Investors commit to tackle deforestation in Brazil’s Cerrado savanna

A string of big-name investment corporations including Legal and General Investment Management (LGIM), APG and Robeco have pledged (31 July) to act to prevent deforestation in Brazil's tropical savanna.

The investors, which collectively manage $2.8trn (£2.1trn) of assets, have joined dozens of large corporate buyers such as Unilever, Tesco and Marks and Spencer (M&S) in signing the Cerrado Manifesto, which calls for zero deforestation in the Cerrado region, where around 50% of the natural landscape is believed to have been lost since 2000. 

recent joint report from WWF and RSPB concluded that the Cerrado region, which once covered a quarter of Brazil, loses an area the size of London every two months as global demand for products including cocoa, palm oil and soy increases.

The voluntary commitment, which has now been signed by 76 companies, was set up by the Brazilian Government and international NGOs last year in a bid to help the private sector work with local and international stakeholders to halt forest and native vegetation loss in the region. Today, a host of big-name investors have joined the agreement.

Robeco’s senior engagement specialist, Peter van der Werf, said the fresh commitments show that the economic and environmental costs of deforestation are “quickly being understood” by the investment industry.

“To protect long-term value and to avoid the loss of ecosystems rich in biodiversity such as the Cerrado, Robeco continues to engage with companies in our investment portfolio on deforestation,” van der Werf said.

“We call upon other institutional investors to follow that example and ensure they are engaging with portfolio companies on the sustainability of their supply chains.”

Deforestation contributes up to 15% of global greenhouse gas emissions, but research has shown that the forest and land-use sector could deliver 37% of the emissions reductions required by 2030 to halt dangerous levels of global warming.

The string of investment firms to have committed to the Manifesto additionally includes US-based company Green Century Capital Management, which markets itself on its fossil-fuel-free sustainable investing strategy.

Divestment drive

The pledges come at a time when banking and insurance giants are announcing plans to make their portfolios more sustainable by divesting from coal companies and those linked with deforestation.  

Approximately £15bn has been divested from fossil fuels by insurers in the past two years, according to an Unfriend Coal Network report, which found that 15 companies had fully or partially cut financial ties by selling holdings in coal companies and refusing to back their operations.

Similarly, LGIM last month announced that it would divest from a host of companies it believes are showing “persistent inaction” on addressing climate risks, removing the firms from its Future World Fund, which requires the firms it holds to disclose their environmental impact, including their carbon footprints, water footprints and exposure to forest risk communities.

Commenting on LGIM’s commitment to the Cerrado Manifesto, the firm’s head of sustainability and responsible investment strategy, Meryam Omi, said: “Given the significant role deforestation plays in increasing greenhouse gas emissions, it is essential to increase the importance of this issue on board agendas.

“Ensuring responsible sourcing and land use for commodities such as soy and cattle is a key component of risk mitigation.”

Sarah George

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie