Boreal ecosystems play a key role in stabilizing the climate and conserving biodiversity, holding approximately 44 percent of all terrestrial carbon and sheltering more than 32,000 species. Yet, despite financial markets’ growing recognition of the economic importance of conserving biodiversity, upon which over half of global GDP depends,[1] the damage to critical northern forests continues. Recent analysis indicates that long-term effects of current forestry practices in the Canadian boreal have severe negative impacts on forest biodiversity and important ecosystem services.[2]

P&G is one of the largest paper and pulp purchasers globally, with approximately 30% of its pulp sourced from Canadian boreal forests.[3] P&G discloses that the pulp from its Canadian supply chain is sourced from trees that are, on average, 100 years old.[4] P&G’s dependency on these biodiversity rich, mature forests implies not only a contribution to the accumulated impact on the region but also exposes the company to significant physical and reputational risks, including:

? Physical Risk: Industrial logging in the Canadian boreal has been associated with decreased resilience to natural shocks such as wildfires and pest infestations.[5] In 2023, Canada saw record breaking wildfires with over 45 million acres burned, roughly equal to the totals from 2015 through 2022 combined.[6]

? Reputational Risk: In 2020, 67 percent of voting shareholders supported a resolution asking P&G to assess the feasibility of eliminating deforestation and the degradation of intact forests from its supply chains. While P&G has taken steps to eliminate deforestation, in 2023 it removed all references to degradation from its forest policies [7] and has faced related pressure from NGOs and descendants of Company founders including a director

“vote no” campaign.[8]

While P&G has made efforts to adopt certification standards, credible scientific analysis raises serious concerns about the sufficiency of this approach. Competitor Kimberly-Clark has published a clear roadmap to reduce its overall natural fiber footprint.[9] By contrast, P&G has not established a goal of minimizing its use of natural forest fiber. P&G’s recent removal of forest degradation from its policy and stagnant disclosures on progress assessing and addressing biodiversity impacts in the region leave shareholders with no means to evaluate the efficacy of the Company’s work to secure a long-term supply of fiber without exacerbating systemic biodiversity risks.