Deforestation is a climate risk. While conversations about the climate crisis often focus on fossil fuels, investors cannot overlook the risks posed by deforestation and native vegetation conversion in corporate supply chains. To address the climate crisis, biodiversity loss, and the risks they pose, corporations and investors must protect tropical and boreal forests, peatlands, grasslands, and other native vegetation.

Thankfully, the financial sector is starting to recognize and act on these risks. European banks, including Standard Chartered, Rabobank, and, most recently, BNP Paribas, have adopted restrictive lending policies for potential clients. They no longer will finance corporations driving deforestation or companies that have failed to implement best practice policies to mitigate forest-related risks in their operations.

Green Century has been working to end deforestation in corporate supply chains since 2012 and last year shareholder support may have finally reached a tipping point.

The 2020 shareholder resolution at Procter & Gamble provides a good example. It raised concerns that the company did not have plans to adequately prevent deforestation in its supply chain. P&G sources wood pulp from Canada, including the climate-critical boreal forest, to produce some of its tissue products. While the company sources wood pulp certified by the Sustainable Forestry Initiative, this does not prohibit logging in old-growth and high carbon stock forests such as the Canadian boreal, or provide safeguards for threatened species like caribou. Old-growth forests such as the Canadian boreal store large amounts of carbon, and managing them sustainably and preserving intact forests is critical to combating the climate crisis.

In our resolution, we urged P&G to increase the scale, pace, and rigor of its efforts to eliminate deforestation and the degradation of intact forests in its supply chains. We also pressed it to reduce its reliance on natural forest fibers and ensure all remaining virgin fiber is certified by the Forest Stewardship Council (FSC), the industry gold standard.

Green Century’s resolution with P&G received the support of a whopping 67 percent of the shareholder votes cast. Even BlackRock, which had not previously supported any of the 15 deforestation-related resolutions that had gone to vote since 2012, voted in favor of it. This is progress.

For 2021, Green Century has filed resolutions with Archer-Daniels-Midland and Bunge given continued reports that link their operations to deforestation and native vegetation conversion throughout Latin America, particularly in the Brazilian Cerrado. Alarmingly, more than 109,266 square miles of forest, grassland, and scrub have been converted to cropland in the Cerrado since 2001.

To limit global warming to 1.5° Celsius, as laid out in the Paris Agreement, and prevent catastrophic biodiversity loss, we must act swiftly. It is difficult to overstate the potential risk of inaction, or even insufficient or delayed action to our portfolios, society, economy, and the environment. We need investors to support shareholder resolutions that push companies to address deforestation and land use changes, and we need them to consider and address deforestation risk in their portfolios.