LEAF: Corporate spending commitments to end tropical deforestation reach $1.5bn at COP27
Volkswagen and H&M have been named as the latest signatories to a global coalition to scale the market for emissions reduction credits from forestry programmes, with more than $1.5bn in corporate spending now committed to the initiative.
Established at the World Leader’s Summit on Climate at COP26 in Glasgow, the Lowering Emissions by Accelerating Forest finance (LEAF) Coalition is being steered by the governments of the UK, Norway and the US with private sector support arriving from Amazon, Airbnb, Bayer, Boston Consulting Group, GSK, McKinsey, Nestlé, Salesforce, Unilever and others.
The LEAF initiative had aimed to mobilise at least $1bn to support emissions reductions by ensuring tropical forests that act as carbon sinks are protected from deforestation while protecting the rights of Indigenous Peoples and members of local communities.
Now at COP27, it has been confirmed that financial commitments through the coalition now total more than $1.5bn, following a string of new private sector commitments.
LEAF announced that auto manufacturer Volkswagen Group and fashion retailer H&M Group have joined the coalition. As corporate members, the companies have committed to purchasing “high-integrity” emissions reductions credits, based on national or large-scale Reducing Emissions from Deforestation and Forest Degradation (REDD+) schemes.
The new funding commitments represent a 100% increase in private sector spending commitments since COP26.
From a corporate perspective, members of the LEAF Coalition will support the initiative while accelerating their own internal targets, with the likes of Amazon and Unilever aiming to transform themselves into net-zero businesses. More than 25 global corporations are now part of the Coalition, including Salesforce, Bayer, PwC and Blackrock.
On a national level, LEAF has also welcomed the Republic of Korea, which was unveiled at COP27 as the first Asian government to support the initiative.
Elsewhere, Ecuador became the first country to sign a memorandum of agreement (MOA) with Emergent, the coordinator of The LEAF Coalition, to develop a roadmap and timetable for a binding Emissions Reduction Purchase Agreement by the end of April 2023.
“The need is urgent – for the climate, for biodiversity and the people that depend on forests,’ Emergent’s chief executive and administrative coordinator of LEAF Eron Bloomgarden said. “That’s why this first agreement with Ecuador is so significant. It shows the considerable progress we have made together since COP26, providing a clear roadmap and demonstrating the commitment of all parties to sign ERPAs in the coming months.
“We are also delighted that Volkswagen and H&M have joined LEAF and our mission to end tropical deforestation. Finance is needed at scale from the private sector if we are to fulfil our goal. We are pleased with the growth of commitments to $1.5bn and the one hundred percent increase in corporate commitments since COP26. The recruitment of the Korean government as LEAF’s first sovereign supporter in Asia represents a significant milestone too. But we know much more is needed and we are committed to accelerating our efforts to grow LEAF and increase its impact.”
Finance Sector Deforestation Action
According to the World Economic Forum (WEF), $44trn – more than half of global GDP – is exposed to risks from nature loss. Similar research from WWF found that nature loss will cost the global economy at least £8trn by 2050 without transformational action from the public and private sectors, alongside governments.
Also announced at COP27 was the fact that financial institutions from nations such as Brazil, Japan and Norway are all signatories to the Financial Sector Commitment on Eliminating Commodity-driven Deforestation. Organisations including LGIM, Aviva, AXA, Schroders, Storebrand, JGP (Brazil), Impax, Generation Investment Management, Bancolombia and the Church Commissioners, have been moving forward with implementation as the Finance Sector Deforestation Action (FSDA) initiative.
The FSDA aims to eliminate deforestation by 2025 from major agricultural commodities such as beef, soy, palm oil, pulp and paper – as part of the global transition towards sustainable production.
FSDA members recently developed shared investor expectations that they are now using in connection with stepping up engagement with companies. Others, such as Aviva and Impax have set and published deforestation policies and are now engaging with data providers in order to try and create issuer-level data on deforestation risk exposure and management.
New signatories adopting the Commitment include SouthBridge Group, the first African financial institution to join the initiative, Banco Estado de Chile, London CIV and GAM Investments.
Many of the firms in the FSDA are members of the Investor Policy Dialogue on Deforestation (IPDD), which has been engaging with industry associations in Brazil, Indonesia, the EU, and the UK. The IPDD plans to work with agencies in the US and China from next year.