1. Forests and Climate Change Science Policy FinanceQuickTime and aQuickTime and adecompressor decompressorare needed to see this picture. are needed to see this picture.

2. REDUCING THE FOREST FOOTPRINT OF CORPORATIONS AND THE FINANCE SECTORTHE FOREST FOOTPRINT DISCLOSURE PROJECT Andrew W. Mitchell Chair FFD Steering CommitteeGeneral Presentation Autumn 2009 Global Canopy Programme 3. How does Business Drive Deforestation? Beef and Leather Soy Palm Oil Paper and Pulp Bio-fuels Oil and Gas and Mining 4. Building Bridges Along the lengthof a supplychain Betweencorporates,NGOs andResearchers Betweencompanies andtheir investors 5. Why Investors care about Forest FootprintDisclosure? Economics of muchdeforestation is driven bydemand for commodities Halting deforestation is nowa key action on climatechange to 2020 Political and Regulatoryframeworks being put intoplace $5+ billion has been pledgedto make it happen 6. The Risks - Ecosystem Services underpinClimate, Water, Food, Health & Energy SecurityEG: Amazonia $1 trillion food industry share thiseco-dependency 3 trillion tonnes of water stored 8 trillion tonnes of water vapourevaporated each year Deforestation may meandeclining service provision Rising temperatures maycompound the effects The Amazons Rainfall Service? After J. Marengo, INPE 7. 13 Million hectares converted annually 8. Global supply chains. their lives.. and oursQuickTime and adec ompressorar e needed to see this pic ture. 9. A New 21st Century Economic Opportunity?Natural Capital & Ecosystem Services Worth US$1.4 - 4.5Trillion per yearUNEP- TEEB Review 2010Business in the future must account and pay for the restoration, maintenance, and growthof natural capital it uses 10. Eco-Utilities & the Biosphere Economy Amazon Eco-Utility draft frameworkStewardship Climate Security Water Security CommunityForest Food Security Energy Security Ecosystem Health Security Services (local) Livelihoods Ecosystem Services Benefit sharing(regional-global) Economy 11. RELEVANCE IN THE UNFCCC PROCESS UN CDM > REDD > REDD+> PINC?1t/CO2 1 ha/forest?Three complementary and reinforcing mechanisms for conserving and restoringforest and mitigating and adapting to climate change 12. HOW TO ENGAGE WITH CORPORATIONSAND FINANCE DRIVERSSTOP > MOVE > INTENSIFY Regulation - disincentivise bad behaviour Restore degraded land - perverse subsidies? Increase efficiency - sustainably Positive Incentives - market pull/Tax credits Operate at scale - aggregate projects De-risk investments - Eg. insurance 13. KEY ENTRY POINTS FOR REDD ROUND TABLES (Soy/Beef/Palm/Biof/ etc) FOREST RISK COMPANIES FOREST RISK INVESTORS DESIGNING FINANCE MECHANISMS FOOD/ENERGY/SUBSIDY REFORM PUBLIC PROCUREMENT CARBON/ATMOSPHERE > FOOD/WATER 14. A Case Study: Forest Footprint Disclosure Understand and reduce the impacts of the use ofForest Risk Commodities on deforestation Review FRC supply chain better practiceannually Deliver relevant risk information to investors Identify sector leaders Build capacity for changeTO REDUCE THE UNSUSTAINABLE GLOBAL FOREST FOOTPRINT 15. How does Forest Disclosure work? Global project - based in the UK A Disclosure Request is sent to companies asking them how deforestation risk is managed within their supply chains Key forest-risk commodities covered: timber, soy, beef & leather, palm oil and biofuels US$5.7 Trillion asset managers endorse the disclosure request Targets 300+ listed companies 16. Deliverables Disclosure Request data series Sector leaders highlighted in Annual Review Specific company reports for investors andparticipants Input into round tables and investor-focusedevents on FRC risks to business Private sector engagement on deforestationsupply chains 17. Why is the Finance Sector Engaged? Indentifies risks and opportunities Provides a forum for deforestation issueswithin finance community Safeguards future financial risks Leads new dialogue with corporates Opens up potential new markets 18. Investor endorser engagement is growingNumber of endorsers (Column)AUM (USD) line504,500454,000403,500353,000302,500252,000201,500151,00010 5500 0- May Jun Jul Aug Sep Oct Nov Dec JanFeb Mar Apr May 20092010 19. Deforestation: Downside Risks Reputation impact: Consumer/Customer/Staff Regulation is tightening Supply chain dislocation Commodity price inflation Decreased access to finance Exclusion from mature markets Carbon pricing impact (unclear) 20. Upside Opportunities: of Not deforesting New funding for agricultural reform Preparedness for new regulations and markets Marketing opportunities vary globally byconsumer education and credibility of labelling Public procurement increasingly demandssustainability criteria Investor valuation opportunity (unclear) Staff and Consumers love you more! 21. Selection of Target Companies Sources: Global 500, FTSE 350 to 100,Eurostoxx and additional major players in keyemergent stock markets Filtered according to known or anticipatedForest Risk Commodity profile Key privately owned companies known tohave a high impact through growing, tradingor buying + voluntary participants! 22. Performance Improvement FRC issues are not well understood Companies want neutral sources of expert support FFD offers customised feedback More sophisticated are asking for standards and quantification of impact Public procurement has a big role to play FFD builds capacity: Metrics Workshop (Sep 2010) and Peak Soya? (May 2011) 23. The 2010 DR Cycle: Sector Leaders Basic MaterialsStora Enso Oyj Biofuels Greenergy Clothing/Accessories Adidas AG and Nike Inc Farming and FishingIOI Group Food & Drug Retail Carrefour and J. Sainsbury Food Products/ SoftDanisco General RetailersMarks and Spencer Industrials/Construction DLH and Weyerhaeuser MediaReed Elsevier Oil and GasNeste Oil Personal care /Household Kimberly-Clark Travel and Leisure British Airways UtilitiesDrax Group 24. The FFD Disclosure Request 25. NEXT STEPS1. Building Bridges between Commodity Round Tables and REDD How to fund transition costs IPAM + others2. Innovation in Forests and Finance How to leverage public funds GCP + others 26. We Thank the Institutions Below for their Financial Support:Department for International Development (DFID) The Esme Fairbairn FoundationThe Rufford Maurice Laing Foundation CLUAThe Waterloo Foundation