scarcity, and geopolitical uncertainty. Almost all major commodities have been experiencing more excessive price volatility since 2022. Yet one of the most significant drivers to this risk remains underappreciated: the loss and degradation of forests.
The World Economic Forum estimates that more than half of global GDP depends moderately or highly on nature. Meanwhile, agricultural expansion accounts for nearly 90% of global deforestation, meaning the future of production directly links to the health of the ecosystems that support it. For companies reliant on agricultural commodities such as palm oil, soy, beef and paper-based products, deforestation and conversion is one of the biggest supply chain threats.
The soy sector shows how forest loss can undermine the commodity production it is meant to expand. In Brazil’s Cerrado, nearly half of its native cover is converted for agriculture, mainly for soy. Yet, expanding farmlands do not lead to better productivity. Zero Carbon Analytics’ research on Cerrado found that land clearing reduces yields at a regional scale, with climate spillover effects outweighing the gains from new farmland by 3:1. For every tonne of soy produced on new land, three tonnes were lost from existing fields due to climate spillovers. If no land had been cleared for soy in the Cerrado since 2008, the region would have produced an additional $9.4 billion of soy.
For supply chain leaders, these figures are alarming. Forest loss directly undermines efficiency, and increases sourcing costs. As environmental pressures intensify, businesses may find it increasingly difficult to secure affordable and stable supplies of key commodities if the natural systems that underpin production continue to deteriorate.
Beyond direct supply chain impact, the regulatory landscape is changing as well. The European Union Regulation on Deforestation-free products (EUDR), expected to take effect at the end of 2026, covers cocoa, coffee, cattle, palm oil, soy, rubber and wood, and requires companies to trace products back to their origin, and demonstrate they are not linked to deforestation after December 31, 2020. Non-compliant companies may face fines of up to 4% of annual EU turnover, alongside product confiscation and exclusion from EU markets.
Forest protection is becoming critical for managing costs and operational risk as much as environmental responsibility. Businesses that invest now in traceability, supplier engagement and conversion-free sourcing will be better positioned to navigate regulatory requirements while seeing tangible business benefits.
Encouragingly, solutions already exist. While traceability and supplier engagement remain essential, businesses are increasingly recognizing that supply chains depend on the wider production landscapes they source from. Addressing deforestation therefore requires action beyond individual farms and factories, supported by collaboration across producers, governments, local communities and supply chain partners.
By convening and engaging stakeholders to determine shared social, economic and environmental goals, a landscape approach is vital to addressing the root causes of deforestation, as is involving local stakeholders and communities in solutions.
The Consumer Goods Forum’s Forest Positive Coalition, for example, now supports 30 landscape initiatives and represents 21 manufacturers and retailers with a combined market value of $1.8 trillion, helping to scale action on traceability, supplier engagement and deforestation-free sourcing. In East Kutai, Indonesia, the SUSTAIN KUTIM initiative is working with the government, local communities, smallholders, workers and plantation companies to support sustainable agricultural production, particularly palm oil. The program has identified over 203,000 hectares of potential high conservation value areas for conservation planning, increasing palm oil yields by 20% to 16,119 kilograms per hectare.
For companies reliant on agricultural commodities, it makes clear sense for them to invest in or support landscape projects. The approach takes corporate action from “do no harm” to “doing good,” creating a virtuous circle that also brings business benefits. Together, these partnerships demonstrate that meaningful progress is possible when companies take a holistic approach to work with their stakeholders.
A Business Imperative
As business leaders look to COP31 in November as a major climate milestone, they must seize the opportunities that taking a landscape approach offers to secure the long-term stability and affordability of the commodities they depend on.
Forests are a critical infrastructure of global supply chains and local economies, regulating rainfall, stabilizing local climates, protecting soil health and safeguarding water resources. Healthy ecosystems make farms more productive, resulting in more reliable supply chains that support long-term business growth. Over 1.6 billion people — nearly one-fifth of the global population — depend on forests for jobs, fuel, food and clean water.
A forest-positive future offers a win-win-win for business, suppliers and local communities. The simple fact is that forests are the natural infrastructure companies can’t afford to lose.
Didier Bergeret is director of sustainability at The Consumer Goods Forum.