Family offices are being asked to “save the trees” by Global Canopy.
The nonprofit organization based in Oxford, England, has produced a guide to investing for family offices and foundations on how to steer their investments away from firms that contribute to deforestation, which is a leading cause of climate change.
The how-to guide, the “Deforestation, Conversion and Abuse-Free Investment Mandate,” is designed to show large investors how to keep the destruction of forests and the conversion of other natural habitats, along with the human rights abuses that are the result, out of portfolios, Global Canopy said.
According to the UBS 2022 Global Family Office Report, the 221 largest single-family offices in the worlds have a total net worth of $493 billion, with the individual families’ net worth averaging $2.2 billion. “When invested, this money could be funding forest destruction” and other destruction of natural habitats, Global Canopy said.
“The guide was born out of a realization that any philanthropic giving could be undermined by investments that are financing the destruction of nature and contributing to the climate crisis. The mandate provides clear guidance to ensure that this doesn’t happen,” Alex Robertson. Global Canopy’s sustainable finance associate, said in an email exchange. ““Family offices and foundations have tremendous leverage and influence over financial institutions. The guide also can be used by other investors, including retail investors.”
“Many foundations and philanthropically minded family offices have an impressive record when it comes tackling environmental crises, so it is essential that their investments don’t unwittingly cause destruction. Deforestation hidden in their investments could be at risk of outweighing their positive impact” of their other work, Niki Mardas, Global Canopy’s executive director, said in a statement. The guide is designed to help them use their tremendous leverage to lead the way on deforestation-free portfolios, by putting pressure on asset managers and financial institutions.”
Deforestation is responsible for 11% of greenhouse gas emissions globally, Global Canopy said. Race to Zero, the United Nations campaign to stem climate change, has called on investors to eliminate investment-driven deforestation from portfolios by 2025.
The guide provides tools and resources for mitigating deforestation risks from portfolios and advises investors on how to engage asset managers in the campaign, Global Canopy said.
Global Canopy’s deforestation-free investment mandate is the latest guidance provided by the organization, along with the Finance Sector Roadmap on Eliminating Commodity-Driven Deforestation and the Deforestation-Free Pensions Guidance.
“We need action on deforestation from the finance sector now,” Robertson said. “To date there has been excellent uptake and engagement from family offices and foundations. Over the coming months we plan to roll this out across other geographies, including the United States, where a substantial number of foundations and family offices are based.
“We plan to build on this uptake and engagement with training on how to utilize the mandate in practice. We produce a series of case studies and other best practices, so that family offices and foundations can learn from each other and help create that change together. It’s only through collective action that we will begin to see the systemic change we need,” he said.