This third edition of the WWF Sustainable Finance newsletter introduces The 2050 Criteria, a guide to responsible investment in agricultural, forest, and seafood commodities. These commodities are an integral part of our lives: dairy and beef are a component of the middle-class diet, palm oil is used to cook with in many countries and is an ingredient in soaps and cosmetics; sugar sweetens the food that we eat, and forestry products go into the books that we read and the buildings where we work and live. Their production is supported by modern science and technology but it ultimately relies on the well-being of the workers who provide the necessary labour, and on the health of the environments in which these commodities grow.

Modern banking and insurance were founded on the financing and risk management of the trade in commodities such as silk, spices and timber, with banks financing individuals and organisations from the beginning to the end of the supply chain: from plantation owners to merchant ships, to warehouses, to factories, to retailers. Understanding and correctly pricing the risks at each stage of these supply chains was an important factor in the sustainability of these financial institutions. This fact remains the same today, as evidenced by the plethora of regulatory regimes and production and manufacturing standards and that govern these sectors.

The 2050 Criteria guide provides a framework to identify responsible practices in key soft commodities around the globe, including aquaculture, beef, bioenergy, cotton, dairy, palm oil, soy, sugar, timber, pulp and paper, and wild-caught fish. Covering socially and environmentally impacts and practices, this guide represents a break from WWF’s traditional focus on solely environmental factors, in recognition of the fact that these factors are often interlinked and, along with governance and economic issues, form the basis of sustainability.

The report is available on this URL: www.wwf.org.za/2050_criteria.

I hope that you will find it as educational and encouraging as I did.

SuStainable Finance South aFrica

© Jam

es Morgan / W

WF-International

Malango MughoghoProgramme Manager: Sustainable Business WWF-SA

assessing the 2050 criteria

Soft commodities represent funda-mental building blocks of the global economy and play a vital role in hu-man development. Agriculture, forest products, and seafood supply chains are responsible for feeding, clothing, and helping to fuel the world. In the past decade, soft commodity markets have experienced unprecedented vol-atility and scarcity, generating a range of supply chain shocks, social outcries, and policy responses. In many cases, the Earth’s natural resources are prov-ing insufficient to meet accelerating global demand. Such trends pose a threat to businesses and investors, key ecosystems, and society at large. The 2050 Criteria provides a summary framework for mainstream financial actors to promote the global sustain-ability of these resources and the mar-kets that depend on them.

The 2050 Criteria addresses 10 ma-jor global commodity sectors. These sectors are identified as high priority by WWF owing to the depth and sig-nificance of their current and poten-tial aggregate impacts on global bio-diversity, greenhouse gas emissions, and water use. These sectors include: aquaculture; beef; cotton; dairy; palm oil; soy; sugar; timber, pulp, and pa-per; wild-caught seafood; and bioen-ergy. Overall guidance is also provided

for ‘other terrestrial commodities’.

Each chapter contains a summary of the industry and a guide to respon-sible investment. Primary environ-mental and social risks associated with the sector are clearly outlined. Leading standards and certifications, which can function as robust systems of verification and traceability, typi-cally representing current best prac-tices for mainstream financiers, pro-ducers, and procurers, are identified. For markets where credible standards do not yet exist, or for firms just be-ginning on the path to sustainability, the cornerstone of this document is the Key Performance Criteria (KPC) for identifying environmentally and socially responsible companies and projects. The 2050 Criteria’s environ-mental and social risks and mitigation criteria are organised according to 10 cross-cutting themes: Biodiversity Loss & Conversion; Climate Change & Air Quality; Soil Erosion & Degrada-tion; Water Use; Pesticides & Toxicity; Nutrient Loading & Eutrophication; Disease & Animal Care; Labour; Local & Indigenous Communities; and So-ciety & Consumers. In addition, each chapter provides an overview of major trends, emerging investment opportu-nities, and links to external tools and resources.

newsletter - June 2013

Guide promoteS Global

reSource and market

SuStainability

the earth’s resources are insufficient to meet growing global demand.

© B

rent Stirton / G

etty Images

newsletter - June 2013

Investors are keenly aware of the boom in soft commodities, but not ev-eryone fully understands its complex environmental implications. Thanks to WWF and its unique expertise and understanding of the interaction be-tween markets and conservation, The 2050 Criteria sheds much light on the subject. The financial communi-ty will benefit from this timely, sci-ence-based overview of high-impact global commodity sectors. Further, by identifying key performance cri-teria for responsible practice, we now have a tangible framework to evalu-ate companies on the ground and to support the data-driven assessments of business value that sustainability creates.

At Credit Suisse, we believe that fi-nancial institutions should system-atically evaluate environmental and social risk in transactions, which in fact is becoming standard practice in the banking industry. We also believe that this process should be part of a broader commitment to long-term sustainability, including support for organisations such as the United Na-tions Global Compact and the United Nations Environment Programme Finance Initiative and membership in industry sustainability initiatives such as the Roundtable on Sustain-able Palm Oil.

Excerpt from The 2050 Criteria - Guide to Responsible Investment in Agricultural, Forest, and Seafood Commodities

Biod

iver

sity

Los

s &

Con

vers

ion

CATEGORIES OF IMPACT

Clim

ate

Chan

ge &

Air

Qual

ity

Soil

Eros

ion

/ Deg

rada

tion

Wat

er U

se

Pest

icid

es &

Tox

icity

Nutri

ent L

oadi

ng &

Eut

roph

icat

ion

Dise

ase

& A

nim

al C

are

Labo

r

Loca

l & In

dige

nous

Com

mun

ities

Soci

ety

& C

onsu

mer

s

Biodiversity Loss & Conversion

Climate Change & Air Quality

Soil Erosion / Degradation

Water Use

Pesticides & Toxicity

Nutrient Loading & Eutrophication

Disease & Animal Care

Labor

Local & Indigenous Communities

Society & Consumers

2050 CRITERIA OVERVIEWKEY PERFORMANCE CRITERIACATEGORIES OF IMPACT ENVIRONMENTAL & SOCIAL RISKS COMMODITIES PAGE

Wild Brood and Seed

Water Use

Water Discharge from Mills

Genetic Modification

Timber Rights

Soil Health, Compaction, & Erosion

Smallholders

Riparian Areas

Respiratory Risks to Laborers & Communities

Poor Working Conditions

POME Discharge

Overgrazing and Loss of Pasture Biodiversity

Nutrient Loading in Runoff

Nutrient and Waste Loading in Water

Loss of Pasture Biodiversity

Land Conversion

Irresponsible Forestry Practices & Habitat Conversion

Indirect Land Use Change

Importing Labor

Illegal, Unregulated and Unreported (IUU)

Illegal and Untraceable Products

Health & Safety Risks

Habitat Loss

Greenhouse Gas Emissions

Food Safety

Global Food Security

Food Insecurity

Food Displacement

Fishery Collapse

Fish/Shrimp Feed

Excessive Chemical & Antibiotic Use

Escaped Fish

Encroachment on MPAs

Ecosystem Services

Disease

Credit and Debt

Conflicts Over Shared Commons

Community Displacement

Child Labor and Debt Bondage

Cattle Feed

Bycatch

Benthic Impacts

Animal Health & Welfare

Air Quality

Agrochemical Use Impacting Reefs

Agrochemical Use

Animal Health and Welfare

BEEF 21

AQUACULTURE 15

DAIRY 33

COTTON 27

SOY 45

SUGAR 51

TIMBER, PULP, AND PAPER

57

WILD CAUGHTSEAFOOD

65

PALM OIL 39

BIOFUELS 73

OTHER TERRESTRIALCOMMODITIES

79

Price volatility and scarcity in soft commodity supply chains pose significant challenges for businesses and financiers. Navigating these risks and uncertainties in agricultural, forest, and fisheries sectors grows increasingly complex as environmental and social impacts are brought to light. WWF’s 2050 Criteria unravels this complexity, identifying the primary environmental and social risks for each commodity and pinpointing the Key Performance Criteria needed to smartly manage these issues and identify good practice. Throughout the publication, the Key Performance Criteria of utmost priority are identified by boldface type.

Area Based Management

Chemical Use

Ecosystem Functions

Food Security

Greenhouse Gas Emissions

Indirect Land Use

Labor Rights

Land Management System

Legal Production

Life Cycle GHG

Local & Indigenous Communities

Manure Management

Non-Target Species Impacts

Nutrient Management

Operational Health & Safety

Pest Management

Priority Areas Protection

Soil Management

Sustainable Feed

Transparency and Traceability

Water ManagementDesign by TRUTHstudio© World Wildlife Fund

KPC_Overview_A4_sign_04.pdf 1 10/17/12 12:34 PM

expert opinion

The 2050 Criteria - Guide to Responsible Investment in Agricultural, Forest, and Seafood Commodities

IMA

GE

: [from http://w

wf.panda.org/w

hat_w

e_do/how

_w

e_w

ork/businesses/transform

ing_markets/solutions/m

ethodology/commodity_

financing/2050_criteria/]

John TobinManaging Director, Global Head of Sustainability Affairs, Credit Suisse

newsletter - June 2013

policy Support For ShiFt towardS a Green economy china GoeS beyond Gdp aS a meaSure: Our first newsletter in November 2012 focused on the Natural Capital Declaration, which is a pledge by financial institutions and other stakeholders to work towards integrating natural capital considerations into their products and services, and to support the requirement for public spending and procurement to report and eventually account for the use of natural capital. Last year, the China Centre for Internal Economic Exchange (CCIEE) launched a ‘Beyond GDP Indicators System’ in partnership with WWF. The indicator system aims to help evaluate local governments’ achievement of green development, a goal of the 12th Five-Year Plan, and to facilitate the development of China’s green economic policies.

Another important policy development in China was the recent inclusion of the concept of ‘ecological civilisation’ in the list of five pillars that are used to measure China’s overall development. The other four pillars are Economic, Political, Cultural and Social.

Other countries that are taking a beyond GDP approach to their national accounting include Botswana, Colombia, Costa Rica, Madagascar, and the Philippines.

we welcome your FeedbackPlease send your feedback, comments or suggestions to mmughogho@wwf.org.zaFor more information on WWF-SA’s Sustainable Business Work go to http://www.wwf.org.za/what_we_do/sustainable_business/

WWF-SA is a registered Non-Profit Organisation, number 003-226 NPO. © 1986 panda symbol and ® “WWF” Registered Trademark of WWF-World Wide Fund For Nature (formerly World Wildlife Fund), Boundary Terraces, Bridge House, 1st Floor, Mariendahl Lane, Newlands 7700, P O Box 23273, Claremont 7735, Tel: +27 21 657 6600, Fax: 086 535 9433, www.wwf.org.za

SuStainable Finance South aFricawwF.orG.Za

© H

artmut Jungius / W

WF-C

anon