All Hands on Deck—Forests and Holistic Action

January 23, 2023

In this article, we discuss the importance of forests, the threats they currently face, and how they impact us. We examine these issues holistically and look at the overall condition of forests and our goals of preservation and enhancement of their ability to help address climate change and biodiversity loss. We consider questions pertaining to forest value creation. But it can feel overwhelming to choose where to zoom in and start taking solution-oriented steps.

Where should we begin? How can we drive change?
And who needs to be at the table to make that change happen

To help us answer these questions, we initially conducted desk research and interviews with investors,
non-governmental organizations, and issue-area experts. Through this work, one thing became clear:
collaboration and alignment of objectives are necessary for achieving forest and biodiversity protection
and achieving sustainability. And without collaboration, it will be difficult to become a true forest value

“If you are not part of the problem, then you can’t be part of the solution.” 1

This quote from Professor Bill Torbert characterizes the challenge in organizing holistic change for forest
systems. Stakeholders, including investors, corporations, environmental advocates, communities, labor
organizations, and Indigenous peoples can all play key roles in establishing forest-positive behavior. For
many, including investors, deforestation is something they have yet to fully address. Others, for example
corporations, may have implemented some forest management measures, but fail to evaluate the full
impact of their supply chain. Conversely, Indigenous communities have long been able to forge
sustainable and mutually beneficial relationships with forests. For this reason, in trying to find solutions,
it’s necessary to support and lift up the voices and actions of impacted and front-line communities
whenever possible.

At Domini, this challenge has motivated us to identify leverage points that can lead to integrated
solutions. Our focus on these leverage points—that is, specific opportunities for relevant stakeholders to
influence elements of the forest system that need changing—grew out of our seven Forest-Positive
Themes. These themes in turn came from our interviews with key stakeholders, desk research, and
engagements with corporations and peers in the investment community. These themes help guide us
toward opportunities to make systemic interventions to help end deforestation and support forest positive initiatives.

The seven themes are as follows:

  1. Responsibility for Long-term System Health
    We take the long-term view: forest systems are valuable tomorrow, not just today
  2. Metrics, Measurement and Intangible Value
    We seek to account for the intangible and tangible value of forests
  3. Transparency and Disclosure
    We use forest data to promote action
  4. Sustainable Supply Chains and Demand
    We advocate for forest-positive supply chains
  5. Due Diligence in Lending, Underwriting, and Insurance
    We assess best practice for finance and forests
  6. Government Regulation and Enforcement
    We support forest-positive government actions
  7. Alignment of Interests
    We understand the need for stakeholder collaboration

These seven themes cover a range of actions from investment, to recognizing forest value, to putting
forest data into action, to public policy reform and stakeholder coordination. Our hope is that investors
and other stakeholders can use these themes to assess their contribution to deforestation, to identify
stakeholders they should be working with, and to help guide the development of forest-positive

1 A System Leader’s Fieldbook Website. Webpage “See Your Part in the System You Want to Change.” Accessed October 31, 2022 at

Theme #1: Responsibility for Long-term System Health

We take the long-term view: forest systems are valuable tomorrow, not just today

In a 2019 report, the World Wildlife Fund noted that, “climate change is the result of unsustainable
business practices, which are also causing deforestation and biodiversity loss and the degradation of
other ecosystems

These practices and their negative impact pose risks to the long-term health of the
environmental and social systems upon which we depend. As investors, we can send a message to
businesses to change their practices through stock selection, engagement, and proxy-voting among
other things in order to help contend with these risks.

Theme One, Responsibility for Long-term System Health, stresses the need for investors to pay more
attention to systemic risks and in particular to the health of our forests and related lands. Forests can
suck carbon dioxide from the air, absorbing the greenhouse gases responsible for climate change. They
can feed “rivers in the sky” that spread life-giving rains far and wide. They are the home for an
unimaginable diversity of life on earth—including the rarest of animals, millions of insect species, and
birds of all kinds. Even the healthy soil of regenerative agriculture farmlands plays host to tens of
thousands of microscopic creatures that participate in a vibrant web of life hidden underground.
Although overall there is still a lack of recognition of the importance of forests and biodiversity in
comparison to that for climate change, in the past five years, a growing number of investors have begun
to focus on deforestation, biodiversity, and the value of nature in general.

In November 2021, Domini was one of 30 investors that signed the Financial Sector Commitment Letter
on Eliminating Commodity-Derived Deforestation; we have also joined its Financial Sector Deforestation
Action collaborative engagement team. In addition, we participated in the 11-member launch group for
the Nature Action 100 investor initiative.

This is just the start for the work of Domini and others on this topic that we hope will encourage more
asset owners and managers to make public commitments to forest-positive practices and policies, as we
have at Domini.

You can read more about our Forest Beliefs and Principles in our blog: “Why Forests? A Look into Domini’s
Forest Project”
andEverything but the Kitchen Sink – Forest Risk Commodities in Your Home

2 Keith Lee and Jeanne Stampe. Resilient and Sustainable Portfolios: A Framework for Responsible Investment. Sustainable Finance Report. (Gland, Switzerland: World Wide Fund for Nature) 2019:8.

Theme #2: Metrics, Measurement and Intangible Value

We seek to account for the intangible and tangible value of forests

The value of forests is immense and it manifests itself in myriad ways. Some are easy to quantify; for
example, forest commodities that companies turn into products and services for consumers. Many
everyday products would not exist, or would at least look very different, if not for forests. Companies’
revenues speak for themselves regarding the monetary value contained in forests and ecosystem

However, what about the value forests provide as a home to animals, plants, insects as a haven for
biodiversity? And how to evaluate not only their value in sequestering carbon but their ability to
maintain the climate’s resilience and stability as well? Or even their inherent value as a source of
spiritual inspiration and well-being? This is where attempts at measurement becomes trickier.
Moreover, to put a price on something implies that those who can afford it may have the right to exploit

Theme Two, Metrics, Measurement, and Intangible Value, seeks to answer some of these questions
and to help determine how investors, corporations, and society in general can appropriately value
forests and related lands.

These metrics must be able to capture the intangible value of forests as well as their tangible value as
foundational elements of natural capital, climate-risk mitigation, biodiversity, and Indigenous peoples’
rights and cultures. Some of these metrics will be quantitative and other qualitative. The Capitals
Coalition, for example, has developed decision-making “protocols” that seek to help “organizations to
identify, measure and value their direct and indirect impacts and dependencies” on natural, social, and
human capitals.3 The Coalition even has specific forest-sector guides for these three capitals.
Forest valuation metrics can also allow us to see which industries, companies, and communities are the
leaders and laggards in protecting both the intangible and tangible value of forests. For example,
research has shown that lands managed by Indigenous communities have lower deforestation rates and
have greater biodiversity in certain regions.4 The intrinsic value of forests managed in ways that
promotes these desirable outcomes should be reflected in so as to encourage stakeholders, including
corporations and governments, to protect the full range of forest values.

A focus on forest value creators is part of Domini’s Forest Project. It is difficult pursue this approach if
we do not have effective mechanisms to measure value in the first place. Read more on our definition of
forest value creator companies here.

3 Capitals Coalition Website. Webpage “Natural Capital Protocol.” Natural Capital Coalition. Accessed October 31, 2022 at
4 Forest Peoples Programme et al. Local Biodiversity Outlooks 2: The Contributions of Indigenous Peoples and Local Communities to the Implementation of the Strategic Plan for Biodiversity 2011–2020 and to Renewing Nature and Cultures. ( Moreton-in-Marsh, England: Forest Peoples Programme) 2020:134. Accessed October 31, 2022 at

Theme #3: Transparency and Disclosure

We use forest data to promote action

Following up on Theme Two, we recognize that forest-related metrics and data are essential to bringing
about change in current practices that are leading to deforestation. We need high-quality data on the
policies of corporations, including those in the financial industry, to move towards ending deforestation
and encourage forest-positive initiatives. Theme Three, Transparency and Disclosure will help ensure
that investors have adequate data to put their own forest policies into practice and influence
corporations to do the same.

We know how important corporations’ policies are to the preservation of forests, particularly those
involved in the palm oil, cattle, soy, and lumber, pulp, and paper industries. Current practice by many
leads to the clear-cutting of intact forests to make way for farms to grow soy, plantations for palm oil,
and pastures for beef cattle. Moreover, corporations’ lack of transparency in their relationship with
Indigenous communities is a concern. Indigenous peoples have had to fight against habitat destruction
as industrial agriculture and extractive industries encroach on their communities and threaten their

In 2022, responding to the Securities and Exchange Commission request for input on climate-related
disclosure, Domini stressed the need for data on forests, land use, and Indigenous peoples in the
context of climate-risk mitigation. In particular, mandatory disclosure can be a powerful tool. Currently,
33 stock exchanges around world require listed companies to make public their environmental, social,
and governance data.5

But data alone will not solve the challenges forests face. Action is necessary. To date, however,
corporations have failed to put available data to maximum use when it comes to making certain that
forests help slow climate change and prevent biodiversity loss. For example, ShareAction’s 2020 rating
and ranking of major asset managers’ biodiversity policies and practices could find “little evidence” that
asset managers were comprehensively evaluating the biodiversity impacts of their investments across
asset classes, with less than half of firms raised biodiversity concerns in their engagements with

Changing the forest systems’ dynamics is not a straightforward task. It is going to take the efforts of
many stakeholders. Without access to high-quality and comprehensive data on corporations’ and
investors’ practices, the challenge of scaling forest-positive behavior becomes much more difficult.

5 Sustainable Stock Exchanges Initiative. Website. Homepage “Stock Exchange Sustainability Activities” Accessed at on November 7, 2022.
6 Krystyna Springer. Point of No Returns, Part IV Biodiversity (London: Share Action) 2020:6.

Theme #4: Sustainable Supply Chains and Demand

We advocate forest-positive supply chains

In this article, we have noted that companies with forest-risk commodities, including palm oil, soy,
cattle, and wood and paper pulp, will face long-term sustainability challenges if they do not introduce
forest-positive practices. Domini terms them as impact-and-depend companies: they contribute to the
depletion of forests when sourcing their products while they simultaneously rely on these forests’
resources for their financial success
. Theme Four, Sustainable Supply Chains and Demand, advocates
that investors find ways to counteract this trend.8

Demand for affordable food products is driving deforestation into the supply chains of supermarkets,
food processors, and commodity traders. These commodity products include beef, soy (in large part
used to feed chickens, hogs, and cattle), and palm oil (used to add smooth textures to various foods and
consumer products). Forests are being cut down to clear land for these uses. This trend can be reversed
if demand for more sustainable practices is built into these supply chains.7

Commodity traders, in particular, play a key role in supply chains for these products and can use their
influence to favor farmers that pledge to eliminate deforestation from their daily operations. These
traders typically purchase from farmers directly or else indirectly through small intermediaries such as
farm cooperatives. Either way, they can set “no-deforestation” standards for their purchases from these
sources and often do so, although less frequently when using the small intermediaries.8

Reducing demand of the ultimate customer for meat, even moderately, can also help. Currently,
approximately half of the Earth’s habitable land is devoted to agriculture. And of that land, just over
three-quarters is taken up by livestock and the crops that feed them, while the remaining one-quarter of
land serves all other human food needs.9 The trend to deforestation could be reduced if a portion of
lands now devoted to livestock could be used instead for non-livestock-based food purposes.
Large traders dominate the markets for forest-risk commodities. These traders ultimately source from a
wide range of family-owned farms and small-scale landholders that together account for about 80
percent of food production globally.10 These farmers can lead the way in forest-positive practices by
incorporating forest-positive initiatives while also ensuring secure land rights for small landholders and
Indigenous peoples.

Governments can also play a large role through their ability to build customer demand and adopt forest positive procurement policies. Engagement, research, and coordination with impact-and-depend companies can help them work in their own long-term interests as well as those of the environment and society in general.

7 Earsmus K. H. J. zu Ermgassen et al. “Assessing Indirect Sources in Zero Deforestation Commodity Supply Changes” Science Advances Vol. 8 Issue 17:1. April 22, 2022.
8 Ibid. p. 1.
9 Our World in Data website page. “Land Use” Accessed at Land Use – Our World in Data on July 29, 2022.
10 Our World Data. Website page. “Smallholders produce less than one-third of the world’s food. Less than half of what many headlines claim” Accessed at on November 7, 2022.

Theme #5: Sustainable Supply Chains and Demand

We assess best practice for forests and finance

This theme turns to the role of finance in promoting forest-positive practices, particularly among
financial services companies involved in banking, investment, and insurance. At present, credit and
security analysis in these industries does not generally take into account the externalities associated
with deforestation, including loss of biodiversity and climate-related risks, as well as impacts on
Indigenous communities, as we have noted in several of the themes of this blog series. For this reason,
Theme Five, Due Diligence in Lending, Underwriting and Insurance, advocates that financial services
companies account for unsustainable practices when they conduct their due diligence of those
companies with forest-dependent business models and evaluate forest-positive best practices in project
finance, lending, and security selection.

As in Theme One, where we discussed the role of asset managers and owners in adopting a long-term,
forest-positive perspective, the first step is to get this group of major stakeholders—that is, financial
services companies—to recognize their current contributions to forest-related risks and their potential
for leverage
in changing the current system. At Domini, we have begun our own work to catalog specific
risks related to deforestation for financial services companies by adding new forest-related key
performance indicators
(KPIs) into our process for assessing companies. We introduced this topic in our
blog: “Why Forests? A Look Into Domini’s Forest Project” a more in-depth look at our process of
identifying and utilizing KPIs. For financial services companies, we take specific note of their
sustainability disclosures relating to forests, their assessments of climate-related and deforestation risks,
and revenue from conservation finance, among other things.

Global pressure can play a big role in encouraging financial services companies to start taking forest risk
seriously in their business operations. Ultimately, efforts to bring about industry-wide change in this
area will be most effective if there is consensus among a coalition of financial services leaders as to best
practice standards. Evidence of substantial financial risks will be crucial. For example, increased
deforestation can mean a worsening of climate change impacts, including adverse weather events with
their economic consequences for the insurance industry.11

Theme Five does not just ask financiers to stop harmful forest-risk lending, but also to incorporate
improved due diligence practices that will encourage value-creating forest-related business operations.

11 Owen Gaffney, et al. Sleeping Financial Giants: Opportunities in Financial Leadership for Climate Stability. (Stockholm: Stockholm Resilience Center) 2018:21.

Theme #6: Government Regulation and Enforcement

We support forest-positive government actions

Theme Six, Government Regulation and Enforcement, stresses both the need for governments to enact
strong forest-positive policies and enforce them and urges investors and corporations to support these
policies. Our introductory blog “Why Forests? A Look into Domini’s Forest Project” discusses how great
the risk is in heavily forested countries such as Indonesia and Brazil. We have also touched on the
challenges imposed on Indigenous communities by governments and corporations throughout this
our blogs and forest articles. Change in these areas should be built around a formal acknowledgement that Indigenous cultures are focused on environmental stewardship—that their actions have been credited with being effective in preserving forests and biodiversity in government protected areas.12 Not only have they demonstrated their knowledge and ability to sustainably use and protect forest resources, but policies that do not account for Indigenous rights and cultures are incomplete and handicapped in respecting the environmental and social value of forests.

As key stakeholders, governments have tremendous power to change the current dynamics of the forest
system. However, a contradiction exists in many governments’ behavior. While some claim that they
want to take efforts to protect forests, they also actively contribute to their destruction. According to
one report, for example, Brazil provides $14 billion in subsidies annually to deforestation-linked
industries and at the same time spends $158 million each year preventing deforestation.13 If
governments’ efforts push money towards forest-positive policies while simultaneously financing
deforestation practices, significant progress is not going to be made any time soon.

Domini has supported forest-related endeavors to develop laws and regulations in recent years that
include the California Deforestation-Free Procurement Act, mandatory due diligence for forest-risk
commodities in the United Kingdom, and the Investor Policy Dialogue on Deforestation (IPDD) initiative.
IPDD’s goal is to engage governments and coordinate a comprehensive policy response to illegal
deforestation in Brazil and Indonesia. As of October 2022, IPDD had garnered support from 65 global
institutional investors representing approximately $10 trillion of assets under management.14 These
attempts circle around the idea that companies, including investors, should be required to implement
policies and disclosure wherever forests are concerned.

As with many potential solutions, collaboration is key for change here; investors and corporations can
support governments’ efforts to enact and enforce forest-positive initiatives.

12 Forest Peoples Programme et al. Local Biodiversity Outlooks 2: The Contributions of Indigenous Peoples and Local Communities to the Implementation of the Strategic Plan for Biodiversity 2011–2020 and to Renewing Nature and Cultures (Global Biodiversity Outlook. Moretonin-Marsh, England: Forest Peoples Programme) 2020:135.
13 Ibid. 64.
14 Tropical Forest Alliance. Website, webpage “Investors Policy Dialogue on Deforestation Initiative: Frequently Asked Questions.”

Theme #7: Alignment of Interests

We understand the need for stakeholder collaboration

Finally, Theme Seven emphasizes the importance of aligning stakeholders’ interests in order to achieve
success in developing a holistic approach to protecting and preserving forests. If interests are misaligned,
overwhelming challenges can emerge. For example, at one given time, a group of stakeholders may
see old growth forests as a source of valuable timber, job creation, and prosperity for local communities.
But others may be equally passionate about these lands as essential to preservation of irreplaceable
biodiversity, a store of carbon essential in slowing climate change, and a way to protect the spiritual value and cultures of Indigenous peoples.

These conflicting interests can lead to years of bitter confrontations, social disruptions, and political
paralysis. And once positions on both sides have hardened, they can be very difficult to undo; left
unaddressed they can derail progress and make discovering shared goals next to impossible.
We need a world with healthy, resilient forests. A world without forests would be a poorer one for all.
Finding the compromises necessary to move forward can lead to mutually beneficial agreements, but it
will only happen if it is founded on trust and respect. Trust is difficult to build; it needs open
communications among all parties, sharing of concerns, and understanding points of view. Unless all
parties are heard and have a seat at the table, there is little chance of finding enduring resolutions to
the conflicts that often arise. The starting point may be finding small areas of agreement in peripheral
issues before moving on to the heart of the matter, but communication must start somewhere.

Aligning interests and resolving conflicts old and new are perhaps the greatest challenges that we face
when it comes to resolving global systemic issues such as protecting and preserving forests. But unless
we acknowledge and address these issues directly, solutions arrived at today are likely to be short lived
and the world of tomorrow will not be one we had hoped to see.