skip to content

Cambridge Institute for Sustainability Leadership (CISL)

None

12 January 2021 – A new report outlines how banks can take steps to accelerate the reduction and reversal of deforestation leading to greater stability for nature, climate and the economy.

The action plan set out by the University of Cambridge Institute for Sustainability Leadership (CISL) highlights the opportunities for banks to grow the supply of soft commodities that are deforestation-free or forest restorative. Underpinned by a set of five actions, the new report aims to act as a catalyst for banks to respond to the biodiversity crisis.

Soft commodities such as palm oil, soy, beef and timber products are responsible for the majority of deforestation caused by commercial agriculture. Banks provide finance and financial services to enterprises along these soft commodity supply chains, indirectly contributing to deforestation.

Banking beyond deforestation suggests it is this very positioning of financial services along the supply chain that means banks are well-placed to support activities that can halt and reverse deforestation.

Nick Villiers, Director, Centre for Sustainable Finance, CISL said:

“More collaboration is needed between local and global banks and their clients if we are to halt and reverse deforestation. Our Action Plan maps out the unique part banks can play in tackling deforestation and aims to catalyse further action by the banking industry and beyond. By acting together, banks can help rewire the economy, mobilising and structuring finance so that it supports deforestation-free and forest restorative soft commodity production.”

Bank services along commercial agriculture supply chains include term loans, trade finance, bond and fund structuring, capital raising, project finance. As a result, they can act as intermediaries for financial incentives that can increase the supply of deforestation-free and forest-restorative soft commodities because they have:

  • access to businesses along the supply chain and to impact investors;
  • expertise to assess counterparty risk and structure capital; and
  • data about client operations.

A supportive context also exists for ambitious action. From remote sensing to the mandated disclosure of financed emissions, to a growing appetite from banks’ clients, there are today factors enabling banks to support a transition to deforestation-free commodities.

More than 50 per cent of global GDP relies upon services provided by nature, including freshwater, healthy soil and clean air. Despite this, nature is experiencing a precipitous decline. Every six seconds, a football pitch of primary forest is lost. The Covid-19 pandemic has underscored the urgency of tackling this decline, with habitat loss increasing the likelihood that viruses transmit from animals to humans.

CISL’s Action Plan outlined below can help banks become part of creating the solution to deforestation rather than waiting for others to define standards and regulation:

  • Action 1: Alignment and traceability – align anti-deforestation policies to a best practice standard and support improvement to supply traceability
  • Action 2: Scaling sustainability supply – structure financing facilities that offer benefits to producers of deforestation-free and forest-restorative soft commodities
  • Action 3: Measurable targets – set time-bound targets that enable progress towards deforestation reversal, with performance measured and managed
  • Action 4: Accountability – identify a team responsible for delivering against time-bound targets, with C-suite accountability and expertise to implement
  • Action 5: Systemic support – advocate for government action that makes deforestation commercially unattractive or illegal

The bedrock of the action plan is collaboration between local, regional and global banks along the supply chain. By collaborating, these banks share costs and expertise, reduce the likelihood that deforestation leaks to another financier and can create standardised, scalable financial solutions that reduce transaction costs and enable scale. The proposal also acknowledges the need for banks to engage with external stakeholders.

Banking beyond deforestation marks the close of the Soft Commodities Compact project - a company-led alliance between CISL’s Banking Environment Initiative (BEI) and the Consumer Goods Forum (CGF), the goal of which was to lead the banking industry in aligning with the CGF’s resolution to help achieve zero net deforestation by 2020.

As a result of the ambitious public commitment, Compact banks lead the industry. Using Technical Guidance developed in consultation with banks and other stakeholders, banks established anti-deforestation policies and began reporting compliance levels. Today, Forest 500 ranks Compact adopters amongst the most advanced in terms of ‘policy’ – all are in the top 30 of 150 financial institutions.

Simon Connell, Head of Sustainability Strategy, Standard Chartered and Chair of the BEI said:

“By sharing both the successes and lessons from the ‘Soft Commodities’ Compact, CISL shows what role the banking industry as a whole could play, working with business and government, to tackle the ongoing challenge of deforestation. As protecting and restoring nature rightfully moves up the agenda, the CISL Action Plan provides the wider banking industry, including local banks, with a way to engage with tangible methods for collective action on deforestation.”


Click here to read the report Banking beyond deforestation.

Find out more about the Banking Environment Initiative.

Roadmap: Identification and integration of nature-related risks and impacts in underwriting and insurance brokerage

4 April 2023

12 April 2023 – New roadmap from CISL’s ClimateWise charts a path for the insurance sector towards nature-positive underwriting and explores the industry’s role in supporting the transition of its clients towards a sustainable economy. 

The ClimateWise Principles Independent Review for 2022

20 January 2023

23 January 2023 – The ClimateWise Principles Independent Review for 2022 sees scores continue to increase across the membership.

Financial innovation for SME net zero transition: Role of banks and buyers

6 January 2023

17 January 2023 – The University of Cambridge Institute for Sustainability Leadership (CISL), Business for Social Responsibility (BSR), We Mean Business Coalition (WMB) and the SME Climate Hub have published a new report highlighting the role of commercial banks and multi-national corporations in helping small and medium sized businesses (SMEs) reach net zero.

Integrating climate and nature: The rationale for financial institutions

26 September 2022

27 September 2022 – Building on the nature-related financial risks collaboration between the Banking Environment Initiative (BEI) and Investment Leaders Group (ILG), CISL has published a new report detailing the importance of an integrated approach to addressing environmental challenges, encompassing climate and other nature-related issues.

Investing in quality jobs for a just transition

13 September 2022

22 September - Building on the ILG's Sustainable Investment Framework, the group have published two reports exploring the key concepts, initiatives, and investment impacts on decent work. This paves the way for the development of a simple, robust, and transparent metric for investors to measure and report both the quantitative and qualitative information about their investment impacts on decent work.

Why nature matters: Nature-related risks and opportunities for insurance underwriting

30 August 2022

5 September 2022 – The University of Cambridge Institute for Sustainability Leadership’s (CISL) ClimateWise has published a new report on Nature Insurance.

Modelling it all: Secondary Perils in a warming world

27 June 2022

29 June 2022 – The University of Cambridge Institute for Sustainability Leadership’s (CISL) ClimateWise has published a new white paper on secondary perils.

Land degradation, UK farmers and indicative financial risk - Nature-related financial risk use case

6 April 2022

April 2022 – The University of Cambridge Institute for Sustainability Leadership (CISL) in collaboration with NatWest Group has published a use case about the indicative financial risk from farming degraded land.

The EU Farm to Fork Strategy and Fertiliser Companies – Nature-related financial risk use case

6 April 2022

April 2022 – The University of Cambridge Institute for Sustainability Leadership (CISL) in collaboration with Deutsche Bank and Union Bancaire Privée (UBP) has published a use case on how the transition to a sustainable and resilient food system impacts fertiliser company valuations.

Mapping exposure to nature-related risks across financial indices – Nature-related financial risk use case

6 April 2022

April 2022 – The University of Cambridge Institute for Sustainability Leadership (CISL) in collaboration with Aon has mapped nature-related risks across financial indices.