Meeting the 2025 deforestation target: Strategies for investors
In the race to protect the planet, financial institutions and companies are being encouraged to take concrete steps towards deforestation-free supply chains. The Accountability Framework initiative (AFi) has set a target of 2025 for companies to eliminate deforestation and ecosystem conversion in agricultural and forestry commodity supply chains, with continued ambition post-2025.
The AFi's roadmap involves accelerated implementation to meet urgent 2025 milestones, evolving commitments to sustain progress, enhanced monitoring and reporting, and multi-stakeholder collaboration. Key actions include managing 2025 target dates and closing remaining gaps, communicating performance and progress effectively, adapting strategies to drive real transformation, using updated Monitoring Protocols and tools, engaging with e-learning modules and self-assessment tools, complying with environmental and legal frameworks, and promoting collaboration across sectors and landscapes.
Financial institutions can find resources on assessing risk, managing, and engaging their portfolios through the Accountability Framework. Companies that have already demonstrated deforestation-free commodity production and sourcing are recognised and celebrated by civil society, positioning them for competitive advantage.
However, many food and agriculture companies are falling behind in this transformation, posing risks for their investors. Companies lacking time-bound commitments are encouraged to set no-deforestation and no-conversion policies in alignment with the Accountability Framework, with ambitious target dates. Few companies are on track to achieve this goal by 2025.
The transformation of agricultural supply chains to eliminate deforestation and conversion of natural ecosystems is urgent to reach net zero emissions and avoid biodiversity loss. Business-as-usual commodity production often leads to widespread human rights violations affecting Indigenous Peoples, local communities, and workers. Numerous companies, financial institutions, industry associations, and environmental and human rights organizations have aligned on 2025 as the deadline for addressing commodity-driven deforestation.
For companies with commitments, they should have clear, timebound plans addressing critical gaps, set and publish annual quantitative milestones, and publish implementation plans describing specific actions. Companies should disclose their supply chain risks, performance, and progress towards halting deforestation and conversion linked to their supply chains each year. Disclosures should cover all commodity production and sourcing, and companies can use the CDP questionnaire to disclose on the deforestation- and conversion-free status of their commodity volumes.
The year 2025 is considered crucial for protecting forests and natural ecosystems. Governments are focusing on addressing the negative impacts of agricultural supply chains, with policies such as the EU Deforestation Regulation (EUDR) being adopted. These issues are becoming increasingly important for companies' investors, lenders, and customers.
Investors should assess how their portfolio companies are addressing risks tied to their agricultural and forestry products, such as by improving traceability, monitoring systems, procurement practices, and supplier engagement. The Accountability Framework can help companies move from ambition to impact in their emissions reductions journeys.
Companies can leverage the Accountability Framework to implement strategies that ensure their agricultural and forestry supply chains are deforestation-free, thereby aligning with investors' growing focus on environmental issues. Financial institutions can invest in companies that demonstrate a commitment to environmental science, such as those that have set no-deforestation and no-conversion policies, as these companies are more likely to be competitive in the environmental-science-focused market.
