Commodity financing
Commercial capital flows shape the world´s commodity markets and as such, the way trade and investment decisions are made, can generate serious environmental impacts; from fisheries, forests and livestock to pollution and climate change.
Rapid global growth in demand for some commodities, an increasing interest in bio-fuel and food/fuel use and the rising impacts of climate change, scarcity and food security, are becoming material investment and reputational risks to the financial sector. They are encouraging the sector to develop a better understanding of the complex environmental and social issues associated with unsustainable sourcing.
Acknowledging the enormous environmental and social costs of commodity production, a number of financial institutions have started to develop responsible financial policies and risk management procedures that aim to effectively respond to these challenges. Screening companies for environmental performance and risk, including greenhouse gas emissions reporting, and excluding poor business performers from investments through standards such as The Equator Principles and UNEP-Finance Initiative are some good examples of this.
WWF is working with financial institutions to help address these challenges, by integrating environmental and social issues in commodity financing, and delivering better risk management and financial performance. We work in carbon markets and agricultural commodities such as oil palm, sugarcane and salmon, contributing to shaping emerging investment frameworks for sustainable commodities.
Some concrete examples:
WWF launched an online Palm Oil Financing Handbook and quiz to help bankers and investors develop and implement responsible palm oil financing and investment policies.
Recognizing that now is not the time for “business as usual”, companies across the world are re-examining the ways in which they do business, realising that sustainability, more than ever before, will be the key to their success.
On 14-15 January 2010, with support from the Swedish International Development Cooperation Agency (SIDA), WWF´s Global Forest & Trade Network (GFTN) brought together over 20 leading stakeholders in the finance sector and WWF colleagues to discuss how finance institutions can leverage responsible forest management and trade.
