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Investors use satellites to target companies with deforestation in supply chains

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A coalition of investors including Fidelity International, Aviva Investors, and Nomura, with a total of EUR1.8 trillion in assets under management, are calling on companies to end deforestation in their supply chain and improve transparency. 

A coalition of investors including Fidelity International, Aviva Investors, and Nomura, with a total of EUR1.8 trillion in assets under management, are calling on companies to end deforestation in their supply chain and improve transparency. 

The investors, led by Netherlands-based sustainable investment specialist ACTIAM, are asking  companies to publicly disclose supplier lists for agricultural ‘soft’ commodities, and demanding that companies involved in past deforestation take action to mitigate its effects and prevent it from happening in the future.

The initiative uses satellite imagery and artificial intelligence from Satelligence to detect forest cover changes in Malaysia, and then identify companies in the palm oil sector whose supply chains involve deforestation risks. The group is also reaching out to companies that do not yet disclose sufficient information about their supply chains.

Since 1990, forests have lost more than 120 million hectares, an area almost the size of South Africa, contributing to biodiversity loss and carbon emissions.

The production of ‘soft’ commodities such as soy, palm oil, beef, and timber, has been responsible for 61 per cent of forest loss in Southeast Asia and 64 per cent in South America, between 2001 and 2015. 

Companies are expected to meet the investors’ requests in two to three years, in which time investors will be able to assess the progress made by the engaged companies, and whether this reduces deforestation in the monitored regions and suppliers.

“As investors, we have a fiduciary duty to lead the transition to a more sustainable society, where financial, environmental and social returns go hand in hand. This engagement initiative is part of our growing commitment to biodiversity allowing investors to positively influence a much-needed change of behaviour by companies, in line with the Finance for Biodiversity Pledge,” says Dennis van der Putten, director of sustainability at ACTIAM, which has also announced a target of zero deforestation across all its portfolios by 2030.

The investor group also includes Achmea Investment Management, Aegon Nederland Robeco and Zwitserleven. 

The group of investors is currently looking into extending this initiative, in collaboration with Satelligence, towards other regions and soft commodities such as palm oil in Indonesia, soy in Latin-America, and cocoa in Africa.

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