The 44 investors with approximately US$6.4 trillion in assets under management are concerned about the carbon pollution from global cattle production and tropical deforestation.
The group said that beef production was the world’s leading driver of tropical deforestation, responsible for 65% of gross deforestation from 2001-2009.
The biggest losses as a result of beef production were tropical forests in Brazil and other areas of South America, it said.
The Investor Expectations Statement on Deforestation in Cattle Supply Chains said: “Cattle production has been identified as a leading driver of tropical deforestation, primarily through the conversion of forest to pasture and through the cattle industry’s demand for soy-based feed products.”
The investors signing the statement, which include Aberdeen Standard Investments and BNP Paribas Asset Management, said they wanted to protect long-term value and mitigate risks.
The statement laid out what investors expected of companies regarding their disclosure and management of deforestation risks. It called for companies to demonstrate a commitment to eliminate deforestation by having stronger awareness of deforestation risks, including oversight at board level. It has also called for companies to have a publicly disclosed commodity-specific deforestation policy, traceability across the entire cattle supply chain and have monitoring and verification processes in place to ensure that suppliers were complying with the company’s deforestation policy.
“In order to curb carbon emissions and limit global warming to below 2˚C, eliminating deforestation in cattle, soy and other key agriculture commodities must be a top priority,” said Julie Nash, director of food and capital markets at sustainability non=profit organisation Ceres.
“There is growing awareness amongst institutional investors of the material risks that deforestation poses to investee companies, in particular the link between tropical deforestation and greenhouse gas emissions. As such, many investors are increasingly looking to engage with companies to discuss this issue,” added Danielle Carreira, senior manager, environmental issues at Principles for Responsible Investment.