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Trase Finance
For the first time, interconnected data on corporate ownership structures, and the direct and indirect financing of deforestation, can all be found in one place. Trase Finance, an initiative of Global Canopy, Stockholm Environment Institute and Neural Alpha, launches today, enabling financial institutions to clean up their portfolios and improving accountability in this area of high environmental and social risk.
Trase Finance will be formally launched at a public webinar on 28 October where panellists from the finance sector and civil society will discuss some of the most powerful insights being generated by this new wealth of data. From today, the platform is freely available for use by journalists and campaigners, as well as those working in the finance sector.
Trase Finance covers the financing of commodity traders exporting Brazilian beef, Brazilian soy and Indonesian palm oil, and will expand to cover the financing of other commodities mapped by the Trase initiative – which is set to expand to cover more than half of the volume of globally traded soft commodities by 2021.
It enables financial institutions to systematically identify their exposure to deforestation-risk through their financing of commodity traders. And it allows civil society, governments and regulators to strengthen accountability of financial institutions by assessing their exposure to deforestation risks and monitoring progress against policy commitments.
Exports of Brazilian soy alone are estimated by Trase Finance to be associated with 50,000 hectares of deforestation risk, which can be traced to $379 billion of equity investments, $250 billion held in bonds, and $160 billion of loans. The tool identifies the specific financiers of the commodity trading companies and enables users to understand their deforestation risk.
Toby Gardner, Director of Trase and Senior Research Fellow at SEI, commented: “Data is the foundation for robust risk management. We are extremely pleased to have launched Trase Finance which allows financial institutions to now take more concrete steps towards tackling the risk in their portfolios, while also continuing to push companies and investors to improve disclosure to close remaining data gaps.“
Following a three month testing phase, Trase Finance is now ready to be used by sustainability and investment analysts, credit and risk managers, and portfolio and client relationship managers on due diligence, portfolio monitoring and product innovation in addressing deforestation risk.
“Trase Finance is an innovative and important step forward in enabling financial institutions to better identify and manage deforestation related risks in their portfolios,” said Oliver Kumaran, Group Sustainability, Group Strategy and Design at CIMB Group.
“The launch of Trase Finance marks a break-through in soft commodity supply chain transparency, tracing and revealing not just companies back to places of production but also the banks and investors that finance them,” added Vermund Olsen, Senior Policy Advisor, Rainforest Foundation Norway.
