Political momentum and ambition to tackle the loss of tropical forests is stronger than ever. Tropical forests are now widely recognised by governments for their important role in climate, food, water, energy, and livelihood security. Yet forest loss shows little sign of slowing down; deforestation rates are rising rapidly in parts of South-East Asia and Africa, and remain high across parts of South America.
Over the last few years, increasing attention has been focused on companies across supply chain segments and sectors, and their links to deforestation. Now, increasing attention is being focused on investors, in recognition of the critical role that green investment and lending can play in the transition to a deforestation-free global economy. Specifically, by making commitments that ensure they only invest in or lend to companies that are making progress towards removing deforestation from their supply chains, investors could minimise their own reputational and portfolio risks, and leverage their unique position to have positive impact at scale.
Forest 500 is the world’s first rainforest ratings agency. Among the 500 powerbrokers it identifies and ranks are 150 investors from around the world. Among the selection criteria is the size of their holdings in publicly listed Forest 500 companies, amounting to around US$1.7 trillion worth in 2015. The world’s largest banks, sovereign wealth funds, and pension funds are also included since their large portfolios create a high risk of exposure to forest risk commodities (i.e. palm oil, soy, beef, leather, timber, paper).
This report tracks the progress of investors in terms of their policies and gives examples of how they are engaging with companies, and the next steps required for the sector to transition towards deforestation-free investment and lending.