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New lending and investment tool to set agricultural supply chain on a sustainable path
A newly unveiled lending and investment policy tool for financial institutions will help countries to reduce deforestation caused by the unsustainable production, trade, processing and retail of soft commodities, especially soy, palm oil and beef
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newly unveiled lending and investment policy tool for financial institutions will help countries to reduce deforestation caused by the unsustainable production, trade, processing and retail of soft commodities, especially soy, palm oil and beef.
The UN Environment Programme (UNEP) and the Natural Capital Declaration explain in new research that there is a critical need to fundamentally strengthen how financial institutions view, address and manage deforestation and degradation.
The research assessed 30 financial institutions and found the majority of them did not have policies that explicitly require clients to comply with local, national and ratified international laws and regulations related to forest conservation.
The study, entitled 'Bank and Investor Risk Policies for Soft Commodities', highlights policies that banks and investors can adopt to help reduce deforestation and forest degradation resulting from unsustainable practices across agricultural supply chains that are major drivers of tropical deforestation.
Accompanying the study, the Soft Commodities Forest-risk Assessment Tool provides a framework to evaluate policies adopted by banks and investors to address deforestation and forest degradation in the agricultural value chain.
UN Under-Secretary-General and UNEP executive director Achim Steiner said addressing deforestation was high on the twenty-first century policy agenda.
The continuing loss of the world's tropical rainforests represented a significant threat to the security of water, food, energy, health and climate for millions worldwide, he added.
'Banks and investors who engage in the destruction of forests through their lending and investment practices expose themselves to potentially significant regulatory, reputational, legal, operational and market risks, which could affect the credit risks and market value of underlying assets,' Steiner said on Wednesday.
'Financial institutions can and should be part of the solution should they decide to adopt the tools and mechanisms designed to curb deforestation and produce sustainable value chains for commodities,' he concluded.
Andrew Mitchell, Co-Director, Natural Capital Declaration and CEO, Global Canopy Programme says: 'Financial institutions have a major role to play in curbing deforestation and in helping to accelerate the transition to new more sustainable practices.'
'The NCD's new Soft Commodity Forest Risk Assessment Tool now gives them the means to update or develop soft commodity policies using the minimum and best-practice suggestions provided in the report.' (ebf)
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