Terms of reference:

1. Introduction and context (what we know)

The most important cause of deforestation is the global demand for natural resources found in forest areas and agricultural expansion into forest land. The specific drivers of deforestation and forest degradation vary between countries and regions, but most are tied to trade and finance through complex supply chains and finance flows. Companies, including financial institutions, can be exposed to the risk of deforestation through their own operations and through the supply chains of the commodities that they source and consume.

The finance sector plays a key role in financing such company operations. The international finance sector holds significant leverage over these companies and is positioned to have a strong impact on company practices. Financial institutions are increasingly addressing the deforestation risks in their portfolio by using tools such as standard-setting initiatives and policies, active ownership, and company dialogues. In recent years we have also seen the emergence and proliferation of various finance sector initiatives, aimed at improving company disclosures, promoting ESG standards, and setting sustainability targets.

In November 2021, thirty institutional investors committed during COP 26 to work towards deforestation-free investment portfolios by 2025. A roadmap that was developed in conjunction to this public commitment proposes a step-by-step approach that starts with a systematic assessment of deforestation risks. A known challenge for such deforestation risk assessments is the availability of reliable and actionable data. Whereas several tools, benchmarks and other datasets exist that aim to provide comprehensive data on supply chains, no such overviews exist of companies that hold agricultural or mining licenses on forested land.

With this backdrop Rainforest Foundation Norway (RFN), and the World Wide Fund for Nature (WWF) Norway are looking at the possibilities to develop a dataset of listed companies with a high risk of deforestation in their direct operations in the following sectors: mining and oil and gas. The objective of such a dataset is to inform both financial sector risk assessment on their exposure to deforestation, as well as subsequent company engagement with the identified companies and financial institutions. It is anticipated that this data can also be utilized to identify supply exposure for downstream purchasers of minerals and oil and gas. To secure uptake of datasets, a robust and reliable methodology is required.

2. Objectives

WWF-Norway and RFN have secured access to asset-level data on mining and oil and gas concessions with third-party services that provide geospatial coordinates and reveal corporate ownership structures.

The consultant’s role will be to review and improve the proposed methodology to translate currently available concession information into an actionable dataset that can be used by financial institutions. This will include identifying relevant high risk assets from current datasets, tracing corporate ownership structures and generating a product that can inform financial institutions and influence their decisions around investor-engagement, strengthening due diligence/disclosure policies and active ownership.

The final product will be generated with support of staff in RFN and WWF-Norway and will have the following general objectives:

1. The data generated provides FIs with additional and actionable information not currently available regarding deforestation and conversion risk.

2. This additional information will be credible, easily accessible, and where possible, updatable, to enable financial institutions to screen their portfolios on an ongoing basis.

3. Companies holding concessions will need to be screened to assess the overall corporate ownership structure to enable the most complete cross-over between investments of FIs and companies operating directly and indirectly, through their subsidiaries, in rainforest areas/deforestation fronts.

4. The methodology will be reliable and valid, and the analytical approach will be replicable over time.

3. Scope

The study will take a global scope – looking at the overlap between concessional data for mining, oil and gas, and rainforest areas/deforestation fronts. The consultant will support RFN and WWF-Norway to identify the appropriate methodology and delimitation of geographical scope based on the objectives outlined in Section 2.

Selected sectors: extractives (mining and oil and gas).

4. Activities

STEP 1: Delimitation of rainforest areas/deforestation fronts

The consultant will assess the methodology provided by WWF-Norway and RFN regarding the geographical scope of the study and suggest improvements. It is required that any methodology is based on existing geospatial mapping of rainforest areas/deforestation fronts – to enable a GIS-based overlap assessment.

The consultant will also determine, in conjunction with RFN and WWF-Norway, the feasibility in adding additional datasets to the study. This can include overlap assessments on the presence of concessions within protected areas and indigenous territories.

STEP 2: Determination of companies present in deforestation fronts.

Within the geographical scope determined, RFN and WWF-Norway will undertake a GIS analysis to generate a list of mining claims/concessions and oil and gas sector blocks present within rainforest areas/deforestation fronts.

The consultant will be tasked with using this raw data and tracing corporate ownership structures (using third-party service providers) to identify all relevant publicly held companies that own substantial stakes in the entities that hold forested concessions or land use rights.

The final list will outline the following information:

• Geospatial coordinates of the concession (provided by WWF-Norway and RFN)
• Concession holder (provided by WWF-Norway and RFN)

• Status of the concession (i.e., is it a claim, or active concession)
• Intermediate and ultimate parent companies of the concession holder
• Securities Identification Numbers, in particular ISIN codes.

The final list should be presented in a way that makes it easy to browse/navigate for external actors and based on a methodology that is easily usable by RFN, WWF-Norway and Financial Institutions. The list and the analysis should be designed so to be usable by all kind of financial institutions - banks, insurance companies and institutional investors - which might have financing activities directly to the holders or, most likely, to publicly listed companies that are related to the concessions.

STEP 3: Correlation with Financial Institution’s holding lists.

Based on the list generated in STEP 2, the consultant will assess the holdings of major Norwegian Financial Institutions including the Norwegian Sovereign Wealth Fund, Storebrand, DnB and KLP. Data on the holdings of Norwegian Financial Institutions will be provided by WWF-Norway and RFN.

STEP 4: Results and analysis

The consultant should be available to present the results and methodology in a 1-hour webinar to relevant and interested financial institutions, chosen by WWF-Norway and RFN based on their dialogue with the sector.

Synthesis report: A final report providing key insights on the underlying data – details to be determined in collaboration with RFN and WWF-Norway. It may be considered desirable to publish two separate synthesis reports, one showcasing the global data, and another outlining the specific holdings of Norwegian Financial Institutions.

5. Suggested methodology

The proposed methodology follows the steps above but needs to be reviewed and fine-tuned by the consultant and a small project team. We suggest this work will be carried out together with a small project team comprised of staff members from RFN and WWF-Norway. The work will require desk research, data gathering and mapping and the production of a final report with key insights from the base data. The consultant will be able to use their expertise and experience to enhance the delivery of the final product.

6. Budget

300,000-400,000 NOK

7. Timeline

Three to four months. Ideal starting date: 10th June.

We have estimated the total time commitment required to be 30-40 working days.

8. Deliverables

1. Brief inception report: confirming the methodology, timeline, analyses to be carried, stakeholders to engage, etc.

2. An Excel sheet with all easily available data.

3. Draft structure for the report with an outline of the different sections and authors for the various sections.

4. Draft report(s)

5. Final report(s) providing key insights on the underlying data – details to be determined in collaboration with RFN and WWF-Norway.

9. Criteria for selection:

• Degree in relevant field – data science or similar.
• Familiarity with GIS overlap assessments.

• Expertise with corporate assets, finance-sector risk assessments, and corporate disclosure.
• 5 years experience working with civil society organizations or within the finance sector.
• Overall cost.

If you are interested in applying for the consultancy, please contact erlend@rainforest.no or smcqueen@wwf.no .