Deforestation – What companies don’t tell you is hiding in plain sight

Henry Morgan, Co-founder, Frontierra

Note: The views expressed on these pages are the opinions of their respective author(s) only and do not necessarily reflect the views and opinions of UKSIF.

This website should not be taken as financial or investment advice or seen as an endorsement or recommendation of any particular company, investment or individual. While we have sought to ensure information on this site is correct, we do not accept liability for any errors.

 

Deforestation – What companies don’t tell you is hiding in plain sight

Henry Morgan, Co-founder, Frontierra

The data to meaningfully assess deforestation risk in your portfolio already exists. The question is whether you’re using it.

There is a quiet assumption embedded in how most institutional investors approach nature-related risk. It goes something like this: assess what companies disclose, screen their policies, consult sector-level data tools, and if a company scores well enough, proceed. The assumption is that disclosure is a reasonable proxy for reality.

It isn’t.

This is not a critique of sustainability data providers, many of whom do excellent work contextualising sector-level exposure. It is a structural observation about the limits of any framework anchored in what companies choose to report. And as the regulatory environment around nature risk accelerates through TNFD, the EU Deforestation Regulation, and growing shareholder pressure, that structural gap is becoming a material one.

The question fiduciary duty is increasingly demanding is not “does this company have a deforestation policy?” It is: is this specific company, at these specific locations, linked to actual deforestation on the ground, right now? Those are very different questions, and only one can be answered by reading a sustainability report.

The capability already exists
What is often underappreciated is that the tools to answer the second question are already here, and the underlying data is largely open-source.

Satellite-based Earth Observation now offers continuous, independently verifiable coverage of forest loss and land use change across the globe. Annual forest cover data can be interrogated at the site level, layered with land use classifications, filtered for non-deforestation signals, and cross-referenced with protected area boundaries, peatland maps, and Indigenous territory datasets. This is not experimental technology. It is operational.

The limiting factor has never really been the satellite data. It has been the ability to translate that data into decision-relevant formats that portfolio managers actually need: standardised, comparable, and actionable at portfolio level.

A recent project conducted by geospatial data and analytics firm Frontierra, in partnership with Norwegian asset manager Storebrand, illustrates what becomes visible when this approach is applied systematically. Working from nothing more than a list of company names, a geospatial database was compiled detailing over 3,500 operational sites and sourcing locations across 35 countries, spanning paper and pulp, mining, and palm oil. Government concession databases, RSPO mill lists, technical reports, annual report disclosures: the data existed. It required systematic effort to compile and verify, but it was there.

The satellite analysis that followed revealed material deforestation exposure that policy-level screening had not surfaced. Across the paper and pulp companies assessed, the majority received a Critical rating — with total forest loss running into the hundreds of thousands of hectares. Mining sites revealed high rates of natural vegetation conversion that a tree cover loss metric alone would have missed. Palm oil supply chains showed active, ongoing deforestation as recently as 2025, at roughly half of all sourcing locations assessed.

None of this required company cooperation. It required methodology.

Non-disclosure is not a neutral finding
One of the more significant outputs of this kind of analysis is what it reveals about the companies where location data cannot be found. Of 22 companies assessed, location data could be sourced for 14. For the remaining eight, including consumer goods businesses with significant palm oil exposure, no traceability information was publicly available.

This should not be read as an absence of risk. It should be read as an amplification of it.

When external verification is impossible, deforestation exposure can be neither confirmed nor ruled out. For investors operating under TNFD-aligned frameworks or zero-deforestation commitments, that uncertainty is not a neutral gap in the data. It is itself a risk signal, and arguably a more serious one than disclosed exposure, which can at least be measured, monitored, and engaged with.

The implication for investment practice is clear: non-disclosure of traceability information should carry a risk weighting. Institutions should seek to incorporate traceability requirements into stewardship expectations and, where possible, into investment criteria.

The direction of travel
UKSIF’s mission to advance sustainable finance depends on the quality of the information available to the market. Better data enables better engagement. Better engagement drives better outcomes. That chain only works if investors are willing to look beyond the report on the page to the ground beneath the company’s feet.

Location-specific, satellite-verified analysis is not a niche capability reserved for specialists. It is scalable, standardised, and increasingly automated. Geospatial analytics can be extended across portfolios of any size, applied across sectors, and is translatable into the kind of decision-useful output such as clear exposure ratings, visual evidence and engagement triggers, which investment professionals can act on.

The question for institutional investors, investment managers, and portfolio managers is not whether geospatial intelligence will become part of credible nature risk assessment. It is whether their processes are ready for it when it does.

Satellite imagery doesn’t lie. Public reports sometimes do. The gap between the two is where material risk lives.

The views expressed on these pages are the opinions of their respective author(s) only and do not necessarily reflect the views and opinions of UKSIF.

This website should not be taken as financial or investment advice or seen as an endorsement or recommendation of any particular company, investment or individual. While we have sought to ensure information on this site is correct, we do not accept liability for any errors.