Carola van Lamoen, Head of Sustainable Investing at Robeco: “As long term investors in Brazilian bonds and equities it is important to us how Brazil deals with deforestation and climate change not only a matter of social responsibility, but also as a financially material factor in our investment decisions. These go hand in hand, and that fact that the Brazilian government is open to discuss these matters with investors is an important sign, and we’re grateful for having that, but it’s not the ultimate goal itself. The ultimate goal to achieve is significant reduction in deforestation rates and proper law enforcement against environmental crimes. This is why, together with the other investors from the Investor Policy Dialogue on Deforestation (IPDD), we had this second call with the Vice President of Brazil. We are not able to solve global challenges like climate change and deforestation on our own, but together we can contribute to positive change.”
Robeco has identified biodiversity as one of its key sustainability topics next to climate change. We recognize the crucial role that tropical forests play in tackling climate change, protecting biodiversity and ensuring ecosystem services.
We, the investors involved in the Investor Policy Dialogue on Deforestation (IPDD), would like to express our gratitude to the Vice President. We are encouraged by his willingness to continue constructive and informative dialogue with us and look forward to its continuation.
As financial institutions, we have a fiduciary duty to act in the best long-term interests of our beneficiaries. We recognize that tropical forests are essential to prevent climate change, protect biodiversity and maintain ecosystem services, and that indigenous peoples play a crucial role in protecting forests. In order to promote a more sustainable and favorable business environment, the government of Brazil must demonstrate clear commitment to eliminating deforestation and protecting the rights of indigenous peoples. We are concerned about the financial impact that deforestation may have on our clients and investee companies, by potentially increasing reputational, operational and regulatory risks.
We will continue to follow developments in Brazil to assess our exposure to financial risks arising from deforestation. We were interested in understanding progress against the five expected outcomes which we raised to the government last year.
During our meeting with Vice President Mourão, we raised our concerns about the increased deforestation and forest fires in the Amazon and how developments are not yet sufficient to meet our desired outcomes. At the same time we are encouraged to hear that the Amazon Council shares the objectives of the IPDD and wants to continue the dialogue with the investor coalition. The conversation covered topics linked to the IPDD outcome areas, and identified some practical areas where investors could contribute to the government’s efforts. Ensuring our engagement with other stakeholders also supports the shared agenda to achieve sustainable development and nature conservation is also a priority for the IPDD. We also welcome Vice President Mourão’s strong commitment to combatting illegal deforestation, and the ending of the ongoing military-led operations in the Amazon. It is very positive that IBAMA is scheduled to take back responsibility in April.
The Investors 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 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 in the countries they are invested in by promoting sustainable land use and forest management and respect for human rights, with an initial focus on tropical forests and natural vegetation. It will work with key stakeholders to encourage adoption and implementation of regulatory frameworks that ensure protection of such natural assets and human rights.
IPDD is governed through an Advisory Committee, currently co-chaired by Storebrand Asset Management and BlueBay Asset Management. The IPDD is supported by a membership of 55 financial institutions with approximately US$7 trillion in assets under management. Institutional investors (investment managers or asset owners) are welcome to join the IPDD. For more information please see here: https://www.tropicalforestalliance.org/en/collective-action-agenda/investors-policy-dialogue-on-deforestation-ipdd-initiative/