Nature loss

RDCP: Deforestation exposure in liquid credit portfolios

Written by Stephanie Mielnik & Ulf Erlandsson

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This paper introduces a universe of credits, the Representative Deforestation Credit Portfolio (RDCP), deemed relevant for liquid credit portfolios seeking to manage deforestation exposure.

In the area of the fixed income markets, one particular task can be overwhelming: that of analysing nature loss in general, and deforestation in particular. Using the RDCP, alongside other AFII tools seeks to comprehensively address this issue.

Investors’ focus on deforestation and nature-loss is growing, and so is regulatory focus: the purpose of the RDCP is to allow investors to be ahead of that curve rather than being reactive to new developments.

Rather than pursuing a benchmark of ‘good’ or ‘bad’ exposures, the RDCP has been created as a basis for extended analysis and evaluation of the companies and securities that – based on the AFII Deforestation Score – are most relevant to global investors, in terms of deforestation exposure.

About the authors

Ulf Erlandsson

Ulf Erlandsson

Founder, Board member

Dr Ulf Erlandsson founded the Anthropocene Fixed Income Institute and was its first CEO. A pioneer of climate-focused fixed income portfolio management, he was named Environmental Finance’s Bond Personality of the Year 2022.

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