Overview
The financial materiality of deforestation continues to evolve as new regulations are implemented and as the risks associated with deforestation become increasingly well understood across the economy.
This briefing aims to provide investors that are interested in assessing their deforestation risk exposure with:
an accessible overview of what deforestation is and the activities that drive it;
the policies and regulations trying to address deforestation; and
the best practices that investors, and their portfolio companies, can adopt to mitigate these risks in their supply chains.
It highlights the links between agriculture, economic trade, and protein supply chains in relation to deforestation, with a focus on beef and shrimp, as well as soy and palm oil used in animal feed.
It also includes focused spotlights outlining what investors need to know about the upcoming EU Deforestation Regulation and how they can engage companies on best practices to improve traceability when sourcing these commodities.
Investors can either read the briefing in full, or focus on the EUDR and commodity spotlight section.
Research briefing highlights
Key findings from this briefing:
Significantly reducing the deforestation exposure of global agricultural supply chains, and eliminating the risks to companies and investors, will require an enabling environment.
Policymakers are key to this, as are the nascent efforts of international financial markets to recognise the value of natural capital contained within forests.
Investors can use available tools and datasets to consider their exposure to deforestation across the entire value chain for sectors that depend on high-risk agricultural inputs.
They can work with portfolio companies or borrowers to identify the strategies and systems that best mitigate the physical and regulatory risks of deforestation.