USA, Boston, Ma. “As investors, we believe that environmental, social and governance issues can impact long-term performance and financial returns for portfolio companies. Climate change has been identified as one of these issues, and poses material transition, physical, and liability risks to client assets.
Its causes have been linked to anthropogenic increases in GHG levels, with land use and land use change contributing the second largest anthropogenic source of carbon dioxide in the atmosphere,after fossil fuel combustion.
Overall, agriculture accounts for approximately one third of these emissions. Within agriculture, 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 dem and for soy-based feed products.
The associated land use change also increasingly risks degrading the welfare of communities that depend upon tropical forests for livelihood. Under a two-degree scenario, countries committing to achieve their Nationally Determined Contributions will not achieve their goals without reducing emissions from land use and land use change driven by the production of soft commodities in tropical forest regions. Companies with supply chain exposure to these commodities, and their investors, should anticipate that country-level efforts will increasingly impact their activities.
With a view toward protecting long-term value and mitigating risks, we will seek toengage relevant investee companies on deforestation risk within their supply chains, particularly those with direct or supply chain exposure to cattle and related products.
While its impact on climate is a key concern, soft commodity-driven deforestation also presents other sustainability related risks to companies.
We therefore expect companies to demonstrate commitment to eliminating deforestation within their supply chains, and will seek evidence of this on multiple levels.”