ACTIAM: Satellite-based engagements towards no deforestation
Engagement to tackle the complex challenge of deforestation measurement using satellite imagery
What we know
ACTIAM, the investment management firm, believes it is its fiduciary duty to support the transition to a sustainable society while creating longer-term financial returns to its clients.
It works to achieve this by investing on behalf of its clients in companies and countries that operate or are making the transition towards operating within the planetary boundaries, essential to a sustainable society. It also encourages companies and countries to prepare for the new challenges they are facing.
As part of its sustainable investment strategy, ACTIAM has set the goal to reach zero deforestation by 2030. The complexity of measuring deforestation occurring in the supply chains of investee companies is a major challenge, however.
What we’re doing
In 2019 ACTIAM partnered with Satelligence, a geodata-analytics company, to take first steps towards measuring and reducing company-specific deforestation.
In 2020, ACTIAM teamed up with other investors, representing EUR 1.8 trillion in assets, to launch the investor initiative.
This initiative involves a group of institutional investors entering into dialogue with companies to address deforestation cases found by satellite detection and call for preventive measures, including supply chain transparency.
Engagement with large publicly listed companies sourcing palm oil from Malaysia and Indonesia has been on two fronts: encouraging commitments to full traceability and public disclosure on the risks, and encouraging commitments to reduce and mitigate deforestation connected to specific palm oil supply chains.
The palm oil-sourcing companies receive evidence of incidences of deforestation in the regions where their suppliers are active.
Investors then start a dialogue with these companies to discuss how they deal with this information, how they can reach out to their suppliers, and how they can take appropriate action in line with engagement, grievance or suspension procedures.
As a result, companies using palm oil become more aware of the risks of deforestation for their supply chains and how they can improve traceability and dialogue with their suppliers.
Read more, here.
What it’s worth
It is too early to say whether the initiative has resulted in reduced deforestation.
However, measuring changes in deforestation over time and attributing deforestation incidences to companies higher in the supply chain enables all involved to better gauge whether companies improve their no-deforestation activities or whether policies should be improved.
ACTIAM sees it as its fiduciary duty to support the transition to a sustainable society. We recognise that financial returns do not matter if there is no future with a good quality of life for our clients to enjoy. The business case for biodiversity is clear: recently, the Dutch Central Bank estimated that the Dutch financial sector is exposed to significant financial losses, with around EUR 510 billion dependent on ecosystems services. This shows the materiality of biodiversity and the importance to consider biodiversity in our decision makingFrank Kusse Chief Executive Officer, ACTIAM