March 11, 2019 / News

Global fund groups issue deforestation warning

By Joe McGrath, ESG Clarity

Investment groups from around the world express their concern at growing deforestation levels from soybean farming

Global fund groups issue deforestation warning

An international group of 57 asset managers, with some US$6.3 trillion of funds under management are calling on companies sourcing soybean products to lay down stricter supply chain controls to guard against deforestation.

A statement published by the Investor Initiative for Sustainable Forests – a joint project between Ceres and the UN-backed Principles for Responsible Investment (PRI) – called on companies operating in the sector to scrutinise their business activities and eliminate deforestation risks.

“As a long-term investor, we consider climate change to be a systemic risk to our global investment portfolio and view the reduction of deforestation as one of many solutions to help manage our exposure to climate change risk,” Beth Richtman, managing investment director of the sustainable investments programme at CalPERS said in a statement.

“Effective management and reduction of deforestation by our investee companies in their agricultural supply chains, such as soybean, is critical to reducing our portfolio exposure to climate change related risks.”

The Investor Initiative for Sustainable Forests explained that soybean production is now the second largest soft commodity driver of deforestation with demand for soybean based products continuing to escalate.

In 2006, a soy moratorium was put in place in Brazil to reduce deforestation across the Amazon region but the group has flagged concerns that a spread in soybean production to other regions may have led to increased deforestation elsewhere.

“Much of the discussion around climate change has been focused on the energy sector,” Danielle Carreira, senior manager for environmental issues at the PRI said.

“However, agriculture, forestry and land use is a very large portion of the problem. Increased deforestation and land conversion in important biomes is putting business and society at risk.

“As the problems associated with climate change and deforestation continue, companies will see more investors looking to engage with them on the issue.”