Forest IQ enables financial institutions to easily screen portfolios, engage with the most relevant companies, manage deforestation risks and achieve their climate change, biodiversity and nature targets.
In an era where deforestation remains a critical issue, financial institutions now have a new tool at their disposal — Forest IQ. This sophisticated data platform, launched on November 1st, has been designed to steer the finance world towards deforestation-free portfolios, a target that has been elusive until now.
RELEVANT SUSTAINABLE GOALS
AForest IQ :Combating Deforestation with Data
Forest IQ, developed through the collaboration of not-for-profits such as Global Canopy, the Stockholm Environment Institute (SEI), and ZSL (Zoological Society of London), is the first of its kind to amalgamate actionable data on how over 2,000 key corporations interlink with deforestation.
The platform affords banks and investors the ability to screen their investment portfolios, engage with relevant companies, manage associated risks, and align with their climate objectives. This innovation comes at a pivotal moment as the finance sector faces escalating policy and regulatory pressure to address the deforestation impacts within their purview.
Forest IQ will enable us to improve and expand our screening, risk assessment and stewardship, and help us in our efforts to eliminate commodity-driven deforestation from our investment portfolios.
Underpinning these pressures are international movements like the UN’s High-Level Expert Group, which has set a 2025 deadline for deforestation-free finance, and the Glasgow Financial Alliance for Net Zero, which underscores deforestation as a priority. Additionally, the EU is tightening its regulations, demanding thorough due diligence from companies and indicating a spillover into financial governance
Niki Mardas, Executive Director of Global Canopy, warns of the perils of inaction. “Ignoring deforestation is no longer a viable strategy,” he states. “There’s no real progress towards net-zero or biodiversity targets without addressing deforestation, yet many financial institutions have barely begun to confront this issue.”
Forest IQ addresses this gap by facilitating a market-wide shift from deforestation practices through a mix of simplicity and analytical rigor. The platform provides a comprehensive company benchmark on deforestation and offers over 2,400 indicators encompassing deforestation, land conversion, and human rights concerns, making the dataset robust and evolving.
Integral to the platform are three newly minted core indicators concerning exposure, materiality, and reported performance. These align with leading datasets, enabling nuanced analysis and engagement with companies considered high-risk.
Designed with input from ten major global financial entities, including Blackrock, BNP Paribas, and HSBC, Forest IQ has been rigorously tested by over 50 organizations over the last year to ensure it caters to the needs of the finance sector. Storebrand, an early contributor to the design, has lauded the platform’s ability to address the data void that has long hindered effective screening for deforestation risks.
Open to all, the platform’s indicators seek to enhance accountability and spur action among key players in deforestation. It supports financial institutions in meeting the criteria of upcoming global reporting frameworks, such as the Taskforce for Nature Related-Financial Disclosures.
Forest IQ will make it easier than ever for financial institutions to play their vital part in a rapid market-wide transition away from deforestation.
Forest IQ’s comprehensive data encompasses a wide array of companies and institutions — including those highly exposed to deforestation risk, and those not exposed but significantly invested in such companies. It integrates multiple data points from seven distinct datasets, and plans to incorporate data from CDP Forests later in the year, with the intent of continuously expanding and updating its database.
As Forest IQ continues to evolve, the team is engaged in dialogues with leading ESG service providers to make this valuable data readily available where financial institutions already source their information.
This data-driven approach to combating deforestation reflects a significant stride for the finance sector, marrying environmental stewardship with the rigor and strategic planning characteristic of financial analytics. Forest IQ is not merely a tool but a call to action — for a sector that holds significant sway over the planet’s ecological future.
Lead image courtesy of John Foxx from Photo Images
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