Economic actors that constitute the supply chains of forest risk commodities require finance from capital markets. Clear guidelines for disclosure and sustainability are necessary to ensure that investors do not (involuntarily) support activities that result in deforestation.
The European Union (EU) has taken some first steps to facilitate financing decisions that protect forests and ecosystems worldwide. In April 2021, the European Commission (EU COM) adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD), affecting companies’ disclosure practices. The EU COM is also developing delegated acts to extend the EU taxonomy for sustainable activities, a common classification system for sustainable economic activities. The EU taxonomy with its delegated acts provide financers with a tool to classify sustainable economic activities in terms of their impact on climate and biodiversity.