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New investment mandate to help private wealth tackle deforestation

Launch of new guidance for family offices and foundations to help them lead the way to deforestation-free portfolios 

New guidance released today provides family offices and foundations with a clear pathway to ensure their investments are not driving deforestation.

The practical how-to guide from Global Canopy, the Deforestation, Conversion and Abuse-Free (DCAF) Investment Mandate, will help keep the destruction of forests, the conversion of other natural habitats, and associated human rights abuses out of portfolios.

According to the UBS 2022 Global Family Office Report, 221 of the world’s largest single-family offices cover a total net worth of USD 493 billion, with the individual families’ net worth averaging USD 2.2 billion. When invested, this money could be funding destruction, contributing to the more than $6.1 trillion in private finance driving deforestation each year.

Deforestation is a leading cause of climate change, responsible for 11% of global greenhouse gas emissions, if deforestation were a country it would be the third highest emitter in the world. Due to its high impact, Race to Zero, the UN-backed campaign striving for a net-zero economy, has called on all investors to eliminate commodity-driven deforestation from their portfolios by 2025.

“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 destruction. 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,” said Niki Mardas, Global Canopy’s Executive Director.

For the first time, Global Canopy’s Deforestation, Conversion and Abuse-Free (DCAF) Investment Mandate brings together different tools, resources and examples of best practice, so family offices and foundations can task their asset managers with identifying and mitigating deforestation risks. It provides them with a blueprint of how to engage asset managers and gives them the power to drive positive change through their investments.

Created in consultation with family offices, foundations, asset managers and other stakeholders, the new market-ready guide outlines the steps asset managers should take to play their part in combating deforestation, conversion and associated human rights abuses.

“As an investor, we know there is no way to tackle the climate crisis without an end to deforestation, conversion and association human rights abuses. We have always strived for our investments to be part of the solution, instead of driving the problem. By sign-posting key tools, datasets and examples of best practice, this guide can help us reach deforestation-free investments,” said Dr Paddy Walker, the managing director of the UK based family office J. Leon & Company Ltd.

Global Canopy’s Deforestation-free Investment Mandate is the latest in a suite of guidance created for the finance sector. It includes the Finance Sector Roadmap on Eliminating Commodity Driven Deforestation launched at COP26, and the Deforestation-free pensions guidance launched earlier this year. Collectively they show the clear steps needed to ensure investments are not driving destruction.

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