Financial institutions can reduce their carbon footprint by ensuring that portfolio companies are implementing strategies to reduce their emissions. Tackling deforestation from soft commodity supply chains is key to addressing climate change as 10-15 percent of the world’s greenhouse gas emissions are driven by deforestation. Financial institutions should require companies in their portfolio to put in place systems to monitor GHG emissions and have clear targets to reduce these emissions. For most companies in the supply chain, land use change emissions are not caused directly by their operations, but indirectly from their sourcing of soft commodities (scope III). It is therefore essential that both upstream and downstream companies in soft commodity supply chains account for emissions related to land use change, and that reduction targets includes land use change emissions.
- IUCN (2018), INFOFLR
- Quantis (2017), The Land Use Change Guidance: shaping the future of climate, forestry and agriculture
- Final report - Recommendations of the Task Force on Climate-related Financial Disclosures (2017)