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The Finance Sector Deforestation Action (FSDA) Initiative

Deforestation sits at the intersection of climate and nature: net-zero targets will be out of reach unless deforestation is urgently halted and reversed.

By committing to use best efforts to eliminate agricultural commodity-driven deforestation from portfolios and drive the sustainable transition of the agricultural sector, financial institutions can simultaneously enable the delivery of climate targets, support biodiversity and food security, mitigate against risk, and prepare for new and forthcoming regulations.

Launched at COP26, Finance Sector Deforestation Action (FSDA) brings together 36 financial institutions with more than (US) $8 trillion in assets under management who are working toward eliminating agricultural commodity-driven deforestation risks (from cattle, soy, palm oil, pulp, and paper) in their investment and lending portfolios by 2025. To read the commitment letter signed by these financial institutions, please click here.

Finance and Deforestation Advisory Group: FSDA members have the support of the Finance and Deforestation Advisory Group, which is focused on helping signatories to meet their Commitment. The Group provides ongoing advice and support on data, tools, and best practices. This group includes Conservation International, Global Canopy, Global Optimism, Climate Champions Team, Make My Money Matter, Nature4Climate Coalition, and WEF Tropical Forest Alliance.

Join the Finance Sector Deforestation Action Initiative by emailing deforestationfree@climatechampions.team

Take Action

Financial institutions can access and sign on to the Financial Sector Commitment on Eliminating Agricultural Commodity-Driven Deforestation by emailing deforestationfree@climatechampions.team.

View FAQs here.

Tools to Support Implemen-tation

Address deforestation risk:

Investor Expectations: FSDA members have developed investor expectations to support company engagements. These expectations are grounded in the Commitment, informed by relevant science and best practices, and anticipated to evolve over time. Click here for details.
Finance Sector Roadmap: AFi-aligned and endorsed Finance Sector Roadmap provides stepwise guidance and actions for financial institutions to tackle deforestation in their portfolios and meet the Commitment. It brings together the best available data and tools, showing financial institutions how they can map risk, set policies, identify and engage with non-compliant portfolio constituents, and look to increase exposure to nature-positive activities.
Examples of tools that can be used by clients and holdings to combat agricultural commodity deforestation are: SBTN targets, Taskforce on Nature-related Financial Disclosures (TNFD) Framework, CDP Forests Guidance.

Tools related to NBS investment:

NbS Pilot Investment Platform: focused on NbS, including regenerative and sustainable agriculture, forests, and land use.
The Little Book of Investing in Nature: offers an essential overview of innovative financial products to increase investment in nature-positive activities.

Progress so far:

COP27 Briefing: See more detail available here on how signatories have been moving forward with implementation as the Finance Sector Deforestation Action (FSDA) initiative.
Policies: FSDA signatories have made progress in enhancing or establishing deforestation policies.
Company Engagements: FSDA signatories have been using the investor expectations they developed and published to step up engagement with companies on increasing actions that address their deforestation impact.
Data Providers: FSDA signatories are engaging with major data providers to call for issuer-level data on deforestation risk exposure and management.
Investment in NbS: FSDA signatories are implementing strategies and increasing investments in nature-based solutions.

Case Studies:

Storebrand: Creating deforestation-free investment portfolios
Schroders: Steering finance towards a net zero, nature-positive future
Aviva: Biodiversity efforts continue with £38m pledge to restore lost UK rainforests and through achieving net zero.
JGP: Eliminating commodity-driven deforestation through active ownership, creative financing, and nature restoration

MOMENTUM ACROSS THE NATURE & CLIMATE FINANCE ECOSYSTEM

Momentum Shift Leading to Inevitability of Action

Kunming-Montreal Global Biodiversity Framework (GBF) includes goals and targets relevant to the finance sector, including disclosure on nature-related risks, impacts and dependencies, and alignment of financial flows.
Glasgow Leaders’ Declaration on Forests and Land Use commitment to halt and reverse forest loss and land degradation by 2030 is endorsed by over 141 governments covering 90% of the world’s forests.
GFANZ co-chairs and vice-chairs call to action on deforestation note that transition plans that lack objectives and clear targets to eliminate and reverse deforestation are incomplete.
The High‑Level Expert Group on the Net Zero Emissions Commitments of Non-State Entities (HLEG) report recommends that financial institutions should eliminate agricultural commodity-driven deforestation from their investment and credit portfolios by 2025, as part of their net zero plans.
Deforestation-free procurement acts are emerging, such as US Forest Act, European Union Regulation on deforestation-free supply chains , and UK Environment Act 2021.

Guidance, Tools, and Frameworks are Emerging Accelerate Action

Updated Race to Zero – Leadership Practices include recognition of the need for organizations to set net-zero commitments to halt deforestation and protect biodiversity.
GFANZ Financial Institution Net-zero Transition Plan Guidance incorporates guidance on tackling commodity-driven deforestation.
SBTi FLAG Guidance stipulates a no-deforestation commitment with a target date no later than 2025.
Science Based Targets Network (SBTN) is developing guidance for companies to set appropriate targets to reduce, eliminate, and reverse biodiversity loss in their operations and supply chains.
Taskforce on Nature-related Financial Disclosures (TNFD) recommendations for companies and financial institutions to assess, disclose and manage nature-related risk released in September 2023.
WBCSD Publication offers valuable guidance and a call to action, highlighting the pressing need and practical ways for financial institutions to assess and disclose their exposure to deforestation risks.
Investor Climate Action (ICAP) Expectations Ladder integrates clear guidance for investors on deforestation across focus areas of investment, corporate engagement, policy advocacy, investor disclosure and governance.
Resource Navigator for Companies and Financial Institutions: orients companies and financial institutions within the landscape of business guidance, management tools, methodologies, and disclosure frameworks that address nature and climate action and transparency.