The Home Depot is the world's largest home improvement retailer and a major purchaser of wood products. Wood products are among the leading drivers of deforestation and forest degradation, which are responsible for approximately 12.5 percent of global greenhouse gas emissions and contribute to biodiversity loss. Companies that do not adequately mitigate deforestation and forest degradation in their supply chains are vulnerable to material climate and reputational risks.
Approximately 86 percent of Home Depot’s wood comes from North America, including from Canada’s boreal forest. Boreal forests stabilize the climate and harbor biodiversity, holding approximately 44 percent of all terrestrial carbon. Canada’s boreal, which constitutes 25 percent of the world’s remaining intact forest and stores twice as much carbon per hectare as tropical forests, experiences the third highest rate of intact forest loss globally, releasing tens of millions of metric tons of carbon annually. Demand for wood products is a primary driver of Canadian forest clearance.
Home Depot’s forest policies do not meaningfully address impacts on primary forests. Home Depot does not report to CDP Forests or comprehensively disclose the sourcing geographies and certifications of its wood products. Further, Home Depot has not committed to ensuring that its purchased wood is free of deforestation and forest degradation. The company also lacks comprehensive commitments to achieving third-party certification for purchased wood products, requiring certification only for wood products from a small subset of the regions at highest risk for deforestation.
These policies position Home Depot behind peers like Lowe’s, which has reported to CDP Forests since 2017. Lowe’s has committed to achieving 100 percent certification or controlled sourcing of wood products by 2025, and committed to achieving Forest Stewardship Council certification for wood products sourced from a more extensive list of regions at risk. Further, Lowe’s has committed to sourcing wood that “does not come from deforestation or other ecosystem conversion.”
In its 2020 10-K, Home Depot acknowledges reputational damage could materially impact company finances, and notes that the company’s position on environmental issues “could harm our reputation.” Failure to adopt and implement policies that mitigate these exposures may subject the company to significant systemic and company-specific risks.