Aviva, Axa and Scor are among more than 30 major financial institutions that have promised to end investment in agricultural commodity-driven activities linked to deforestation by 2025.  

Deforestation

In one of several initiatives unveiled at COP26 to tackle deforestation, financial institutions representing $8.7trn in assets have committed to assess their investment exposure to deforestation risk by the end of next year. 

This will focus on agricultural commodities - palm oil, soy, beef and leather, pulp and paper - that are thought to be tied to the most significant deforestation impacts.  

By the end of 2023, the financial institutions have agreed to disclose the deforestation risk and mitigation activities in their portfolios including due diligence and engagement. 

By 2025 they will publicly report credible progress on milestones to eliminate forest-risk agricultural commodity-driven deforestation in underlying holdings in investment/lending portfolios, and only provide finance to clients that have met risk-reduction criteria.  

The companies have also said they will Increase investment in nature based solutions. 

“In striving to eliminate commodity-driven deforestation from our investment and lending portfolios by 2025, we intend to reduce deforestation-related risks while supporting the transition to a sustainable agricultural sector,” the signatory companies said in a letter.  

“We see this as an important part of enabling progress towards limiting temperature rise to 1.5°C and reducing the overall systemic financial markets risks associated with climate change, biodiversity loss and food security concerns.” 

Amanda Blanc, group CEO at Aviva said protecting forests and their biodiversity was “fundamental to the fight against climate change”.  

“Financial institutions have a pivotal role, using our influence on the companies we invest in to encourage and ensure best practice.  

“Aviva is proud to sign the commitment to end deforestation, helping build a critical mass for change. Together we can reduce risk to the planet and the financial markets, and capitalise on the opportunities that come from more sustainable investment.” 

Fiona Reynolds, CEO at the Principles for Responsible Investment, said the new joined-up approach “builds on a considerable foundation of investor engagement with companies, regulators and policy-makers to address deforestation impacts”.  

“Taken together with other announcements at COP26 regarding efforts to mobilise new private capital flows for forest protection, restoration, and sustainable land management, and to reverse nature loss, this marks a step-change in financial sector focus on the crucial role of nature in achieving net zero targets and keeping the 1.5°C temperature target within reach,” she said. 

Today saw the first major deal of COP26 with more than 100 world leaders promising to end and reverse deforestation by 2030.  

Countries signing the pledge cover around 85 percent of the world’s forests, with 12 donor countries have pledged to provide $12bn of public climate finance from 2021 to 2025 to support a new Global Forest Finance Pledge. More than $7.2bn of private sector funding has also been mobilised.