Sweden’s AP2 has partnered with German-based sustainable finance think tank Climate & Company to systematically identify deforestation exposure in global portfolios.

Through the collaboration, Climate & Company will assess and combine existing resources to create a publicly accessible workflow to be tested and applied to AP2's holdings in listed equities.

The aim is to highlight how far practitioners get with existing (data) resources and pinpoint any apparent gaps. The collaboration is being funded by the Gordon and Betty Moore foundation.

Commenting, AP2 sustainability strategist, Åsa Mossberg, said: "We in the financial sector have a key role to play in accelerating the transition towards a deforestation-free economy through engagement with our portfolio companies and by reallocating capital.

“Through the collaboration with Climate & Company, AP2 is contributing to the development of practical guidance that becomes public and that the financial sector can use to map and quantify the deforestation risk in their portfolios.”

AP2, as a signatory to the Financial Sector Commitment on Eliminating Agricultural Commodity-Driven Deforestation, aims to have a portfolio that does not contribute to deforestation by 2025. This is also in line with the fund's climate commitment to net-zero greenhouse gas emissions by 2045.

"Through our collaborative approach, we offer investors clear guidance on systematically identifying potential exposure to deforestation. Our publicly accessible guideline aims to provide the required resources, minimising the time and staff resources needed to fulfil deforestation-free commitments,” Climate & Company analyst, Malte Hessenius, said.

“By doing so, we aim to demonstrate to regulators that existing data and tools are sufficient to get started, while also highlighting crucial gaps that, when addressed, will simplify evaluations in future.”

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