At COP26 during the World Leaders Summit’s Forest Day session on November 2, 2021, the United States launched the Forest Finance Risk Consortium (FFRC). The Consortium will bring together financial institutions and experts in forest monitoring and climate finance disclosure to better assess and disclose exposure to forest-related emissions in investment portfolios.
Investment portfolios contain significant exposure to investments and activities linked to deforestation and land degradation globally. Although many companies are taking steps to assess and disclose their climate-related risk, they often lack the specific tools and expertise needed to understand and disclose exposure to forest-related emissions. Addressing the linkages between financial investments and deforestation is critical for reducing emissions from deforestation, ecosystems conversion, and other land sector activities – enhancing and expanding their carbon sequestration potential – and ultimately achieving net-zero emissions by 2050.
The FFRC will improve disclosure of forest-related climate risk in line with existing and emerging climate finance disclosure guidance, decreasing future risks to financial markets and helping financial institutions eliminate climate risks from their portfolios. FFRC will serve as a platform for convening financial institutions and technical experts in forest monitoring and climate finance disclosure. The aim will be to identify, develop, and refine tools, resources, and best practices to incorporate emissions from land-use across all three scopes (direct, energy-related, and other indirect emissions) into reporting and financial decision making.