Companies linked to deforestation pose potentially significant risks for financial institutions
New platform launched to help financial institutions assess these risks
London 1 March 2018: The Soft Commodity Risk Platform (SCRIPT), a new system to help banks and investors analyse their exposure to risk in soft commodity supply chains is launched today.
Every year over nine million hectares of tropical forests are cleared to make way, principally for the production of soft commodities such as palm oil, soy, cattle and timber. Over half of the world’s tropical forests have been lost to date and new deforestation frontiers are opening up as demand for these products increases.
SCRIPT is a freely-available system to help financial institutions which fund companies in these soft commodity supply chains understand the risks associated with deforestation. With more than US$1.4 trillion in investments, credit and underwritings in companies involved in the production and procurement of these soft commodities, financial institutions can play a crucial role in reducing deforestation and forest degradation.
While these risks are increasingly recognised, it can be difficult to identify which companies are most exposed. SCRIPT has been developed to support financial institutions in assessing these growing risks. The platform supports these institutions in identifying the business risks associated with ﬁnancing unsustainable companies and, understanding and adopting corporate best practices for reducing deforestation associated with soft commodities. It encourages effective engagement with companies operating in soft commodity supply chains with step-by-step engagement guidance.
SCRIPT hosts two tools:
- The Policy Benchmarking Tool allows financial institutions to assess the strength of policies against 150 peers and develop new or stronger deforestation policies based on customised analysis;
- The Portfolio Risk Tool screens for highest risk companies across a portfolio. It covers up to 1000 companies and provides the data and information needed to build capacity for effective engagement with companies on deforestation;
- Users are able to adjust the tool methodologies to ensure that analysis aligns with their institution’s priorities;
- The platform has been developed by Global Canopy in partnership with WWF (Policy Benchmarking Tool) and Ceres (Portfolio Risk Tool) and ZSL SPOTT and CDP as data partners;
- The project is funded by the Moore Foundation.
“The purpose of SCRIPT is to facilitate more productive engagement between financial institutions and companies on deforestation. By encouraging users to monitor the progress of portfolio companies and engage those not doing enough to minimise their business’ impact we hope to shift the needle on improving practices of companies in soft commodity supply chains,” states Tom Bregman, Senior Sustainable Finance Associate, Global Canopy.
Addressing deforestation driven by soft commodities is critical to achieving the transition to a low-carbon economy and meeting international ambition to prevent warming beyond 1.5/2°C. Deforestation and forest degradation account for approximately 10-15% of the world’s greenhouse gas emissions according to CDP’s Global Forests Report 2017.
For more information please contact:
Ashleigh Lezard: firstname.lastname@example.org; + 44 7920 510065
The platform currently holds two tools. The Policy Benchmarking Tool developed in partnership with WWF; this interactive tool assesses the strength and quality of a financial institution’s policy against those of peers in order to identify areas of excellence and opportunities for improvement. The Portfolio Risk Tool developed in partnership with Ceres offers a comprehensive company information system to identify, and effectively engage, clients that are failing to mitigate their exposure to the risks associated with deforestation.
About Global Canopy
Global Canopy is an innovative environmental organisation that targets the market forces
destroying tropical forests. Our mission is to accelerate progress towards a deforestation-free global economy - through improved transparency, innovative finance and strategic communications. Since 2001, we have catalysed new thinking and action by leading governments, companies and investors
CDP is a global environmental impact non-profit that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. Voted number one climate research provider by investors and working with institutional investors with assets of US$87 trillion, we leverage investor and buyer power to motivate companies to disclose and manage their environmental impacts. Over 6,300 companies with some 55% of global market capitalization disclosed environmental data through CDP in 2017. This is in addition to the over 500 cities and 100 states and regions who disclosed, making CDP’s platform one of the richest sources of information globally on how companies and governments are driving environmental change. CDP, formerly Carbon Disclosure Project, is a founding member of the We Mean Business Coalition. Please visit www.cdp.net or follow us @CDP to find out more.
About ZSL SPOTT
Founded in 1826, ZSL (Zoological Society of London) is an international scientific, conservation and educational charity whose mission is to promote and achieve the worldwide conservation of animals and their habitats. Developed by ZSL, SPOTT is an online platform featuring transparency assessments of commodity producing and trading companies, scored on the public availability of corporate information relating to environmental, social and governance (ESG) issues. For more information visit www.spott.org
Ceres is a sustainability nonprofit organization leading the most influential investors and companies to build leadership and drive solutions throughout the economy. For more information, visit www.ceres.org or follow on Twitter @CeresNews.