Nature and biodiversity are systemically important to climate stabilization, health, human rights, and thriving economies. An estimated $5 trillion of private financial flows were directly harmful to nature in 2022.1 Companies that mismanage their nature impacts face risks,2 while companies that mitigate harmful nature impacts may capture opportunities.3
Home Depot is exposed to risk from its contributions to nature and biodiversity loss yet its business, including its global sourcing, also depends on nature and healthy ecosystems. Home Depot’s sourcing contributes deforestation and loss of primary forests. Logging leaves forests vulnerable to fires, pests, and climate disruption that threaten its ability to regenerate, in spite of using “sustainable forest management” practices.4 The company has also been linked to illegally logged timber.5 Additional product categories also have a negative impact on nature. For example, the sale of invasive species, pesticides containing glyphosate,6 and paints or other products that may contain PFAS (per- and poly-fluoroalkyl substances) known as “forever chemicals”,7 can harm human health, and contribute to biodiversity loss and legal risk.
The importance of conducting biodiversity assessments is recognized by the Global Biodiversity Framework, regulations, and growing industry tools.8 A recent report from Nature Action 100, a widely supported investor initiative, found Home Depot has not met benchmark expectations in any of the six assessment areas.9 Meanwhile, over 300 companies are using the Taskforce on Nature-related Financial Disclosures (TNFD) framework to assess their nature-related dependencies, impacts, risks, and opportunities, providing the foundation for the development of informed biodiversity strategies.10
Home Depot has incomplete nature-related initiatives and disclosures. Because these efforts are not rooted in a biodiversity assessment of upstream and downstream risks, impacts, dependencies, and opportunities, they do not necessarily address key issues. Investors are therefore unable to evaluate Home Depot’s exposure to systemic biodiversity risk and determine whether its management systems are sufficient. For example, it does not address sourcing from primary forests and its forest report does not adequately consider degradation and the risks of Canadian sourcing. Failure to evaluate and manage the risks associated with cumulative forest degradation threatens the long-term viability of this revenue stream.11 Logging can increase wildfire risk, and proportionally more wildfires occurred in Canada’s managed forests where logging took place in 2023.
Logging and related infrastructure have played a significant role in disturbing wildlife habitats and contribute to the decline of the threatened wood caribou, an indicator species for the health of the boreal ecosystem.13
In addition, a biodiversity assessment of opportunities to improve the nature impacts of products may result in higher sales margins and build consumer trust, while reducing litigation and reputational risk.14