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We all know climate change is happening. But do investors understand the role that deforestation plays, and the impact on their portfolios?
Biodiversity loss and climate change are two of the most pressing sustainability challenges for investors, with deforestation being the most tangible and critical element of these twin threats. Agriculture is responsible for 23% of greenhouse gas emissions globally and its expansion accounts for 73% of deforestation worldwide. Forests are not only the source of livelihoods for 22% of humanity, but they also absorb 40% of greenhouse emissions.
Deforestation is a very material risk for investors. It drives reputational risks related to consumers and environmental organisations as well as legal risks as new legislation for climate-related financial disclosure is expected. Traceability technology can identify investors and companies along the supply chain connected to deforestation and expose them to liability and rapid loss of market share.
The PRI has coordinated collaborative investor engagement on sustainable commodities since 2011 on palm oil, and more recently on soy and cattle supply chains. Later this year, the PRI plans to relaunch these engagements in a centralised stewardship initiative.
Investors have set out their expectations of companies operating within these supply chains in public expectations statements. These documents highlight investor expectations of disclosure and practice, and have each been signed by more than 50 investors representing more than US $6 trillion in assets under management.
The PRI-Ceres partnership aimed to tackle commodity-driven deforestation within cattle and soybean supply chains at investee companies
To find out more about our initiatives and how your organisation could be involved, please contact us.
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