Deforestation: investors can play an important role in the fight against this rampant scourge. Sustainable and responsible investment choices reward companies that protect forests and, vice versa, exclude those that do not have a specific anti-deforestation policy.
Ceres (Coalition for Environmentally Responsible EconomieS) has published a framework that aims to provide investors with more information so they can assess whether companies should be included in fund portfolios from a deforestation risk perspective.
The guide to deciphering deforestation and climate change
The guide is entitled “Investor Guide to Deforestation and Climate Change” and contains three core points:
- setting ambitious targets to reduce greenhouse gas emissions, including those arising from deforestation;
- developing and implementing anti-deforestation policies as part of their climate action plan;
- communicating progress in eliminating deforestation and greenhouse gas emission reduction targets.
Deforestation: major cause of climate risks
According to the Ceres report, tropical deforestation caused by the search for raw materials is responsible for about 2.6 gigatonnes of carbon dioxide emissions per year – 5% of global greenhouse gas emissions.
About 33% of these raw-material-driven emissions occur in Indonesia and 27% in Brazil.
Responsible investor engagement
Asset management companies can do much to reduce deforestation: as an “engine of the economy,” they can make compelling arguments to get big firms to rethink their business in a sustainable way. For example, through engagement (a strategy that Etica has always implemented) they can encourage consumer companies (food, clothing and luxury goods) to incorporate more fully the financial risks arising from deforestation into their climate risk models.
The ongoing loss of tree cover in large areas of the world has convinced asset managers to redouble their efforts to link deforestation and climate change.
Etica’s new forest in Milan
Our company is twenty years old in 2020. To celebrate this important milestone, we decided to give a gift to our home city (and its citizens). And what better gift than a bit of greenery?
In this case, the Etica Forest in Milan’s Parco Nord. The forest will serve to offset the emissions produced by Etica during 2019, all of which will then be documented in the next Integrated Report.
The project involves Etica’s employees and partners planting 400 trees. The forest will be able to absorb around 235,000 kg of CO2 when mature, equivalent to the emissions of a car travelling more than 30 times around the Earth, of around 450,000 half-litre bottles and of 2,300 fridges switched on for a year.
The initiative is in collaboration with Rete Clima, to participate in the commitment to an increasingly green Milan within the framework of ForestaMI, the project for the Milan Metropolitan Area that envisages planting 3 million trees by 2030.Environment Climate Change deforestation forest