230 Investors With USD $16.2 Trillion in AUM Call for Corporate Action on Deforestation, Signaling Support for the Amazon
September 18, 2019 /3BL Media/ - Today, 230 institutional investors representing USD $16.2 trillion in assets under management are calling on companies to take urgent action in light of the devastating fires in the Amazon, which have been fueled in part because of the deforestation happening at an alarming rate in Brazil and Bolivia.
“It is with deep concern that we follow the escalating crisis of deforestation and forest fires in Brazil and Bolivia,” the investors wrote in a statement released today. “As investors, who have a fiduciary duty to act in the best long-term interests of our beneficiaries, we recognise the crucial role that tropical forests play in tackling climate change, protecting biodiversity and ensuring ecosystem services.”
The full statement with the list of investor signatories is available here. Among the signatories are some of the largest investment managers and asset owners (30% of signatories) from around the globe, representing more than 30 countries. The statement calls on companies to tackle the financial material deforestation risks, including market and reputational risks, within their operations and global supply chains. It specifically asks companies to:
- Publicly disclose and implement a commodity-specific no deforestation policy with quantifiable, time-bound commitments covering the entire supply chain and sourcing geographies
- Establish a transparent monitoring and verification system for supplier compliance with the company’s no deforestation policy
- Report annually on deforestation risk exposure and management, including progress towards the company’s no deforestation policy
“Deforestation is a global issue for long term investors like CalPERS, who face severe and urgent risks posed by climate change," said Anne Simpson, CalPERS' director of board governance and strategy and Climate Action 100+ steering committee member. "The fires ranging in the Amazon, Indonesia and beyond, threaten the natural carbon sinks which absorb rapidly escalating greenhouse gas emissions. We are committed to engaging companies to bring down greenhouse gas emissions through Climate Action 100+, and we welcome other multi-stakeholder initiatives around the world, such as the Investor Initiative for Sustainable Forests, the Leticia Pact and the planned Alliance for the Amazon led by France and Chile for UNGA 74. We stand ready to do our part as fiduciary investors to ensure we protect assets, manage risks, and realize sustainable returns for our members.”
“For too long, the discussion on climate change has concentrated on the energy sector. There is an urgent need to focus more on effective management of agricultural supply chains,” said Jan Erik Saugestad, CEO Storebrand Asset Management. “Deforestation and loss of biodiversity are not only environmental problems. There are significant negative economic effects associated with these issues and they represent a risk that we as investors cannot ignore. The adoption of Storebrand's investment policy to curb deforestation, lays out a clear mandate to intensify our work on active ownership, and obliges us to apply maximum pressure to change company behavior. Storebrand’s ambition is to have an investment portfolio that does not contribute to deforestation by 2025, and we will not knowingly finance operations that are illegal, fail to protect high conservation value forests or violate the rights of workers and local people.”
“The escalating crisis in Brazil and Bolivia is a clear indicator of the ongoing risks to the global economy from the combined impacts of climate change, deforestation and land-use changes,” said Lauren Compere, Boston Common Asset Management. “As investors, we have a responsibility to address these threats within our portfolios across the value chain from agricultural producers to the banks that finance them. We can address this through financial mechanisms and solutions that are in the best interests of our clients, the environment, and the communities we affect on the ground.”
The statement, coordinated by the nonprofit organizations PRI and Ceres, also comes on the heels of a new special report on climate change and land released by the Intergovernmental Panel on Climate Change, which shows that 11% of global greenhouse gas emissions are caused by poor forestry and land-use management including commodity-driven deforestation.
“The gargantuan biodiversity of the Amazon forest calls for innovative solutions to harness its biological assets,” said Professor Carlos Nobre, Senior Researcher with the University of São Paulo’s Institute of Advanced Studies. “The use of modern technologies can help to keep the forest standing, and preserve its vital role storing carbon, protecting species and providing invaluable ecosystems services for the planet. Investors have a critical role to play in developing and harnessing these technologies to help preserve the Amazon forest.”
Many of the investors who have signed the statement are involved in a collaborative investor engagement initiative with global companies exposed directly or indirectly to soy and cattle from South America. The Investor Initiative for Sustainable Forests (IISF), led by PRI and Ceres, aims to transform industry practices to eliminate deforestation from cattle and soy supply chains.
“In signing this statement, investors representing a significant portion of global capital are pledging their support for the Amazon region, which has been devastated by fires and deforestation,” said PRI CEO Fiona Reynolds. “In doing so, investors are recognising the critical role they play to urgently accelerate action to help societies affected by this tragedy, and to prevent environmental disasters of this scale in the future.”
"Institutional investors increasingly recognize that deforestation creates material financial risks, including reputational and regulatory risks for companies, and that it exacerbates systemic risk across portfolios by contributing to climate change," said Ceres CEO and President Mindy Lubber. "Therefore, companies must demonstrate to investors that they can hold their global suppliers accountable for disclosing and eliminating these risks."
PRI works with its international network of more than 2,500 signatories, representing over US$86.3 trillion in assets, to put the six Principles for Responsible Investment into practice. Its goals are to understand the investment implications of ESG issues and to support signatories in integrating these issues into investment and ownership decisions. The six Principles were developed by investors and are supported by the United Nations. PRI does not operate for its own profit; it engages with global policymakers but is not associated with any government; it is supported by, but not part of, the United Nations.
Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy. Through powerful networks and advocacy, Ceres tackles the world’s biggest sustainability challenges, including climate change, water scarcity and pollution, and equitable workplaces. For more information, visit www.ceres.org and follow @CeresNews.