Alliance of Net-Zero Asset Holders Urges Immediate Steps to Combat Deforestation
The Net-Zero Asset Owner Alliance (NZAOA), a coalition of 86 institutional investors managing a combined US$9.5 trillion, has released its "Guidelines and Recommendations for Halting Deforestation." This comprehensive roadmap aims to tackle the global issue of deforestation by 2030, aligning with net-zero goals and safeguarding financial interests.
The NZAOA, backed by the PRI, WWF, and Global Optimism, proposes a four-step pathway for investors, companies, policymakers, and data providers to follow. These steps, which include Assessment, Commitments, Stewardship, and Transparency, are designed to ensure a comprehensive, multi-stakeholder approach.
**For Investors:**
The NZAOA encourages investors to assess their portfolio exposure to deforestation and linked human rights abuses, phase out deforestation and forest conversion risks by 2030, engage actively with companies, asset managers, and policymakers, and disclose their actions, risks, and progress transparently using measurable data. This approach leverages their longer-term investment horizons to effect systemic change.
**For Companies:**
Companies are recommended to eliminate deforestation from their supply chains entirely, commit publicly to comprehensive policies covering all forest-risk commodities and regions, and improve data collection to monitor progress. Increased transparency is key to reassuring investors and stakeholders about deforestation risk management.
**For Policymakers:**
Policymakers are advised to implement mandatory reporting requirements on deforestation risks and impacts for companies and financial institutions, phase out environmentally harmful subsidies, and strengthen laws and enforcement mechanisms to ensure compliance within supply chains linked to deforestation. They are also encouraged to support initiatives that improve monitoring, surveillance, and law enforcement against illegal deforestation activities.
**For Data Providers:**
Data providers are recommended to enhance data transparency by improving the quality, granularity, and accessibility of deforestation-related data. They are also advised to translate data into metrics aligned with financial and sustainability reporting frameworks to facilitate informed decision-making by investors and companies. Supporting the development and deployment of innovative monitoring technologies and tools is also crucial.
The COP30 presidency has reiterated the COP28 consensus to call for enhanced efforts towards halting and reversing deforestation and forest degradation by 2030. The NZAOA's guidelines align with this commitment and aim to leverage the financial sector's influence to halt deforestation globally.
The European Union's Regulation on Deforestation-free products (EUDR) is a growing regulatory momentum, and companies are recommended to commit and take action to eliminate deforestation from their supply chains, respect human rights, and report transparently. The International Sustainability Standards Board (ISSB) and the Task Force on Climate-related Financial Disclosures (TNFD) have placed greater emphasis on deforestation in their disclosure standards.
In essence, the NZAOA's roadmap reflects a firm commitment to leveraging the financial sector's influence to halt deforestation globally by 2030, protecting ecosystems, and safeguarding financial interests. The integrated approach aims to ensure a comprehensive, multi-stakeholder approach to phase out deforestation and forest conversion risks by 2030 while aligning with net-zero goals.
| Stakeholder | Key Actions | |------------------|------------------------------------------------| | Investors | Assess exposure, phase out risks, engage, disclose | | Companies | Eliminate deforestation in supply chains, commit publicly, improve data collection | | Policymakers | Mandate reporting, phase out harmful subsidies, enforce laws | | Data Providers | Improve transparency, align metrics to frameworks, innovate monitoring |
The Net-Zero Asset Owner Alliance (NZAOA) proposes that data providers improve the quality, granularity, and accessibility of deforestation-related data, aligning it with financial and sustainability reporting frameworks to help investors and companies make informed decisions.
The NZAOA recommends that companies eliminate deforestation from their supply chains, commit publicly to comprehensive policies covering all forest-risk commodities and regions, and improve data collection to monitor progress, ensuring increased transparency.
In addition to these actions, the financial sector, as represented by the NZAOA, aims to leverage its influence to halt climate-change-related deforestation globally, demonstrating a commitment to environmental stewardship and business sustainability.
