IIGCC launches framework to help investors tackle deforestation by 2030 deadline

The Institutional Investors Group on Climate Change (IIGCC) has published a framework setting out how investors can push companies to eliminate deforestation from their operations and supply chains by 2030 at the latest.

The paper, Investor expectations of companies on deforestation, sets out five actions investors should expect companies to take: make a public commitment; assess deforestation risks; transform operations and supply chains; participate in collaborative action; and disclose progress annually.

Developed with input from investors in IIGCC’s Deforestation Investor Group (DIG), the expectations are intended to support engagement between investors and companies.

The framework follows IIGCC’s launch earlier this year of the DIG, a platform designed to help investors understand and manage deforestation-related financial risks.

The platform, which was trialled last year, builds on the Financial Sector Deforestation Action (FSDA) initiative and aims to broaden investor action on deforestation by supporting investors at different stages of engagement with companies.

The DIG is underpinned by guidance on integrating deforestation into net-zero strategies, with recommendations across asset classes. The guidance is intended to help investors implement the IIGCC Net Zero Investment Framework.

“We see these expectations as a practical tool to support better conversations with companies on deforestation. By bringing together existing frameworks and market best practice, they provide a common language for engagement and a consistent benchmark for assessing progress over time,” said Isobel Mitchell, senior responsible investment associate at the Church Commissioners for England.

IIGCC said the framework was designed to align with existing frameworks that companies are already working towards, including the Taskforce on Nature-related Financial Disclosures (TNFD) and IFRS S2, rather than create additional reporting requirements.

The expectations are also intended to help companies integrate deforestation into broader climate and nature transition planning, governance, risk management and disclosure processes.

Vemund Olsen, senior sustainability analyst at Storebrand Asset Management, said: “Financial risks arising from deforestation permeate global supply chains. Reducing these risks is part of investors’ fiduciary duty. The new IIGCC Investor Expectations of Companies on Deforestation clearly outline what companies should do to reduce their impact and risk exposure, and will hopefully contribute to increased investor engagement on this critical issue.”

Push for greater consistency

The framework comes amid wider efforts to improve consistency in nature-related investment and corporate reporting.

Earlier this year, IIGCC published Navigating nature investments, a paper proposing a common language for describing, comparing and assessing nature investments. IIGCC said the proposed “translation layer” aimed to address inconsistent terminology and improve visibility of nature-related risks.

Meanwhile, the International Sustainability Standards Board (ISSB) is developing a proposed IFRS Practice Statement to help companies disclose financially material nature-related risks and opportunities, drawing on the TNFD. A draft is expected in October.

The ISSB’s work has also highlighted the challenge of translating nature-related risks into a standardised financial framework.

The TNFD’s second annual status report is due to be released on 21 September during Climate Week NYC. It will examine market progress on nature-related assessment, reporting and decision-making.