Financial Institutions

Assess and manage deforestation and human rights risks related to soft commodities.

The Accountability Framework helps financial institutions to establish policies for responsible lending and investment in the food, agribusiness, and forestry sectors and to screen and engage their portfolios to fulfil these policies. 

1. Establish responsible lending and investment policies and practices

Use the Accountability Framework to develop sound policies and practices, in line with international norms, to avoid deforestation, ecosystem conversion, and human rights impacts from your loans and investments. Several Accountability Framework-aligned tools support this process:

  • The Deforestation-Free Finance Roadmap is endorsed by the Accountability Framework initiative as a guide to help financial institutions operate in accordance with the Accountability Framework. It provides step-by-step recommendations to assess risk, set policies, engage clients/holdings, and disclose progress to eliminate financing of commodity-driven deforestation, ecosystem conversion and associated human rights abuses. Building from this Roadmap, the Deforestation-Free Finance advisory group is now developing additional tailored guidance for pension funds, banks, and other classes of financial institutions.
  • WWF has released a practical guide for financial institutions to take action against their deforestation and ecosystem conversion risks in alignment with the Accountability Framework. It offers step-by-step guidance to help financial institutions operationalize key elements of the Accountability Framework. It also provides details on the risks faced by financial institutions, including specific case studies, and presents nature-positive finance opportunities to drive positive environmental impact.
  • Ceres’s Investor Guide to Deforestation and Climate Change provides an explanation of the deforestation risks that investors may be exposed to in their portfolios, as well as the relationship between deforestation and broader climate change risk. It also offers high-level guidance on how investors can analyze and assess their own exposure and begin engagement with companies.
  • Ceres’s Engage the Chain guidance highlights the environmental and social risks and impacts of eight commonly sourced agricultural commodities: beef, corn, dairy, fiber-based packaging, palm oil, soybeans, sugarcane and wheat. It provides information on key companies sourcing these commodities, and identifies actions investors can take to reduce exposure to agricultural supply chain risks.

Additional Accountability Framework-aligned resources for financial institutions will be added here as they become available.

2. Assess deforestation risk and performance within your portfolio

Use Accountability Framework-aligned disclosures to assess how companies in your portfolio measure up against your policies for responsible supply chains.

Once your deforestation, ecosystem conversion, and human-rights related policies and lending or investment criteria are determined, your organization will need to use clear and consistent corporate data on these topics to assess risk, guide engagement, and make decisions regarding your portfolio.

Many widely used reporting standards and platforms that address environmental and human rights issues linked to soft commodities are well aligned with the Accountability Framework. These include CDP’s forests questionnaire, the Forest 500 assessment and the forthcoming GRI Agriculture, Fishing, and Aquaculture Sector Standard.

By using these Framework-aligned data sources to assess companies against your policies and requirements, your organization can integrate best available information and analysis on deforestation and associated risks into your decision making on lending and investment.

Still have questions?

If you have specific questions about how the Framework can be applied in your context, or if you would like to speak to a member of the AFi team, please contact us below.

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