Investors welcome Brazil’s Amazon commitment and reiterate call for specific actions to achieve it

The Investor Policy Dialogue on Deforestation (IPDD) notes that President Bolsonaro of Brazil has written to President Biden of the United States of America ahead of the latter’s virtual Leaders’ Summit on Climate this week. The IPDD welcomes President Bolsonaro’s restatement of Brazil’s existing commitment to eliminate illegal deforestation in the Amazon by 2030. We recognise that the public health emergency caused by Covid-19 has exacerbated the challenges facing Brazil on many fronts and put particular pressure on public finances.

We note, however, that policies over the last couple of years have moved Brazil further away from the goal of reducing illegal deforestation. Forest loss in 2020 hit a 12-year high, and although the rainy season months of January and February hinted at an improvement this year, we note both that the peak period of concern in the dry season still lies ahead, and that last month’s data was worse than in March 2020.

We therefore welcome also President Bolsonaro’s willingness to engage with civil society, including NGOs and representatives of indigenous peoples living in the Amazon and other sensitive biomes, to find constructive solutions to the threat of illegal deforestation.

We have been engaging with the Brazilian authorities since the launch of the initiative in June 2020 as we believe that tackling illegal deforestation requires enforcement of the existing legislation, including by prosecuting illegal activity; firm steps to stop legislation that might encourage deforestation, such as granting property rights to illegal occupiers of land; and transparent traceability of supply chains that might be contaminated by illegal deforestation.

We look forward to hearing from the Brazilian government how they will put in place these building blocks for a successful strategy to combat illegal deforestation.

On behalf of the IPDD Brazil workstream, co-chairs
Jan-Erik Saugestad, CEO, Storebrand Asset Management
Graham Stock, Partner, BlueBay Asset Management

Jan-Erik Saugestad, CEO, Storebrand Asset Management
“Brazil has in the past shown that it is possible to combat deforestation, while at the same time providing favorable conditions for business and investment. We hope that Brazil again can take the steps necessary to eliminate deforestation and create a regulatory environment which encourages sustainable corporate practices. It is important that governments, companies and investors pull in the same direction. We win or lose the fight against climate change together.”

Graham Stock, Partner, BlueBay Asset Management
“Brazil leads the green agenda in many respects but the recent increase in forest fires and deforestation is alarming. We hope that recommitting to ending illegal deforestation will herald a fresh push to halt this trend.”

Mr Eduardo Camara Lopes, CIO, Itau Asset Management
"We believe that a partnership between the private sector, gathering resources and investing in the region with government support is part of the solution we can offer, and we are working on. Reducing poverty is the best way the private sector can pursue to combat deforestation in the Amazon region. It is up to the government to provide the right environment for these investments.”

About the IPDD: The Investor Policy Dialogue on Deforestation (IPDD) is a collaborative investor initiative set up in July 2020 to engage with public agencies and industry associations in selected countries on the issue of deforestation. The IPDD is supported by a membership of 51 financial institutions with approximately US$7 trillion in assets under management.

The goal of the initiative is to coordinate a public policy dialogue on halting deforestation. The IPDD seeks to ensure long-term financial sustainability of investments by highlighting the threat posed by loss of biodiversity and other eco-system services, and instead promoting sustainable land use and forest management and respect for human rights, with an initial focus on tropical forests and natural vegetation. It works with key stakeholders to encourage adoption and implementation of regulatory frameworks that ensure protection of such natural assets.

The Brazil workstream was initiated in June 2020 with a letter to the Brazilian government seeking five outcomes:

• A significant reduction in deforestation rates, i.e. showing credible efforts to comply with the commitment set down in Brazil’s Climate Law, article 19.
• Enforcement of Brazil’s Forest Code.
• Enhancement of the ability of Brazil’s agencies tasked with enforcing environmental and human rights legislation to carry out their mandates effectively, and the withdrawal of any legislative developments that may negatively impact forest protection.
• Prevention of fires in or near forest areas, in order to avoid a repetition of the 2019 fire season.
• Public access to data on deforestation, forest cover, tenure and traceability of commodity supply chains.

Secretariat support is provided by the Tropical Forest Alliance (TFA), an initiative hosted by the World Economic Forum. IPDD is an initiative supported by the Principles for Responsible Investment (PRI).

More details available here: Investors Policy Dialogue on Deforestation (IPDD) Initiative » Tropical Forest Alliance