Deforestation leaving $941bn of turnover at risk

21st November 2017

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Publicly listed companies are dependent on $941bn (£711bn) worth of commodities linked to deforestation globally, despite the risk of a fall in supply or reputational damage.

That is according to a report released today by CDP, which reveals nearly a third of firms are already experiencing the negative impacts of these risks.

However, just 13% have made a time-bound comprehensive net zero deforestation commitment, while over a third do not take responsibility for the issue in the boardroom.

In addition, 77% are failing to disclose how they are affected to investors, despite the unsustainable production of commodities like timber, palm oil and soy potentially leaving investments as ‘stranded assets’.

“We call on investors to ramp up their engagement and demand greater levels of disclosure from companies,” CDP director, Morgan Gillespy, said.

“With deforestation accounting for around 15% of global emissions and putting almost a trillion dollars of listed equity turnover at risk, protecting forests has become a pre-requisite for both a stable climate and a stable economy.”

The research involved analysing data provided by 201 companies, however, this is less than a quarter of the 838 firms that were approached on behalf of investors by CDP.

Of those that provided data, 73% have taken some action to limit forest loss, suggesting there is a large and growing market for deforestation-free commodities.

This was reflected in a study earlier in the year that revealed there could be a $200bn annual investment opportunity for deforestation-free investment and financing by 2020.

The CDP report argues that investors are uniquely positioned to influence corporate action by engaging with companies, and shifting capital away from high-risk, unsustainable firms.

“Deforestation poses a number of material concerns to investors, including restricted market access, competitive disadvantage and reputational damage,” Green Century Capital president, Leslie Samuelrich, said.

“To counter this risk, investors must demand rigorous disclosure from companies.”


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