Stephanie Pfeifer is CEO of the Institutional Investors Group on Climate Change (IIGCC), a European-focused investor-led membership organisation.
As world leaders meet in Belém for the so-called Amazon COP, the global financial community should seize the opportunity to declare its commitment to managing the growing investment risks posed by deforestation in the Amazon and beyond.
Besides emphasising their support for a global transition towards sustainable supply chains at the COP30 talks, investors can also help unlock the investment and financing opportunities that such a transition makes possible.
The financial impacts of deforestation-related risk are broad and growing. For long-term asset owners such as pension funds and insurers, exposure to deforestation can affect everything from investment performance to reputational resilience. For investors more broadly, addressing deforestation exposure is increasingly part of fulfilling fiduciary duty in a world with compounding climate- and nature-related risks.
Tech tools to improve supply chain traceability
To that end, many investors are already taking meaningful steps to address deforestation risk.
Some are working directly with portfolio companies to improve traceability, strengthen supply chain policies, and support the economic inclusion of smallholder farmers. Others are using geospatial tools and satellite data to monitor deforestation in real time and inform engagement discussions. There has also been positive momentum in integrating deforestation into risk assessments, stewardship strategies, and exclusions policies.
This work cannot be done in isolation. For investors looking to accelerate action, collaboration will remain key. Global initiatives like the Finance Sector Deforestation Action (FSDA), launched at COP26, have raised the bar of ambition for investors seeking to address agricultural commodity-driven deforestation risks in their portfolios.
EUDR should be implemented without further delays
While previous COPs highlighted the urgent need to halt and reverse deforestation by 2030, only a few countries have taken steps to drive that action through policy.
One of the few jurisdictions mounting a comprehensive approach to deforestation is the European Union, with its Deforestation Regulation (EUDR) – a prime example of ambitious policy that can transform supply chains while protecting company competitiveness.
In its current form, the regulation frames deforestation as a material business risk and safeguards companies taking proactive steps toward deforestation-free supply chains by ensuring that non-compliant companies are penalised for falling short on due diligence. Given the level of ambition, the multiple changes in direction around the implementation of the EUDR have understandably raised concern.
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Last year’s delay of the EUDR was disappointing for many investors, who view the regulation as a critical lever in mitigating deforestation risk exposure. The EU’s recent announcement that it will no longer propose a further one-year delay but instead implement a six-month transition period to ensure the legislation enters into force as planned is a more positive sign.
We’re pleased that the voices of investors and businesses calling for a timely implementation – given the importance of the law and the work done by a number of producer countries – have been taken into account.
Maintaining momentum, beyond policy
Though some provisions of the EUDR still lack certainty, public policy remains integral to redirecting financial flows towards deforestation- and conversion-free production systems.
A clear, well-designed regulatory environment provides investors with the consistency and confidence to scale solutions and make long-term decisions for financial stability and sound risk management. Continued engagement with policymakers is therefore essential, with COP30 providing a crucial platform to advance public-private dialogue on global deforestation.
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It is important to remember, however, that regulation is not the only lever for progress. The need for meaningful investor action – and for maintaining momentum – continues.
When IIGCC assumed the secretariat role for FSDA in 2024, the aim was to advance the initiative’s ambitious agenda and mainstream deforestation action across the investment community. As FSDA concludes its four-year term in December, IIGCC will continue this work through the Deforestation Investor Group (DIG) – an investor-led platform that will maintain momentum for multistakeholder action, align with global goals, and be reinforced by IIGCC’s forthcoming guidance on integrating deforestation into net-zero planning.
Ten years on from Paris, forests are firmly a climate issue The first Global Stocktake underscored the urgent need to halt and reverse deforestation and forest degradation by 2030 to keep 1.5C within reach. For the first time, countries were asked to report on forest-related progress, turning pledges into measurable benchmarks and cementing deforestation as central to climate targets.
The conference also built momentum around nature-based solutions, with financial commitments and policy frameworks aimed at protecting tropical forests and empowering Indigenous stewardship. The message was clear: there is no net zero without addressing deforestation.
Now, in the lead-up to COP30, attention is turning to emerging finance mechanisms – such as the Tropical Forests Forever Facility (TFFF) spearheaded by Brazil – that directly target deforestation.
World failing on goal to halt deforestation by 2030, raising stakes for Amazon COP
For the COP30 presidency and delegates, the “Amazon COP” is a clear opportunity to align the climate and biodiversity agendas, reaffirm their interdependence, and strengthen coordination across the Rio Conventions.
With that stage already set, it’s crucial that the financial sector continues engaging and maintaining dialogues with corporates, policymakers, and the wider range of stakeholders to support global efforts to address deforestation. This includes participation in engagement work such as through the DIG.
Progress remains possible, but the window for action is narrowing as deforestation continues unabated. The cost of inaction will far exceed the investment required to build resilience and end deforestation and land-conversion as soon as possible.
The post Investor action is crucial to maintaining progress on deforestation risk appeared first on Climate Home News.
Investor action is crucial to maintaining progress on deforestation risk
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Samantha Kemnah looked out the foggy window of her home in New Berlin, New York, at the 150-acre dairy farm she and her husband, Chris, bought last year. This winter, an unprecedented cold front brought snowstorms and ice to the region.
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Heatwaves driving recent ‘surge’ in compound drought and heat extremes
Drought and heatwaves occurring together – known as “compound” events – have “surged” across the world since the early 2000s, a new study shows.
Compound drought and heat events (CDHEs) can have devastating effects, creating the ideal conditions for intense wildfires, such as Australia’s “Black Summer” of 2019-20 where bushfires burned 24m hectares and killed 33 people.
The research, published in Science Advances, finds that the increase in CDHEs is predominantly being driven by events that start with a heatwave.
The global area affected by such “heatwave-led” compound events has more than doubled between 1980-2001 and 2002-23, the study says.
The rapid increase in these events over the last 23 years cannot be explained solely by global warming, the authors note.
Since the late 1990s, feedbacks between the land and the atmosphere have become stronger, making heatwaves more likely to trigger drought conditions, they explain.
One of the study authors tells Carbon Brief that societies must pay greater attention to compound events, which can “cause severe impacts on ecosystems, agriculture and society”.
Compound events
CDHEs are extreme weather events where drought and heatwave conditions occur simultaneously – or shortly after each other – in the same region.
These events are often triggered by large-scale weather patterns, such as “blocking” highs, which can produce “prolonged” hot and dry conditions, according to the study.
Prof Sang-Wook Yeh is one of the study authors and a professor at the Ewha Womans University in South Korea. He tells Carbon Brief:
“When heatwaves and droughts occur together, the two hazards reinforce each other through land-atmosphere interactions. This amplifies surface heating and soil moisture deficits, making compound events more intense and damaging than single hazards.”
CDHEs can begin with either a heatwave or a drought.
The sequence of these extremes is important, the study says, as they have different drivers and impacts.
For example, in a CDHE where the heatwave was the precursor, increased direct sunshine causes more moisture loss from soils and plants, leading to a drought.
Conversely, in an event where the drought was the precursor, the lack of soil moisture means that less of the sun’s energy goes into evaporation and more goes into warming the Earth’s surface. This produces favourable conditions for heatwaves.
The study shows that the majority of CDHEs globally start out as a drought.
In recent years, there has been increasing focus on these events due to the devastating impact they have on agriculture, ecosystems and public health.
In Russia in the summer of 2010, a compound drought-heatwave event – and the associated wildfires – caused the death of nearly 55,000 people, the study notes.

The record-breaking Pacific north-west “heat dome” in 2021 triggered extreme drought conditions that caused “significant declines” in wheat yields, as well as in barley, canola and fruit production in British Columbia and Alberta, Canada, says the study.
Increasing events
To assess how CDHEs are changing, the researchers use daily reanalysis data to identify droughts and heatwaves events. (Reanalysis data combines past observations with climate models to create a historical climate record.) Then, using an algorithm, they analyse how these events overlap in both time and space.
The study covers the period from 1980 to 2023 and the world’s land surface, excluding polar regions where CDHEs are rare.
The research finds that the area of land affected by CDHEs has “increased substantially” since the early 2000s.
Heatwave-led events have been the main contributor to this increase, the study says, with their spatial extent rising 110% between 1980-2001 and 2002-23, compared to a 59% increase for drought-led events.
The map below shows the global distribution of CDHEs over 1980-2023. The charts show the percentage of the land surface affected by a heatwave-led CDHE (red) or a drought-led CDHE (yellow) in a given year (left) and relative increase in each CDHE type (right).
The study finds that CDHEs have occurred most frequently in northern South America, the southern US, eastern Europe, central Africa and south Asia.

Threshold passed
The authors explain that the increase in heatwave-led CDHEs is related to rising global temperatures, but that this does not tell the whole story.
In the earlier 22-year period of 1980-2001, the study finds that the spatial extent of heatwave-led CDHEs rises by 1.6% per 1C of global temperature rise. For the more-recent period of 2022-23, this increases “nearly eightfold” to 13.1%.
The change suggests that the rapid increase in the heatwave-led CDHEs occurred after the global average temperature “surpasse[d] a certain temperature threshold”, the paper says.
This threshold is an absolute global average temperature of 14.3C, the authors estimate (based on an 11-year average), which the world passed around the year 2000.
Investigating the recent surge in heatwave-leading CDHEs further, the researchers find a “regime shift” in land-atmosphere dynamics “toward a persistently intensified state after the late 1990s”.
In other words, the way that drier soils drive higher surface temperatures, and vice versa, is becoming stronger, resulting in more heatwave-led compound events.
Daily data
The research has some advantages over other previous studies, Yeh says. For instance, the new work uses daily estimations of CDHEs, compared to monthly data used in past research. This is “important for capturing the detailed occurrence” of these events, says Yeh.
He adds that another advantage of their study is that it distinguishes the sequence of droughts and heatwaves, which allows them to “better understand the differences” in the characteristics of CDHEs.
Dr Meryem Tanarhte is a climate scientist at the University Hassan II in Morocco, and Dr Ruth Cerezo Mota is a climatologist and a researcher at the National Autonomous University of Mexico. Both scientists, who were not involved in the study, agree that the daily estimations give a clearer picture of how CDHEs are changing.
Cerezo-Mota adds that another major contribution of the study is its global focus. She tells Carbon Brief that in some regions, such as Mexico and Africa, there is a lack of studies on CDHEs:
“Not because the events do not occur, but perhaps because [these regions] do not have all the data or the expertise to do so.”
However, she notes that the reanalysis data used by the study does have limitations with how it represents rainfall in some parts of the world.
Compound impacts
The study notes that if CDHEs continue to intensify – particularly events where heatwaves are the precursors – they could drive declining crop productivity, increased wildfire frequency and severe public health crises.
These impacts could be “much more rapid and severe as global warming continues”, Yeh tells Carbon Brief.
Tanarhte notes that these events can be forecasted up to 10 days ahead in many regions. Furthermore, she says, the strongest impacts can be prevented “through preparedness and adaptation”, including through “water management for agriculture, heatwave mitigation measures and wildfire mitigation”.
The study recommends reassessing current risk management strategies for these compound events. It also suggests incorporating the sequences of drought and heatwaves into compound event analysis frameworks “to enhance climate risk management”.
Cerezo-Mota says that it is clear that the world needs to be prepared for the increased occurrence of these events. She tells Carbon Brief:
“These [risk assessments and strategies] need to be carried out at the local level to understand the complexities of each region.”
The post Heatwaves driving recent ‘surge’ in compound drought and heat extremes appeared first on Carbon Brief.
Heatwaves driving recent ‘surge’ in compound drought and heat extremes
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