P&G’s Forest Degradation Claim Warrants SEC Scrutiny
When 67% of Procter & Gamble’s voting shareholders resoundingly urged the company two years ago to address its role in driving deforestation and forest degradation, P&G had the opportunity to embrace environmental leadership, divesting itself from the destruction of climate-critical forests. Instead, P&G responded with inaction coated in greenwashing.
When 67% of Procter & Gamble’s voting shareholders resoundingly urged the company two years ago to address its role in driving deforestation and forest degradation, P&G had the opportunity to embrace environmental leadership, divesting itself from the destruction of climate-critical forests. Instead, P&G responded with inaction coated in greenwashing that, as NRDC highlighted in a complaint to the Securities and Exchange Commission (SEC), risks leaving investors unwittingly tethered to the unsustainable practices they called on the company to address.
In the months following the 2020 shareholder vote, P&G issued a flurry of materials for investors on its commitments to sustainable sourcing, including a claim that it “does not permit forest degradation” in its supply chains. On the surface, this statement seemed to get to the heart of a key pillar of the shareholder resolution. Within the same document and in other materials, however, P&G contradicted itself, indicating that, not only does it continue to fuel the degradation of Canada’s boreal forest, but has no immediate plans to stop.
The integrity of P&G’s claim to prohibit forest degradation has significant reputational, marketplace, and regulatory implications for the company—and for its investors, which is why NRDC recommends the SEC examine these claims, require P&G to correct them, and consider potential enforcement action. In a global marketplace where a company’s value increasingly depends on the sustainability of its practices, environmental commitments carry growing capacity to help transform supply chains. But it also means that greenwashing carries a heavy toll, driving down ambition across the marketplace and disadvantaging those that are meaningfully improving.
P&G’s claim that it prohibits forest degradation sets a problematic precedent. Forest degradation refers, generally, to industrial activities that erode a forest’s value, whether for carbon storage, biodiversity, ecosystem services like water filtration, or even future timber supply. As a recent letter from over 100 scientists makes clear, it is incontrovertible that industrial logging in primary forests qualifies as forest degradation. Primary forests, which are those that have never been previously industrially disturbed, have unique value for the climate, species, and communities. Once gone, these forests are irreplaceable on any meaningful human timescale, and as scientists have underscored, must remain standing to avoid climate catastrophe.
P&G’s policy therefore, ought to entail the company eliminating sourcing from primary forests. Yet, as NRDC’s SEC complaint notes, P&G’s own disclosures show that, not only does P&G continue to source from these irreplaceable areas for Charmin and other products, but it doesn’t even have the necessary data or expertise to know the full extent of its primary forest footprint.
Within a July 2022 policy update where it claims to prohibit forest degradation, P&G notes that its wood pulp suppliers’ tenures overlap with intact forest landscapes (IFLs), which are large stretches of primary forests larger than 50,000 hectares, and with boreal caribou habitat, which is a proxy for primary forests.
P&G indicates that it has no intention of ending sourcing from IFLs, much less primary forests more broadly. For the lesser ambition of phasing out sourcing from IFLs, P&G states that “there is uncertainty in our ability to achieve [that goal] given it will require action by parties outside of our control.” Meanwhile, as the company notes, while it has maps for IFLs and boreal caribou habitat, it does not have a comprehensive map of primary forests in Canada. Despite the two years P&G has had to act on the shareholder resolution, it hasn’t cultivated the data needed to know the full extent of its degradation footprint.
In addition, P&G continues to remain overly reliant on third-party certifications that do not, in fact, have standards that would ensure the company is avoiding forest degradation. P&G indicates that all three of its wood pulp certifiers, the Sustainable Forestry Initiative (SFI), PEFC, and the Forest Stewardship Council (FSC), guarantee the elimination of forest degradation. SFI and PEFC, however, are notoriously industry-dominated greenwashing mechanisms that fail to require little more than adherence to existing Canadian laws. Even FSC, the only credible forest certification system in Canada, does not eliminate sourcing from primary forests.
While NRDC has raised these inconsistencies with P&G representatives, the company failed to adjust its materials and, in fact, reiterated its claim that it does not permit forest degradation in its July update for investors.
P&G’s current positioning on forest degradation has far-reaching implications. It obscures the extent to which P&G is out of alignment with a growing global policy push to end forest degradation. The Glasgow Leaders’ Declaration on Forests and Land Use commits its 145 signatories to halting and reversing deforestation and forest degradation by 2030. Proposed legislation like the New York Deforestation-Free Procurement Act would require marketplace actors to ensure their supply chains are not driving forest degradation or violations of Indigenous rights. P&G’s actual sourcing practices fail to meet these standards.
The SEC has an important role to play in preserving the integrity of companies’ sustainability standards. Through addressing any materially misleading statements from P&G on its wood pulp supply chains, the SEC will not only hold P&G accountable and protect its investors, but ensure the marketplace remains aligned with scientific integrity and is a force for promoting, rather than attenuating, practices globally recognized as essential to a safe and sustainable future.