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Risk Horizon Data Focus: Deforestation

The Landmark ESG Team are continually researching to find the most current, authoritative, and accurate global data covering the 46+ risk factors contained within the Risk Horizon tool. We cross-reference these with industry materiality scores to output an inherent risk rating and assign a value to the performance of these material risks worldwide. In the summer of 2022, we updated our deforestation dataset, produced by the Environmental Performance Index of Yale University using Global Forest Watch data.

This measures tree cover loss as a proportion, showing the average annual loss in forest area within a country over the past five years, in comparison to the total forested extent in the year 2000. We then convert this data into our ranking system so these align across risk factors.

Deforestation is an increasingly important issue as the world strives to keep global warming to 1.5°c and halt biodiversity loss. As well as a greater awareness and public discourse on worsening climate extremes, the recent election in Brazil and COP27 has brought these issues into sharp focus. In October, Luiz Inácio Lula da Silva was [re]elected to replace President Jair Bolsonaro.

Lula’s earlier presidency, between 2003 and 2010, saw deforestation rates drop to near-record lows with rates falling by approximately three-quarters since peaking in 2004, while Bolsonaro’s subsequent premiership from 2019 lead to a 15-year high in deforestation across Brazil’s Amazon. In 2021 alone, Brazil lost 1.55 million hectares of tropical primary forest. In September this year, Brazil’s Amazon saw the most fire alerts in a single month that’s been recorded for a decade.

Whilst the Amazon is a vital carbon sink, it’s fast approaching a tipping point where it has the potential for emissions from deforestation and worsening forest fires and subsequent cattle ranching to overtake the rate at which the remaining forest absorbs greenhouse gases. Crucially, Lula has committed to “spare no effort to have zero deforestation and the degradation of our biomes by 2030”.

ESG due diligence is instrumental in ensuring global supply chains are sustainable and resilient. It will be interesting to follow our deforestation dataset in coming years following commitments to halt deforestation globally by 2030, particularly across the Brazilian Amazon in light of surging degradation over recent years and Lula’s pledge to strengthen conservation efforts. Now, more than ever, we all need to ensure we’re playing our part in monitoring and minimising global deforestation towards zero degradation by the end of the decade, it we’re to avoid the worst of the climate and biodiversity crisis.




Find more details on the introduction Practice Note | ESG data and ratings providers.

As ESG reporting and data solutions continue to increase, it can be tricky to keep up with the different types of data and ratings providers out there, as well as the benefits of using different approaches to assess ESG performance. Landmark in collaboration with Latham & Watkins have drafted a Practice Note to summarise the types of data and corresponding products in the market. This was published in December 2022.

Learn more about Risk Horizon.