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Banks urged to adopt guidance tool to assess forestry investments

Increased focus on the sustainable management of the world’s forests and the associated risks and opportunitie…

Increased focus on the sustainable management of the world’s forests and the associated risks and opportunities posed for the financial sector has led PricewaterhouseCoopers (PwC) and the World Business Council for Sustainable Development (WBCSD) to develop the Sustainable Forest Finance Toolkit.
The Sustainable Forest Finance Toolkit provides, for the first time, guidance for financial institutions to better manage risks related to investments in forestry and industrial projects that have forest impacts, such as agriculture. It contains information on sustainable forestry standards and is meant to help frontline banking staff proactively address forest loss and illegal logging activities when considering loan applications.
“Currently, banks and other financial institutions invest US$150 billion in the global forestry sector and many more billions are invested in infrastructure and land use change projects that directly impact forests. The Toolkit recognizes the scale of the sustainability challenges facing the finance sector,” says Björn Stigson, president of the World Business Council for Sustainable Business Development.
“Globally, deforestation continues at an alarming rate of up to 130,000 square kilometers every year,” says Bruce McIntyre, partner and national leader of the Forest, Paper and Packaging industry practice for PwC in Canada. “Fortunately this is not a significant issue in Canada, which has the largest area of certified forests in the world. The challenge for the financial sector is in developing consistent and effective policies, and monitoring procedures to encourage sustainable forestry, and the toolkit provides a framework to support this goal.”
The toolkit provides guidance in four key areas:
– New client assessments: evaluating the sustainability performance of forestry and high forest-impact clients by using a client evaluation decision tree, interview template and due diligence for higher risk clients, including briefings which reference key risks and opportunities in the forest, paper and packaging sectors
– Portfolio management: assessing legacy clients within the bank’s “forest footprint” portfolio
– Policy development: designing a clear and pragmatic forest finance policy
– Procurement: illustrating a forestry procurement policy and links to additional resources.
Björn Stigson and Bruce McIntyre will be speaking more about sustainable economic development and Transformation through Innovation at the PwC 23rd Annual Global Forest & Paper Industry Conference, on Tuesday May 11 in Vancouver.