Regardless of where they are on their climate journey, investors have a fiduciary duty to act on climate-related risks. Many investors have already committed to net zero via the net zero alliances – Net Zero Asset Managers initiative, Paris Aligned Asset Owners and UN-convened Net-Zero Asset Owners Alliance – but, to get there, they need comprehensive transition plans that consider the whole landscape, including how they address deforestation.
To help investors accelerate action on climate change, the Founding Partners of The Investor Agenda – AIGCC, CDP, Ceres, IGCC, IIGCC, PRI and UNEP FI – developed Investor Climate Action Plans (ICAPs) Expectations Ladder and Guidance to help investors navigate existing expectations and initiatives on climate change.
Comprehensive ICAPs need to address deforestation
The ICAPs Expectation Ladder has been updated this July (2023), to ensure that it aligns with the latest science and encourages investors to develop and issue comprehensive, ambitious and effective ICAPs that will deliver on net zero commitments or help investors just starting on their climate transition to map out their journey effectively. As part of this update, specific deforestation actions have been clearly laid out in the ICAPs Expectations Ladder.
Investors should make action on deforestation an early focus of their transition plans – aiming to redirect finance away from economic activities that involve deforestation and towards businesses, supply chains and solutions that protect, manage and restore forests. The ultimate ambition should be to eliminate deforestation from portfolios as part of a sustained engagement process that also looks to scale investments in nature-based solutions. This is essential to meeting net zero targets -the GFANZ co-chairs and vice-chairs statement on deforestation notes that transition plans that lack objectives and clear targets to eliminate and reverse deforestation are incomplete.
Engagement-focused actions on deforestation are also essential to supporting local, regional and national economies, as well as local communities and indigenous people – and investors who are early actors will also prepare themselves for forthcoming regulations and calls for public accountability.
The window of time we have left to limit global warming to 1.5°C is narrowing fast – but it’s not yet out of sight. By protecting and resorting forests around the world, we can achieve 18% of the emissions cuts needed by 2030 to prevent the worst impacts of climate change. As such, it’s vital that investors – both those who are just starting to think about their climate transition and those that are relative pioneers – issue and publish comprehensive ICAPs and continue to assess their progress against public and private targets.
To find out more about ICAPs and how you can get involved, click here.