A joint statement issued on 18 September urges companies sourcing products from the Amazon to make sure their supply chains are not involved in rainforest clearance. Much of the beef or soy produced on deforested land is used in western food production or ends up in restaurants and supermarkets.
The Brazilian rainforest has been hit by record numbers of fires, many of which were started deliberately to clear land for livestock or farming. The Amazon is seen as acting as the world’s lungs, taking billions of tons of CO2 out of the atmosphere and producing 20% of the planets oxygen.
Robeco sits on the advisory committee of the UN’s Principles for Responsible Investment (PRI) working group on deforestation. In response to the fires, more than 200 investors have signed an investor statement that will be shared with the companies involved in soy and cattle production in Brazil and other South American countries.
Mitigating climate change
“Preventing deforestation is the cheapest way to mitigate climate change and is a crucial element of the policy scenario’s developed by the PRI to meet the 1.5 degree global warming target set by the Paris Accord,” says Robeco Engagement Specialist Peter van der Werf.
“The next steps will be to turn the investor collaboration into concrete discussions with companies about how they should change their business conduct to prevent deforestation.”
The investor statement calls on companies to demonstrate a clear commitment to eliminating deforestation within their operations and supply chains, with four main calls-to-arms. It says companies should:
Publicly disclose and implement a commodity-specific, no deforestation policy, with quantifiable, time-bound commitments covering the entire supply chain and sourcing geographies
Assess operations and supply chains for deforestation risk and reduce this risk to the lowest possible level, publicly disclosing this information
Establishing a transparent monitoring and verification system for supplier compliance with the company’s no deforestation policy.
Report annually on deforestation risk exposure and management, including progress towards the company’s no deforestation policy.
“Increasing deforestation and fires in the Amazon are an environmental catastrophe with an immense impact on society, biodiversity, water and the climate,” the statement says. “The Amazon, as the world’s largest rainforest, is a global repository of biological diversity, and provides invaluable ecosystem services which underpin economic activities across the globe.”
“Deforestation and its associated impacts could pose systemic risks to investors’ portfolios. Several hundred companies have committed to end commodity-driven deforestation by 2020. However, evidence of progress against commitments has been limited.”
Reputational and regulatory risks
“Companies exposed to deforestation in their operations and supply chains may find it increasingly difficult to access international markets and will face increased reputational, operational and regulatory risks.”
The PRI says global institutional investors, along with members of the Investor Initiative for Sustainable Forests (which includes Robeco), have been engaging with a number of companies across the cattle and soy supply chains to improve their disclosure and management of deforestation-related risks.