Jefferies Warns of New Risk Tied to Commodities: ESG Regulation

Investors should review their portfolios as new European Union rules targeting deforestation are set to reverberate through companies exposed to key commodities, according to analysts at Jefferies Financial Group Inc.

Companies whose goods incorporate raw materials such as rubber, palm oil and cocoa or livestock products such as beef are potentially in the crosshairs, as the EU enforces regulations designed to slash global deforestation. The bloc, whose rules affect all investors and companies doing business with and in the EU, has set a goal of stopping 10% of deforestation and reducing CO2 emissions by at least 32 million metric tons a year.