The Anthropocene Fixed Income Institute (AFII) has released its latest guide for investors: Deforestation and fixed income markets: A primer, addressing the intersection of global deforestation risks and fixed income investing.
It aims to provide a toolkit for investors to assess and manage the evolving impact of nature loss across corporate and sovereign debt markets, because as deforestation threatens both biodiversity and climate stability, it has become a material risk for investors.
Co-authored by Josephine Richardson and Claire Meier, the book draws on AFII research to show how deforestation exposure can impact fixed income investment returns, through regulatory costs, investor flows, and credit ratings, and features case studies on major issuers including JBS, Mars and Cargill.
“Deforestation increases risks for investors by destabilising supply chains, exacerbating climate change, and exposing both companies and countries to regulatory, reputational, and credit risks,” said Josephine Richardson, managing director and head of research at the AFII.
“With an area about the size of England lost in 2024 alone, our goal with this primer is to highlight how fixed income investors can use their influence to reverse this trend,” she added. “AFII’s aim is to provide practical, actionable insights; we look forward to hearing the market’s feedback on the solutions we propose to address this urgent and critical issue.”
The book explores how portfolio managers can assess and integrate these risks within sovereign and corporate debt, and how engagement and innovative structures like sustainability-linked bonds and debt-for-nature swaps can promote better market outcomes.
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