UK-based non-profit Global Canopy has cooperated with a number of financial market participants to draw up guidelines for how global family offices can help put pressure on asset managers to rid their portfolios of activities that drive deforestation.
As part of its finance sector roadmap to eliminate commodity-driven deforestation, Global Canopy hopes to influence the behaviour of and impact of the portfolios of family offices, as 221 of the world’s biggest single-family offices dispose total wealth of almost $500 billion, the group said in an announcement.
“Many foundations and philanthropically minded family offices have an impressive record when it comes to giving to tackle the environmental crisis, so it is essential that their investments don’t unwittingly cause destructions,” said Niki Mardas, Global Canopy’s executive director.
“Deforestation hidden in their investments could be at risk of outweighing their positive impact. This mandate can help them use their tremendous leverage and influence to lead the way on deforestation-free portfolios, putting pressure on asset managers and financial institutions to clean up their act.”
In cooperation with various market participants, Global Canopy has authored a ‘mandate’, consisting of demands that family offices can put towards their asset managers.
It outlines an expectation that their investment portfolios by the end of 2025 must be free from commodity-driven deforestation, conversion, and associated human rights abuse.
“The six key commodities we expect to be taken into account as a minimum are beef, leather, soy, timber, pulp & paper, and palm oil, since these drive the majority of tropical deforestation globally,” it said.
Outlining a series of sets of principles concerning zero deforestation, conversion, Indigenous peoples’ rights, and labour rights, the mandate asserts that asset managers meet all criteria for all asset classes, investments, and companies.
If there are elements restricting asset managers’ ability to meet all the criteria, they are asked to prioritise the most-exposed investments, companies taking the least action to address their exposure to deforestation, the holdings that have the greatest opportunity for positive impact.
“If by 2025, despite continued engagement, companies and investment products that we are invested in are not making sufficient progress towards meeting these requirements, then we would expect to redirect our holdings towards companies and investment products which are operating in line with the criteria set out in this mandate,” it said.
“It is also important to note that holdings could be divested at any time in advance of 2025, should this be deemed necessary.”
Global Canopy launched its main Finance Sector Roadmap at climate COP26 in Glasgow last year, and earlier this year released a similar document targeting pension funds.
By Stian Reklev – email@example.com