Introduction

Agriculture, forestry and other land use (AFOLU) sources contribute up to 21% of global emissions (p.5), with roughly half attributed to deforestation, the primary driver being agriculture (p.5). Within IPCC 1.5°C pathways, CO2 emissions from deforestation and wider AFOLU sources must reach net zero by 2030 (p.5).

Deforestation compounds climate-related financial risks. Amazon dieback, for example, would result in impacts of an estimated USD 3.6 trillion of lost net present value (p.6). Agriculture is the leading driver of tropical deforestation, with seven soft commodities historically most responsible (p.6). Hard commodities such as mining also contribute significantly, with evidence suggesting forest loss from mining is accelerating (p.6).

The interrelation between climate, nature and human rights

An estimated 55% of global GDP is highly or moderately dependent on nature (p.9). In the Netherlands alone, EUR 510 billion of investments by insurers, pension funds and banks are estimated to be critically dependent on nature (p.9). A fifth of countries are now at risk of ecosystem collapse (p.9), and biodiversity loss and ecosystem collapse are seen as the second-most severe risk to business over the next decade, behind extreme weather events (p.9).

Indigenous Peoples and local communities steward or hold tenure over a quarter of the world’s land surface (p.9). Human rights considerations — particularly those linked to deforestation — fall under transition risk and represent significant legal, reputational, and operational risks for investors.

Alignment with the net zero investment framework

This guidance builds on the Net Zero Investment Framework (NZIF) 2.0, which includes advanced action points on deforestation. Five priority actions are recommended before progressing to further actions: assess and disclose exposure; develop a deforestation policy; integrate deforestation considerations into investment decision-making; address material exposure through portfolio stewardship; and conduct systems-level stewardship by advocating for deforestation-curbing regulation (pp.13–14).

Recommended asset class-agnostic action points

Actions are structured across six NZIF component areas: governance and strategy; objectives; strategic asset allocation; asset-level assessment and targets; stakeholder and market engagement; and policy advocacy. The corresponding investment opportunity for climate adaptation is expected to increase from USD 2 trillion to USD 9 trillion by 2050 (p.12). Opportunities from addressing nature loss are estimated at over USD 1.3 trillion, with a cost of just USD 22.7 billion (p.12).

Investors are encouraged to join coalitions such as the Deforestation Investor Group (DIG) and engage with data and index providers to ensure deforestation considerations are reflected in their products (p.20).

Recommended asset class-specific action points

For listed equity and corporate fixed income, investors should use available tools (e.g. Forest500, ForestIQ, CDP) and develop time-bound engagement and escalation strategies, including the use of shareholder resolutions (pp.23–24).

For sovereign bonds, engagement should balance dialogue with both producer and consumer countries, monitoring metrics such as forest loss and regulation enforcement (p.26).

For real estate and infrastructure, investors should screen for land conversion risks, require deforestation-free construction commodities, and prioritise brownfield over greenfield development (pp.27–28).

For private equity and debt, recommended actions include tying performance incentives to deforestation KPIs, including deforestation-related covenants in agreements, and engaging during debt issuance — particularly with companies carrying higher debt-to-asset ratios (pp.29–30).