Geospatial ESG investing
The intersection of human rights, the destruction of natural capital and commodity production provides an important example of why neither corporates nor investors can no longer look at risk in silos.
Analysis for our Human Rights Outlook 2021 evidences clear links between land grabs and biodiversity loss; the poverty, corruption and weak rule of law that drive them; and how these issues enter our everyday lives.
Using our ESG data covering 170 hard and soft commodities, we identify the raw materials posing the highest risk of land grabs.
What we’ve found is an outsized risk to indigenous peoples and natural habitats stemming from a surprising range of commodities that not only provide the food we eat (such as the ubiquitous ingredient palm oil), but also the materials needed to power the energy transition, such as cobalt, zinc, bauxite and silicon.
Billions of dollars’ worth of illegally produced commodities tainted by land grabs and the destruction of natural capital are washed into global supply chains each year.
Corporates, investors and banks must be prepared to determine if their purchases (and financing) of these goods are linked to expropriated land or trashed ecosystems, otherwise the backlash could be considerable.
Unless threats to human rights in the supply chain are addressed by companies and investors, it will be increasingly hard to justify labelling the likes of EV’s, lithium-ion batteries and solar panels as ‘clean’ technology’, for instance.
Organisations and investors can mitigate risks by working within frameworks like the forthcoming Taskforce for Nature-related Financial Disclosures (TNFDs) to identify natural capital risks and then integrate those findings into corporate strategies.
A more proactive approach would see sovereign investors using capital to persuade governments to improve their ESG performance through policies that create jobs and alleviate poverty, which would have the knock-on effect of addressing land grabs and natural capital risk.