Sustainable Finance Instruments for Sustainable Land Use
Preventing supply-chain driven deforestation - Phase 2
May 23, 2023
Currently, the level of deforestation around the world is dangerously high despite international pledges aimed at halting ecosystem loss. This poses a real threat to the environment and humanity by severely impacting biodiversity, the carbon capture capacity of forests, the spread of diseases and pandemics, and more. Furthermore, the fact that most/countless economic activities are dependent on a healthy ecosystem leads to significant risks to the global economy, which financial and non-financial corporates should be aware of and mitigate. EU legislation plays an important role in preventing deforestation.
What?
We support a coherent set of EU due diligence and disclosure requirements for the financial sector to enable deforestation-free supply chains.
This project is a follow-up to our first project funded by the Gordon E. and Betty I. Moore Foundation on bridging the regulatory & financial sectors to enable deforestation-free supply chains (see here). We continue working on preventing deforestation during key years for the development and adoption of important European legislations under the Green Deal – 2023 and 2024.
We focus on enabling access to information to support the favourable inclusion of deforestation in a coherent set of EU due diligence and disclosure requirements. Our aim is to incentivise financial institutions and companies to transition to and report on conversion-free commodity production in their portfolios and supply chains. We provide analytical work, engagement activities and empowerment actions for decision-makers, financial institutions and corporates “upstream” and “downstream” of the deforestation-related supply chains to achieve data and regulatory compliance.
We work on: (1) Market Access and Due Diligence (2) Disclosure and Transparency and (3) Access to Data and Tools.
Why?
To ensure a framework within the EU that enables financial institutions and companies to take action to halt supply-chain driven deforestation in the land-use sector, efforts are needed to increase:
(1) the coherency and ambition of the EU Regulatory Framework,
(2) access to reliable data and tools to make informed investment decisions
and to improve:
(3) partnerships and cooperation between producer countries and the EU with the aim of boosting inclusivity for smallholders and SMEs that facilitate compliance with EU Regulatory measures.
How?
1. Market Access and Due Diligence
1.1 Financial institutions play an important role in preventing financial flows contributing directly or indirectly to deforestation and land-use change. Our goal is to explain how the EU due diligence and disclosure regulatory framework can be shaped to create incentives for financial institutions to address deforestation in their portfolio.
Contact: Louise Simon | [email protected]
1.2. It is key that producer countries’ stakeholders get improved access to information on the upcoming EU Regulatory Framework and that their perspectives and needs are taken into consideration within it. Brazil is one of the most important partner countries the EU imports agricultural commodities from. Our goal is to enhance cooperation between the EU and Brazil for effectively reducing (supply-chain driven) deforestation.
Contact: Paula Pinto Zambrano | [email protected]
2. Disclosure and Transparency
Ambitious and effective disclosure requirements provide transparency on deforestation and land-use change, crucial for financial market participants to get the necessary data on deforestation impacts and risks throughout (their clients’) supply chains and make informed investment decisions. Our goal is to engage in the development of the European Sustainability Reporting Standards (ESRS) at various stages and support the development and inclusion of verifiable KPIs that safeguard against land-use change throughout entire supply chains.
Contact: Max Tetteroo | [email protected]
3. Access to Data and Tools
Demonstrate the feasibility of mapping deforestation-related risks by partnering with a financial institution and conducting a comprehensive pilot study for a broad market portfolio. This will highlight remaining gaps and inform relevant regulatory discourses, in particular the review of the EU Deforestation Regulation and its impact assessment on financial institutions.
Contact: Malte Hessenius | [email protected]
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