Cutting to the Chase: Deforestation Risks in Investment Portfolios

Amidst the intense focus that the investor community has placed on climate change, there is growing awareness of biodiversity loss and the resulting climate feedback loops that pose a significant threat to our society and economy. While much attention has been given to recently-announced net-zero emissions targets and climate risk management strategies, tracking the progress of long-standing net-zero deforestation targets and quantifying the financial impacts of biodiversity loss has been less prevalent. How can investors better measure deforestation-related risks in their portfolios?

In this session, senior ESG Research analysts will address the financial impacts of widespread deforestation linked to increased production of palm oil in Southeast Asia and cattle and soy in Brazil, and why traditional “best practices” have failed to effectively curb deforestation. What are the key engagement questions that bondholders and shareholders can pose to better understand corporate and sovereign debt issuers’ management efforts? How do different governance structures pose risks to investors in their ability to effect change and which oversight practices can be implemented to manage deforestation risk?

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