As BlackRock’s Larry Fink sent his annual letter, urging chief executives to focus on the transition to a greener economy, research has pointed to the gaps between broader intent and specific policy. Global Canopy, a non-profit organisation, has found that the world’s largest asset manager still lacks a deforestation policy that would ensure the companies it invests in do not contribute to the problem.
An area larger than the UK is deforested every year, mostly due to agricultural expansion, with the average tropical forest loss accelerating by 44% since 2014, says Global Canopy.
In its Forest 500 report, it found that 95 of the world’s 150 largest banks and investors lack a deforestation policy. Through loans, bonds and shareholdings, they channel a total of $2.7tn into companies in the timber, soy, cattle and palm oil supply chains, which are most at risk of causing deforestation.
In BlackRock’s case, while the firm has made its stewardship approach to sustainable agriculture and the palm oil industry public, it does not set standards that companies are required or encouraged to meet, notes Global Canopy. BlackRock did not respond to requests to comment on the Forest 500 report.
For financial institutions, the environmental group defines a deforestation policy as a commodity-specific policy focused on forest protection, or a policy to protect primary, intact or high-conservation value forests, or commits to a credible certification scheme that protects these.