WWF launches impressive guide for responsible commodities investing

By André Chanavat | 25 September 2012

Today’s launch of the World Wildlife Fund’s The 2050 criteria guide to responsible investment in agricultural, forest, and seafood commodities should be commended for providing a detailed and yet practical framework to help financial institutions engage in sustainable investment practices across soft commodities.

Faced with the world’s global population set to increase by anywhere between 1 and 4 billion in 2050 and the subsequent increased demand and constraints this will have on accessing basic goods and resources, there is a clear need to accelerate sustainable ways of production, consumption and investment.

Just one of the many statistics that the report highlights which you cannot help but be startled by: humanity must now produce more food in the next four decades than we have in the last 8,000 years of agriculture.  Examples such as the below chart also illustrate humanity’s ecological footprint (demand) continuing to outstrip earth’s finite bio-capacity (supply).

These observations as well as many others specific to each of the 10 commodities that are explored in detail, underline the importance of the work carried out by the WWF to provide examples of best practice, transparency and practical guidance to the investment community.   The report also manages to tackle complex commodity specific issues around sustainability and distill them into very useful key performance criteria with novel info graphics highlighting the relationship between social and environmental risks with key performance criteria and their degree of relevancy.

The report also highlights that what is often lacking for achieving sustainability is the alignment of producers, buyers and financiers around credible certification and performance criteria across commodities.   So today’s newly released guide is a step which will hopefully help align investors around a set of key indicators when trying to identify responsible companies and projects in the agricultural, forest and seafood industries.

By adopting the guidance in The 2050 Criteria, the WWF believes that financiers will be able to:

• Manage critical business and reputational risks
• Reduce transaction costs and simplify decision making by aligning investment criteria with leading industry practice
• Contribute to improved risk adjusted returns
• Shape responsible practices on the ground in these high-impact sectors