P&G Dropped Its Pledge Against Forest Degradation. That Could Hurt Its Brands in the Long Run

Procter & Gamble dropped a reference to forest degradation from its anti-deforestation policy in May this year, a move that green investors and environmental groups have denounced, but that the brand claims is due to streamlining terminology. The change comes after the Natural Resources Defense Council (NRDC) filed a complaint late last year with the Securities and Exchange Commission (SEC). It claimed that P&G—parent company to Charmin, Bounty and Puffs—wasn't complying with its own no-degradation policy, potentially misleading investors. It's the latest in a series of efforts from NGOs, investors and descendants of P&G's founders to eliminate climate-harming practices from the company's paper product supply chain. The SEC hasn't announced whether it plans to take any action against P&G as a result of the NRDC complaint. The broader campaign to prevent P&G from sourcing wood pulp from virgin forests hasn't yet made much of a splash among the average person. But experts warned that as the impacts of climate change continue to ramp up, and as younger, environmentally conscious shoppers begin stocking their own household paper products, more people are likely to take notice. The SEC didn't respond to Adweek's request for an update on the NRDC's complaint. Finding the forest in the trees P&G has had a no-deforestation policy related to wood pulp on the books since 1994, according to the new forest commodities policy. Causing consternation among activists is that it still uses virgin forest fiber to make the majority of its paper products and is one of the largest purchasers of Canadian wood pulp, according to the NRDC. Now, the issue for environmental groups is in how the term deforestation is defined—and whether that includes forest degradation. Deforestation is when a forest is cut down and "turned into a parking lot or into a plantation," explained Shelley Vinyard, boreal corporate campaign manager at the NRDC. Forest degradation, on the other hand, happens when an area of intact forest is clear-cut for logging, and the land is left to regrow. New trees might even be planted. But it still degrades the forest, interrupts ecosystems and destroys wildlife habitats like that of the threatened boreal caribou. A 2020 shareholder resolution prompted P&G to implement a no-degradation commitment on top of its no-deforestation policy. With the new streamlined policy, updated this May, the reference to forest degradation was removed. Americans Love Paper Towels. Critics Warn the Relationship Isn’t Sustainable In a July 18 ESG-focused investor call, P&G global vp of sustainability Jack Mcenany described the change as an effort to streamline the language of the policy. This is in light of a divergence among agreed-upon definitions of forest degradation, citing a report from the U.N.'s Food and Agriculture Organization which states that "a widely applied definition of forest degradation is unavailable." Environmental groups have pushed back on the idea that there's a lack of consensus around the meaning of forest degradation as it applies to P&G's operations within Canada's boreal forest. "Our commitment to keep forests as forests for generations to come is unchanged," a P&G spokesperson told Adweek via email. "We only source wood pulp from responsibly managed forests. Additionally, in the sourcing of our paper products, for every tree used, at least two are regrown." "If a company essentially levels a forest and eliminates habitats and then just replants small homogeneous rows of trees in its place, is it really addressing its impact on climate change and biodiversity loss?" asked Leslie Samuelrich, president of P&G investor Green Century Funds. Transparency amid evolution Companies should expect to adapt their environmental policies over time as laws, regulations and available science evolve, noted Laura Donnelly, director of the nature practice at sustainability-focused consulting group BSR. But rather than dropping the forest degradation policy altogether, Donnelly said she would have advised a company like P&G to align with a third-party definition from the beginning to avoid confusion. "When you are using this terminology that has either legal implications, or perception may differ, not only [must] you define it clearly, but you're also citing a very credible, third-party source that's science-driven," she said. That way, as changes arise, a pivot can be easily and transparently explained to stakeholders. In its July 18 presentation, P&G cited research that found a majority of people are willing to pay more for sustainable products, and that the share of households looking for sustainable options is growing. As consumer literacy around climate change grows and younger generations gain more spending power, it's becoming less likely that issues like deforestation and forest degradation will continue to occupy the environmental niche that they're currently relegated to, Donnelly predicted. And in the meantime, "There's a lot that [brands] can do to get ahead of that." While the difference between forest degradation and deforestation might be "over the consumer's head for now," she continued, "That window is closing. They're going to be more and more discerning and see through false claims, over claims or lack of transparency."