200+ Investors Managing US$16T Urge Brazil to Protect Amazon

SÃO PAULO, BRAZIL – Ahead of next week’s United Nations Climate Action Summit in New York, 230 institutional investors from thirty different countries issued a statement urging Brazil’s government to take action to stop the burning and deforestation in the Amazon region. Together, these investors manage over US$16.2 trillion in funds.

“We are concerned about the financial impact deforestation may have on investee companies, by potentially increasing reputational, operational and regulatory risks,” said the statement issued by the group.

“Considering increasing deforestation rates and recent fires in the Amazon, we are concerned that companies exposed to potential deforestation in their Brazilian operations and supply chains will face increasing difficulty accessing international markets,” continued the statement.

According to the group, they have requested that the companies in which they invest, redouble efforts to eradicate deforestation from their operations and supply chains.

Led by France’s Amundi (Europe’s leading fund and ninth-largest in the world) the portfolios under the group’s management add up to a volume of resources that exceeds China’s GDP.

Many of these institutional investors have invested significant amounts in Brazilian companies. Among them is UK’s Aberdeen which has a share of BRF, owner of Brazilian meat producers, Sadia and Perdigão brands and Australia’s Macquarie, which has a fund focusing on infrastructure business for Brazil and Latin America.

Much of the recent burnings in the Amazon were found to be deliberate. Environmentalists have blamed those wanting to clear land for cattle and grains, and those interested in building roads into the forest for the destruction.

Many of the concerned investors are significant pension funds that are always looking to invest the millions they have from their employees’ retirement plans. This includes CalPERS, the California public employee pension fund that manages more than US$370 billion in assets.

The institutional investors praised CEBDS (Brazilian Business Council for Sustainable Development), for advocating the improvement of control and monitoring systems to immediately eliminate illegal deforestation and fires in the Amazon and other biomes.

They also expressed support to a declaration made by the Brazilian Coalition on Climate, Forests, and Agriculture (stakeholders and companies from the Brazilian agribusiness sector), that have pledged to regain control of the situation as a matter of urgency.

“Companies producing, trading and using agricultural commodities have been under increasing pressure from stakeholders to demonstrate deforestation-free supply chains,” said the statement issued by the institutional investors.

“While several hundred companies have committed to ending commodity-driven deforestation by 2020, recent research indicates that very few companies are on track to reach this goal,” concluded the statement.

The move was applauded by environmental groups, such as Amazon Watch and The Rainforest Foundation – Norway.

“This call from investors to end deforestation in the Amazon is timely, significant and forceful,” says Moira Birss, Finance Campaign Director at Amazon Watch.

According to Birss with next week’s Summit and December’s COP 25 in Chile, companies should be held accountable not doing more for the environment.

“This would be the perfect moment for the U.S. financial institutions that have yet to take action for the Amazon to step up. To do otherwise would be to continue their complicity in Amazon destruction,” said the Amazon Watch director.

Despite the praise, Birss said she was disappointed not seeing more institutional investors adhere to the ‘cause’.

“It is both disappointing and problematic that the biggest equity investors – BlackRock, Vanguard, Fidelity and State Street- did not sign this statement, nor did other major U.S. financial institutions. Once again, U.S. financial institutions have left leadership on environmental and climate issues to Europe and socially responsible investors,” concluded Birss.

“This should be the final wake-up call for businesses complicit in deforestation. If they lose the capital of investors, they risk being put out of business,” says Vemund Olsen of Rainforest Foundation Norway.

“Companies must clean up their supply chains, but they also need to put pressure on the government of Brazil to do what it takes to stop deforestation, secure the rights of indigenous peoples and reintroduce credible monitoring and enforcement of Brazil’s environmental legislation,” added Olsen.

Norway has been one of the most active voices in the fight to combat deforestation. The Nordic country was one of the primary donors of the Amazon Fund. In more than a decade of working closely with the Brazilian government, Norway donated more than R$3 billion to protect the Amazon Forest. In August, after disagreeing with the new configuration of the Fund’s committees, Norway suspended the aid.