Andra AP-fonden and Climate & Company join forces to make deforestation due diligence practical & workable

September 28, 2023

Andra AP-fonden (AP2) and the German-based sustainable finance think tank Climate & Company have initiated a collaboration to systematically identify deforestation exposure in global portfolios. Through the collaboration, they will assess and combine existing resources to create a publicly accessible workflow to be tested and applied to AP2’s holdings in listed equities. This endeavour aims to highlight how far practitioners get with existing (data) resources for deforestation due diligence and pinpoint any apparent gaps.

Nature is not just a resource to be exploited. It is essential for human existence and a vast share of economic activity is directly or indirectly dependent upon having healthy ecosystems. Alarmingly, however, biodiversity is declining faster than at any time in human history, with far-reaching and irreversible consequences. Deforestation and land conversion are one of the main drivers of biodiversity loss and climate change. Sustainable land use and forest conservation play a crucial role in protecting biodiversity and limiting global warming.

AP2, as a signatory to the Financial Sector Commitment on Eliminating Agricultural Commodity-Driven Deforestation, aims to have a portfolio that does not contribute to deforestation by 2025, which is also in line with the Fund’s climate commitment to net-zero greenhouse gas emissions by 2045.

“We in the financial sector have a key role to play in accelerating the transition towards a deforestation-free economy through engagement with our portfolio companies and by reallocating capital. Through the collaboration with Climate & Company, AP2 is contributing to the development of practical guidance that becomes public and that the financial sector can use to map and quantify the deforestation risk in their portfolios,”

says Åsa Mossberg, sustainability strategist at AP2.

“Through our collaborative approach, we offer investors clear guidance on systematically identifying potential exposure to deforestation. Our publicly accessible guideline aims to provide the required resources, minimising the time and staff resources needed to fulfil deforestation-free commitments. By doing so, we aim to demonstrate to regulators that existing data and tools are sufficient to get started with deforestation due diligence, while also highlighting crucial gaps that, when addressed, will simplify evaluations in future,”

says Malte Hessenius from Climate & Company.

The collaboration between AP2 and Climate & Company is funded by the Gordon and Betty Moore foundation. You can find more about this project here.