Robeco amongst investors representing over €1.8 trillion in assets urge companies to advance no-deforestation efforts
5 November 2020 – Today, a coalition of nine financial institutions representing €1.8 trillion in assets under management is asking companies to take action to end deforestation in their supply chains, as well as to enhance supply chain traceability. The initiative will provide investors with more transparency in the supply chains of companies they invest in and reduce deforestation risks in their portfolios.
The call to action is part of an engagement program initiated and coordinated by ACTIAM, a sustainable investment specialist. Together, the investors aim to reduce deforestation across their investments, in light of climate change and biodiversity loss, as well as financial risks connected to deforestation. With this initiative, the investors reach out to companies that provide insufficient information about their supplier lists as well as companies linked to deforestation cases in the palm oil sector in Malaysia. These cases have been unveiled through satellite imagery and artificial intelligence provided by Satelligence.
The investors, including ACTIAM, Achmea Investment Management, Aegon Nederland N.V., a.s.r. Asset Management, Aviva Investors, Fidelity International, Nomura Asset Management, Robeco and Zwitserleven, are asking these companies to publicly disclose supplier lists for soft commodities, as these products present high risks for deforestation. Companies linked to cases of deforestation are being asked to mitigate the effects of such deforestation and to prevent it from happening in the future.
Financial and material risks
The loss of biodiversity due to deforestation is one of the greatest risks to society and the economy. Scrutiny of the financial and material risks, as well as recent governmental and regulatory discussions, has brought analysis and risk management of deforestation to the forefront of investors’ minds. Thus, traceability and transparency of companies’ supply chains are crucial to investors in order to identify and reduce deforestation risks in their portfolios.
Dennis van der Putten, Director of Sustainability at ACTIAM, states: “As investors, we have a fiduciary duty to lead the transition to a more sustainable society, where financial, environmental and social returns go hand in hand. This engagement initiative is part of our growing commitment to biodiversity allowing investors to positively influence a much-needed change of behavior by companies, in line with the Finance for Biodiversity Pledge.”
Companies are expected to meet the investors’ requests in two to three years. The use of innovative tools such as satellite imagery and data analysis will allow investors to assess the progress made by the engaged companies, and whether their efforts are indeed leading to a reduction of deforestation in the monitored regions and suppliers.
Several soft commodities are huge contributors to driving deforestation worldwide. Therefore, the group of investors is currently looking into extending this initiative, in collaboration with Satelligence, towards other regions and soft commodities such as palm oil in Indonesia, soy in Latin-America, and cocoa in Africa.