Finance Sector Roadmap

This Roadmap provides a practical pathway for all types of financial institutions to eliminate commodity-driven deforestation, conversion, and associated human rights abuses from their financial portfolios by 2025, or within four years of using the Roadmap.

Many sectors, industries, companies and projects are exposed to these risks including through forest-risk commodity production and sourcing, and infrastructure and mining projects.

Industries, sectors, and commodities covered by this Roadmap

This Roadmap focuses on finance provided to clients/holdings (including companies, projects, and financial institutions) which produce, process, procure and finance the highest-risk agricultural commodities, which are responsible for over two-thirds of tropical deforestation including:

• Soy
• Cattle products (including beef and leather)
• Palm oil
• Timber
• Pulp and paper

This Roadmap provides guidance on engaging with clients/holdings who are connected to these agricultural commodities (and their associated infrastructure) through their own operations, sourcing of materials, or financing, and specifically through:

• Production
• Processing
• Trading
• Manufacturing
• Retailing
• Financing

1. Mapping risk
2. Setting an effective policy and managing risk
3. Monitoring and engagement
4. Disclosing
5. Eliminating deforestation

Each phase has one or two ‘Steps’, broken down into specific ‘Recommended actions’.

These Steps are not necessarily linear, and can be completed in any order within the Phase. However, each of these Steps are critical pieces of the process and should be addressed to ensure that commodity-driven deforestation, conversion, and associated human rights abuses are being eliminated from portfolios.

To support global goals and targets and achieve portfolios that are free from commodity-driven deforestation, conversion, and associated human rights abuses, all Steps and Recommended actions included in this Roadmap should be complete by 2025, or if your organisation is starting this process after 2021, within four years or less of beginning to follow this Roadmap.

If your organisation is already acting on deforestation, conversion, and associated human rights risks, identify where your organisation is currently operating within the Phases outlined in this Roadmap, and then pick up from there following the objective time-period recommendations outlined in each Phase.

Beyond the roadmap’s primary focus on risk reduction, the roadmap also highlights additional actions that financial institutions can take to redirect financing towards nature- and people-positive financing.

This Roadmap will enable financial institutions to eliminate commodity-driven deforestation, conversion, and associated human rights abuses from their portfolio, with the aim being that by 2025 portfolios are:

• free from commodity driven deforestation
  • specifically, the ‘loss of natural forest as a result of: i) conversion to agriculture or other non-forest land use; ii) conversion to a tree plantation; or iii) severe and sustained degradation’
• free from commodity driven conversion
  • specifically, ‘the change of a natural ecosystem to another land use or profound change in a natural ecosystem’s species composition, structure, or function’
•  free from human rights abuse associated with commodity-driven deforestation and conversion. These rights include:
  • the right to Free, Prior, and Informed Consent (FPIC) of Indigenous peoples and local communities
  • the customary rights of Indigenous peoples and local communities to land, resources, and territory
  • zero tolerance for threats and attacks against environmental and human rights defenders
  • the labour rights of workers (including contractors, smallholders, and temporary staff) at the points of production, including from the point of forest clearance to active production, for the highest forest-risk commodities
    • Where a financial institution or company is engaging with or monitoring a supply chain for deforestation or land rights risks, labour rights should be included in engagement or monitoring efforts in order to eliminate abuses of these rights too

The definitions of each of these terms are detailed in the appendices, with deforestation, conversion and each of the associated human rights and key terms being defined in line with the Accountability Framework initiative.