Aidenvironment takes Lead in Five Year NORAD-funded Research Project
Aidenvironment takes lead in five year NORAD-funded research project, targeting institutional investors to adopt no-deforestation policies.
Aidenvironment is proud to announce the start of the five year RISC project, funded under the Norwegian International Climate and Forest Initiative (NICFI) grant scheme for Civil Society 2016-2020. In a consortium consisting of values-driven consultancies Aidenvironment, Profundo and Climate Advisers and investment fund Green Century Capital Management, the project aims to convince global investors active in agriculture, forestry and other sectors that affect tropical forests to integrate REDD+ objectives in their investment decisions.
Tropical deforestation constitutes a major source of global carbon emissions. With 71% of deforestation driven by commodity agriculture – mostly soy, cattle, timber and palm oil, it is essential that commodity producers take on their responsibility in curbing global warming by adopting sustainable practices. Where unsustainable practice within commodity production has generated large corporate profits in the past, there is a growing body of evidence showing the significant financial risks for companies if they do not accurately incorporate sustainability risks into their business models. In a context of increased global awareness of climate change and a growing demand for sustainable products, deforestation-driven financial risks for companies and investors include lost price premium for sustainable products, loss of customers due to incompliance with their sustainable procurement policies and increasing number of deforestation-free commitments and an increase of costs for finding substitute buyers and storage for stalling inventory.
The RISC project builds further on the research performed under the Chain Reaction Research (CRR), targeting investors with interests in the Indonesian Palm Oil sector and expands the CRR scope to include other commodities and countries based in Latin-America and Africa. By following the money the RISC project seeks to disrupt and transform the finance community that makes commodity deforestation possible. It aims to provide investors and analysist with unbiased and objective information about the facts on the ground that will help them to determine to what extent commodity risks are embedded in their current and future investments, and the potential impact of such risk. They can then decide whether to press for sustainability commitments from sustainable practices, or to divest from those that embed major risks.
The project partners bring together experience across the commodity sector, from supply chains to financial instruments, to create a targeted intervention where it can have the largest impact. Aidenvironment takes the lead in the project and will identify sustainability risks such as contested land, deforestation, fires, exploitation, and inconsistencies in official corporate policies through GIS mapping, working together with local community organizations, field visits, and complementary desk-research; Profundo will develop financial models analysing the financial risks inherent to current unsustainable practices; Climate Advisers will provide financial commentary and policy analysis and will coordinate outreach to U.S. and global investment firms together with Green Century.
Over the course of the next five years, the consortium aims to write over forty reports analysing the sustainability and financial risks of strategically selected companies and identifying key issues related the risks these commodity producers face. The research will be accompanied by a strong outreach programme, informing, engaging and training influential financial institutions and analysts to recognize the links between sustainability and financial risks. All reports will be published on the Chain Reaction Research Website.