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Deforestation exposure: Q2 & Q3 2024 issuance review

Written by Josephine Richardson & Emiel Loh

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Fixed income investors are increasingly sensitive to deforestation risk exposures. The AFII Representative Deforestation Credit Portfolio (RDCP) helps investors in monitoring issuance from potentially exposed companies.

In this note, we review Q2 and Q3 2024 issuances from this universe. This shows how benchmarked investor exposure may have changed over the last six months and provides insights on ESG-labelled debt usage from these companies.

In Q2 and Q3, 18 RDCP issuers came to market with a total of $24bn in new debt.

USD-denominated issuances were dominated by Kroger, the US supermarket chain, which placed a seven-tranche $10.5bn deal in August. Kroger is exposed to deforestation risk through its use of palm oil, soy, beef, timber, and pulp & paper.

EUR-denominated issuances lagged, with multinational food companies Danone and General Mills bringing the largest deals that could be exposed to deforestation risks.

ESG-labelled debt usage has reduced in this period. Investors can support these structures to improve transparency in an environmentally important area.

About the authors

Josephine Richardson

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.

Emiel Loh

Emiel Loh

Emiel was formerly a Research Analyst at AFII.

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