Overlooked investment risks - A study of the importance of deforestation risks to Chinese financial institutions
China is a major consumer of forest-risk commodities, and it has become the world's largest importer and consumer of soybeans. China's imports of soybeans from Latin America, where there is a high risk of deforestation, will continue to grow in the foreseeable future, posing potential reputational, operational, and regulatory risks to Chinese companies involved in the soybean supply chain, as well as to related financial institutions. This study uses soybeans, a forest risk commodity, and the associated deforestation risk as an entry point to explore the correlation between deforestation risk and Chinese financial institutions. By analyzing the financial flows (shareholdings, bond and equity issuance underwriting, and loans) of 30 major Chinese soybean supply chain firms (including importers, crushers, feed producers, and breeders), the study presents an overview of the financing behind the Chinese soybean supply chain and estimates The distribution of financial flows across industries and the total value of assets exposed to deforestation risk for each industry in the soybean supply chain.
