Catalysing Action by Corporates and Financial Institutions on Deforestation Risk

Why: Demand for forest risk commodities is driving two thirds of deforestation in Latin America with impacts on people & biodiversity.

Cattle ranching and soy grown for animal feed are major commodities produced in the region. Production is growing as the world’s population and economic development means that more meat and hence more animal feed is being produced to meet this increased demand. Companies at every stage in the value chain of these commodities are responsible for ensuring that they are committed to addressing deforestation.

However, data shows that few companies are making strides in implementing such commitments particularly for cattle and soy and that supply chains are currently inadequately addressed or monitored. This exposes purchasing companies to a range of operational and reputational risks and prevents them from acting on their commitments to reduce and eliminate deforestation caused by their activities.

CDP Worldwide will establish a forest risk commodities supply chain platform that brings together high impact purchasing companies of commodities produced in Latin America with the suppliers of these commodities. Together with their project partners, they will establish a program of collaboration in Latin America and advocacy in China which will bridge private sector action and public sector policy goals and provide evidence and data to inform investment decisions that favour deforestation free companies.

Expected results: Private sector behaviour change towards deforestation free supply chains

• High impact purchasing organisations have adopted and are implementing policies (including engaging their suppliers) that reduce the pressure on forests in Latin America. 
• Suppliers of the high impact purchasing companies are actively measuring, monitoring and managing deforestation risk and reporting progress to their customers annually.
• Small and medium enterprises in the supply chains of high impact purchasing companies have the capacity to be able to meet their customers’ requirements.

In 2018, Norad was tasked to assess an additional application from CDP.

An addendum for an additional funding of NOK 21 200 000 was signed on February 20^th 2019 to support two additional project components:

• “Linking Forest-Related Metrics to Earnings for Critical Forest-Risk Commodity Sectors”
• “Increasing Transparency with Southeast Asian Banks to Stop Financing Deforestation”

The project’s outcomes are:

• Increased awareness among mainstream investors leads to greater engagement with companies on forest-risk commodities
• Benchmarks for corporate accountability in two key sectors (agribusiness and consumer goods) developed
• Improved adoption of forests safeguard policies among banks within the Southeast Asian finance sector
• Increased transparency among the banks financing agricultural commodities
• Financial regulators in Southeast Asia and Nordic and European financial institutions hold Southeast Asian financial institutions to account on financing of forests related risk

Partners

Global Canopy Programme, Fundación Natura Colombia, Sociedad Peruana de Ecodesarollo

Geography

Brazil, Colombia, Peru, Latin America regional, Indonesia, Southeast Asia regional