Major investors back disclosure on deforestation

LONDON (Reuters) - Major investors are backing a project designed to push companies towards greater disclosure of their role in the deforestation of land, the Department for International Development (DFID) said on Monday.

Credit Agricole Asset Management, Aviva, F&C Asset Management and pension fund manager Hermes are among 12 investors with $1.3 trillion of assets who are supporting the Forest Footprint Disclosure Project (FFD).

"What we're dealing with here is an emerging risk that both investors and companies don't fully realise," said Andrew Mitchell, chair of the FFD Project steering committee.

Deforestation has been picked out as a key contributor to global warming, emitting more greenhouse gas globally than the transport sector and only second behind energy, Mitchell said.

"From investors' point of view, in their portfolios there is a growing reputational risk, as well as a material, earnings risk," he told Reuters.

The FFD helps to fill holes in the Carbon Disclosure Project (CDP), launched in 2000 and supported by 475 investors. The CDP requests details of carbon emissions but not on deforestation directly nor the 20 percent of emissions that DFID estimates it causes.

The 12 institutions have put their names to a letter sent to 150 Fortune 500 companies selected for potential exposure to deforestation risk, as well as to 50 other smaller firms. The letter will request disclosure of the firms' 'forest footprint'.

"Deforestation is a global emergency, the importance of which the business world needs to wake up to. Billion dollar funding mechanisms and new regulations are being put in place by governments to curb emissions from forests and agriculture," Mitchell said.

He said investors and companies have been slow to realise the potential impact of those funding mechanisms and regulations -- such as new EU laws on timber exports -- on current business practice.

The FFD will publish an annual report in January 2010 which identifies 'best-in-class' companies as well as those seeking to manage their risk, and those that declined to make disclosures.

Gareth Thomas, minister of state for international development, urged companies and investors to participate.

"Deforestation is a real and serious threat. It is important that businesses seize the initiative and engage with the FFD Project ... I want to see companies taking the lead in the same way as many have done when reducing their carbon footprint."