The Investor Participant Voices series highlights the expertise and experiences of Nature Action 100 Investor Participants.   

In this piece, Annie Sanders, Director of Shareholder Advocacy at Green Century, discusses her firm’s experience in engaging U.S. and global companies on addressing material risks from tropical deforestation and the opportunities to encourage more progress on tackling the issue. 

What experience does Green Century have in engaging companies on tropical deforestation as a firm and as part of Nature Action 100? 

Green Century has encouraged companies to adopt no-deforestation commitments since the early 2010s, when Starbucks and Kellogg’s were among the first U.S. companies to commit to deforestation-free palm oil supply chains. We have built on this work to safeguard corporate bottom lines by advocating for the protection of wild lands in Brazil, where forests are burned to make way for soy plantations and cattle producers. In recent years, our engagements with consuming-facing companies in the U.S., such as Costco, Kraft Heinz, and J.M. Smucker, have led them to implement forest protection policies. Through our participation in Nature Action 100, we are supporting 10 companies to assess and reduce their impact on biodiversity, including through the adoption of no-deforestation and no-conversion commitments and implementation plans for key commodities. 

What have you learned from your experience with deforestation engagements and how have you used that experience to engage companies under Nature Action 100?   

Companies do not always fully appreciate the financial risks associated with even modest exposure to deforestation in their supply chain. We have found that it can be clarifying when investors initiate direct conversations to flesh out the regulatory, competitive, and reputational risks the company is exposed to without systems and plans in place to monitor and ultimately eliminate deforestation. Sometimes, companies will take that feedback up the chain and adjust accordingly. We have also found that other approaches can prompt a meaningful response — from investor sign-on letters to shareholder proposals.  

As the rate of forest loss remains high, what do you see are the greatest obstacles to removing deforestation from corporate supply chains?  

In our view, the main obstacles fall into three categories: insufficient traceability and monitoring systems, few regulatory frameworks, and a fundamental economic reality, which is that for most companies, there is little incentive to keep trees standing because they are still deriving strikingly high returns in the short term from clearing forests for agricultural commodity production.  

How can investors support companies to overcome those obstacles?  

Ultimately, deforestation-free supply chains lead to business resilience that protects long-term shareholder value. Investors need to keep making the case to companies that deforestation-linked supply chains are just not worth the systemic, regulatory, competitive, and reputational risks.  

However, direct company engagement alone cannot fully solve problems like deforestation that require market-wide and policy-level intervention. It is necessary for companies to have supply chain no-deforestation commitments, but they only partially address problems that are fundamentally structural. Companies, investors, and stakeholders need to invest in – and promote initiatives and solutions that change – the economics of forest protection. 

What other factors, such as policies or investment opportunities, do you think are necessary to spur progress on protecting forests?  

Companies need to continue to implement traceability and monitoring systems, robust certification schemes, and meaningful investments in sourcing landscapes. At the same time, public policy is critical. The European Union’s Deforestation Regulation will spur a shift toward deforestation-free supply chains, but we need the regulation fully implemented and more laws like it in the works. Investors have a key role to play in expressing support for this kind of public policy that levels the playing field for companies and protects the long-term financial interests of diversified investors.  

But we are not going to get legislation on the books everywhere we need it. And there’s a limit to what companies can do by acting alone. Some of the work – particularly in high-risk regions – needs to be done by companies and stakeholders working together through landscape initiatives to safeguard the ecosystems on which they – and we all – collectively depend.  

Annie Sanders is Green Century’s Director of Shareholder Advocacy, leveraging the Funds’ and the firm’s clout as a shareholder to drive companies to adopt more environmentally sustainable policies and practices. Prior to joining Green Century in 2022, she served as Executive Director of Green Corps, where she worked for 16 years advancing campaigns to protect our climate, expand clean energy, promote land conservation and protect wildlife. She holds a BA in Environmental Studies from the University of Chicago.