Legal & General Investment Management (LGIM) is co-chairing an engagement that will take on the UK, EU, US and – from 2023 – China on deforestation, Responsible Investor can reveal.
The initiative is the latest workstream to be undertaken by the Investors Policy Dialogue on Deforestation (IPDD) initiative.
Launched in July 2020, the programme – which is supported by 61 financial institutions representing $8.8 trillion in assets under management – aims to co-ordinate public policy dialogues on halting deforestation.
The IPDD has already initiated workstreams engaging with the Brazilian and Indonesian governments. But whereas these dialogues are focused on producing nations, the new workstream targets consumer countries.
Alexander Burr, ESG policy lead at LGIM, explained to RI: “It seemed like the logical next step to look at the consumer countries and their regulatory space around the issue.”
He continued: “With the increase in deforestation-focused supply chain regulation being debated and implemented in consumer countries, investors noted the importance of engaging with these regions to guarantee that regulation is robust when it comes to tackling commodity-driven deforestation.”
The target regions for this year are the UK, EU, and US. Engagement with China is set for the beginning of 2023.
Components such as international harmonisation, scope, roadmaps/timeline for implementation enforcement, and monitoring, will be looked at by the investors in light of the deforestation-free commodity regulations being debated and implemented in these jurisdictions.
With regard to the specific engagement targets, Burr said this will need to be mapped out. However, his initial thinking is that in the US this could be at both a state and federal level, in the EU it would probably be a mix of the European Commission and Parliament, and in the UK it would likely be with the Department for Environment, Food and Rural Affairs.
An invitation has gone out to investors in the IPDD about joining the workstream and engagement is expected to begin once the membership group is established.