Last week Domini Impact Investments called on members of the California State Senate to pass legislation that would ensure that public purchasing avoids negative impacts on forests. The California Deforestation-Free Procurement Act, AB572, would mandate No Deforestation, No Peat, and No Exploitation (NDPE) policies, certification, and public disclosure from specific state contractors and subcontractors.
We drafted a letter to members of the Senate committee reviewing the legislation, coordinating sign on by investors representing $400 billion in assets under management, explaining why investors support the bill. The required policies and disclosure would help ensure that companies we invest in don’t face material reputational, legal, and climate risks from deforestation.
Deforestation causes release of carbon, loss of plant and animal habitat and species, and can be harmful to indigenous peoples and sustainable livelihoods. In fact, deforestation is currently one of the biggest drivers of climate change and biodiversity loss. An estimated 15% of all greenhouse gas emissions result from deforestation.
Loss of forests is largely driven by four forest-risk commodities, beef, palm oil (often found in packaged good and personal care products), soy (for biofuels and animal feed), and pulp and paper. Therefore, changing the policies and practices of large companies and large buyers can have a noticeable impact on rates of deforestation, especially in South American and Southeast Asian rainforests.
The bill has already been passed by California’s Assembly, and now is being considered by the Senate. It will go to a vote in September. We hope investor support will help California State Senators support this important legislation.