August 16, 2016

Dear colleagues,

Now that hundreds of companies have made deforestation commitments, pressure from campaign organizations has been moving to the financial institutions that lend to companies with agricultural assets linked to deforestation and land grabs. A recent report on palm oil by the environmental watchdog Friends of the Earth (FOE), finds that the top ten U.S. financers of palm oil have invested $14 billion in palm oil companies through 2015. According to FOE, these firms have no policies to address documented risks of deforestation and land grabs associated with these assets. In response, FOE has recommended a four step solution for financial institutions: 1) disclose all investments in palm oil, 2) commit to deforestation and exploitation-free investment policies, 3) exclude investments in bad actors and advocate for palm oil company reforms, and 4) repair the environmental and social damage caused by investments through support for restoration and justice for communities.

"Investments in palm oil are embedded in our pension funds, IRAs and 401(k)s but most of us are not even aware of it," says Andrew Behar, the CEO of the environmental group As You Sow (AYS) in an FOE press release. This lack of transparency about exposure to palm oil compelled AYS and FOE to create a free Deforestation Free Funds database including 6,500 global mutual funds "to empower investors to check their financial exposure to deforestation and land grabs" says Behar.

Grappling with similar issues, the green group, Fern, recently assessed the sources of credit and how capital was raised by 23 agribusinesses between 2010 and 2015. All of these companies had documented incidents of deforestation and land grabbing around the world. European investment firms played a surprisingly large role globally in lending to and investing in companies reviewed by the report. For example, European banks loaned $18.4 billion to these companies, over five times as much as did their American counterparts who lent $3.6 billion. However, not surprisingly, because most of the agribusiness assets were located in Asia, the largest lenders, investors and underwriters for these risky assets were from Asia. The authors similarly concluded a need for greater transparency in financial exposure to these risks.

With most of the financial sector apparently unaware of the financial risks posed by deforestation, Green Century Capital Management, an environmentally focused investment advisor to the Green Century Funds announced plans to lead a five year worldwide campaign to inform investors of these risks. Two European environmental non-profits, Aidenvironment and Profundo, along with the US-based policy group Climate Advisers will help lead this work as part of the new RISC (Risk In Supply Chains) project funded under Norway's International Climate and Forest Initiative. "When the finance and investment community has been informed of these risks through credible analysis, they have acted as a powerful force for ending deforestation—and we hope that this continues," explained Lesli Samuelrich, the Green Century's president.

A number of financial institutions have already taken the lead addressing deforestation among their lending practices. In 2015, BNP Paribas became the first financial institution committed to removing deforestation from its investments. Dozens of other financial institutions are working toward similar goals through initiatives such as the Banking Environment Initiative and the Natural Capital Declaration. One of the most active financial institutions removing deforestation from its investments is also the largest fund in the world. The Norwegian Sovereign Wealth Fund has divested from 50 companies since 2012 because of their deforestation practices, around half being palm oil companies that did not meet its zero tolerance policy on deforestation and social conflict.

More stories about changing supply chains are summarized below, so keep reading!

-The Supply Change team



Your questions answered

In case you weren't able to participate in last month's webinar on corporate deforestation commodity commitments, the Supply Change team recorded the session and put together a comprehensive Q&A to answer over 30 questions that we didn't have time to answer.

You can access the recording, view the presentation slide deck, read our blog with some highlights from the Supply Change team, and download the full Q&A document.



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Read more at the Guardian

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Case Closed

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Read more from Mongabay

Superteam, Assemble!

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Read the press release

Stocking up

Brazil only has 16 years' worth of timber stocks from primary forest left and many other large timber exporters to the United Kingdom (UK) are not far behind, warns the World Wildlife Fund in their recent report. The environmental group makes the business case for "UK businesses to shift 100% of their trade in timber and timber products to legal, sustainable sources by 2020" by forecasting the number of years remaining for different types of timber stocks among major timber exporters to the UK. Becky Coffin, sustainability lead at the retailer Kingfisher expressed support for the call to action and acknowledged the challenges, saying that "timber is an essential element in around a third of our products, so security of supply is hugely important for us."


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