Six takeaways from London Climate Action Week

If we are going to tackle the climate and biodiversity crises, 2023 needs to be a decisive year in a decisive decade. Six months into the year at an increasingly important London Climate Action Week, what did we learn about the challenge ahead of us?

1. Deforestation is still central to net-zero ambitions

In 2022 the world lost an area of tropical forest the size of Switzerland. Despite high profile international pledges, WRI’s Global Forest Watch data showed that the trajectory is going in the wrong direction – the tropics lost 10% more primary rainforest in 2022 than in 2021.

The carbon emissions from tropical forest loss in 2022 were higher than India’s total emissions. Achieving net zero is impossible without an end to deforestation.

This year’s London Climate Action Week (LCAW) saw its first ever finance day, highlighting the link between finance and the climate and nature crises. However, our Forest 500 shows that $6.1 trillion of financing is going into the companies that are most at risk of driving deforestation, demonstrating that we have a lot to do to move money away from nature destruction.

2. We won’t succeed without Indigenous leadership

At the start of the year a new government in Brazil generated hope. President Lula made halting deforestation a key part of his legislative agenda. The new figures from WRI show this pledge has never been more urgent, Brazil accounted for almost half of all tropical deforestation in 2022.

The UN has made clear that any action on deforestation that doesn’t include Indigenous peoples and local knowledge will not work. Marcio Astrini, the Executive Secretary of the Climate Change Observatory in Brazil, told our Future of the Amazon event: “Indigenous communities have been protecting the forests for 500 years, we need to protect them.”

“When you protect the rights of Indigenous peoples, deforestation is much lower in those areas”

Octavio Ferraz, Co-director of the Transnational Law Institute King's College

3. Finance sector collaboration is key

The Global Biodiversity Framework demands financial institutions align financial flows with biodiversity values. In September of this year, the Task Force on Nature-related Financial Disclosures (TNFD) will release its final disclosure framework on nature-related risks and impacts. Financial institutions can’t afford to be left behind.

During London Climate Action Week, we saw leading examples of finance sector collaboration, including the Nature Action 100, a global investor engagement initiative focused on driving greater corporate ambition and action to reverse nature and biodiversity loss, and the Finance Sector Deforestation Action (FSDA) initiative which brings together financial institutions to eliminate agricultural commodity-driven deforestation from portfolios by 2025.

José Pugas from JGP Asset Management in Brazil whose firm is part of the FSDA group said: “Who owns the capital in Brazil? A few thousand families and pension funds. Do not alienate us. Do not say the finance sector is evil. We want to be involved. We need to be included to change the market.”

4. International laws matter

We cannot rely solely on the voluntary action of companies and financial institutions to change at the scale we require globally. For change to happen at the speed we need, regulation is essential.

EU due diligence legislation officially came into force on 29 June requiring companies to ensure products derived from key forest-risk commodities – including cattle, cocoa, palm oil, soy and wood – that are sold in the EU market are deforestation-free. Marcio Astrini called it a “very important first step in favour of climate and the forest. International pressure helps to keep the forests in Brazil alive and to reduce deforestation. It was absolutely important over the last four years… to move agri-businesses and the key politicians and decision makers.”

5. The UK must reclaim its environmental leadership

The UK government has come under fire over recent weeks for its climate leadership. First the Climate Change Committee, the government’s own advisors, issued a report saying Britain is likely to miss most of its own targets. Then long-term Environment Minister Lord Goldsmith resigned, accusing the UK Prime Minister of being “simply uninterested” in the issue.

In their analysis, the Climate Change Committee said the UK government was overdue on implementing proposed policy on due diligence of forest-risk commodities. Moving forward with effective secondary legislation of the UK Environment Act would help to demonstrate the UK’s commitment.

6. The data to drive change is available

A lack of data can no longer be used as an excuse for inaction by financial institutions. Deforestation is complex but it has the most advanced, concrete data in the nature space.

At our event on deforestation data, which introduced a new tool, Forest IQ that brings together market-leading deforestation data in one place for financial institutions, Laura Garcia Velez from Lombard Odier Asset Management Ltd said: “So far we use deforestation data mostly through engagement rather than restrictions. As data becomes more and more available with the due diligence in the EU coming into place, we are expecting those conditions to start changing across our investment process.”

At an LCAW event Global Canopy co-hosted with partners including the Climate Champions team, the WWF’s global leader of Climate and Energy, Manuel Pulgar-Vidal issued a challenge to the finance sector: “This has been a call to action to integrate nature into your own activities. Into your own investments. Nature can protect us if we protect nature.”